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<SEC-DOCUMENT>0000928816-04-001028.txt : 20041004
<SEC-HEADER>0000928816-04-001028.hdr.sgml : 20041004
<ACCEPTANCE-DATETIME>20041004172155
ACCESSION NUMBER:		0000928816-04-001028
CONFORMED SUBMISSION TYPE:	N-14 8C
PUBLIC DOCUMENT COUNT:		12
FILED AS OF DATE:		20041004
DATE AS OF CHANGE:		20041004

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			PUTNAM HIGH INCOME BOND FUND
		CENTRAL INDEX KEY:			0000810943
		IRS NUMBER:				046562068
		STATE OF INCORPORATION:			MA
		FISCAL YEAR END:			0831

	FILING VALUES:
		FORM TYPE:		N-14 8C
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-119523
		FILM NUMBER:		041063468

	BUSINESS ADDRESS:	
		STREET 1:		ONE POST OFFICE SQ
		STREET 2:		MAILSTOP A 14
		CITY:			BOSTON
		STATE:			MA
		ZIP:			02109
		BUSINESS PHONE:		8002251581

	MAIL ADDRESS:	
		STREET 1:		PUTNAM LLC
		STREET 2:		ONE POST OFFICE SQ
		CITY:			BOSTON
		STATE:			MA
		ZIP:			02109

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	PUTNAM HIGH BOND FUND
		DATE OF NAME CHANGE:	20021107

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	PUTNAM HIGH INCOME CONVERTIBLE & BOND FUND
		DATE OF NAME CHANGE:	19920703
</SEC-HEADER>
<DOCUMENT>
<TYPE>N-14 8C
<SEQUENCE>1
<FILENAME>hi1.txt
<DESCRIPTION>PUTNAM HIGH INCOME BOND FUND
<TEXT>

       As filed with the Securities and Exchange Commission on
                           October 4, 2004
                         Registration No.
          (Investment Company Act Registration No. 811-05133)
- ---------------------------------------------------------------------
                U.S. SECURITIES AND EXCHANGE COMMISSION
                        WASHINGTON, D.C. 20549
                          ---------------
                             FORM N-14
                               ----

        REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933       /X/

                               ----
                               ----
                   Pre-Effective Amendment No. / /
                               ----
                               ----
                   Post-Effective Amendment No. / /

                               ----
                 (Check appropriate box or boxes)
                         ---------------

                    PUTNAM HIGH INCOME BOND FUND
         (Exact Name of Registrant as Specified in Charter)

        One Post Office Square, Boston, Massachusetts 02109
           (Address of Principal Executive Offices)
                           617-292-1000
                 (Area Code and Telephone Number)

                         ---------------
                  BETH S. MAZOR, Vice President
                   PUTNAM HIGH INCOME BOND FUND
                     One Post Office Square
                  Boston, Massachusetts 02109
            (Name and address of Agent for Service)
                         ---------------

                           Copy to:
                   JOHN W. GERSTMAYR, Esquire
                        ROPES & GRAY LLP
                     One International Place
                  Boston, Massachusetts 02110
                         ---------------

Approximate Date of Proposed Offering:

As soon as practicable after this Registration Statement is declared
effective.


<TABLE>
<CAPTION>

CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933

- ---------------------------------------------------------------------------------------------------------------
Title of Securities Being  Amount Being  Proposed Maximum Offering     Proposed Maximum          Amount of
      Registered            Registered        Price Per Unit        Aggregate Offering Price  Registration Fee
- ---------------------------------------------------------------------------------------------------------------
     <S>                  <C>                   <C>                     <C>                     <C>
     Common Shares         8,716,170             $7.87(1)                $68,596,258             $8,691.15
- ---------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Average of high and low reported price for common shares on
September 28, 2004.

The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that
this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until the
Registration Statement shall become effective on such date as the
Securities and Exchange Commission, acting pursuant to said Section
8(a), may determine.

Important information for shareholders of

PUTNAM HIGH INCOME OPPORTUNITIES TRUST AND
PUTNAM HIGH INCOME BOND FUND

The document you hold in your hands contains a combined prospectus/proxy
statement and proxy card.  A proxy card is, in essence, a ballot.  When
you complete and sign your proxy card, the Trustees of your fund will
vote on your behalf exactly as you have indicated.  If you simply sign
the proxy card, it will be voted in accordance with the Trustees'
recommendations on page [  ].  The Trustees recommend that shareholders
vote in favor of the proposal described in this document and listed on
your proxy card.

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 may cost your fund money.

You can vote by returning your proxy card in the envelope provided.  Or
you can call our toll-free number, or go to the Web.  See your proxy
card for the phone number and Web address.  If you have any questions,
please contact Putnam at 1-800-225-1581 or call your financial advisor.

[Putnam Scales Logo]

TABLE OF CONTENTS

A Message from the Chairman                                      [  ], [  ]
Notice of a Joint Meeting of Shareholders                        [  ]
Combined Prospectus/Proxy Statement                              [  ]

PROXY CARD(S) ENCLOSED

If you have any questions, please contact us at the special toll-free
number we have set up for you (1-800-225-1581) or call your financial
advisor.

A Message from the Chairman

Dear Shareholder of Putnam High Income Bond Fund:

[Photo of John A. Hill]

I am writing to you to ask for your vote on an important matter that
affects your investment in Putnam High Income Bond Fund ("High Income
Bond Fund").  While you are, of course, welcome to join us at the
meeting, most shareholders cast their vote by filling out and signing
the enclosed proxy card, by calling or by voting via the Internet.

We are asking for your vote on the following matter:

1. Approving a proposed merger of Putnam High Income Opportunities Trust
("High Income Opportunities Trust") into High Income Bond Fund.  In this
merger, the shares of High Income Opportunities Trust would, in effect,
be exchanged on a tax-free basis for shares of High Income Bond Fund
with an equal total net asset value.

The proposed merger is not intended to change significantly the nature
of your investment.  The investment objective and policies of High
Income Opportunities Trust and your fund are substantially similar.
Both are closed-end funds that seek to provide high current income as a
primary objective and capital appreciation as a secondary objective by
investing in a portfolio of lower-grade and nonrated convertible
securities and non-convertible, high-yield securities.  Although the
proposed merger will not materially affect the operation of your fund,
we are required by the rules of the New York Stock Exchange to solicit
your vote on this matter.

The proposal is intended to result in a combined fund that is more
attractive to investors than either of the two funds separately.  Putnam
Investment Management, LLC believes that creating a broader shareholder
base for the combined fund's shares may attract more interest in the
combined fund than is currently the case with either fund, which may
result in higher trading levels for the combined fund's shares. However,
there can be no guarantee that the proposed merger will have the intended
effect.

Your vote is important to us.  We appreciate the time and consideration
I am sure you will give this important matter.  If you have questions
about the proposal, please call 1-800-225-1581 or call your financial
advisor.

Sincerely yours,

[Signature of John A. Hill]

John A. Hill, Chairman


A Message from the Chairman

Dear Shareholder of Putnam High Income Opportunities Trust:

[Photo of John A. Hill]

I am writing to you to ask for your vote on an important matter that
affects your investment in Putnam High Income Opportunities Trust ("High
Income Opportunities Trust").  While you are, of course, welcome to join
us at the meeting, most shareholders cast their vote by filling out and
signing the enclosed proxy card, by calling or by voting via the
Internet.

We are asking for your vote on the following matter:

1. Approving a proposed merger of High Income Opportunities Trust into
Putnam High Income Bond Fund ("High Income Bond Fund").  In this merger,
the shares of High Income Opportunities Trust would, in effect, be
exchanged on a tax-free basis for shares of High Income Bond Fund with
an equal total net asset value.

The proposed merger is not intended to change significantly the nature
of your investment.  The investment objective and policies of High
Income Bond Fund and your fund are substantially similar.  Both are
closed-end funds that seek to provide high current income as a primary
objective and capital appreciation as a secondary objective by investing
in a portfolio of lower-grade and nonrated convertible securities and
non-convertible, high-yield securities.

The proposal is intended to result in a combined fund that is more
attractive to investors than either of the two funds separately.  Putnam
Investment Management, LLC believes that creating a broader shareholder
base for the combined fund's shares may attract more interest in the
combined fund than is currently the case with either fund, which may
result in higher trading levels for the combined fund's common shares.
However, there can be no guarantee that the proposed merger will have
the intended effect.

Your vote is important to us.  We appreciate the time and consideration
I am sure you will give this important matter.  If you have questions
about the proposal, please call 1-800-225-1581 or call your financial
advisor.

Sincerely yours,

[Signature of John A. Hill]

John A. Hill, Chairman


PUTNAM HIGH INCOME OPPORTUNITIES TRUST ("HIGH INCOME OPPORTUNITIES
TRUST") AND PUTNAM HIGH INCOME BOND FUND ("HIGH INCOME BOND FUND")

Notice of a Joint Meeting of Shareholders

* This is the formal agenda for the joint meeting of shareholders.  It
  tells you what matter will be voted on and the time and place of the
  meeting.

To the Shareholders of High Income Opportunities Trust:

A Meeting of Shareholders of High Income Opportunities Trust will be
held on [  ], at [  ], Boston time, on the eighth floor of One Post
Office Square, Boston, Massachusetts, to consider the following:

1. Approving an Agreement and Plan of Reorganization and the
transactions contemplated thereby, including the transfer of all of the
assets of High Income Opportunities Trust to High Income Bond Fund in
exchange for the issuance and delivery of shares of beneficial interest
of High Income Bond Fund and the assumption by High Income Bond Fund of
all of the liabilities of High Income Opportunities Trust, and the
distribution of such shares to the shareholders of High Income
Opportunities Trust in complete liquidation of High Income Opportunities
Trust.  See page [  ].

To the Shareholders of High Income Bond Fund:

A Meeting of Shareholders of High Income Bond Fund will be held on [  ],
at [  ], Boston time, on the eighth floor of One Post Office Square,
Boston, Massachusetts, to consider the following:

1. Approving an Agreement and Plan of Reorganization and the
transactions contemplated thereby, including the transfer of all of the
assets of High Income Opportunities Trust to High Income Bond Fund in
exchange for the issuance and delivery of shares of beneficial interest
of High Income Bond Fund and the assumption by High Income Bond Fund of
all of the liabilities of High Income Opportunities Trust, and the
distribution of such shares to the shareholders of High Income
Opportunities Trust in complete liquidation of High Income Opportunities
Trust.  See page [  ].

By the Trustees

John A. Hill, Chairman
George Putnam, III, President

Jameson A. Baxter
Charles B. Curtis
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
John H. Mullin, III
Robert E. Patterson
A.J.C. Smith
W. Thomas Stephens

WE URGE YOU TO MARK, SIGN, DATE AND MAIL THE ENCLOSED PROXY IN THE
POSTAGE-PAID ENVELOPE PROVIDED OR RECORD YOUR VOTING INSTRUCTIONS BY
TELEPHONE OR VIA THE INTERNET SO THAT YOU WILL BE REPRESENTED AT THE
MEETING.

[  ], 2004


Prospectus/Proxy Statement

[  ], 2004

This Prospectus/Proxy Statement relates to the proposed merger of Putnam
High Income Opportunities Trust ("High Income Opportunities Trust") into
Putnam High Income Bond Fund ("High Income Bond Fund"), each located at
One Post Office Square, Boston, MA 02109; 1-617-292-1000.  As a result
of the proposed merger, each shareholder of High Income Opportunities
Trust would receive a number of full and fractional shares of High
Income Bond Fund of equal net asset value at the date of the exchange to
the total net asset value of the shareholder's High Income Opportunities
Trust shares.

This Prospectus/Proxy Statement is being mailed on or about [  ], 2004.
It explains concisely what you should know before voting on the matter
described herein or investing in High Income Bond Fund, a closed-end
management investment company.  Please read this Prospectus/Proxy
Statement and keep it for future reference.

A Statement of Additional Information (the "SAI"), dated [  ], 2004,
relating to the proposed merger has been filed with the Securities and
Exchange Commission ("SEC") and is incorporated by reference into this
Prospectus/Proxy Statement.  For a free copy of the SAI, please contact
us at 1-800-225-1581.

The securities offered by this Prospectus/Proxy Statement have not been
approved or disapproved by the SEC, nor has the SEC passed upon the
accuracy or adequacy of this Prospectus/Proxy Statement.  Any
representation to the contrary is a criminal offense.

Shares of High Income Bond Fund are not deposits or obligations of, or
guaranteed or endorsed by, any financial institution, are not insured by
the Federal Deposit Insurance Corporation, the Federal Reserve Board or
any other agency, and involve risk, including the possible loss of
principal amount invested.

This document will give you the information you need to vote on the
proposal.  Much of the information is required under rules of the SEC;
some of it is technical.  If there is anything you don't understand,
please contact us at our toll-free number, 1-800-225-1581, or call your
financial advisor.  Like High Income Bond Fund, High Income
Opportunities Trust is in the family of funds managed by Putnam
Investment Management, LLC ("Putnam Management").  High Income Bond Fund
and High Income Opportunities Trust are collectively referred to herein
as the "funds," and each is referred to individually as a "fund."

The common shares of High Income Bond Fund are listed on the New York
Stock Exchange (the "NYSE") under the symbol "PCF," and the common
shares of High Income Opportunities Trust are listed on the NYSE under
the symbol "PCV."  You may inspect reports, proxy material and other
information concerning either High Income Bond Fund or High Income
Opportunities Trust at the NYSE.

High Income Bond Fund and High Income Opportunities Trust are subject to
the informational requirements of the Securities Exchange Act of 1934
and, as a result, file reports and other information with the SEC.  You
may review and copy information about the funds, including the SAI, at
the SEC's public reference room at 450 Fifth Street, NW, Washington,
D.C.; or at the public reference facilities in its Northeast and Midwest
regional offices, at 233 Broadway, New York, NY, and 175 W. Jackson
Boulevard, Suite 900, Chicago, IL.  You may call the SEC at
1-800-SEC-0330 for information about the operation of the public
reference room.  You may obtain copies of this information, with payment
of a duplication fee, by electronic request at the following e-mail
address:  publicinfo@sec.gov, or by writing the SEC's Public Reference
Section, Washington, D.C. 20549-0102.  You may also access reports and
other information about the funds on the EDGAR Database on the SEC's
Internet site at http://www.sec.gov.

I. Synopsis

* The responses to the questions that follow provide an overview of key
points typically of concern to shareholders considering a proposed merger
between closed-end funds.  These responses are qualified in their entirety
by the remainder of the Prospectus/Proxy Statement, which contains
additional information and further details regarding the proposed merger.

1. What is being proposed?

The Trustees of the funds are recommending that shareholders of each fund
approve the merger of High Income Opportunities Trust into High Income Bond
Fund and the related transactions contemplated by the Agreement and Plan of
Reorganization among each of the funds and Putnam Management, dated as of
[ ] (the "Agreement").  The Agreement is attached to this Prospectus/Proxy
Statement as Appendix A.  If approved by shareholders of each fund, all of
the assets of High Income Opportunities Trust will be transferred to High
Income Bond Fund in exchange for the issuance and delivery to High Income
Opportunities Trust of shares of High Income Bond Fund (the "Merger
Shares") with a net asset value equal to the value of High Income
Opportunities Trust's assets net of liabilities and for the assumption by
High Income Bond Fund of all of the liabilities of High Income
Opportunities Trust.  Immediately following the transfer, the Merger Shares
received by High Income Opportunities Trust will be distributed to its
shareholders, pro rata.

2. What will happen to my shares as a result of the proposed merger?

If you are a shareholder of High Income Opportunities Trust, your shares
will, in effect, be exchanged on a tax-free basis for shares of High
Income Bond Fund with an equal aggregate net asset value on the date of
the merger.  It is possible, however, that the market value of such
shares may differ.  See question 12 below.

If you are a shareholder of High Income Bond Fund, your shares of High
Income Bond Fund will not be directly affected by the merger, but will
represent interests in a larger fund pursuing the same investment
objectives and policies.

3. Why is the merger being proposed at this time?

Putnam Management proposed the merger of High Income Opportunities Trust
into High Income Bond Fund to the funds' Trustees because it believes
the proposed merger may result in a combined fund that is more
attractive to investors than either of the two funds separately.  Putnam
Management believes that creating a broader shareholder base for the
combined fund's shares may attract more interest in the combined fund
than is currently the case with either fund, which may result in higher
trading levels for the combined fund's common shares.  However, there
can be no guarantee that the proposed merger will have the intended
effect.

In addition, the merger would offer shareholders of both funds the
opportunity to invest in a larger fund with substantially similar
investment policies and the potential to achieve greater economies of
scale and a lower expense ratio.  In addition, the funds are managed by
the same investment teams with a common investment process and similar
objectives; therefore, the proposed merger would permit the funds'
investment teams to focus their efforts on a single fund.

Both funds invest significantly in both high-yield bonds and convertible
securities.  Convertible securities typically are bonds, preferred stocks
or warrants that can be converted into or exchanged for common stock. The
convertible securities portion of High Income Bond Fund is a heavily
income-oriented portfolio composed of so-called "broken" convertibles,
which are convertibles whose underlying equity has fallen to the point
where the convertibles trade based primarily on their fixed-income
attributes.  The convertible securities portion of High Income
Opportunities Trust was originally more equity-oriented, emphasizing
smaller capitalization issuers.  In 2002, however, a number of investment
policy changes were made to these funds, including changing the convertible
securities portion of High Income Opportunities Trust to permit it to focus
its convertible holdings on larger capitalization and "broken"
convertibles.  As a result, the management of the two funds has converged,
and they are now managed in parallel by the same investment management
teams.

For these reasons, Putnam Management recommended that High Income
Opportunities Trust, which had assets of $72.5 million as of July 31,
2004, be combined with High Income Bond Fund, which had assets of $114.9
million as of July 31, 2004.  As High Income Bond Fund is larger than
High Income Opportunities Trust, the Trustees believe that it is
appropriate for the smaller High Income Opportunities Trust to be merged
into High Income Bond Fund.

                            * * *

The Trustees of the Putnam Funds, who serve as Trustees of each of the
funds involved in the proposed merger, have carefully considered Putnam
Management's recommendations.  Following a review of the anticipated
benefits and costs of the proposed merger to the shareholders of each
fund, the Trustees of the funds, including all of the independent
Trustees, who are not "interested persons" of Putnam Management, unanimously
determined that the proposed merger is in the best interests of each
fund and recommend that shareholders vote FOR approval of the proposed
merger.

4. How do the investment goals, policies and restrictions of the two
funds compare?

Investment Goals

The investment goals of the funds are identical.  Each fund seeks high
current income as a primary objective and capital appreciation as a
secondary objective.  The management of the two funds has converged, and
they are now managed in parallel.  As of July 31, 2004, each fund had
47-48% of its net assets in convertible securities and 43-44% in high-
yield bonds.

Investment Policies

The funds share substantially similar fundamental investment policies,
though there are three differences that Putnam Management believes are of
little practical importance since, as discussed above, the funds are now
managed in parallel.  First, High Income Opportunities Trust may borrow up
to 10% of the value of its total assets.  By contrast, High Income Bond
Fund may borrow up to 15% of the value of its total assets. Secondly, High
Income Bond Fund may not purchase securities restricted as to resale if, as
a result, such investments would exceed 10% of the value of its net assets.
By contrast, High Income Opportunities Trust has a non-fundamental policy
under which it may invest up to 15% of its net assets in securities that
are restricted as to resale.  Third, while both funds are generally
prohibited from issuing senior securities (as defined in the Investment
Company Act of 1940, as amended (the "1940 Act")), High Income
Opportunities Trust is permitted to issue shares of beneficial interest
with preference rights.

The funds share substantially similar non-fundamental investment policies.
Each fund will invest, under normal circumstances, at least 80% of its net
assets in fixed income securities (including debt instruments, convertible
securities and preferred stock) rated below investment grade (e.g., below
BBB/Baa) by at least one nationally recognized rating agency (or nonrated
securities Putnam Management believes are of comparable credit quality).
There are two differences in non-fundamental investment policies that
Putnam Management believes are of little practical importance because, as
discussed above, the funds are now managed in parallel.  First, High Income
Bond Fund may invest up to 20% if its net assets in securities principally
traded in foreign markets.  By contrast, High Income Opportunities Trust
may only invest up to 15% of its assets in securities principally traded in
foreign markets. Secondly, High Income Bond Fund may not invest in the
securities of registered open-end investment companies, except as they may
be acquired as part of a merger or consolidation or acquisition of assets
or by purchases in the open market involving only customary brokers'
commissions.  High Income Opportunities Trust is not subject to a
corresponding restriction.

5. How do the management fees and other expenses of the two funds
compare, and what are they estimated to be following the proposed
merger?

The following tables summarize the maximum fees and expenses you may pay
when investing in the funds, expenses that each of the funds incurred for
its most recent fiscal year as well as the pro forma expenses of High
Income Bond Fund.  As shown below, the merger is expected to result in
decreased total expenses for shareholders of each fund.  For more
information on the management fees paid by the funds, see "Information
about the Funds--Management" below.

                                             High Income     High Income
                                              Bond Fund   Opportunities Trust

Shareholder transaction expenses
Maximum sales charge imposed on purchases
(as a percentage of offering price)            None (a)       None (a)
Dividend Reinvestment Plan                     None (b)       None (b)

(a) Shares of either fund purchased on the secondary market are not
subject to sales charges but may be subject to brokerage commissions or
other charges.  The table does not include an underwriting commission
paid by shareholders in the initial offering of each fund.

(b) Each participant in a fund's dividend reinvestment plan pays a
proportionate share of the brokerage commissions incurred with respect
to open market purchases in connection with such plan.

Annual Fund Operating Expenses
(expenses that are deducted from fund assets)

                         High Income       High Income  High Income Bond Fund
                      Opportunities Trust   Bond Fund   (Pro forma combined)

Management Fees            1.35%*             0.75%             0.75%
Other Expenses             0.44%              0.38%             0.29%**
Total Annual Fund
Operating Expenses         1.79%              1.13%             1.04%**

* Includes a quarterly investment management fee based on the average
weekly net asset value of the fund at the annual rate of 1.10% and a
quarterly administrative service fee based on the average weekly net
asset value of the fund at the annual rate of 0.25%.

** Does not reflect non-recurring expenses related to the merger.  If such
expenses had been reflected, pro forma "other expenses" and Total Annual
Fund Operating Expenses would have been 0.34% and 1.09%, respectively.

The tables are provided to help you understand the expenses of investing
in the funds and your share of the operating expenses that each fund
incurs and that Putnam Management expects the combined fund to incur in
the first year following the merger.  The expenses shown in the table do
not reflect the application of credits related to expense offset
arrangements that reduce certain fund expenses.

Examples

These examples translate the "Total Annual Fund Operating Expenses"
shown in the preceding table into dollar amounts.  By doing this, you
can more easily compare the cost of investing in the funds.  The
examples make certain assumptions.  They assume that you invest $1,000
in a fund for the time periods shown.  They also assume, as required by
the SEC, a 5% return on your investment each year and that a fund's
operating expenses remain the same.  The examples are hypothetical; your
actual costs and returns may be higher or lower.

                                  1 Year     3 Years     5 Years     10 Years

High Income Bond Fund               $12        $36         $62         $137
High Income Opportunities Trust     $18        $56         $97         $211
High Income Bond Fund
(Pro forma combined)                $11        $33         $57         $127

6. How does the investment performance of the funds compare?

As shown in the table below, in recent years, the total returns at NAV
of High Income Opportunities Trust have approximated those of High
Income Bond Fund.  Each fund's performance at market price may differ
from its results at NAV.  Although market price performance generally
reflects investment results, it may also be influenced by several
factors, including changes in investor perceptions of each fund or its
investment adviser, market conditions, fluctuations in supply and demand
for each fund's shares and changes in each fund's distributions.

TOTAL RETURN FOR PERIODS ENDED 8/31/04

                      High Income Bond Fund   High Income Opportunities Trust
                      NAV       Market Price       NAV       Market Price

1 year               16.40%        12.06%         15.43%         8.01%
5 years              58.79%        36.49%         29.56%        22.95%
Annual average        9.69%         6.42%          5.32%         4.22%
10 years            133.54%       104.14%
Annual average        9.13%         7.40%            --            --
Life of fund*                                     91.47%        69.35%
Annual average       10.12%         9.10%          7.34%         5.91%

*  The inception dates of High Income Bond Fund and High Income
Opportunities Trust were 7/9/87 and 6/29/95, respectively.

The performance information does not account for taxes.

COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 8/31/04

                                                          Lipper Convertible
                      Merrill Lynch         JP Morgan      Securities Funds
                     All-Convertible      Global High       (closed-end)
                         Index*          Yield Index**   category average***

1 year                     9.72%              14.62%              10.59%
5 years                   31.43%              38.05%              21.12%
Annual average             5.62%               6.66%               3.80%
10 years                 158.46%             115.52%             113.01%
Annual average             9.96%               7.98%               7.78%
Life of High Income
Bond Fund (7/9/87)           --                  --                8.58%
Annual average
Life of High Income
Opportunities Trust
(6/29/95)                132.87%              92.36%              91.30%
Annual average             9.66%               7.40%               7.27%


*  Primary benchmark for High Income Bond Fund and High Income
Opportunities Trust. This index began operations on 12/31/87.

**  Secondary benchmark for High Income Bond Fund and High Income
Opportunities Trust. This index began operations on 12/31/93.

***  Over the 1-, 5- and 10-year periods ended 8/31/04, there were 13,
8 and 7 funds, respectively, in this Lipper category.

Index and Lipper results should be compared to each fund's performance
at NAV.

7. What are the federal income tax consequences of the proposed merger?

For federal income tax purposes, no gain or loss will be recognized by
the funds or their shareholders directly as a result of the proposed merger.
Certain other tax consequences are discussed below under "Information
about the Proposed Merger--Federal Income Tax Consequences."

8. Will my dividend be affected by the proposed merger?

The merger will not result in a change in dividend policy.  Because the
funds' earning rates are currently substantially similar, the merger
will not result in any immediate material change in current dividend
rate.  As of August 31, 2004, the dividend rates for High Income Bond
Fund and High Income Opportunities Trust were 6.67% and 6.04%,
respectively, and the estimated dividend rate for shares of High Income
Bond Fund on a pro forma basis, after giving effect to the merger, would
have been 6.67%.  As of August 16, 2004, the SEC yields for shares of
High Income Bond Fund and High Income Opportunities Trust were 5.76% and
5.11%, respectively.  Over the longer term, the level of dividends will
depend on market conditions and the ability of Putnam Management to
invest the fund's assets, including those received in the merger, in
securities meeting High Income Bond Fund's investment objectives and
policies.

High Income Bond Fund will not permit any holder of High Income
Opportunities Trust shares holding certificates for such shares at the
time of the merger to receive cash dividends or other distributions,
receive certificates for Merger Shares or pledge Merger Shares until
such certificates for High Income Opportunities Trust shares have been
surrendered, or, in the case of lost certificates, until an adequate
surety bond has been posted.

If a shareholder is not, for the reason above, permitted to receive cash
dividends or other distributions on Merger Shares, High Income Bond Fund
will pay all such dividends and distributions in additional shares,
notwithstanding any election the shareholder may have made previously to
receive dividends and distributions on High Income Opportunities Trust
shares in cash.

9. Do the procedures for purchasing and selling shares of the two funds
differ?

No. The procedures for purchasing and selling shares of each fund are
identical.  As closed-end funds, the funds are not required to redeem
outstanding shares, and do not continuously offer shares.  The funds'
shares currently may be bought and sold at prevailing market prices on
the NYSE.  High Income Bond Fund will apply to list the Merger Shares on
the NYSE.  It is a condition to the closing of the merger that the
Merger Shares be approved for listing.

10. How will I be notified of the outcome of the vote?

If the proposed merger is approved and you are a shareholder of High
Income Opportunities Trust, you will receive confirmation after the
reorganization is completed, indicating your new account number, the
number of shares you are receiving and the procedures for surrendering
your certificates, if you have any.  Otherwise, you will be notified in
the next annual report of your fund.

11. Will the number of shares I own change?

If you are a shareholder of High Income Opportunities Trust, the number
of shares you own will change but the total net asset value of the
shares of High Income Bond Fund you receive will equal the total net
asset value of the shares of High Income Opportunities Trust that you
hold at the time of the merger.  If you are a shareholder of High Income
Bond Fund, the number of High Income Bond Fund shares you own will not
change.  Even though the net asset value per share of each fund is
different, the total net asset value of a shareholder's holdings will
not change as a result of the merger.  Of course, the Merger Shares may
trade on the NYSE at a discount from net asset value, which might be
greater or less than the trading discount of High Income Opportunities
Trust shares at the time of the merger.

12. Will the market value of my investment change?

Shares of each fund will continue to be traded on the NYSE until the
time of the merger, and may at times trade at a market price greater or
less than net asset value.  In recent years, shares of both funds have
traded at a discount to net asset value.  Depending on market conditions
immediately prior to the exchange, shares of High Income Bond Fund may
trade at a larger or smaller discount to net asset value than shares of
High Income Opportunities Trust.  This could result in the Merger Shares
having a market value that is greater or less than the market value the
High Income Opportunities Trust shares currently have.

13. Why is the vote of High Income Bond Fund's shareholders being
solicited?

Although High Income Bond Fund will continue its legal existence and
operations as before, we are required by the rules of the NYSE to
solicit the vote of High Income Bond Fund's shareholders on this matter.

14. What percentage of shareholders' votes is required to approve the
merger?

Approval of the merger will require the "yes" vote of the holders of:

* a majority of the outstanding shares of High Income Bond Fund voted,
if holders of more than 50% of such shares vote, and

* the lesser of (1) more than 50% of the outstanding shares of High
Income Opportunities Trust or (2) 67% or more of the shares present at a
meeting if more than 50% of the outstanding shares are represented at
the meeting in person or by proxy.

The Trustees believe that the proposed merger is in the best interests
of each fund's shareholders.  Accordingly, the Trustees unanimously
recommend that shareholders vote FOR approval of the proposed merger.

II. Risk Factors

* What are the risks of High Income Bond Fund, and how do they compare with
those of High Income Opportunities Trust?

The risks of an investment in High Income Bond Fund (the "fund" as used
in the following discussion of main risks) are generally similar to the
risks of an investment in High Income Opportunities Trust.

The main risks that could adversely affect the value of the fund's
shares and the total return on your investment include:

* The risk that the issuers of the fund's fixed-income investments will
not make timely payments of interest and principal.  Because the fund
invests significantly in junk bonds, it is subject to heightened credit
risk.  Investors should carefully consider the risks associated with an
investment in the fund.

* The risk that the stock price of one or more of the companies in the
fund's portfolio will fall, or will fail to rise.  Many factors can
adversely affect a stock's performance, including both general financial
market conditions and factors related to a specific company or industry.
This risk is generally greater for small and midsized companies, which
tend to be more vulnerable to adverse developments.

* The risk that movements in financial markets will adversely affect the
value of the fund's investments.  This risk includes interest rate risk,
which means that the prices of the fund's investments are likely to fall
if interest rates rise.  Interest rate risk is generally higher for
investments with longer maturities.

* The risks of investing outside the United States, such as currency
fluctuations, economic or financial instability, lack of timely or
reliable financial information or unfavorable political or legal
developments.  These risks are increased for investments in emerging
markets.

* The risk that the fund's shares may trade at a discount to net asset
value.  Although the market price of the fund's shares generally
reflects investment results, it may also be influenced by several
factors, including changes in investor perceptions of the fund or its
investment adviser, market conditions, fluctuations in supply and demand
for the fund's shares and changes in fund distributions.  As a result,
the fund cannot predict whether its shares will trade at, below or above
net asset value.

* What are the main investment strategies and related risks of High Income
Bond Fund, and how do they compare with those of High Income Opportunities
Trust?

Because the funds share substantially similar goals and policies, the
risks described below for an investment in High Income Bond Fund are
virtually identical to the risks of an investment in High Income
Opportunities Trust.

Any investment carries with it some level of risk that generally reflects
its potential for reward.  Putnam Management pursues the fund's goal by
investing, under normal circumstances, at least 80% of its net assets in
fixed income securities (including debt instruments, convertible securities
and preferred stock) rated below investment grade (e.g., below BBB/Baa) by
at least one nationally recognized rating agency (or nonrated securities
Putnam Management believes are of comparable credit quality).  Convertible
securities typically are bonds, preferred stocks or warrants that can be
converted into or exchanged for common stock.  A convertible security tends
to provide a higher yield than the underlying stock, which may cushion it
against declines in the price of that stock. The convertible bonds the fund
buys usually have intermediate- to long-term maturities (three years or
longer).  The fund may invest in companies of any capitalization.

Putnam Management will consider, among other factors, a company's
financial strength, competitive position in its industry, projected
future earning, cash flows and dividends when deciding whether to buy or
sell investments.  A description of the risks associated with the fund's
main investment strategies follows:

Interest rate risk.  The values of bonds and other debt instruments
usually rise and fall in response to changes in interest rates.
Declining interest rates generally increase the value of existing debt
instruments, and rising interest rates generally decrease the value of
existing debt instruments.  Changes in a debt instrument's value usually
will not affect the amount of interest income paid to the fund, but will
affect the value of the fund's shares.  Interest rate risk is generally
greater for investments with longer maturities.

Some investments give the issuer the option to call or redeem an
investment before its maturity date.  If an issuer calls or redeems an
investment during a time of declining interest rates, we might have to
reinvest the proceeds in an investment offering a lower yield, and
therefore might not benefit from any increase in value as a result of
declining interest rates.

"Premium" investments offer coupon rates higher than prevailing market
rates.  However, they involve a greater risk of loss, because their
values tend to decline over time.

Credit risk.  Investors normally expect to be compensated in proportion
to the risk they are assuming.  Thus, debt of issuers with poor credit
prospects usually offers higher yields than debt of issuers with more
secure credit.  Higher-rated investments generally offer lower credit
risk.

The fund invests, under normal circumstances, at least 80% of its net
assets in fixed income securities (including debt instruments,
convertible securities and preferred stock) rated below investment grade
(e.g., below BBB/Baa) by at least one nationally recognized rating
agency (or nonrated securities Putnam believes are of equivalent credit
quality).  We will not necessarily sell an investment if its rating is
reduced after we buy it.

Investments rated below BBB or its equivalent are known as "junk bonds."
This rating reflects a greater possibility that the issuers may be
unable to make timely payments of interest and principal and thus
default.  If this happens, or is perceived as likely to happen, the
values of those investments will usually be more volatile and are likely
to fall.  A default or expected default could also make it difficult for
us to sell the investments at prices approximating the values we had
placed on them.  Lower-rated debt usually has a more limited market than
higher-rated debt, which may at times make it difficult for us to buy or
sell certain debt instruments or to establish their fair value.  Credit
risk is generally greater for investments that are issued at less than
their face value and that are required to make interest payments only at
maturity rather than at intervals during the life of the investment.
Although investment-grade investments generally have lower credit risk,
they may share some of the risks of lower-rated investments.

Credit ratings are based largely on the issuer's historical financial
condition and the rating agencies' investment analysis at the time of
rating.  The rating assigned to any particular investment does not
necessarily reflect the issuer's current financial condition, and does not
reflect an assessment of an investment's volatility or liquidity. Although
Putnam Management considers credit ratings in making investment decisions,
Putnam Management performs its own investment analysis and does not rely on
ratings assigned by the rating agencies.  The fund depends more on Putnam
Management's ability in buying lower-rated debt than it does in buying
investment-grade debt.  The fund may have to participate in legal
proceedings or take possession of and manage assets that secure the
issuer's obligations.  This could increase the fund's operating expenses
and decrease its net asset value.

A company's convertible securities generally receive payments only after
the company has paid the holders of its non-convertible debt; for this
reason, the credit risk of a company's convertible securities is
generally greater than that of its non-convertible debt.

Common stocks.  Common stock represents an ownership interest in a
company.  The value of a company's stock may fall as a result of factors
directly relating to that company, such as decisions made by its
management or lower demand for the company's products or services.  A
stock's value may also fall because of factors affecting not just the
company, but also companies in the same industry or in a umber of
different industries, such as increases in production costs.  The value
of a company's stock may also be affected by changes in financial
markets that are relatively unrelated to the company or its industry,
such as changes in interest rates or currency exchange rates.  In
addition, a company's stock generally pays dividends only after the
company invests in its own business and makes required payments to
holders of its bonds and other debt.  For this reason, the value of a
company's stock will usually react more strongly than its bonds and
other debt to actual or perceived changes in the company's financial
condition or prospects.  Stocks of smaller companies may be more
vulnerable to adverse developments than those of larger companies.

The price of a convertible security normally varies with the price of the
underlying stock.  Companies Putnam Management believes are undergoing
positive change and whose stock Putnam Management believes is undervalued
by the market may have experienced adverse business developments or may be
subject to special risks that have caused their stocks to be out of favor.
If Putnam Management's assessment of a company's prospects is wrong, or if
other investors do not similarly recognize the value of the company, then
the price of the company's stock may fall or may not approach the value
that Putnam Management has placed on it.

Foreign investments.  The fund may invest up to 20% of its net assets in
foreign investments.  Foreign investments involve certain special risks.
For example, their values may decline in response to changes in currency
exchange rates, unfavorable political and legal developments, unreliable
or untimely information, and economic and financial instability.  In
addition, the liquidity of these investment may be more limited than for
most U.S. investments, which means we may at times be unable to sell
them at desirable prices.

Foreign settlement procedures may also involve additional risks.  These
risks are generally greater in the case of developing (also known as
emerging) markets with less developed legal and financial systems.

Certain of these risks may also apply to some extent to U.S.-traded
investments that are denominated in foreign currencies, investments in
U.S. companies that are traded in foreign markets or investments in U.S.
companies that have significant foreign operations.  Special U.S. tax
considerations may apply to the fund's foreign investments.

Small and midsized companies.  These companies, some of which may have a
market capitalization of less than $1 billion, are more likely than
larger companies to have limited product lines, markets or financial
resources, or to depend on a small, inexperienced management group.
Stocks of these companies often trade less frequently and in limited
volume, and their prices may fluctuate more than stocks of larger
companies.  Stocks of small and midsized companies may therefore be more
vulnerable to adverse developments than those of larger companies.

Derivatives.  Putnam Management may engage in a variety of transactions
involving derivatives, such as futures, options, warrants and swap
contracts.  Derivatives are financial instruments whose value depends
upon, or is derived from, the value of something else, such as one or
more underlying investments, pools of investments, indexes or
currencies.  Putnam Management may use derivatives both for hedging and
non-hedging purposes.  However, Putnam Management may also choose not to
use derivatives, based on its evaluation of market conditions or the
availability of suitable derivatives.  Investments in derivatives may be
applied toward meeting a requirement to invest in a particular kind of
investment if the derivatives have economic characteristics similar to
that investment.

Derivatives involve special risks and may result in losses.  The
successful use of derivatives depends on Putnam Management's ability to
manage these sophisticated instruments.  The prices of derivatives may
move in unexpected ways due to the use of leverage or other factors,
especially in unusual market conditions, and may result in increased
volatility.  The use of derivatives may also increase the amount of
taxes payable by shareholders.

Other risks arise from our potential inability to terminate or sell
derivatives positions.  A liquid secondary market may not always exist for
the fund's derivatives positions at any time.  In fact, many
over-the-counter instruments (investments not traded on an exchange) will
not be liquid. Over-the-counter instruments also involve the risk that the
other party to the derivative transaction will not meet its obligations.
For further information about the risks of derivatives, see the statement
of additional information (SAI).

Anti-takeover provisions.  The fund's agreement and declaration of trust
includes provisions that could limit the ability of other persons or
entities to acquire control of the fund or to cause it to engage in
certain transactions or to modify its structure.  Such provisions may
have the effect of depriving shareholders of an opportunity to sell
their shares at a premium over prevailing market prices and may have the
effect of inhibiting the fund's conversion to open-end status.

Market price of shares.  Shares of closed-end investment companies often
trade at a discount to their net asset values, and the fund's shares may
likewise trade at a discount, although it is possible that they may
trade at a premium above net asset value.  Net asset value will be
reduced immediately following the merger as a result of merger-related
expenses.  Although the market price of the fund's shares generally
reflects investment results, it may also be influenced by several
factors, including changes in investor perceptions of the fund or its
investment adviser, market conditions, fluctuations in supply and demand
for the fund's shares and changes in fund distributions.  As a result,
the fund cannot predict whether its shares will trade at, below or above
net asset value.

Other investments.  In addition to the main investment strategies
described above, the fund may make other types of investments, such as
investments in non-convertible preferred stocks and asset-backed
securities, which may be subject to other risks, as described in the
SAI.

Alternative strategies.  Under normal market conditions, Putnam
Management keeps the fund's portfolio fully invested, with minimal cash
holdings.  However, at times Putnam Management may judge that market
conditions make pursuing the fund's usual investment strategies
inconsistent with the best interests of the fund's shareholders.  Putnam
Management then may temporarily use alternative strategies that are
mainly designed to limit losses.  However, Putnam Management may choose
not to use these strategies for a variety of reasons, even in very
volatile market conditions.  These strategies may cause the fund to miss
out on investment opportunities, and may prevent the fund from achieving
its goal.

Changes in policies.  The fund's Trustees may change the fund's goal,
investment strategies and other policies without shareholder approval,
except as otherwise indicated.

An investment in High Income Bond Fund may not be appropriate for all
investors, and there is no assurance that High Income Bond Fund will
achieve its investment objective.  High Income Bond Fund is designed
primarily as a long-term investment and not as a trading vehicle.

III.  Information about the Proposed Merger

General.  The shareholders of each fund are being asked to approve a
merger between High Income Opportunities Trust and High Income Bond Fund
pursuant to the Agreement, which is attached to this Prospectus/Proxy
Statement as Appendix A.  Although the term "merger" is used for ease of
reference, the transaction is structured as a transfer of all of the
assets of High Income Opportunities Trust to High Income Bond Fund in
exchange for the assumption by High Income Bond Fund of all of the
liabilities of High Income Opportunities Trust and for the issuance and
delivery to High Income Opportunities Trust of shares of High Income
Bond Fund equal in aggregate net asset value to the net value of the assets
transferred to High Income Bond Fund.

After receipt of the Merger Shares, High Income Opportunities Trust will
distribute the Merger Shares to its shareholders, in proportion to their
existing shareholdings, in complete liquidation of High Income
Opportunities Trust, and the legal existence of High Income Opportunities
Trust as a separate business trust under Massachusetts law will be
terminated.  Each shareholder of High Income Opportunities Trust will
receive a number of full and fractional Merger Shares equal in aggregate
net asset value at the date of the exchange to the aggregate net asset
value of the shareholder's High Income Opportunities Trust shares.

Prior to the date of the transfer (the "Exchange Date"), High Income
Opportunities Trust will declare a dividend that will have the effect of
distributing to shareholders all of its remaining investment company income
(computed without regard to the deduction for dividends paid) and net
realized capital gains, if any, through the Exchange Date.

The Trustees have voted unanimously to approve the proposed merger and to
recommend that shareholders also approve the merger.  The actions
contemplated by the Agreement and Plan of Reorganization and the related
matters described therein will be consummated only if approved by the
affirmative vote of the holders of a majority of the outstanding shares of
High Income Bond Fund voted, if holders of more than 50% of such shares
vote, and the lesser of (1) more than 50% of the outstanding shares of High
Income Opportunities Trust or (2) 67% or more of the shares present at a
meeting if more than 50% of the outstanding shares of High Income
Opportunities Trust are represented at the meeting in person or by proxy.

The Agreement provides that the investment restrictions of High Income
Opportunities Trust will be temporarily amended to the extent necessary
to effect the transactions contemplated by the Agreement.

In the event that the merger does not receive the required approvals,
each fund will continue to be managed as a separate fund in accordance
with its current investment objective and policies, and the Trustees may
consider such alternatives as may be in the best interests of each
fund's respective shareholders.

Trustees' Considerations Relating to the Proposed Merger.  The Trustees
of the Putnam Funds, who serve as Trustees of each of the funds involved
in the proposed mergers, have carefully considered the anticipated
benefits and costs of the proposed merger from the perspective of each
fund.  The Contract Committee of the Trustees of the Putnam Funds, which
consists solely of Trustees who are not "interested persons" of the
funds as defined in the 1940 Act (the "independent Trustees"), reviewed
the terms of the proposed merger.  The Contract Committee and the
Trustees were assisted in this process by independent legal counsel for
the funds and the independent Trustees.  Following the conclusion of
this process, the Trustees, including all of the independent Trustees,
determined that the proposed merger of High Income Opportunities Trust
into High Income Bond Fund would be in the best interests of each fund
and its shareholders, and that the interests of existing shareholders of
each fund would not be diluted by the proposed merger.  The Trustees
unanimously approved the proposed merger and recommended its approval by
shareholders of each fund.

In evaluating the proposed merger, the Trustees first considered the
underlying investment rationale articulated by Putnam Management.  The
Trustees noted the similarity of the funds' investment objectives,
policies and restrictions.  The Trustees also considered the historical
investment performance of each fund and its current distribution rate,
as well as the expected savings in annual fund operating expenses for
shareholders of the combined fund, based on Putnam Management's
unaudited estimates of the funds' expense ratios as of July 31, 2004 and
the expected pro forma expense ratios based on combined assets of the
funds as of the same date, as shown in the table below:

                                          Total Expenses

High Income Bond Fund                          1.08%
High Income Opportunities Trust                1.78%
High Income Bond Fund Pro Forma Combined       1.04%

The Trustees also considered the tax effects of the proposed merger.  In
particular, using data as of July 31, 2004, they reviewed the historical
and pro forma tax attributes of the funds and examined the effect of a
hypothetical merger occurring as of that date on certain tax losses of
the funds (see "Federal Income Tax Consequences" below).  The Trustees
noted that since the funds had relatively similar gain/loss positions at
that time, there was no significant prospect that one fund's
shareholders would have been placed at a disadvantage, for example, due
to the spreading of their losses (which are a potential tax benefit)
among a larger group of shareholders.  The Trustees also noted that, at
that time, since each fund had significant capital loss carryforwards of
its own, the impact of the loss limitation rules governing the use of
pre-merger losses by the combined fund was expected to be modest.  The
effect of this limitation on the proposed merger, however, will depend
on the amount of losses in each fund at the time of the merger.

The Trustees took into account the expected costs of the proposed merger,
including proxy solicitation costs, fees associated with registering the
sale of High Income Bond Fund's shares to be issued in the proposed merger,
accounting fees and legal fees.  The Trustees weighed these costs (and the
estimated portfolio transaction expenses described below) against the
quantifiable expected benefits of the proposed merger and considered Putnam
Management's agreement to bear these costs to the extent they exceed
certain limits established by the Trustees and set forth in the Agreement.
Accordingly, the funds are expected to bear these costs in the following
amounts:

High Income Bond Fund               $26,887 (0.02% of July 31, 2004 assets)
High Income Opportunities Trust     $57,752 (0.08% of July 31, 2004 assets)

The Trustees also took into account a number of factors, including:  (1)
a comparison of the investment objectives and policies of the funds; (2)
the classification and performance rating of each fund by independent
research firms such as Morningstar, Inc. and Lipper Inc.; (3) the
performance history of each fund; (4) the performance history of each
fund as compared to its benchmark indexes; (5) the volatility of each
fund's portfolio relative to the market; (6) the composition of each
fund's management team; (7) the net assets, average duration and average
credit quality of each fund; (8) the current dividend rates and SEC
yield for each fund; and (9) the terms of the Agreement.

Agreement and Plan of Reorganization.  The proposed merger will be governed
by the Agreement, a copy of which is attached as Appendix A. The Agreement
provides that High Income Bond Fund will acquire all of the assets of High
Income Opportunities Trust in exchange for the assumption by High Income
Bond Fund of all of the liabilities of High Income Opportunities Trust and
for the issuance of and delivery to High Income Opportunities Trust of
Merger Shares equal in aggregate net asset value to the aggregate net asset
value of the transferred assets net of assumed liabilities.  The shares
will be issued on the next full business day (the "Exchange Date")
following the time as of which the funds' shares are valued for determining
net asset value for the merger (4:00 p.m., Boston time, on [  ], or such
other date as may be agreed upon by the parties (the "Valuation Time")).
The following discussion of the Agreement is qualified in its entirety by
the full text of the Agreement.

High Income Opportunities Trust will sell all of its assets to High
Income Bond Fund, and in exchange, High Income Bond Fund will assume all
of the liabilities of High Income Opportunities Trust and deliver to
High Income Opportunities Trust a number of full and fractional Merger
Shares having an aggregate net asset value equal to the value of assets
of High Income Opportunities Trust, less the value of the liabilities of
High Income Opportunities Trust assumed by High Income Bond Fund.  The
Agreement provides that the investment restrictions of High Income
Opportunities Trust will be temporarily amended to the extent necessary
to effect the transactions contemplated by the Agreement.

Immediately following the Exchange Date, High Income Opportunities Trust
will distribute pro rata to its shareholders of record, as of the close of
business on the Exchange Date, the full and fractional Merger Shares
received by High Income Opportunities Trust.  As a result of the proposed
merger, each shareholder of High Income Opportunities Trust will receive a
number of Merger Shares equal in aggregate net asset value at the Exchange
Date to the net asset value of High Income Opportunities Trust shares held
by the shareholder.  This distribution will be accomplished by the
establishment of accounts on the share records of High Income Bond Fund in
the name of such shareholders, each account representing the respective
number of full and fractional Merger Shares due such shareholder.  New
certificates for Merger Shares will be issued only upon written request.
If you hold certificates for shares of High Income Opportunities Trust, you
will not, following the merger, be able to receive any dividends or
transfer your High Income Bond Fund shares until you have delivered your
High Income Opportunities Trust share certificates to Putnam Fiduciary
Trust Company.

The consummation of the merger is subject to the conditions set forth in
the Agreement.  The Agreement may be terminated and the merger abandoned
at any time, before or after approval by the shareholders, prior to the
Exchange Date, by mutual consent of High Income Bond Fund and High
Income Opportunities Trust or, if any condition set forth in the
Agreement has not been fulfilled and has not been waived by the party
entitled to its benefits, by such party.

If shareholders of each fund approve the proposed merger, High Income
Opportunities Trust will liquidate such of its portfolio securities as
High Income Bond Fund shall indicate it does not wish to acquire.  The
Agreement provides that the liquidation will be substantially completed
prior to the Exchange Date, unless otherwise agreed upon by High Income
Opportunities Trust and High Income Bond Fund.  High Income
Opportunities Trust shareholders will bear the portfolio trading costs
associated with this liquidation to the extent that it is completed
prior to the Exchange Date.  There can be no assurance that such
liquidation will be accomplished prior to the Exchange Date.  To the
extent the liquidation is not accomplished prior to the Exchange Date,
the costs of the liquidation will be borne by the shareholders of the
combined fund, including current shareholders of High Income Bond Fund.
Putnam Management does not expect that High Income Bond Fund will require
High Income Opportunities Trust to make any significant dispositions of
securities in connection with the proposed merger.

Except for the trading costs associated with the liquidation described
above, the fees and expenses for the merger and related transactions are
estimated to be $159,264, of which $84,639 will be paid by the funds and the
balance will be paid by Putnam Management.  These fees and expenses,
including legal and accounting expenses, portfolio transfer taxes (if
any) or other similar expenses incurred in connection with the
consummation of the proposed merger and related transactions
contemplated by the Agreement, will be allocated ratably between the two
funds in proportion to their net assets as of the Valuation Time, except
that the costs of proxy materials and proxy solicitations for each fund
will be borne by that fund.  However, to the extent that any payment by
either fund of such fees or expenses would result in the
disqualification of High Income Bond Fund or High Income Opportunities
Trust as a "regulated investment company" within the meaning of Section
851 of the Internal Revenue Code of 1986, as amended (the "Code"), such
fees and expenses will be paid directly by the party incurring them.

Description of the Merger Shares.  The Merger Shares, which are shares
of High Income Bond Fund, will be issued to High Income Opportunities
Trust's shareholders in accordance with the procedures under the
Agreement as described above.  The Merger Shares are fully paid and
nonassessable when issued and will have no preemptive or conversion
rights.  The Merger Shares will be transferable without restriction.

Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of High
Income Bond Fund.  However, High Income Bond Fund's agreement and
declaration of trust disclaims shareholder liability for acts or
obligations of High Income Bond Fund and requires that notice of such
disclaimer be given in each agreement, obligation or instrument entered
into or executed by High Income Bond Fund or its Trustees.  The
Agreement and Declaration of Trust provides for indemnification out of
fund property for all loss and expense of any shareholder held
personally liable for the obligations of High Income Bond Fund.  Thus,
the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which High Income
Bond Fund would be unable to meet its obligations.  The likelihood of
such circumstances is remote.  The shareholders of High Income
Opportunities Trust are currently subject to this same risk of
shareholder liability.

Federal Income Tax Consequences.  As a condition to each fund's
obligation to consummate the reorganization, each fund will receive a
tax opinion from Ropes & Gray LLP, counsel to the funds (which opinion
would be based on certain factual representations and certain customary
assumptions), to the effect that, on the basis of the existing
provisions of the Code, current administrative rules and court
decisions, for federal income tax purposes:

(i) the acquisition by High Income Bond Fund of substantially all of the
assets of High Income Opportunities Trust solely in exchange for Merger
Shares and the assumption by High Income Bond Fund of liabilities of
High Income Opportunities Trust followed by the distribution by High
Income Opportunities Trust to its shareholders of Merger Shares in
complete liquidation of High Income Opportunities Trust, all pursuant to
the Agreement, constitutes a reorganization within the meaning of
Section 368(a) of the Code, and High Income Opportunities Trust and High
Income Bond Fund will each be a "party to a reorganization" within the
meaning of Section 368(b) of the Code;

(ii) under Section 361 of the Code, no gain or loss will be recognized
by High Income Bond Fund or High Income Opportunities Trust upon the
transfer of High Income Opportunities Trust's assets to and the
assumption of High Income Opportunities Trust's liabilities by High
Income Bond Fund or upon the distribution of the Merger Shares to High
Income Opportunities Trust's shareholders in liquidation of High Income
Opportunities Trust;

(iii) under Section 354 of the Code, no gain or loss will be recognized
by shareholders of High Income Opportunities Trust on the exchange of
their shares of High Income Opportunities Trust for Merger Shares;

(iv) under Section 358 of the Code, the aggregate tax basis of the
Merger Shares received by High Income Opportunities Trust's shareholders
will be the same as the aggregate tax basis of High Income Opportunities
Trust shares exchanged therefor;

(v) under Section 1223(1) of the Code, the holding periods of the Merger
Shares received by the shareholders of High Income Opportunities Trust
will include the holding periods of High Income Opportunities Trust
shares exchanged therefor, provided that at the time of the
reorganization High Income Opportunities Trust shares are held by such
shareholders as a capital asset;

(vi) under Section 1032 of the Code, no gain or loss will be recognized
by High Income Bond Fund upon the receipt of assets of High Income
Opportunities Trust in exchange for Merger Shares and the assumption by
High Income Bond Fund of the liabilities of High Income Opportunities
Trust;

(vii) under Section 362(b) of the Code, the tax basis in the hands of
High Income Bond Fund of the assets of High Income Opportunities Trust
transferred to High Income Bond Fund will be the same as the tax basis
of such assets in the hands of High Income Opportunities Trust
immediately prior to the transfer;

(viii) under Section 1223(2) of the Code, the holding periods of the assets
of High Income Opportunities Trust in the hands of High Income Bond Fund
will include the periods during which such assets were held by High Income
Opportunities Trust; and

(ix) High Income Bond Fund will succeed to and take into account the
items of High Income Opportunities Trust described in Section 381(c) of
the Code, subject to the conditions and limitations specified in
Sections 381, 382, 383 and 384 of the Code and Regulations thereunder.

Ropes & Gray LLP will express no view with respect to the effect of the
reorganization on any transferred asset as to which any unrealized gain
or loss is required to be recognized at the end of a taxable year (or on
the termination or transfer thereof) under federal income tax
principles.

High Income Bond Fund will file the tax opinion with the SEC at a future
date.  This description of the federal income tax consequences of the
proposed merger is made without regard to the particular facts and
circumstances of any shareholder.  Shareholders are urged to consult
their own tax advisors as to the specific consequences to them of the
proposed merger, including the applicability and effect of state, local
and other tax laws.

High Income Bond Fund's ability to carry forward the pre-merger losses
of High Income Opportunities Trust will be limited as a result of the
merger.  The effect of this limitation, however, will depend on the
amount of losses in each fund at the time of the merger.  For example,
if the merger were to have occurred on July 31, 2004, approximately 20%
of High Income Opportunities Trust's losses would have been unavailable
post-merger due to the tax law's loss limitation rules.  High Income
Bond Fund's losses, however, would have been available to help mitigate
the effect of this limitation.  If no merger occurred on July 31, 2004,
High Income Opportunities Trust would have been able to realize gains
equal to approximately 30% of its pre-merger net asset value over the
years remaining until its capital loss carryforwards expire without
creating any tax liability.  In contrast, post-merger, the shareholders
of High Income Opportunities Trust would have been shielded from
realized gains of approximately 19% of post-merger net asset value.

Capitalization.  The following table shows the capitalization of the
funds as of February 29, 2004, and on a pro forma combined basis, giving
effect to the proposed acquisition of assets at net asset value as of
that date:

(UNAUDITED)

                                                    High Income
                                     High Income    Opportunities   Pro Forma
                                     Bond Fund      Trust           Combined*

Net assets+ (000's omitted)           $118,385      $74,760          $193,105
Shares outstanding (000's omitted)      13,826        3,713            22,559
Net asset value per share                $8.56       $20.14             $8.56

+ Net assets for each fund reflect proxy-related costs and, in the case of
High Income Bond Fund, the SEC registration fee.

* Pro forma combined net assets reflect legal and accounting
merger-related costs.

Unaudited pro forma combining financial statements of the funds as of
February 29, 2004, and for the twelve-month period then ended, are
included in the SAI.  Because the Agreement provides that High Income
Bond Fund will be the surviving fund following the proposed merger and
because High Income Bond Fund's investment objective and policies will
remain unchanged, the pro forma combining financial statements reflect
the transfer of the assets and liabilities of High Income Opportunities
Trust to High Income Bond Fund as contemplated by the Agreement.

The Trustees, including the independent Trustees, unanimously recommend
approval of the proposed merger.

IV. Information about the Funds

High Income Bond Fund and High Income Opportunities Trust are both
Massachusetts business trusts and are both diversified, closed-end
management investment companies.  High Income Bond Fund was organized on
April 28, 1987, and High Income Opportunities Trust was organized on
February 23, 1995.

Financial Highlights.  The financial highlights tables are intended to
help you understand the funds' recent financial performance.  Certain
information reflects financial results for a single fund share.  The
total returns represent the rate that an investor would have earned or
lost on an investment in the relevant fund, assuming reinvestment of all
dividends and distributions.  This information has been derived from the
funds' financial statements.  For High Income Bond Fund's last five
fiscal years (excluding the unaudited information for this fund for the
six months ended February 29, 2004), High Income Bond Fund's financial
statements have been audited by PricewaterhouseCoopers LLP.  Its report
and the fund's financial statements are included in the fund's annual
report to shareholders, which is available upon request.  For High
Income Opportunities Trust's last five fiscal years, High Income
Opportunities Trust's financial statements have been audited by KPMG
LLP.  Its report and the fund's financial statements are included in the
fund's annual report to shareholders, which is available upon request.


<TABLE>
<CAPTION>

FINANCIAL HIGHLIGHTS
PUTNAM HIGH INCOME BOND FUND
(For a common share outstanding throughout the period)

                                     Six months ended
                                       February 29
Per-share                               (unaudited)             Year ended August 31
operating performance                      2004      2003      2002      2001      2000      1999
<S>                                   <C>       <C>       <C>       <C>       <C>       <C>
Net asset value, beginning of period      $7.73     $6.56     $7.30     $8.09     $8.32     $8.82
Investment operations:
Net investment income (a)                  0.29      0.58      0.60      0.67      0.74      0.82
Net realized and unrealized gain           0.82      1.15     (0.72)    (0.71)    (0.12)    (0.33)
(loss) on investments
Total from investment operations           1.11      1.73     (0.12)    (0.04)     0.62      0.49
Less distributions:                       (0.28)    (0.56)    (0.62)    (0.75)    (0.85)
From net investment income                   --        --        --        --        --     (0.81)
From net realized gains
on investments                               --        --        --        --        --     (0.18)
Total distributions                       (0.28)    (0.56)    (0.62)    (0.75)    (0.85)    (0.99)
Net asset value, end of period            $8.56     $7.73     $6.56     $7.30     $8.09     $8.32
Market price, end of period               $7.92     $7.31     $6.35     $7.45     $7.94     $8.81
Total return at
market price (%) (b)                      12.29*    24.73     (6.77)     3.91      0.78     10.29
Ratios and supplemental data
Net assets, end of
period (in thousands)                  $118,412  $106,934   $90,561  $100,130  $110,839  $113,576
Ratio of expenses
to average net
assets (%) (c)                              .53*     1.13      1.10      1.14      1.11      1.11
Ratio of net investment
income to average
net assets (%)                            3.46*      8.20      8.65      8.91      9.03      9.72
Portfolio turnover (%)                   30.02*     69.94     56.70    106.41     26.31     78.62

<CAPTION>

Per-share                                              Year ended August 31
operating performance                      1998      1997      1996      1995      1994
<S>                                   <C>       <C>       <C>       <C>       <C>
Net asset value, beginning of period     $10.35     $9.48     $9.49     $9.13     $9.52
Investment operations:
Net investment income                      0.90      0.86      0.88      0.79      0.78
Net realized and unrealized gain          (1.20)     0.92     (0.04)     0.42     (0.30)
(loss) on investments
Total from investment operations          (0.30)     1.78      0.84      1.21      0.48
Less distributions:
From net investment income                (0.85)    (0.85)    (0.85)    (0.85)    (0.87)
From net realized gains
on investments                            (0.38)    (0.06)       --        --        --
Total distributions                       (1.23)    (0.91)    (0.85)    (0.85)    (0.87)
Net asset value, end of period            $8.82    $10.35     $9.48     $9.49     $9.13
Market price, end of period               $8.94    $10.56    $10.13    $10.00     $9.75
Total return at
market price (%) (b)                      (4.74)    14.29     10.63     12.60      6.84
Ratios and supplemental data
Net assets, end of
period (in thousands)                  $119,193  $138,400  $125,864  $124,911  $118,988
Ratio of expenses
to average net
assets (%) (c)                             1.13      1.03      1.06      1.00      1.04
Ratio of net investment
income to average
net assets (%)                             9.01      8.80      9.19      8.73      8.23
Portfolio turnover (%)                    59.13     58.88     56.82     61.19     52.10

* Not annualized.

(a) Per share net investment income has been determined on the basis of the weighted
    average number of shares outstanding during the period.

(b) Total return assumes dividend reinvestment.

(c) The ratio of expenses to average net assets for the period ended August 31, 1996
    and thereafter includes amounts paid through expense offset arrangements.  Prior
    period ratios exclude these amounts.

</TABLE>


<TABLE>
<CAPTION>

FINANCIAL HIGHLIGHTS
PUTNAM HIGH INCOME OPPORTUNITIES TRUST
(For a common share outstanding throughout the period)
                                                                                                                  For the period
                                    Year ended                              Year ended     Year ended            June 29, 1995+ to
Per-share                           February 29   Year ended February 28    February 29   February 28               February 29,
operating performance                  2004      2003      2002      2001      2000      1999      1998      1997      1996
<S>                               <C>        <C>       <C>       <C>       <C>       <C>      <C>        <C>       <C>
Net asset value,
beginning of period                  $16.39    $17.56    $19.81    $24.03    $22.93    $27.57    $26.40    $26.43    $24.85 (d)
Investment operations:
Net investment income (a)              1.31      1.11      1.17      1.33      1.38      1.86      1.76      1.77      1.17
Net realized and unrealized gain
(loss) on investments                  3.76     (1.06)    (2.20)    (3.69)     1.81     (3.69)     2.49      1.54      1.63
Total from investment operations       5.07      0.05     (1.03)    (2.36)     3.19     (1.83)     4.25      3.31      2.80
Less distributions:
From net investment income            (1.32)    (1.22)    (1.22)    (1.58)    (1.73)    (1.91)    (1.77)    (2.00)    (1.15)
From net realized gain
on investments                           --        --        --     (0.28)    (0.36)    (0.90)    (1.31)    (1.34)    (0.07)
Total distributions                   (1.32)    (1.22)    (1.22)    (1.86)    (2.09)    (2.81)    (3.08)    (3.34)    (1.22)
Net asset value, end of period       $20.14    $16.39    $17.56    $19.81    $24.03    $22.93    $27.57    $26.40    $26.43
Market price, end of period          $18.44    $15.73    $16.55    $18.88    $18.75    $22.50    $27.31    $24.38    $22.63
Total return at
market price (%) (b)                  26.26      2.77     (5.95)    11.00     (7.49)    (7.47)    26.03     23.54     (4.53)*
Ratios and supplemental data
Net assets, end of period
(total funds) (in thousands)        $74,778   $60,837   $65,192   $73,540   $89,214   $85,134  $102,112   $97,791   $97,881
Ratio of expenses
to average
net assets (%) (c)                     1.79      1.81      1.78      1.72      1.71      1.78      1.71      1.72      1.14*
Ratio of net investment
income to average
net assets (%)                         7.09      6.75      6.34      6.13      5.89      7.31      6.45      6.66      4.56*
Portfolio turnover (%)                68.16    111.75    116.87     99.42     65.85     56.58     60.69     70.33     38.92*

+ Commencement of operations.

* Not annualized.

(a) Per share net investment income has been determined on the basis of the weighted average number of shares outstanding
    during the period.

(b) Total return assumes dividend reinvestment.

(c) Includes amounts paid through expense offset and brokerage services arrangements.

(d) Represents initial net asset value of $25.00 less offering expenses of $0.15.  Original offering costs were reduced by
    $0.03 to reflect actual cost incurred.

</TABLE>

Investment Restrictions.  Each fund has adopted investment restrictions
that may not be changed without the affirmative vote of a "majority of
the outstanding voting securities" of the fund, which is defined in the
1940 Act to mean the affirmative vote of the lesser of (1) more than 50%
of the outstanding shares of the fund, or (2) 67% or more of the shares
present at a meeting if more than 50% of the outstanding shares of the
fund are represented at the meeting in person or by proxy.  High Income
Bond Fund may not:

(i) Borrow 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.

(ii) Underwrite securities issued by other persons except to the extent
that, in connection with the disposition of its portfolio investments,
it may be deemed to be an underwriter under the federal securities laws.

(iii) Purchase securities restricted as to resale if, as a result, such
investments would exceed 10% of the value of the fund's net assets.

(iv) Purchase or sell real estate, although it may purchase securities
of issuers which deal in real estate, securities which are secured by
interests in real estate and securities which represent interests in
real estate or interests in real estate acquired through the exercise of
its rights as a holder of debt obligations secured by real estate or
interests therein.

(v) Purchase or sell commodities or commodity contracts, except that it
may purchase or sell financial futures contracts and related options.

(vi) Make loans, except by purchase of debt obligations in which the
fund may invest consistent with its investment policies (including
without limitation debt obligations issued by other Putnam funds), by
entering into repurchase agreements or by lending its portfolio
securities.

(vii) With respect to 75% of its total assets, invest in the securities
of any issuer if, immediately after such investment, more than 5% of the
total assets of the fund (taken at current value) would be invested in
the securities of such issuer; provided that this limitation does not
apply to obligations issued or guaranteed as to interest or principal by
the U.S. government or its agencies or instrumentalities.

(viii) With respect to 75% of its total assets, acquire more than 10% of
the outstanding voting securities of any issuer.

(ix) Purchase securities (other than securities of the U.S. government,
its agencies or instrumentalities) if, as a result of such purchase,
more than 25% of the fund's total assets would be invested in any one
industry.

The following non-fundamental investment policy of High Income Bond Fund
may be changed by the Trustees without shareholder approval:

The fund may not invest in the securities of registered open-end
investment companies, except as they may be acquired as part of a merger
or consolidation or acquisition of assets or by purchases in the open
market involving only customary brokers' commissions.

High Income Opportunities Trust shares substantially the same
fundamental investment restrictions with respect to restrictions (ii)
and (iv) through (ix) above.  However, High Income Opportunities Trust
substitutes the following for High Income Bond Fund's restriction (i)
above, so that High Income Opportunties Trust may not:

* Issue senior securities, as defined in the 1940 Act, other than shares
of beneficial interest with preference rights, except to the extent such
issuance might be involved with respect to borrowings described under
the restriction below (borrowing money) or with respect to transactions
involving futures contracts, options and other financial instruments.

* Borrow money in excess of 10% 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, and then only from banks as
a temporary measure (not for leverage) in situations which might
otherwise require the untimely disposition of portfolio investments or
for extraordinary or emergency purposes.  Such borrowings will be repaid
before any additional investments are purchased.

In addition, with respect to High Income Bond Fund's restriction (iii)
above (a prohibition against purchasing securities restricted as to
resale if, as a result, such investments would exceed 10% of the value
of the fund's net assets), High Income Opportunities Trust has no
similarly stated restriction.  Instead, High Income Opportunities Trust
has a non-fundamental policy under which it may invest up to 15% of its
net assets in securities that are restricted as to resale.

Finally, with respect to High Income Bond Fund's non-fundamental
investment policy regarding a prohibition against investing in the
securities of registered open-end investment companies, except as they
may be acquired as part of a merger or consolidation or acquisition of
assets or by purchases in the open market involving only customary
brokers' commissions, High Income Opportunities Trust has no
corresponding restriction.

All percentage limitations on investments (other than pursuant to the
non-fundamental investment restriction) will apply at the time of
investment and shall not be considered violated unless an excess or
deficiency occurs or exists immediately after and as a result of such
investment.  Except for the fundamental investment restrictions listed
above, the other investment policies described in this Prospectus/Proxy
Statement are not fundamental and may be changed by approval of the
Trustees.  As a matter of policy, the Trustees would not materially
change the fund's investment objective without shareholder approval.

Management.  Each fund's Trustees oversee the general conduct of each
fund's business.  The funds have the same Trustees.  The Trustees have
retained Putnam Management to be each fund's investment manager,
responsible for making investment decisions for each fund and managing
each fund's other affairs and business.

Putnam Management is paid for management and investment advisory
services quarterly based on the average net assets of each fund.  High
Income Bond Fund pays such fee at the following annual rates:  0.75% on
the first $500 million of average weekly net assets, 0.65% of the next
$500 million, 0.60% of the next $500 million and 0.55% of any excess
over $1.5 billion of such average net asset value.  High Income
Opportunities Trust pays such fee at the annual rate of 1.10% of average
weekly net assets.  In addition, High Income Opportunities Trust pays a
separate administrative services fee at the annual rate of 0.25% of
average weekly net assets.

Putnam Management is one of America's oldest and largest money
management firms.  Putnam Management's staff of experienced portfolio
managers and research analysts selects securities and constantly
supervises each fund's portfolio.  By pooling an investor's money with
that of other investors, a greater variety of securities can be
purchased than would be the case individually; the resulting
diversification helps reduce investment risk.  Putnam Management has
been managing mutual funds since 1937.

Putnam Management is a subsidiary of Putnam Investments Trust, a
Massachusetts business trust owned by Putnam, LLC, which is also the
parent company of Putnam Retail Management Limited Partnership, Putnam
Advisory Company, LLC (a wholly-owned subsidiary of The Putnam Advisory
Company Trust) and Putnam Fiduciary Trust Company.  Putnam, LLC, which
generally conducts business under the name Putnam Investments, is a
wholly-owned subsidiary of Putnam Investments Trust, a holding company
that, except for a minority stake owned by employees, is owned by Marsh
& McLennan Companies, Inc., a publicly-owned holding company whose
principal businesses are international insurance and reinsurance
brokerage, employee benefit consulting and investment management.

Putnam Management's investment professionals are organized into
investment management teams, with a particular team dedicated to a
specific asset class.  The members of the Large-Cap Value and Core
Fixed Income Teams are responsible for the day-to-day management of
each fund.  The names of all team members can be found at
www.putnaminvestments.com.

The following team members coordinate the teams' management of each fund's
portfolio.  Their experience as investment professionals over at least
the last five years is shown.

Portfolio leader       Since    Experience

David L. King          2002     1983 - Present       Putnam Management

Portfolio members      Since    Experience

George P. Maris        2004     1999 - Present       Putnam Management

Robert L. Salvin       2004     2000 - Present       Putnam Management
                                Prior to July 2000   BancBoston Robertson
                                                     Stephens

The funds pay all expenses not assumed by Putnam Management, including
Trustees' fees, auditing, legal, custodial, investor servicing and
shareholder reporting expenses.  The funds also reimburse Putnam
Management for the compensation and related expenses of certain fund
officers and their staff who provide administrative services.  The total
reimbursement is determined annually by the Trustees.

Putnam Fiduciary Trust Company, One Post Office Square, Boston,
Massachusetts 02109, is the custodian of the funds' securities.  Putnam
Investor Services, P.O. Box 41203, Providence, Rhode Island 02940-1203,
as division of Putnam Fiduciary Trust Company, is the investor
servicing, transfer and dividend disbursing agent for the funds.

Regulatory Matters and Litigation.  On April 8, 2004, Putnam Management
entered into agreements with the SEC and the Massachusetts Securities
Division representing a final settlement of all charges brought against
Putnam Management by those agencies on October 28, 2003 in connection with
excessive short-term trading by Putnam employees and, in the case of the
charges brought by the Massachusetts Securities Division, by participants
in some Putnam-administered 401(k) plans.  The settlement with the SEC
requires Putnam Management to pay $5 million in disgorgement plus a civil
monetary penalty of $50 million, and the settlement with the Massachusetts
Securities Division requires Putnam Management to pay $5 million in
restitution and an administrative fine of $50 million.  The settlements
also leave intact the process established under an earlier partial
settlement with the SEC under which Putnam Management agreed to pay the
amount of restitution determined by an independent consultant, which may
exceed the disgorgement and restitution amounts specified above, pursuant
to a plan to be developed by the independent consultant.

Putnam Management, and not the investors in any Putnam fund, will bear
all costs, including restitution, civil penalties and associated legal
fees stemming from both of these proceedings.  The SEC's and
Massachusetts Securities Division's allegations and related matters also
serve as the general basis for numerous lawsuits, including purported
class action lawsuits filed against Putnam Management and certain
related parties, including certain Putnam funds.  Putnam Management has
agreed to bear any costs incurred by Putnam funds in connection with
these lawsuits.  Based on currently available information, Putnam
Management believes that the likelihood that the pending private
lawsuits and purported class action lawsuits will have a material
adverse financial impact on the fund is remote, and the pending actions
are not likely to materially affect its ability to provide investment
management services to its clients, including the Putnam funds.

Review of these matters by counsel for Putnam Management and by separate
independent counsel for the Putnam funds and their independent Trustees
is continuing.

Description of Fund Shares.  The Trustees of each fund have authority to
issue an unlimited number of shares of beneficial interest without par
value in such classes and series as may be provided for in the Bylaws.
Except for the Merger Shares to be issued in the merger, neither fund
has a present intention of offering additional shares.  All other
offerings of a fund's shares require approval of the Trustees.  Any
additional offering of common shares would be subject to the
requirements of the 1940 Act that such shares may not be sold at a price
per common share below the then current net asset value per share,
exclusive of underwriting discounts and commissions, except in
connection with an offering to existing common shareholders or with the
consent of the holders of a majority of a fund's outstanding common
shares.

The outstanding shares of each fund are, and the Merger Shares, when
issued and sold, will be fully paid and non-assessable by the fund.  The
outstanding shares of each fund have, and the Merger Shares will have,
no preemptive, conversion, exchange or redemption rights.  Each share of
a fund has one vote, with fractional shares voting proportionately, and
is freely transferable.  Common shares of High Income Bond Fund are
traded on the NYSE, with an average weekly trading volume for the year
ended December 31, 2003 of 99,993 shares.  Common shares of High Income
Opportunities Trust also are traded on the NYSE, with an average weekly
trading volume for the year ended December 31, 2003 of 35,075 shares.

Set forth below is information about each fund's securities as of July
31, 2004 (except where otherwise noted):

HIGH INCOME BOND FUND

                            Amount         Amount           Amount
Title of Class            Authorized     Held by Fund     Outstanding

Common Shares              unlimited          0           13,825,527

HIGH INCOME OPPORTUNITIES TRUST

                            Amount         Amount           Amount
Title of Class            Authorized     Held by Fund     Outstanding

Common Shares              unlimited          0            3,712,567

Repurchase of shares.  Because each fund is a closed-end investment
company, shareholders of each fund do not, and will not, have the right
to redeem their shares.  A fund, however, may repurchase its shares from
time to time in open-market or private transactions when it can do so at
prices below the current net asset value per share and on terms that
represent a favorable investment opportunity.  The funds currently are
authorized to make periodic repurchases of shares in open-market
transactions at times when discount levels make such purchases an
attractive investment, although neither fund has recently done so or has
any current plan to do so.

Shares of the funds trade in the open market at a price which will be a
function of several factors, including yield and net asset value of the
shares and the extent of market activity.  Shares of closed-end
investment companies frequently trade at a discount from net asset
value, but in some cases trade at a premium.  When a fund repurchases
its shares at a price below their net asset value, the net asset value
of those shares that remain outstanding will be increased, but this does
not necessarily mean that the market price of those outstanding shares
will be affected either positively or negatively.

Determination of net asset value.  The net asset value of each fund's
shares are valued as of the close of regular trading on the NYSE each
day the exchange is open by dividing the total value of its assets, less
liabilities, by the number of its shares outstanding.

Securities for which market quotations are readily available are valued
at market values.  Short-term investments that have remaining maturities
of 60 days or less are valued at amortized cost, which approximates
market value.  All other securities and assets are valued at their fair
value following procedures approved by the Trustees.

Dividend reinvestment plan.  Each fund offers a dividend reinvestment plan
(each, a "Plan").  If a shareholder has elected to participate in a Plan,
all income dividends and capital gains distributions are automatically
reinvested in additional shares of a fund.  Reinvestment transactions are
executed by Investors Bank and Trust Company, 200 Clarendon Street, Boston,
MA (617-937-6300) (the "Plan Agent").  If a shareholder is not
participating in a Plan, every month the shareholder will receive all
dividends and/or capital gains distributions in cash, paid by check and
mailed directly to the shareholder.  If a shareholder would like to
participate in a Plan, the shareholder may instruct Putnam Investor
Services (which provides certain administrative and bookkeeping services to
a Plan) to enroll the shareholder.  The Plan Agent will automatically
reinvest subsequent distributions, and Putnam Investor Services will send
the shareholder a confirmation in the mail telling the shareholder how many
additional shares were issued to the shareholder's account. For both High
Income Bond Fund and High Income Opportunities Trust shareholders,
shareholders are automatically enrolled in a Plan and must elect not to
participate in a Plan.  Holders of High Income Opportunities Trust shares
who have elected not to participate in High Income Opportunities Trust's
Plan will, if the merger is approved, be deemed to have elected not to
participate in High Income Bond Fund's Plan.

Shareholders may contact Putnam Investor Services either in writing, at
P.O. Box 41203, Providence, RI  02940-1203, or by telephone at
1-800-225-1581 during normal East Coast business hours.

If the market price of a fund's shares is equal to or exceed their net
asset value on the payment date, the shareholder will be issued shares
of the fund at a value equal to the higher of the net asset value or 95%
of the market price on that date.  This discount reflects savings in
underwriting and other costs that the fund would otherwise incur.  If
net asset value exceeds the market price of the shares at the time, or
if a fund declares any distribution payable only in cash, the Plan Agent
will buy fund shares for participating accounts in the open market.  If
the market price of fund shares rises to exceed the net asset value
before the open-market purchase has been completed, or if the Plan Agent
is not able to complete the open-market purchases within a specified
time (generally seven days), the Plan Agent will invest the uninvested
portion in newly issued shares at a value equal to the greatest of:

* The net asset value of the shares on the date they are issued,

* 95% of the fair market value of shares on the payment date for the
  distribution, or

* 95% of the fair market value of shares on the date they are issued.

Participants may withdraw from a Plan at any time by notifying Putnam
Investor Services, either in writing or by telephone.  If a participant
withdraws from a Plan (or if a Plan is terminated), the participant will
receive certificates for whole shares credited to the participant's
account, as well as a cash payment for any fraction of a share credited
to the participant's account.  There is no penalty for withdrawing from
or not participating in a Plan.

Putnam Investor Services maintains all participants' accounts in a Plan
on behalf of the Plan Agent and furnishes written confirmation of all
transactions, including information needed by participants for tax
records.  Each participant's shares will be held by Putnam Investor
Services in the participant's name, and each participant's proxy will
include those shares purchased through a Plan.

There are no brokerage charges applied to shares issued directly by a
fund as a result of dividends or capital gains distributions.  However,
each participant pays a proportionate share of brokerage commissions
incurred if the Plan Agent purchases additional shares on the open
market, in accordance with a Plan.  In each case, the cost of shares
purchased for each participant's account will be the average cost
(including brokerage commissions) of any shares so purchased, plus the
cost of any shares issued by a fund.  If a participant instructs the
Plan Agent to sell the participant's shares, the participant will incur
brokerage commissions for the sale.

Reinvesting dividends and capital gains distributions in shares of a
fund does not relieve a participant of tax obligations, which are the
same as if the participant had received cash distributions.  Putnam
Investor Services supplies tax information to the participant and to the
IRS annually and complies with all IRS withholding requirements.  A fund
reserves the right to amend a Plan to include service charges, to make
other changes or to terminate a Plan upon 30-days' written notice.

If a shareholder's shares are held in the name of a broker or nominee
offering a dividend reinvestment service, the shareholder should consult
the shareholder's broker or nominee to ensure that an appropriate
election is made on the shareholder's behalf.  If the broker or nominee
holding the shareholder's shares does not provide a reinvestment
service, the shareholder may need to register the shareholder's shares
in the shareholder's own name in order to participate in a Plan.

In situations where a bank, broker or nominee holds shares for others, a
Plan will be administered according to instructions and information
provided by the bank, broker or nominee.

It may be necessary to suspend operation of High Income Opportunities
Trust's Plan for one or two dividend payments immediately prior to the
combination so that all purchase activity under the Plan is settled in
advance of the effective date of merger.  In that event all
shareholders, including those in the Plan, will receive those dividends
in cash.

Dividends and distributions.  Each fund has a policy to make monthly
distributions to shareholders from net investment income.

Net investment income of each fund consists of all interest and other
income (excluding capital gains and losses) accrued on portfolio assets,
less all expenses of each fund allocable thereto.  Income and expenses
of each fund are accrued each day.

To permit each fund to maintain a more stable monthly distribution, each
fund may from time to time pay out less than the entire amount of
available net investment income to shareholders earned in any particular
period.  Any such amount retained by a fund would be available to
stabilize future distributions.  As a result, the distributions paid by
a fund for any particular period may be more or less than the amount of
net investment income actually earned by that fund during such period.
For information concerning the tax treatment of distributions to common
shareholders, see the discussion under "Taxation" below.  Both funds
intend, however, to make such distributions as are necessary to maintain
qualification as a regulated investment company.

Common shareholders may have their dividend or distribution checks sent
to parties other than themselves.  A "Dividend Order" form is available
from Putnam Investor Services, mailing address:  P.O. Box 41203,
Providence, Rhode Island 02940-1203.  After Putnam Investor Services
receives this completed form with all registered owners' signatures
guaranteed, the shareholder's distribution checks will be sent to the
bank or other person that the shareholder has designated.

For information concerning the tax treatment of such dividends and
distributions to shareholders, see the discussion under "Taxation"
below.

Declaration of Trust and Bylaws.  Each fund's agreement and declaration
of trust includes provisions that could have the effect of limiting the
ability of other entities or persons to acquire control of the fund, or
to cause it to engage in certain transactions or to modify its
structure.  The affirmative vote of at least two-thirds (three-fourths
in the case of High Income Opportunities Trust) of the outstanding
shares of a fund is required to authorize any of the following actions:

(1) merger or consolidation of the fund,

(2) sale of all or substantially all of the assets of the fund,

(3) liquidation or dissolution of the fund,

(4) conversion of the fund to an open-end investment company, or

(5) amendment of the agreement and declaration of trust to reduce the
two-thirds (three-fourths in the case of High Income Opportunities Trust)
vote required to authorize the actions in (1) through (4)
above unless with respect to any of the foregoing such action has been
authorized by the affirmative vote of two-thirds of the total number of
Trustees (in the case of High Income Opportunities Trust, three-fourths
of the total number of Trustees and three-fourths of the total number of
Continuing Trustees, which is a Trustee (i) who is not a person or an
affiliate of such a person who enters or proposes to enter into any
transaction (e.g., a merger or consolidation) with the Trust and (ii)
who has been a Trustee for a period of at least twelve months), in which
case the affirmative vote of a majority of the shares entitled to vote
(in the case of High Income Opportunities Trust, the lesser of (1) more
than 50% of the outstanding fund shares or (2) 67% or more of the shares
present at a meeting if more than 50% of the outstanding fund shares are
represented at the meeting in person or by proxy) is required.

The Trustees have determined that the two-thirds and three-fourths voting
requirements described above, which are greater than the minimum
requirements under the 1940 Act, are in the best interests of High Income
Bond Fund and High Income Opportunities Trust, respectively, and their
respective shareholders generally.  Reference is made to the agreement and
declaration of trust of each fund, on file with the SEC, for the full text
of these provisions.

These provisions could have the effect of depriving shareholders of an
opportunity to sell their shares at a premium over prevailing market
prices by discouraging a third party from seeking to obtain control of a
fund in a tender offer or similar transaction and may have the net
effect of inhibiting the fund's conversion to open-end status.

Taxation.  The following federal tax discussion is based on the advice
of Ropes & Gray LLP, counsel to the funds, and reflects provisions of
the Code, existing treasury regulations, rulings published by the
Service, and other applicable authority, as of the date of this
Prospectus/Proxy Statement.

These authorities are subject to change by legislative or administrative
action.

The following discussion is only a summary of some of the important tax
considerations generally applicable to investments in High Income Bond
Fund.  For more detailed information regarding tax considerations, see
the SAI.  There may be other tax considerations applicable to particular
investors.  In addition, income earned through an investment in High
Income Bond Fund may be subject to state and local taxes.  Because High
Income Bond Fund will be the surviving fund if the merger is approved,
the discussion deals only with the taxation of High Income Bond Fund.

High Income Bond Fund intends to qualify each year for taxation as a
regulated investment company under Subchapter M of the Code.  If the
fund so qualifies, it will not be subject to federal income tax on
income distributed timely to its shareholders in the form of dividends
or capital gain distributions.

To satisfy the distribution requirement applicable to regulated
investment companies, amounts paid as dividends by High Income Bond Fund
to its shareholders must qualify for the dividends-paid deduction.

Fund distributions designated as "tax-exempt dividends" are not
generally subject to federal income tax.  In addition, an investment in
the fund may result in liability for federal alternative minimum tax,
both for individual and corporate shareholders.

The fund may at times buy tax-exempt investments at a discount from the
price at which they were originally issued, especially during periods of
rising interest rates.  For federal income tax purposes, some or all of
this market discount will be included in the fund's ordinary income and
will be taxable to shareholders as such when it is distributed.

The fund's investments in certain debt obligations may cause the fund to
recognize taxable income in excess of the cash generated by such
obligations.  Thus, the fund could be required at times to liquidate
other investments in order to satisfy its distribution requirements.

The fund's investments in foreign securities may be subject to foreign
withholding taxes.  In that case, the fund's yield on those securities
would be decreased.  Shareholders generally will not be entitled to
claim a credit or deduction with respect to foreign taxes.  In addition,
the fund's investments in foreign securities or foreign currencies may
increase or accelerate the fund's recognition of ordinary income and may
affect the timing or amount of the fund's distributions.

For federal income tax purposes, distributions of investment income
other than "tax-exempt dividends" are taxable as ordinary income.
Generally, gains realized by a fund on the sale or exchange of
investments will be taxable to its shareholders, even though the income
from such investments generally will be tax-exempt.

Taxes on distributions of capital gains are determined by how long the
fund owned the investments that generated them, rather than how long a
shareholder has owned his or her shares.  Distributions are taxable to
shareholders even if they are paid from income or gains earned by the
fund before a shareholder's investment (and thus were included in the
price the shareholder paid).  Distributions of gains from investments
that the fund owned for more than one year will be taxable as capital
gains.  Distributions of gains from investments that the fund owned for
one year or less will be taxable as ordinary income.  Distributions are
taxable whether shareholders receive them in cash or reinvest them in
additional shares through the Dividend Reinvestment Plan.

Any gain resulting from the sale of fund shares will generally also be
subject to tax.  You should consult your tax advisor for more information
on your own tax situation, including possible state and local taxes.

For taxable years beginning on or before December 31, 2008, the fund
may designate distributions of investment income derived from dividends
of U.S. corporations and some foreign corporations as "qualified
dividend income," provided the fund meets holding period and other
requirements.  Qualified dividend income will be taxed in the hands of
individuals at the rates applicable to long-term capital gain, provided
the shareholder meets the same holding period and other requirements.
Fund dividends representing distributions of interest income and
short-term capital gains cannot be designated as qualified dividend
income and will not qualify for the reduced rates.  In light of this,
the fund does not expect a significant portion of fund distributions to
be derived from qualified dividend income.

The long-term capital gain rates applicable to most shareholders will be
15% (with lower rates applying to taxpayers in the 10% and 15% ordinary
income tax brackets) for taxable years beginning on or before December
31, 2008.

Under current law, the backup withholding tax rate is 28% for amounts
paid through 2010 and will be 31% for amounts paid after December 31,
2010.  The fund is required to apply backup withholding to certain
taxable distributions including, for example, distributions paid to any
individual shareholder who fails to properly furnish the fund with a
correct taxpayer identification number.

Trading Information.  The following chart shows quarterly per share
trading information for the past two fiscal years and the current fiscal
year of the funds, as listed on the NYSE:

HIGH INCOME BOND FUND
(Unaudited)
                Market     Market    Closing    Closing   Premium or
                 High       Low       Market      NAV     (Discount)
 Quarter        Price      Price      Price       ($)     to NAV (%)
  Ended          ($)        ($)        ($)

 8/31/02        7.09        5.75      6.35       6.56       (3.20)
11/30/02        6.52        5.80      6.47       6.69       (3.29)
 2/28/03        6.97        6.30      6.87       6.91       (0.58)
 5/31/03        7.43        6.80      7.39       7.52       (1.73)
 8/31/03        7.90        7.10      7.31       7.73       (5.43)
11/30/03        7.70        7.27      7.38       8.14       (9.34)
 2/29/04        8.16        7.36      7.92       8.56       (7.48)
 5/31/04        8.02        6.95      7.33       8.27      (11.37)
 8/31/04        7.68        7.16      7.62       8.37       (8.96)

HIGH INCOME OPPORTUNITIES TRUST
(Unaudited)
                Market     Market    Closing    Closing   Premium or
                 High       Low       Market      NAV     (Discount)
 Quarter        Price      Price      Price       ($)     to NAV (%)
  Ended          ($)        ($)        ($)

 2/28/02       17.25       16.35      16.55      17.56      (5.75)
 5/31/02       16.87       16.24      16.39      17.63      (7.03)
 8/31/02       16.44       14.14      15.20      15.81      (3.86)
11/30/02       15.70       14.00      15.31      15.97      (4.13)
 2/28/03       15.74       14.59      15.73      16.39      (4.03)
 5/31/03       17.15       15.50      17.04      17.92      (4.91)
 8/31/03       18.00       16.90      17.40      18.30      (4.92)
11/30/03       18.22       17.29      17.47      19.20      (9.01)
 2/29/04       19.23       17.70      18.44      20.14      (8.44)
 5/31/04       18.77       16.42      17.30      19.44     (11.01)
 8/31/04       17.53       16.95      17.50      19.67     (11.03)

On August 31, 2004, the latest practicable date for which such
information is available, the market price, net asset value per
share and discount to net asset value were $7.62, $8.37, and 8.96%,
respectively, for High Income Bond Fund and $17.50, $19.67,
and 11.03%, respectively, for High Income Opportunities Trust.

V. Information about Voting and the Shareholder Meeting

General.  This Prospectus/Proxy Statement is furnished in connection
with the proposed merger of High Income Opportunities Trust into High
Income Bond Fund and the solicitation of proxies by and on behalf of the
Trustees for use at the Joint Meeting of Shareholders (the "Meeting").
The Meeting is to be held on [  ] at [  ] at One Post Office Square, 8th
Floor, Boston, Massachusetts, or at such later time as is made necessary
by adjournment.  The Notice of the Meeting, the combined
Prospectus/Proxy Statement and the enclosed form of proxy are being
mailed to shareholders on or about [  ].

As of July 31, 2004, there were 3,712,567 outstanding shares of
beneficial interest of High Income Opportunities Trust, and 13,825,527
outstanding shares of beneficial interest of High Income Bond Fund.
Only shareholders of record on [  ] will be entitled to notice of and to
vote at the Meeting. Each share is entitled to one vote, with fractional
shares voting proportionally.

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.

Required vote.  Proxies are being solicited from each fund's
shareholders by its Trustees for the Meeting.  Unless revoked, all valid
proxies will be voted in accordance with the specification thereon or,
in the absence of specifications, FOR approval of the Agreement.  The
transactions contemplated by the Agreement will be consummated only if
approved by the affirmative vote of  the holders of:

* a majority of the outstanding shares of High Income Bond Fund voted,
if holders of more than 50% of such shares vote, and

* the lesser of (1) more than 50% of the outstanding shares of High
Income Opportunities Trust or (2) 67% or more of the shares present at a
meeting if more than 50% of the outstanding shares are represented at
the meeting in person or by proxy.

Record date, quorum and method of tabulation.  Shareholders of record of
each fund at the close of business on [  ] (the "Record Date") will be
entitled to vote at the Meeting or any adjournment thereof.  The holders
of a majority of the shares of each fund outstanding at the close of
business on the Record Date present in person or represented by proxy
will constitute a quorum for action by shareholders of each fund at the
Meeting.

Votes cast by proxy or in person at the meeting will be counted by
persons appointed by the relevant fund as tellers for the Meeting.  The
tellers will count the total number of votes cast "for" approval of the
proposal for purposes of determining whether sufficient affirmative
votes have been cast.  The tellers will count shares represented by
proxies that reflect abstentions and "broker non-votes" (i.e., shares
held by brokers or nominees as to which (i) instructions have not been
received from the beneficial owners or the persons entitled to vote and
(ii) the broker or nominee does not have the discretionary voting power
on a particular matter) as shares that are present and entitled to vote
on the matter for purposes of determining the presence of a quorum.
Abstentions and broker non-votes have the effect of a negative vote on
the proposal.

Share ownership.  As of August 31, 2004, the officers and Trustees of
each fund as a group beneficially owned less than 1% of the outstanding
shares of such fund and, to the knowledge of each fund, no person (other
than The Depository Trust Company ("DTC")) owned of record or
beneficially 5% or more of the outstanding shares of the fund.  In
addition, upon consummation of the proposed merger, to the knowledge of
the fund, no such person (other than DTC) is expected to own of record
or beneficially 5% or more of the outstanding shares of the combined
fund.

Solicitation of proxies.  In addition to soliciting proxies by mail, the
Trustees of each fund and employees of Putnam Management, Putnam
Fiduciary Trust Company and Putnam Retail Management may solicit proxies
in person or by telephone.  Each fund may also arrange to have a proxy
solicitation firm call you to record your voting instructions by
telephone.  If you wish to speak to a representative, call [  ].  The
procedure for solicitation of proxies by telephone is 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.  Each 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.  Each 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 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 of each fund have the opportunity to submit their voting
instructions via the Internet by utilizing a program provided by a
third-party vendor hired by Putnam Fiduciary Trust Company, or by
"touch-tone" telephone voting.  The giving of such a proxy will not
affect your right to vote in person should you decide to attend the
Meeting.  To vote via the Internet or by automated telephone, you will
need the 14-digit "control" number that appears on your proxy card.  To
use the Internet, please access the Internet address found on your proxy
card.  To record your voting instructions by automated telephone, please
call the toll-free number listed on your proxy card.  The Internet and
automated telephone voting instructions 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 submitting their voting instructions
via the Internet should understand that there may be costs associated
with Internet access, such as usage charges from Internet access
providers and telephone companies, that must be borne by the
shareholders.

Each Fund's Trustees have adopted a general policy of maintaining
confidentiality in the voting of proxies.  Consistent with that policy,
each fund may solicit proxies from shareholders who have not voted their
shares or who have abstained from voting.

Persons holding shares as nominees will, upon request, be reimbursed for
their reasonable expenses in soliciting instructions from their
principals.  Each fund has retained at its own expense [  ], to aid in
the solicitation of instructions for nominee and registered accounts for
a fee not to exceed [$] for High Income Bond Fund and [$] for High
Income Opportunities Trust, plus reasonable out-of-pocket expenses for
mailing and phone costs.  Subject to Putnam Management's agreement to
limit such expenses, 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 the funds
(addressed to the funds' Clerk at the principal office of the funds, One
Post Office Square, Boston, Massachusetts 02109), (ii) by properly
executing a later-dated proxy, (iii) by recording later-dated voting
instructions via the Internet or (iv) by attending the Meeting and
voting in person.

Adjournment.  If sufficient votes in favor of the proposal set forth in the
Notice of the Meeting are not received by the time scheduled for the
Meeting, the persons named as proxies may propose adjournments of the
Meeting for a period or periods of not more than 60 days in the aggregate
to permit further solicitation of proxies.  Any adjournment will require
the affirmative vote of a majority of the votes cast on the question in
person or by proxy at the session of the Meeting to be adjourned.  The
persons named as proxies will vote in favor of such adjournment those
proxies that they are entitled to vote in favor of the proposal.  They will
vote against adjournment those proxies required to be voted against the
proposal.  Each fund pays the costs of any additional solicitation and of
any adjourned session for that fund subject to Putnam Management's
agreement, as set forth in the Agreement, to limit the expenses incurred by
each fund in connection with the transactions contemplated by the
Agreement.

Appendix A

AGREEMENT AND PLAN OF REORGANIZATION

This Agreement and Plan of Reorganization (the "Agreement") is made as
of [  ] in Boston, Massachusetts, by and among Putnam High Income Bond
Fund, a Massachusetts business trust ("Acquiring Fund"), Putnam High
Income Opportunities Trust, a Massachusetts business trust ("Acquired
Fund") and Putnam Investment Management, LLC, a Delaware limited
liability company.

PLAN OF REORGANIZATION

(a) Acquired Fund will sell, assign, convey, transfer and deliver to
Acquiring Fund on the Exchange Date (as defined in Section 6) all of its
properties and assets existing at the Valuation Time (as defined in
Section 3(d)).  In consideration therefor, Acquiring Fund shall, on the
Exchange Date, assume all of the liabilities of Acquired Fund existing
at the Valuation Time and deliver to Acquired Fund a number of full and
fractional shares of beneficial interest of Acquiring Fund (the "Merger
Shares") having an aggregate net asset value equal to the aggregate
value of the assets of Acquired Fund transferred to Acquiring Fund on
such date less the value of the liabilities of Acquired Fund assumed by
Acquiring Fund on such date.  It is intended that the reorganization
described in this Plan shall be a reorganization within the meaning of
Section 368 of the Internal Revenue Code of 1986, as amended (the
"Code").  Prior to the Exchange Date, Acquired Fund will declare and pay
to its shareholders a dividend and/or other distribution in an amount
such that it will have distributed all of its net investment income and
capital gains as described in Section 8(l) hereof.

(b) Upon consummation of the transactions described in paragraph (a) of
this Agreement, Acquired Fund shall distribute in complete liquidation
to its shareholders of record as of the Exchange Date Merger Shares,
each shareholder being entitled to receive that proportion of such
Merger Shares that the number of shares of beneficial interest of
Acquired Fund held by such shareholder bears to the number of such
shares of Acquired Fund outstanding on such date.  Certificates
representing the Merger Shares will be issued only if the shareholder so
requests.


AGREEMENT

Acquiring Fund and Acquired Fund agree as follows:

1. Representations and warranties of Acquiring Fund.  Acquiring Fund
represents and warrants to and agrees with Acquired Fund that:

(a) Acquiring Fund is a business trust duly established and validly
existing under the laws of The Commonwealth of Massachusetts, and has
power to own all of its properties and assets and to carry out its
obligations under this Agreement.  Acquiring Fund is not required to
qualify as a foreign association in any jurisdiction.  Acquiring Fund
has all necessary federal, state and local authorizations to carry on
its business as now being conducted and to carry out this Agreement.

(b) Acquiring Fund is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as a closed-end management investment
company, and such registration has not been revoked or rescinded and is
in full force and effect.

(c) A statement of assets and liabilities, statement of operations,
statement of changes in net assets and schedule of investments
(indicating their market values) of Acquiring Fund for the fiscal year
ended August 31, 2003, such statements and schedule having been audited
by PricewaterhouseCoopers LLP, independent registered public accounting
firm, and an unaudited statement of assets and liabilities, statement of
operations, statement of changes in net assets and schedule of
investments (indicating their market values) of Acquiring Fund for the
six months ended February 29, 2004 have been furnished to Acquired Fund.
Such statements of assets and liabilities and schedules of investments
fairly present the financial position of Acquiring Fund as of the dates
thereof, and such statements of operations and changes in net assets
fairly reflect the results of its operations and changes in net assets
for the periods covered thereby in conformity with U.S. generally
accepted accounting principles.

(d) There are no material legal, administrative or other proceedings
pending or, to the knowledge of Acquiring Fund, threatened against
Acquiring Fund which assert liability or may, if successfully prosecuted
to their conclusion, result in liability on the part of Acquiring Fund,
other than as have been disclosed in the Prospectuses (as defined
below).

(e) Acquiring Fund has no known liabilities of a material nature,
contingent or otherwise, other than those shown as belonging to it on
its statement of assets and liabilities as of August 31, 2003 and those
incurred in the ordinary course of Acquiring Fund's business as an
investment company since such date.

(f) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by Acquiring
Fund of the transactions contemplated by this Agreement, except such as
may be required under the Securities Act of 1933, as amended (the "1933
Act"), the Securities Exchange Act of 1934, as amended (the "1934 Act"),
the 1940 Act, state securities or blue sky laws (which term as used
herein shall include the laws of the District of Columbia and of Puerto
Rico) or the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the
"H-S-R Act").

(g) The registration statement and any amendment thereto (including any
post-effective amendment) (the "Registration Statement") filed with the
Securities and Exchange Commission (the "Commission") by Acquiring Fund
on Form N-14 relating to the Merger Shares issuable hereunder, the proxy
statement of Acquired Fund included therein (the "Acquired Fund Proxy
Statement") and the proxy statement of Acquiring Fund included therein
(the "Acquiring Fund Proxy Statement" and, together with the Acquired
Fund Proxy Statement, the "Proxy Statements"), on the effective date of
the Registration Statement (i) will comply in all material respects with
the provisions of the 1933 Act, the 1934 Act and the 1940 Act and the
rules and regulations thereunder and (ii) will not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; and at the time of the shareholders' meeting referred to in
Section 7(a) and at the Exchange Date, each prospectus contained in the
Registration Statement (collectively, the "Prospectuses"), as amended or
supplemented by any amendments or supplements filed or requested to be
filed with the Commission by Acquired Fund, will not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; provided however, that none of the representations and
warranties in this subsection shall apply to statements in or omissions
from the Registration Statement, the Prospectuses or the Proxy
Statements made in reliance upon and in conformity with information
furnished by Acquired Fund for use in the Registration Statement, the
Prospectuses or the Proxy Statements.

(h) There are no material contracts outstanding to which Acquiring Fund
is a party, other than as disclosed in the Registration Statement, the
Prospectuses, or the Proxy Statements.

(i) All of the issued and outstanding shares of beneficial interest of
Acquiring Fund have been offered for sale and sold in conformity with
all applicable federal securities laws.

(j) Acquiring Fund is and will at all times through the Exchange Date
qualify for taxation as a "regulated investment company" under Sections
851 and 852 of the Code.

(k) Acquiring Fund has filed or will file all federal and state tax
returns which, to the knowledge of Acquiring Fund's officers, are
required to be filed by Acquiring Fund and has paid or will pay all
federal and state taxes shown to be due on said returns or on any
assessments received by Acquiring Fund.  All tax liabilities of Acquiring
Fund have been adequately provided for on its books, and to the
knowledge of Acquiring Fund, no tax deficiency or liability of Acquiring
Fund has been asserted, and no question with respect thereto has been
raised, by the Internal Revenue Service or by any state or local tax
authority for taxes in excess of those already paid.  As of the Exchange
Date, Acquiring Fund is not under audit by the Internal Revenue Service
or by any state or local tax authority for taxes in excess of those
already paid.

(l) The issuance of the Merger Shares pursuant to this Agreement will be
in compliance with all applicable federal securities laws.

(m) The Merger Shares to be issued to Acquired Fund have been duly
authorized and, when issued and delivered pursuant to this Agreement,
will be legally and validly issued and will be fully paid and
nonassessable by Acquiring Fund, and no shareholder of Acquiring Fund
will have any preemptive right of subscription or purchase in respect
thereof.

2. Representations and warranties of Acquired Fund.  Acquired Fund
represents and warrants to and agrees with Acquiring Fund that:

(a) Acquired Fund is a business trust duly established and validly
existing under the laws of The Commonwealth of Massachusetts, and has
power to own all of its properties and assets and to carry out its
obligations under this Agreement.  Acquired Fund is not required to
qualify as a foreign association in any jurisdiction.  Acquired Fund has
all necessary federal, state and local authorizations to carry on its
business as now being conducted and to carry out this Agreement.

(b) Acquired Fund is registered under the 1940 Act as a closed-end
management investment company, and such registration has not been
revoked or rescinded and is in full force and effect.

(c) A statement of assets and liabilities, statement of operations,
statement of changes in net assets and schedule of investments
(indicating their market values) of Acquired Fund for the fiscal year
ended February 29, 2004, such statements and schedule having been audited
by KPMG LLP, independent registered public accounting firm, have been
furnished to Acquiring Fund.  Such statements of assets and liabilities
and schedules of investments fairly present the financial position of
Acquired Fund as of February 29, 2004, and such statements of operations
and changes in net assets fairly reflect the results of its operations
and changes in net assets for the period covered thereby in conformity
with U.S. generally accepted accounting principles.

(d) There are no material legal, administrative or other proceedings
pending or, to the knowledge of Acquired Fund, threatened against
Acquired Fund which assert liability or may, if successfully prosecuted
to their conclusion, result in liability on the part of Acquired Fund,
other than as have been disclosed in the Registration Statement.

(e) Acquired Fund has no known liabilities of a material nature,
contingent or otherwise, other than those shown as belonging to it on
its statement of assets and liabilities as of February 29, 2004 and those
incurred in the ordinary course of Acquired Fund's business as an
investment company since such date.  Prior to the Exchange Date,
Acquired Fund will advise Acquiring Fund of all material liabilities,
contingent or otherwise, incurred by it subsequent to February 29, 2004,
whether or not incurred in the ordinary course of business.

(f) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by Acquired Fund
of the transactions contemplated by this Agreement, except such as may
be required under the 1933 Act, the 1934 Act, the 1940 Act, state
securities or blue sky laws, or the H-S-R Act.

(g) The Registration Statement, the Prospectuses and the Proxy
Statements, on the Effective Date of the Registration Statement and
insofar as they do not relate to Acquiring Fund (i) will comply in all
material respects with the provisions of the 1933 Act, the 1934 Act and
the 1940 Act and the rules and regulations thereunder and (ii) will not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; and at the time of the shareholders'
meeting referred to in Section 7(a) below and on the Exchange Date, the
Prospectuses, as amended or supplemented by any amendments or
supplements filed or requested to be filed with the Commission by
Acquiring Fund, will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided
however, that the representations and warranties in this subsection
shall apply only to statements of fact relating to Acquired Fund
contained in the Registration Statement, the Prospectuses or the Proxy
Statements, or omissions to state in any thereof a material fact
relating to Acquired Fund, as such Registration Statement, Prospectuses
and Proxy Statements shall be furnished to Acquired Fund in definitive
form as soon as practicable following effectiveness of the Registration
Statement and before any public distribution of the Prospectuses or
Proxy Statements.

(h) There are no material contracts outstanding to which Acquired Fund
is a party, other than as will be disclosed in the Prospectuses or the
Proxy Statements.

(i) All of the issued and outstanding shares of beneficial interest of
Acquired Fund have been offered for sale and sold in conformity with all
applicable federal securities laws.

(j) Acquired Fund is and will at all times through the Exchange Date
qualify for taxation as a "regulated investment company" under Sections
851 and 852 of the Code.

(k) Acquired Fund has filed or will file all federal and state tax
returns which, to the knowledge of Acquired Fund's officers, are
required to be filed by Acquired Fund and has paid or will pay all
federal and state taxes shown to be due on said returns or on any
assessments received by Acquired Fund.  All tax liabilities of Acquired
Fund have been adequately provided for on its books, and to the
knowledge of Acquired Fund, no tax deficiency or liability of Acquired
Fund has been asserted, and no question with respect thereto has been
raised, by the Internal Revenue Service or by any state or local tax
authority for taxes in excess of those already paid.  As of the Exchange
Date, Acquired Fund is not under audit by the Internal Revenue Service
or by any state or local tax authority for taxes in excess of those
already paid.

(l) At both the Valuation Time and the Exchange Date, Acquired Fund will
have full right, power and authority to sell, assign, transfer and
deliver the Investments and any other assets and liabilities of Acquired
Fund to be transferred to Acquiring Fund pursuant to this Agreement.  At
the Exchange Date, subject only to the delivery of the Investments and
any such other assets and liabilities as contemplated by this Agreement,
Acquiring Fund will acquire the Investments and any such other assets
and liabilities subject to no encumbrances, liens or security interests
whatsoever and without any restrictions upon the transfer thereof
(except for such restrictions as previously disclosed to Acquiring Fund
by Acquired Fund).  As used in this Agreement, the term "Investments"
shall mean Acquired Fund's investments shown on the schedule of its
investments as of February 29, 2004 referred to in Section 2(c) hereof,
as supplemented with such changes as Acquired Fund shall make, and
changes resulting from stock dividends, stock splits, mergers and
similar corporate actions.

(m) No registration under the 1933 Act of any of the Investments would
be required if they were, as of the time of such transfer, the subject
of a public distribution by either of Acquiring Fund or Acquired Fund,
except as previously disclosed to Acquiring Fund by Acquired Fund.

(n) At the Exchange Date, Acquired Fund will have sold such of its
assets, if any, as may be necessary to ensure that, after giving effect
to the acquisition of the assets of Acquired Fund pursuant to this
Agreement, Acquiring Fund will remain in compliance with its investment
restrictions as set forth in the Registration Statement.

3. Reorganization.

(a) Subject to the requisite approval of the shareholders of each of
Acquired Fund and Acquiring Fund and to the other terms and conditions
contained herein (including Acquired Fund's obligation to distribute to
its shareholders all of its net investment income and capital gains as
described in Section 8(l) hereof), Acquired Fund agrees to sell, assign,
convey, transfer and deliver to Acquiring Fund, and Acquiring Fund
agrees to acquire from Acquired Fund, on the Exchange Date all of the
Investments and all of the cash and other properties and assets of
Acquired Fund, whether accrued or contingent (including cash received by
Acquired Fund upon the liquidation by Acquired Fund of any investments
purchased by Acquired Fund after February 29, 2004 and designated by
Acquiring Fund as being unsuitable for it to acquire), in exchange for
that number of Merger Shares provided for in Section 4 and the
assumption by Acquiring Fund of all of the liabilities of Acquired Fund,
whether accrued or contingent, existing at the Valuation Time.  Pursuant
to this Agreement, Acquired Fund will, as soon as practicable after the
Exchange Date, distribute all of the Merger Shares received by it to the
shareholders of Acquired Fund, in complete liquidation of Acquired Fund.

(b) As soon as practicable following the requisite approval of the
shareholders of each of Acquired Fund and Acquiring Fund, Acquired Fund
will, at its expense, liquidate such of its portfolio securities as
Acquiring Fund shall indicate it does not wish to acquire.  Such
liquidation will be substantially completed prior to the Exchange Date,
unless otherwise agreed by Acquired Fund and Acquiring Fund.

(c) Acquired Fund will pay or cause to be paid to Acquiring Fund any
interest, cash or such dividends, rights and other payments received by
it on or after the Exchange Date with respect to the Investments and
other properties and assets of Acquired Fund, whether accrued or
contingent, received by it on or after the Exchange Date.  Any such
distribution shall be deemed included in the assets transferred to
Acquiring Fund at the Exchange Date and shall not be separately valued
unless the securities in respect of which such distribution is made
shall have gone "ex" such distribution prior to the Valuation Time, in
which case any such distribution which remains unpaid at the Exchange
Date shall be included in the determination of the value of the assets
of Acquired Fund acquired by Acquiring Fund.

(d) The Valuation Time shall be 4:00 p.m. Boston time on [  ] or such
earlier or later day as may be mutually agreed upon in writing by the
parties hereto (the "Valuation Time").

4. Exchange date; valuation time.

On the Exchange Date, Acquiring Fund will deliver to Acquired Fund a
number of full and fractional Merger Shares having an aggregate net
asset value equal to the value of assets of Acquired Fund attributable
to shares of Acquired Fund transferred to Acquiring Fund on such date
less the value of the liabilities of Acquired Fund attributable to the
shares of Acquired Fund assumed by Acquiring Fund on that date,
determined as hereafter provided in this Section 4.

(a) The net asset value of the Merger Shares to be delivered to Acquired
Fund, the value of the assets attributable to the shares of Acquired
Fund and the value of the liabilities attributable to the shares of
Acquired Fund to be assumed by Acquiring Fund shall in each case be
determined as of the Valuation Time.

(b) The net asset value of the Merger Shares and the value of the assets
and liabilities of the shares of Acquired Fund shall be determined by
Acquiring Fund, in cooperation with Acquired Fund, pursuant to
procedures customarily used by Acquiring Fund in determining the fair
market value of Acquiring Fund's assets and liabilities.

(c) No adjustment shall be made in the net asset value of either
Acquired Fund or Acquiring Fund to take into account differences in
realized and unrealized gains and losses.

(d) The investment restrictions of Acquired Fund shall be temporarily
amended to the extent necessary to effect the transactions contemplated
by this Agreement.

(e) Acquiring Fund shall issue the Merger Shares to Acquired Fund in a
certificate registered in the name of Acquired Fund.  Acquired Fund
shall distribute the Merger Shares to the shareholders of Acquired Fund
by redelivering such certificates to Acquiring Fund's transfer agent,
which will as soon as practicable set up open accounts for each
shareholder of Acquiring Fund in accordance with written instructions
furnished by Acquired Fund.  With respect to any Acquired Fund
shareholder holding share certificates as of the Exchange Date,
Acquiring Fund will not permit such shareholder to receive dividends and
other distributions on the Merger Shares (although such dividends and
other distributions shall be credited to the account of such
shareholder), receive certificates representing the Merger Shares or
pledge such Merger Shares until such shareholder has surrendered his or
her outstanding Acquired Fund certificates or, in the event of lost,
stolen or destroyed certificates, posted adequate bond.  In the event
that a shareholder shall not be permitted to receive dividends and other
distributions on the Merger Shares as provided in the preceding
sentence, Acquiring Fund shall pay any such dividends or distributions
in additional shares, notwithstanding any election such shareholder
shall have made previously with respect to the payment, in cash or
otherwise, of dividends and distributions on shares of Acquired Fund.
Acquired Fund will, at its expense, request the shareholders of Acquired
Fund to surrender their outstanding Acquired Fund certificates, or post
adequate bond, as the case may be.

(f) Acquiring Fund shall assume all liabilities of Acquired Fund,
whether accrued or contingent, in connection with the acquisition of
assets and subsequent dissolution of Acquired Fund or otherwise.

5. Expenses, fees, etc.

(a) All fees and expenses, including legal and accounting expenses,
portfolio transfer taxes (if any) or other similar expenses incurred in
connection with the consummation by Acquired Fund and Acquiring Fund of the
transactions contemplated by this Agreement (together with the costs
specified below in (i) below, "Expenses") will be allocated ratably between
Acquiring Fund and Acquired Fund in proportion to their net assets as of
the Valuation Time, except that (i) the costs of proxy materials and proxy
solicitation for each fund will be borne by that fund, (ii) the cost of the
SEC registration fee will be borne by Acquiring Fund and (iii) the costs of
liquidating such of Acquired Fund's portfolio securities as Acquiring Fund
shall indicate it does not wish to acquire prior to the Exchange Date shall
be borne by Acquired Fund; provided, however, that the Expenses to be borne
by the Acquired Fund will not exceed $267,888, the Expenses to be borne by the
Acquiring Fund will not exceed $26,887 and the remainder of any Expenses will
be borne by Putnam Investment Management, LLC; and provided further that
such Expenses will in any event be paid by the party directly incurring
such Expenses if and to the extent that the payment by the other party of
such Expenses would result in the disqualification of Acquiring Fund or
Acquired Fund, as the case may be, as a "regulated investment company"
within the meaning of Section 851 of the Code.

(b) In the event the transactions contemplated by this Agreement are not
consummated by reason of Acquiring Fund's being either unwilling or
unable to go forward (other than by reason of the nonfulfillment or
failure of any condition to Acquiring Fund's obligations referred to in
Section 8), or by reason of the nonfulfillment or failure of any
condition to Acquired Fund's obligations referred to in Section 9,
Acquiring Fund shall pay directly all reasonable fees and expenses
incurred by Acquired Fund in connection with such transactions,
including, without limitation, legal, accounting and filing fees.

(c) In the event the transactions contemplated by this Agreement are not
consummated by reason of Acquired Fund's being either unwilling or
unable to go forward (other than by reason of the nonfulfillment or
failure of any condition to Acquired Fund's obligations referred to in
Section 9), or by reason of the nonfulfillment or failure of any
condition to Acquiring Fund's obligations referred to in Section 8,
Acquired Fund shall pay directly all reasonable fees and expenses
incurred by Acquiring Fund in connection with such transactions,
including without limitation legal, accounting and filing fees.

(d) In the event the transactions contemplated by this Agreement are not
consummated for any reason other than (i) Acquiring Fund's or Acquired
Fund's being either unwilling or unable to go forward or (ii) the
nonfulfillment or failure of any condition to Acquiring Fund's or
Acquired Fund's obligations referred to in Section 8 or Section 9 of
this Agreement, then each of Acquiring Fund and Acquired Fund shall bear
all of its own expenses incurred in connection with such transactions.

(e) Notwithstanding any other provisions of this Agreement, if for any
reason the transactions contemplated by this Agreement are not
consummated, no party shall be liable to the other party for any damages
resulting therefrom, including without limitation consequential damages,
except as specifically set forth above.

6. Exchange date.

Delivery of the assets of Acquired Fund to be transferred, assumption of
the liabilities of Acquired Fund to be assumed and the delivery of the
Merger Shares to be issued shall be made at the offices of Ropes & Gray
LLP, One International Place, Boston, Massachusetts, at 10:00 A.M. on
the next full business day following the Valuation Time, or at such
other time and date agreed to by Acquiring Fund and Acquired Fund, the
date and time upon which such delivery is to take place being referred
to herein as the "Exchange Date."

7. Meeting of shareholders; dissolution.

(a) Each of Acquired Fund and Acquiring Fund agrees to call a meeting of
its shareholders as soon as is practicable after the effective date of
the Registration Statement for, among other things, the purpose of
considering the matters contemplated by this Agreement.

(b) Acquired Fund agrees that the liquidation and dissolution of
Acquired Fund will be effected in the manner provided in the Agreement
and Declaration of Trust of Acquired Fund in accordance with applicable
law and that on and after the Exchange Date, Acquired Fund shall not
conduct any business except in connection with its liquidation and
dissolution.

(c) Acquiring Fund has, after the preparation and delivery to Acquiring
Fund by Acquired Fund of a preliminary version of the Proxy Statement
which was satisfactory to Acquiring Fund and to Ropes & Gray LLP for
inclusion in the Registration Statement, filed the Registration
Statement with the Commission.  Each of Acquired Fund and Acquiring Fund
will cooperate with the other, and each will furnish to the other the
information relating to itself required by the 1933 Act, the 1934 Act
and the 1940 Act and the rules and regulations thereunder set forth in
the Registration Statement, including the Prospectuses and the Proxy
Statements.

8. Conditions to Acquiring Fund's obligations.  The obligations of
Acquiring Fund hereunder shall be subject to the following conditions:

(a) That this Agreement shall have been adopted and the transactions
contemplated hereby shall have been approved by the affirmative vote of
(i) at least three-fourths of the total number of Trustees then in
office and by at least three-fourths of the total number of Continuing
Trustees (a "Continuing Trustee" being a Trustee (1) who is not a person
or an affiliate of such a person who enters or proposes to enter into
any transaction (e.g., a merger or consolidation) with the Trust and (2)
who has been a Trustee for a period of at least twelve months) then in
office of Acquired Fund (including a majority of those Trustees who are
not "interested persons" of Acquired Fund, as defined in Section
2(a)(19) of the 1940 Act); (ii) holders of the lesser of (1) more than
50% of the outstanding shares of Acquired Fund or (2) 67% or more of the
shares present at a meeting if more than 50% of the outstanding shares
of Acquired Fund are represented at the meeting in person or by proxy;
(iii) holders of a majority of the outstanding shares of Acquiring Fund
voted, if holders of more than 50% of such shares are represented at the
meeting in person or by proxy; and (iv) a majority of the Trustees of
Acquiring Fund (including a majority of those Trustees who are not
"interested persons" of Acquiring Fund, as defined in Section 2(a)(19)
of the 1940 Act).

(b) That Acquired Fund shall have furnished to Acquiring Fund a
statement of Acquired Fund's net assets, with values determined as
provided in Section 4 of this Agreement, together with a list of
Investments with their respective tax costs, all as of the Valuation
Time, certified on Acquired Fund's behalf by Acquired Fund's President
(or any Vice President) and Treasurer (or any Assistant Treasurer) and a
certificate of both such officers, dated the Exchange Date, to the
effect that as of the Valuation Time and as of the Effective Date there
has been no material adverse change in the financial position of
Acquired Fund since October 31, 2003 other than changes in the
Investments and other assets and properties since that date or changes
in the market value of the Investments and other assets of Acquired Fund
or changes due to dividends paid or losses from operations.

(c) That Acquired Fund shall have furnished to Acquiring Fund a
statement, dated the Exchange Date, signed on behalf of Acquired Fund by
Acquired Fund's President (or any Vice President) and Treasurer (or any
Assistant Treasurer) certifying that as of the Valuation Time and as of
the Exchange Date all representations and warranties of Acquired Fund
made in this Agreement are true and correct in all material respects as
if made at and as of such dates, and that Acquired Fund has complied
with all of the agreements and satisfied all of the conditions on its
part to be performed or satisfied at or prior to each of such dates.

(d) That Acquired Fund shall have delivered to Acquiring Fund an agreed
upon procedures letter from KPMG LLP dated the Exchange Date, setting
forth  findings of KPMG LLP pursuant to its performance of the agreed
upon procedures set forth therein relating to management's assertions
that (i) for the taxable period from March 1, 2004 to the Exchange
Date Acquired Fund qualified as a regulated investment company under the
Code, (ii) as of the Exchange Date, has no liability other than
liabilities stated for federal or state income taxes and (iii) as of the
Exchange Date, has no liability for federal excise tax purposes under
section 4982 of the Code.

(e) That there shall not be any material litigation pending with respect
to the matters contemplated by this Agreement.

(f) That Acquiring Fund shall have received an opinion of Ropes & Gray
LLP, in form satisfactory to Acquiring Fund and dated the Exchange Date,
to the effect that (i) Acquired Fund is a business trust duly
established and validly existing under the laws of The Commonwealth of
Massachusetts, and, to the knowledge of such counsel, is not required to
qualify to do business as a foreign association in any jurisdiction
except as may be required by state securities or blue sky laws, (ii)
this Agreement has been duly authorized, executed, and delivered by
Acquired Fund and, assuming that the Registration Statement, the
Prospectuses and the Proxy Statements comply with the 1933 Act, the 1934
Act and the 1940 Act and assuming due authorization, execution and
delivery of this Agreement by Acquiring Fund, is a valid and binding
obligation of Acquired Fund, (iii) Acquired Fund has power to sell,
assign, convey, transfer and deliver the assets contemplated hereby and,
upon consummation of the transactions contemplated hereby in accordance
with the terms of this Agreement, Acquired Fund will have duly sold,
assigned, conveyed, transferred and delivered such assets to Acquiring
Fund, (iv) the execution and delivery of this Agreement did not, and the
consummation of the transactions contemplated hereby will not, violate
Acquired Fund's Agreement and Declaration of Trust or Bylaws or any
provision of any agreement known to such counsel to which Acquired Fund is
a party or by which it is bound, it being understood that with respect to
investment restrictions as contained in Acquired Fund's Agreement and
Declaration of Trust, Bylaws, then-current prospectus or statement of
additional information or the Registration Statement, such counsel may rely
upon a certificate of an officer of Acquired Fund's whose responsibility it
is to advise Acquired Fund with respect to such matters, (v) no consent,
approval, authorization or order of any court or governmental authority is
required for the consummation by Acquired Fund of the transactions
contemplated hereby, except such as have been obtained under the 1933 Act,
the 1934 Act, the 1940 Act and such as may be required under state
securities or blue sky laws and the H-S-R Act and (vi) such other matters
as Acquiring Fund may reasonably deem necessary or desirable.

(g) That Acquiring Fund shall have received an opinion of Ropes & Gray
LLP dated the Exchange Date (which opinion would be based upon certain
factual representations and subject to certain qualifications), to the
effect that, on the basis of the existing provisions of the Code,
current administrative rules and court decisions, for federal income tax
purposes:  (i) the acquisition by Acquiring Fund of substantially all of
the assets of Acquired Fund solely in exchange for Merger Shares and the
assumption by Acquiring Fund of liabilities of Acquired Fund followed by
the distribution of Acquired Fund to its shareholders of Merger Shares
in complete liquidation of Acquired Fund, all pursuant to the plan of
reorganization, constitutes a reorganization within the meaning of
Section 368(a) of the Code and Acquired Fund and Acquiring Fund will
each be a "party to a reorganization" within the meaning of Section
368(b) of the Code, (ii) no gain or loss will be recognized by Acquiring
Fund or its shareholders upon receipt of the Investments transferred to
Acquiring Fund pursuant to this Agreement in exchange for the Merger
Shares, (iii) the basis to Acquiring Fund of the Investments will be the
same as the basis of the Investments in the hands of Acquired Fund
immediately prior to such exchange (iv) Acquiring Fund's holding periods
with respect to the Investments will include the respective periods for
which the Investments were held by Acquired Fund and (v) Acquiring Fund
will succeed to and take into account the items of Acquired Fund
described in Section 381(c) of the Code, subject to the conditions and
limitations specified in Sections 381, 382, 383 and 384 of the Code and
Regulations thereunder.

(h) That the assets of Acquired Fund to be acquired by Acquiring Fund
will include no assets which Acquiring Fund, by reason of charter
limitations or of investment restrictions disclosed in the Registration
Statement in effect on the Exchange Date, may not properly acquire.

(i) That the Registration Statement shall have become effective under
the 1933 Act, and no stop order suspending such effectiveness shall have
been instituted or, to the knowledge of Acquiring Fund, threatened by
the Commission.

(j) That Acquiring Fund shall have received from the Commission, any
relevant state securities administrator, the Federal Trade Commission
(the "FTC") and the Department of Justice (the "Department") such order
or orders as Ropes & Gray LLP deems reasonably necessary or desirable
under the 1933 Act, the 1934 Act, the 1940 Act, any applicable state
securities or blue sky laws and the H-S-R Act in connection with the
transactions contemplated hereby, and that all such orders shall be in
full force and effect.

(k) That all proceedings taken by Acquired Fund in connection with the
transactions contemplated by this Agreement and all documents incidental
thereto shall be satisfactory in form and substance to Acquiring Fund
and Ropes & Gray LLP.

(l) That, prior to the Exchange Date, Acquired Fund shall have declared
a dividend or dividends which, together with all previous such
dividends, shall have the effect of distributing to the shareholders of
Acquired Fund (i) all of the excess of (X) Acquired Fund's investment
income excludable from gross income under Section 103 of the Code over
(Y) Acquired Fund's deductions disallowed under Sections 265 and 171 of
the Code, (ii) all of Acquired Fund's investment company taxable income
(as defined in Section 852 of the Code) for its taxable years ending on
or after February 29, 2004, and on or prior to the Exchange Date
(computed in each case without regard to any deduction for dividends
paid), and (iii) all of its net capital gain realized after reduction by
any capital loss carryover in each of its taxable years ending on or
after February 29, 2004, and on or prior to the Exchange Date.

(m) That Acquired Fund's custodian shall have delivered to Acquiring
Fund a certificate identifying all of the assets of Acquired Fund held
by such custodian as of the Valuation Time.

(n) That Acquired Fund's transfer agent shall have provided to Acquiring
Fund (i) the originals or true copies of all of the records of Acquired
Fund in the possession of such transfer agent as of the Exchange Date,
(ii) a certificate setting forth the number of shares of Acquired Fund
outstanding as of the Valuation Time, and (iii) the name and address of
each holder of record of any such shares and the number of shares held
of record by each such shareholder.

(o) That all of the issued and outstanding shares of beneficial interest
of Acquired Fund shall have been offered for sale and sold in conformity
with all applicable state securities or blue sky laws and, to the extent
that any audit of the records of Acquired Fund or its transfer agent by
Acquiring Fund or its agents shall have revealed otherwise, either (i)
Acquired Fund shall have taken all actions that in the opinion of
Acquiring Fund or its counsel are necessary to remedy any prior failure
on the part of Acquired Fund to have offered for sale and sold such
shares in conformity with such laws or (ii) Acquired Fund shall have
furnished (or caused to be furnished) surety, or deposited (or caused to
be deposited) assets in escrow, for the benefit of Acquiring Fund in
amounts sufficient and upon terms satisfactory, in the opinion of
Acquiring Fund or its counsel, to indemnify Acquiring Fund against any
expense, loss, claim, damage or liability whatsoever that may be
asserted or threatened by reason of such failure on the part of Acquired
Fund to have offered and sold such shares in conformity with such laws.

(p) That Acquiring Fund shall have received from KPMG LLP an agreed upon
procedures letter addressed to Acquiring Fund dated as of the Exchange
Date satisfactory in form and substance to Acquiring Fund setting forth
the findings of KPMG LLP pursuant to its performance of the agreed upon
procedures set forth therein relating to management's assertion that as
of the Valuation Time the value of the assets of Acquired Fund to be
exchanged for the Merger Shares has been determined in accordance with
the provisions of Article 10, Section 5 of Acquiring Fund's Bylaws
pursuant to the procedures customarily utilized by Acquiring Fund in
valuing its assets and issuing its shares.

(q) That Acquired Fund shall have executed and delivered to Acquiring
Fund an instrument of transfer dated as of the Exchange Date pursuant to
which Acquired Fund will assign, transfer and convey all of the assets
and other property to Acquiring Fund at the Valuation Time in connection
with the transactions contemplated by this Agreement.

(r) That the Merger Shares shall have been approved for listing by the
New York Stock Exchange.

9. Conditions to Acquired Fund's obligations.  The obligations of
Acquired Fund hereunder shall be subject to the following conditions:

(a) That this Agreement shall have been adopted and the transactions
contemplated hereby shall have been approved by the affirmative vote of
(i) at least three-fourths of the total number of Trustees then in
office and by at least three-fourths of the total number of Continuing
Trustees (a "Continuing Trustee" being a Trustee (1) who is not a person
or an affiliate of such a person who enters or proposes to enter into
any transaction (e.g., a merger or consolidation) with the Trust and (2)
who has been a Trustee for a period of at least twelve months) then in
office of Acquired Fund (including a majority of those Trustees who are
not "interested persons" of Acquired Fund, as defined in Section
2(a)(19) of the 1940 Act); (ii) holders of the lesser of (1) more than
50% of the outstanding shares of Acquired Fund or (2) 67% or more of the
shares present at a meeting if more than 50% of the outstanding shares
of Acquired Fund are represented at the meeting in person or by proxy;
(iii) holders of a majority of the outstanding shares of Acquiring Fund
voted, if holders of more than 50% of such shares are represented at the
meeting in person or by proxy; and (iv) a majority of the Trustees of
Acquiring Fund (including a majority of those Trustees who are not
"interested persons" of Acquiring Fund, as defined in Section 2(a)(19)
of the 1940 Act).

(b) That Acquiring Fund shall have furnished to Acquired Fund a
statement of Acquiring Fund's net assets, together with a list of
portfolio holdings with values determined as provided in Section 4 of
this Agreement, all as of the Valuation Time, certified on behalf of
Acquiring Fund by Acquiring Fund's President (or any Vice President) and
Treasurer (or any Assistant Treasurer) and a certificate of both such
officers, dated the Exchange Date, to the effect that as of the
Valuation Time and as of the Exchange Date there has been no material
adverse change in the financial position of Acquiring Fund since August 31,
2003, other than changes in its portfolio securities since that date,
changes in the market value of its portfolio securities or changes due to
dividends paid or losses from operations.

(c) That Acquiring Fund shall have executed and delivered to Acquired
Fund an Assumption of Liabilities dated as of the Exchange Date pursuant
to which Acquiring Fund will assume all of the liabilities of Acquired
Fund existing at the Valuation Time in connection with the transactions
contemplated by this Agreement.

(d) That Acquiring Fund shall have furnished to Acquired Fund a
statement, dated the Exchange Date, signed on behalf of Acquiring Fund
by Acquiring Fund's President (or any Vice President) and Treasurer (or
any Assistant Treasurer) certifying that as of the Valuation Time and as
of the Exchange Date all representations and warranties of Acquiring
Fund made in this Agreement are true and correct in all material
respects as if made at and as of such dates, and that Acquiring Fund has
complied with all of the agreements and satisfied all of the conditions
on its part to be performed or satisfied at or prior to each of such
dates.

(e) That there shall not be any material litigation pending or
threatened with respect to the matters contemplated by this Agreement.

(f) That Acquired Fund shall have received an opinion of Ropes & Gray
LLP, in form satisfactory to Acquired Fund and dated the Exchange Date,
to the effect that (i) Acquiring Fund is a business trust duly
established and validly existing in conformity with the laws of The
Commonwealth of Massachusetts, and, to the knowledge of such counsel, is
not required to qualify to do business as a foreign association in any
jurisdiction except as may be required by state securities or blue sky
laws, (ii) this Agreement has been duly authorized, executed and
delivered by Acquiring Fund and, assuming that the Prospectuses, the
Registration Statement and the Proxy Statements comply with the 1933
Act, the 1934 Act and the 1940 Act and assuming due authorization,
execution and delivery of this Agreement by Acquired Fund, is a valid
and binding obligation of Acquiring Fund, (iii) the Merger Shares to be
delivered to Acquired Fund as provided for by this Agreement are duly
authorized and upon such delivery will be validly issued and will be
fully paid and nonassessable by Acquiring Fund and no shareholder of
Acquiring Fund has any preemptive right to subscription or purchase in
respect thereof, (iv) the execution and delivery of this Agreement did
not, and the consummation of the transactions contemplated hereby will
not, violate Acquiring Fund's Agreement and Declaration of Trust, as
amended, or Bylaws, or any provision of any agreement known to such
counsel to which Acquiring Fund is a party or by which it is bound, it
being understood that with respect to investment restrictions as
contained in Acquiring Fund's Agreement and Declaration of Trust, as
amended, Bylaws or the Registration Statement, such counsel may rely
upon a certificate of an officer of Acquiring Fund whose responsibility
it is to advise Acquiring Fund with respect to such matters, (v) no
consent, approval, authorization or order of any court or governmental
authority is required for the consummation by Acquiring Fund of the
transactions contemplated herein, except such as have been obtained
under the 1933 Act, the 1934 Act, and the 1940 Act and such as may be
required under state securities or blue sky laws and the H-S-R Act and
(vi) the Registration Statement has become effective under the 1933 Act,
and to the best of the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or are
pending or contemplated under the 1933 Act.

(g) That Acquired Fund shall have received an opinion of Ropes & Gray
LLP dated the Exchange Date (which opinion would be based upon certain
factual representations and subject to certain qualifications), to the
effect that, on the basis of the existing provisions of the Code,
current administrative rules and court decisions, subject to the
qualification below, for federal income tax purposes: (i) the acquisition
by Acquiring Fund of substantially all of the assets of Acquired Fund
solely in exchange for Merger Shares and the assumption by Acquiring Fund
of liabilities of Acquired Fund followed by the distribution of Acquired
Fund to its shareholders of Merger Shares in complete liquidation of
Acquired Fund, all pursuant to the plan of reorganization, constitutes a
reorganization within the meaning of Section 368(a) of the Code and
Acquired Fund and Acquiring Fund will each be a "party to a reorganization"
within the meaning of Section 368(b) of the Code, (ii) no gain or loss will
be recognized by Acquired Fund upon the transfer of the Investments to
Acquiring Fund and the assumption by Acquiring Fund of the liabilities of
Acquired Fund, or upon the distribution of the Merger Shares by Acquired
Fund to its shareholders, pursuant to this Agreement, (iii) no gain or loss
will be recognized by Acquired Fund shareholders on the exchange of
their shares of Acquired Fund for Merger Shares, (iv) the aggregate
basis of the Merger Shares an Acquired Fund shareholder receives in
connection with the transaction will be the same as the aggregate basis of
his or her Acquired Fund shares exchanged therefor and (v) an Acquired Fund
shareholder's holding period for his or her Merger Shares will be
determined by including the period for which he or she held Acquired Fund
shares exchanged therefor, provided that the shareholder held Acquired
Fund's shares as a capital asset; however, Ropes & Gray LLP will
express no view with respect to the effect of the reorganization on any
transferred asset as to which any unrealized gain or loss is required to
be recognized at the end of a taxable year (or on the termination or
transfer thereof) under federal income tax principles.

(h) That all proceedings taken by or on behalf of Acquiring Fund in
connection with the transactions contemplated by this Agreement and all
documents incidental thereto shall be satisfactory in form and substance
to Acquired Fund and Ropes & Gray LLP.

(i) That the Registration Statement shall have become effective under
the 1933 Act, and no stop order suspending such effectiveness shall have
been instituted or, to the knowledge of Acquiring Fund, threatened by
the Commission.

(j) That Acquired Fund shall have received from the Commission, any
relevant state securities administrator, the FTC and the Department such
order or orders as Ropes & Gray LLP deems reasonably necessary or
desirable under the 1933 Act, the 1934 Act, the 1940 Act, any applicable
state securities or blue sky laws and the H-S-R Act in connection with
the transactions contemplated hereby, and that all such orders shall be
in full force and effect.

(k) That the Merger Shares shall have been approved for listing by the
New York Stock Exchange.

10. Indemnification.

(a) Acquired Fund will indemnify and hold harmless, out of the assets of
Acquired Fund but no other assets, Acquiring Fund, its trustees and its
officers (for purposes of this subparagraph, the "Indemnified Parties")
against any and all expenses, losses, claims, damages and liabilities at
any time imposed upon or reasonably incurred by any one or more of the
Indemnified Parties in connection with, arising out of, or resulting
from any claim, action, suit or proceeding in which any one or more of
the Indemnified Parties may be involved or with which any one or more of
the Indemnified Parties may be threatened by reason of any untrue
statement or alleged untrue statement of a material fact relating to
Acquired Fund contained in the Registration Statement, the Prospectuses,
the Proxy Statements or any amendment or supplement to any of the
foregoing, or arising out of or based upon the omission or alleged
omission to state in any of the foregoing a material fact relating to
Acquired Fund required to be stated therein or necessary to make the
statements relating to Acquired Fund therein not misleading, including,
without limitation, any amounts paid by any one or more of the
Indemnified Parties in a reasonable compromise or settlement of any such
claim, action, suit or proceeding, or threatened claim, action, suit or
proceeding made with the consent of Acquired Fund.  The Indemnified
Parties will notify Acquired Fund in writing within ten days after the
receipt by any one or more of the Indemnified Parties of any notice of
legal process or any suit brought against or claim made against such
Indemnified Party as to any matters covered by this Section 10(a).
Acquired Fund shall be entitled to participate at its own expense in the
defense of any claim, action, suit or proceeding covered by this Section
10(a), or, if it so elects, to assume at its expense by counsel
satisfactory to the Indemnified Parties the defense of any such claim,
action, suit or proceeding, and if Acquired Fund elects to assume such
defense, the Indemnified Parties shall be entitled to participate in the
defense of any such claim, action, suit or proceeding at their expense.
Acquired Fund's obligation under this Section 10(a) to indemnify and
hold harmless the Indemnified Parties shall constitute a guarantee of
payment so that Acquired Fund will pay in the first instance any
expenses, losses, claims, damages and liabilities required to be paid by
it under this Section 10(a) without the necessity of the Indemnified
Parties' first paying the same.

(b) Acquiring Fund will indemnify and hold harmless, out of the assets
of Acquiring Fund but no other assets, Acquired Fund, its trustees and
its officers (for purposes of this subparagraph, the "Indemnified
Parties") against any and all expenses, losses, claims, damages and
liabilities at any time imposed upon or reasonably incurred by any one
or more of the Indemnified Parties in connection with, arising out of,
or resulting from any claim, action, suit or proceeding in which any one
or more of the Indemnified Parties may be involved or with which any one
or more of the Indemnified Parties may be threatened by reason of any
untrue statement or alleged untrue statement of a material fact relating
to Acquiring Fund contained in the Registration Statement, the
Prospectuses, the Proxy Statements, or any amendment or supplement to
any thereof, or arising out of, or based upon, the omission or alleged
omission to state in any of the foregoing a material fact relating to
Acquiring Fund required to be stated therein or necessary to make the
statements relating to Acquiring Fund therein not misleading, including
without limitation any amounts paid by any one or more of the
Indemnified Parties in a reasonable compromise or settlement of any such
claim, action, suit or proceeding, or threatened claim, action, suit or
proceeding made with the consent of Acquiring Fund.  The Indemnified
Parties will notify Acquiring Fund in writing within ten days after the
receipt by any one or more of the Indemnified Parties of any notice of
legal process or any suit brought against or claim made against such
Indemnified Party as to any matters covered by this Section 10(b).
Acquiring Fund shall be entitled to participate at its own expense in
the defense of any claim, action, suit or proceeding covered by this
Section 10(b), or, if it so elects, to assume at its expense by counsel
satisfactory to the Indemnified Parties the defense of any such claim,
action, suit or proceeding, and, if Acquiring Fund elects to assume such
defense, the Indemnified Parties shall be entitled to participate in the
defense of any such claim, action, suit or proceeding at their own
expense.  Acquiring Fund's obligation under this Section 10(b) to
indemnify and hold harmless the Indemnified Parties shall constitute a
guarantee of payment so that Acquiring Fund will pay in the first
instance any expenses, losses, claims, damages and liabilities required
to be paid by it under this Section 10(b) without the necessity of the
Indemnified Parties' first paying the same.

11. No broker, etc.

Each of Acquired Fund and Acquiring Fund represents that there is no
person who has dealt with it who by reason of such dealings is entitled
to any broker's or finder's or other similar fee or commission arising
out of the transactions contemplated by this Agreement.

12. Termination.

Acquired Fund and Acquiring Fund may, by mutual consent of their
trustees, terminate this Agreement, and Acquired Fund or Acquiring Fund,
after consultation with counsel and by consent of their trustees or an
officer authorized by such trustees, may waive any condition to their
respective obligations hereunder.  If the transactions contemplated by
this Agreement have not been substantially completed by December 31,
2005, this Agreement shall automatically terminate on that date unless a
later date is agreed to by Acquired Fund and Acquiring Fund.

13. Rule 145.

Pursuant to Rule 145 under the 1933 Act, Acquiring Fund will, in
connection with the issuance of any Merger Shares to any person who at
the time of the transaction contemplated hereby is deemed to be an
affiliate of a party to the transaction pursuant to Rule 145(c), cause
to be affixed upon the certificates issued to such person (if any) a
legend as follows:

"THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT TO
PUTNAM HIGH INCOME BOND FUND OR ITS PRINCIPAL UNDERWRITER UNLESS (I) A
REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR (II) IN THE OPINION OF COUNSEL
REASONABLY SATISFACTORY TO PUTNAM HIGH INCOME BOND FUND SUCH
REGISTRATION IS NOT REQUIRED."


and, further, Acquiring Fund will issue stop transfer instructions to
Acquiring Fund's transfer agent with respect to such shares.  Acquired
Fund will provide Acquiring Fund on the Exchange Date with the name of
any Acquired Fund shareholder who is to the knowledge of Acquired Fund
an affiliate of Acquired Fund on such date.

14. Covenants, etc. deemed material.

All covenants, agreements, representations and warranties made under
this Agreement and any certificates delivered pursuant to this Agreement
shall be deemed to have been material and relied upon by each of the
parties, notwithstanding any investigation made by them or on their
behalf.

15. Sole agreement; amendments.

This Agreement supersedes all previous correspondence and oral
communications between the parties regarding the subject matter hereof,
constitutes the only understanding with respect to such subject matter,
may not be changed except by a letter of agreement signed by each party
hereto, and shall be construed in accordance with and governed by the
laws of The Commonwealth of Massachusetts.

16. Agreement and declaration of trust.

Copies of the Agreements and Declarations of Trust of Acquired Fund and
Acquiring Fund are on file with the Secretary of The Commonwealth of
Massachusetts, and notice is hereby given that this instrument is executed
by the Trustees of each Trust, respectively, as Trustees and not
individually and that the obligations of this instrument are not binding
upon any of the Trustees, officers or shareholders of Acquired Fund or
Acquiring Fund individually but are binding only upon the assets and
property of Acquired Fund and Acquiring Fund, respectively.

This Agreement may be executed in any number of counterparts, each of
which, when executed and delivered, shall be deemed to be an original.


                               PUTNAM HIGH INCOME BOND FUND

                               By:  __________________________
                               Executive Vice President

                               PUTNAM HIGH INCOME OPPORTUNITIES TRUST

                               By:  __________________________
                               Executive Vice President

                               PUTNAM INVESTMENT MANAGEMENT, LLC

                               By:  __________________________
                               Managing Director


For more information about
High Income Bond Fund and High Income Opportunities Trust

High Income Bond Fund's statement of additional information (SAI) and
the funds' annual and semi-annual reports to shareholders include
additional information about the funds.  The SAI is incorporated by
reference into this prospectus/proxy statement, which means it is part
of this prospectus/proxy statement for legal purposes.  The funds'
annual and semi-annual reports discuss the market conditions and
investment strategies that significantly affected the fund's performance
during the relevant period.  Shareholders of the funds may get free
copies of these materials, request other information about the funds, or
make shareholder inquiries, by contacting their financial advisor, by
visiting Putnam's Internet site, or by calling Putnam toll-free at
1-800-225-1581.


TABLE OF CONTENTS

I. Synopsis                                                      [  ]
II. Risk Factors                                                 [  ]
III. Information about the Proposed Merger                       [  ]
IV. Information about the Funds                                  [  ]
V. Information about Voting and the Shareholder Meeting          [  ]
Appendix A--Agreement and Plan of Reorganization                 [  ]

[Putnam Scales Logo]

The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
Toll-free 1-800-225-1581


PUTNAM INVESTMENTS

P.O. BOX 9132
HINGHAM, MA  02043-9132

Your vote is important.  For your convenience, you can vote your Proxy
in any of these three ways:

1
TELEPHONE

Call us toll-free at
1-888-221-0697

* Enter the 14-digit control number printed on your proxy card.

* Follow the automated telephone directions.

* There is no need for you to return your proxy card.

2
INTERNET

Go to
https://www.proxyweb.com/Putnam

* Enter the 14-digit control number printed on your proxy card.

* Follow the instructions on the site.

* There is no need for you to return your proxy card. 3

MAIL

Mail in the proxy card attached below:

* Please sign and date your proxy card.

* Detach the card from this proxy form.

* Return the card in the postage-paid envelope provided.

PLEASE FOLD AND DETACH CARD AT PERFORATION BEFORE MAILING

This is your PROXY CARD.

To vote by mail, please record your voting instructions on this card,
sign it below, and return it promptly in the envelope provided.  Your
vote is important.

This proxy is solicited on behalf of the Trustees of the Fund.

Proxy for a meeting of shareholders to be held on [  ], for Putnam High
Income Bond Fund.

The undersigned shareholder hereby appoints John A. Hill and Robert E.
Patterson, and each of them separately, Proxies, with power of
substitution, and hereby authorizes them to represent such shareholder
and to vote, as designated on the reverse side, at the meeting of
shareholders of Putnam High Income Bond Fund on [  ] at 11:00 a.m.,
Boston time, and at any adjournments thereof, all of the shares of the
fund that the undersigned shareholder would be entitled to vote if
personally present.

PLEASE BE SURE TO SIGN AND DATE THIS PROXY.

- ------------------------                 -----------------
Shareholder/Co-owner sign(s) here        Date

Please sign your name exactly as it appears on this card.  If you are a
joint owner, each owner should sign, When signing as executor,
administrator, attorney, trustee, or guardian, or as custodian for a
minor, please give your full title as such.  If you are signing for a
corporation, please sign the full corporate name and indicate the
signer's office.  If you are a partner, sign in the partnership name.

Has your address changed?

Please use this form to notify us of any change in address or telephone
number or to provide us with your comments. Detach this form from the proxy
card and return it with your signed card in the enclosed envelope.

Name
    --------------------------------------------------------
Street
      -----------------------------------------------------------
City                              State                  Zip
    -----------------------------      --------------       -----
Telephone
         ----------------------------


Do you have any comments?

- ------------------------------------------------------------------------

- ------------------------------------------------------------------------

- ------------------------------------------------------------------------

PLEASE FOLD AND DETACH CARD AT PERFORATION BEFORE MAILING

DEAR SHAREHOLDER:

Your vote is important.  Please help us to eliminate the expense of
follow-up mailings by recording your voting instructions via the
Internet or Automated Telephone or by signing and returning this proxy
card.  A postage-paid envelope is enclosed for your convenience.

Thank you!

If you complete and sign the proxy, we'll vote it exactly as you tell
us.  The Proxies are authorized to vote in their discretion upon any
matters as may properly come before the meeting or any adjournments of
the meeting.  If you simply sign the proxy, or fail to provide your
voting instructions on the proposal, the Proxies will vote in the same
manner as the Trustees recommend.

Please vote by filling in the appropriate box below.

THE TRUSTEES RECOMMEND A VOTE FOR PROPOSAL 1.

FOR                           AGAINST                       ABSTAIN

[   ]                         [   ]                         [   ]

1. Approval of an Agreement and Plan of Reorganization and the transactions
contemplated thereby, including the transfer of all of the assets of Putnam
High Income Opportunities Trust to Putnam High Income Bond Fund in exchange
for the issuance and delivery of shares of beneficial interest of Putnam
High Income Bond Fund and the assumption by Putnam High Income Bond Fund of
the liabilities of Putnam High Income Opportunities Trust, and the
distribution of such shares to the shareholders of Putnam High Income
Opportunities Trust in complete liquidation of Putnam High Income
Opportunities Trust.

Note:  If you have any questions on the proposal, please call 1-800-225-1581


PLEASE SIGN AND DATE ON THE REVERSE SIDE.


PUTNAM INVESTMENTS

P.O. BOX 9132
HINGHAM, MA  02043-9132

Your vote is important.  For your convenience, you can vote your Proxy
in any of these three ways:

1
TELEPHONE

Call us toll-free at
1-888-221-0697

* Enter the 14-digit control number printed on your proxy card.

* Follow the automated telephone directions.

* There is no need for you to return your proxy card.

2
INTERNET

Go to
https://www.proxyweb.com/Putnam

* Enter the 14-digit control number printed on your proxy card.

* Follow the instructions on the site.

* There is no need for you to return your proxy card. 3

MAIL

Mail in the proxy card attached below:

* Please sign and date your proxy card.

* Detach the card from this proxy form.

* Return the card in the postage-paid envelope provided.

PLEASE FOLD AND DETACH CARD AT PERFORATION BEFORE MAILING

This is your PROXY CARD.

To vote by mail, please record your voting instructions on this card,
sign it below, and return it promptly in the envelope provided.  Your
vote is important.

This proxy is solicited on behalf of the Trustees of the Fund.

Proxy for a meeting of shareholders to be held on [  ], for Putnam High
Income Opportunities Trust.

The undersigned shareholder hereby appoints John A. Hill and Robert E.
Patterson, and each of them separately, Proxies, with power of
substitution, and hereby authorizes them to represent such shareholder
and to vote, as designated on the reverse side, at the meeting of
shareholders of Putnam High Income Opportunities Trust on [  ] at 11:00
a.m., Boston time, and at any adjournments thereof, all of the shares of
the fund that the undersigned shareholder would be entitled to vote if
personally present.

PLEASE BE SURE TO SIGN AND DATE THIS PROXY.

- ------------------------                 -----------------
Shareholder/Co-owner sign(s) here        Date

Please sign your name exactly as it appears on this card.  If you are a
joint owner, each owner should sign, When signing as executor,
administrator, attorney, trustee, or guardian, or as custodian for a
minor, please give your full title as such.  If you are signing for a
corporation, please sign the full corporate name and indicate the
signer's office.  If you are a partner, sign in the partnership name.

Has your address changed?

Please use this form to notify us of any change in address or telephone
number or to provide us with your comments. Detach this form from the proxy
card and return it with your signed card in the enclosed envelope.

Name
    --------------------------------------------------------
Street
      -----------------------------------------------------------
City                              State                  Zip
    -----------------------------      --------------       -----
Telephone
         ----------------------------


Do you have any comments?

- ------------------------------------------------------------------------

- ------------------------------------------------------------------------

- ------------------------------------------------------------------------

PLEASE FOLD AND DETACH CARD AT PERFORATION BEFORE MAILING

DEAR SHAREHOLDER:

Your vote is important.  Please help us to eliminate the expense of
follow-up mailings by recording your voting instructions via the
Internet or Automated Telephone or by signing and returning this proxy
card.  A postage-paid envelope is enclosed for your convenience.

Thank you!

If you complete and sign the proxy, we'll vote it exactly as you tell
us.  The Proxies are authorized to vote in their discretion upon any
matters as may properly come before the meeting or any adjournments of
the meeting.  If you simply sign the proxy, or fail to provide your
voting instructions on the proposal, the Proxies will vote in the same
manner as the Trustees recommend.

Please vote by filling in the appropriate box below.

THE TRUSTEES RECOMMEND A VOTE FOR PROPOSAL 1.

FOR                           AGAINST                       ABSTAIN

[   ]                         [   ]                         [   ]

1. Approval of an Agreement and Plan of Reorganization and the transactions
contemplated thereby, including the transfer of all of the assets of Putnam
High Income Opportunities Trust to Putnam High Income Bond Fund in exchange
for the issuance and delivery of shares of beneficial interest of Putnam
High Income Bond Fund and the assumption by Putnam High Income Bond Fund of
the liabilities of Putnam High Income Opportunities Trust, and the
distribution of such shares to the shareholders of Putnam High Income
Opportunities Trust in complete liquidation of Putnam High Income
Opportunities Trust.

Note:  If you have any questions on the proposal, please call 1-800-225-1581


PLEASE SIGN AND DATE ON THE REVERSE SIDE.


PUTNAM HIGH INCOME BOND FUND

FORM N-14
PART B

STATEMENT OF ADDITIONAL INFORMATION

[  ], 2004

This Statement of Additional Information ("SAI") contains material that may
be of interest to investors but that is not included in the Prospectus/Proxy
Statement (the "Prospectus") of Putnam High Income Bond Fund ("High Income
Bond Fund") dated [  ] relating to the sale of all or substantially
all of the assets of Putnam High Income Opportunities Trust ("High Income
Opportunities Trust" and, together with High Income Bond Fund, the "funds")
to High Income Bond Fund.  This SAI is not a Prospectus and is authorized for
distribution only when it accompanies or follows delivery of the Prospectus.
This SAI should be read in conjunction with the Prospectus. Investors may
obtain a free copy of the Prospectus by writing Putnam Investor Services, One
Post Office Square, Boston, MA 02109 or by calling 1-800-225-1581.


CHARGES AND EXPENSES...................................................[  ]
MISCELLANEOUS INVESTMENTS, INVESTMENT PRACTICES AND RISKS..............[  ]
TAXES................................................................. [  ]
MANAGEMENT............................................................ [  ]
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS
AND FINANCIAL STATEMENTS.............................................. [  ]
APPENDIX A............................................................ [  ]


CHARGES AND EXPENSES

Management fees

Under a Management Contract dated as of July 11, 1991, High Income Bond
Fund pays a quarterly fee to Putnam Management based on the average net
assets of the fund, as determined at the close of each business day during
the quarter.  Such fee is based on the annual rate of 0.75% of the first
$500 million of average weekly net assets.

Under a Management Contract dated as of May 5, 1995, High Income
Opportunities Trust pays a quarterly fee to Putnam Management based on the
average net assets of the fund, as determined at the close of each business
day during the quarter.  Such fee is based on the annual rate of 1.10% of
average weekly net assets.

For the past three fiscal years, pursuant to its management contract,
each fund incurred the following fees:

                    Fiscal   Management
Fund name           year     fee paid

HIGH INCOME BOND    2003     $728,049
FUND                2002     $719,134
                    2001     $777,389

HIGH INCOME         2004     $754,094
OPPORTUNITIES       2003     $671,383
TRUST               2002     $752,422

Brokerage commissions

The following table shows brokerage commissions paid during the fiscal
periods indicated:

                                      Fiscal   Brokerage
Fund name                             year     commissions

HIGH INCOME BOND FUND                 2003     $13,900
                                      2002     $12,156
                                      2001     $41,001

HIGH INCOME OPPORTUNITIES TRUST       2004     $15,431
                                      2003     $47,530
                                      2002     $41,893

The brokerage commissions for High Income Bond Fund's two most recent
fiscal years were lower than the brokerage commissions for the fund's
2001 fiscal year due to decreases in trading volume.  The brokerage
commissions for High Income Opportunities Trust's most recent fiscal
year were lower than the brokerage commissions for the fund's 2002 and
2003 fiscal years due to a decrease in trading volume.

The following table shows transactions placed with brokers and dealers
during the most recent fiscal year to recognize research, statistical
and quotation services received by Putnam Management and its affiliates:

                        Dollar value of        Percentage of       Amount of
Fund name             these transactions     total transactions   commissions

HIGH INCOME
BOND FUND                   $662,966               4.75%             $2,395

HIGH INCOME
OPPORTUNITIES TRUST         $481,011               3.74%               $665

Administrative Services Fees

Under an Administrative Services Contract dated as of May 5, 1995, High
Income Opportunities Trust pays a quarterly fee to Putnam Management based
on the average net assets of the fund, as determined at the close of each
business day during the quarter. Such fee is based on the annual rate of
0.25% of average weekly net assets.

For the past three fiscal years, pursuant to its administrative services
contract, High Income Opportunities Trust incurred the following fees:

                      Administrative services
Fiscal year                  fee paid

2004                          $172,216
2003                          $152,838
2002                          $171,165

Administrative expense reimbursement

Each fund reimbursed Putnam Management for administrative services during
its most recent fiscal year, including compensation of certain fund
officers and contributions to the Putnam Investments Profit Sharing
Retirement Plan for their benefit, as follows:

                                                       Portion of total
                                                       reimbursement for
                                        Total          compensation and
Fund name                            Reimbursement      contributions

HIGH INCOME BOND FUND                   $6,321             $4,962

HIGH INCOME OPPORTUNITIES TRUST         $5,937             $4,697

Trustee responsibilities and fees

The Trustees are responsible for generally overseeing the conduct of each
fund's business. Subject to such policies as the Trustees may determine,
Putnam Management furnishes a continuing investment program for each
fund and makes investment decisions on its behalf. Subject to the
control of the Trustees, Putnam Management also manages each fund's
other affairs and business.

The table below shows the value of each Trustee's holdings in each fund
and in all of the Putnam funds as of December 31, 2003.

                                         Dollar range of   Aggregate dollars
                       Dollar range of   High Income       range of shares
                       High Income       Opportunities     held in all of
                       Bond Fund         Trust             the Putnam funds
Name of Trustee        shares owned      shares owned      overseen by Trustee
- ------------------------------------------------------------------------------
Jameson A. Baxter      $1-10,000         $1-10,000         over $100,000
Charles B. Curtis      $1-10,000         $1-10,000         over $100,000
John A. Hill           $1-10,000         $1-10,000         over $100,000
Ronald J. Jackson      $1-10,000         $1-10,000         over $100,000
Paul L. Joskow         $1-10,000         $1-10,000         over $100,000
Elizabeth T. Kennan    $1-10,000         $1-10,000         over $100,000
John H. Mullin, III    $1-10,000         $1-10,000         over $100,000
Robert E. Patterson    $1-10,000         $1-10,000         over $100,000
W. Thomas Stephens     $1-10,000         $1-10,000         over $100,000
*George Putnam, III    $1-10,000         $1-10,000         over $100,000
*A.J.C. Smith          $1-10,000         $1-10,000         over $100,000

* Trustees who are or may be deemed to be "interested persons" (as
  defined in the Investment Company Act of 1940) of the funds or Putnam
  Management. Messrs. Putnam, III and Smith are deemed "interested
  persons" by virtue of their positions as officers of the funds, Putnam
  Management, Putnam Retail Management or Marsh & McLennan Companies, Inc.
  and as shareholders of Marsh & McLennan Companies, Inc. Mr. Putnam, III
  is the President of the funds and each of the other Putnam funds. Mr.
  Smith is the Chairman of Putnam Investments and serves as a Director of
  and Consultant to Marsh & McLennan Companies, Inc.

Each independent Trustee of the funds receives a fee for his or her
services to each fund. Each independent Trustee of a fund also receives
fees for serving as Trustee of other Putnam funds. Each independent
Trustee of the Putnam funds receives an annual retainer fee and an
additional meeting fee for each Trustees' 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. All of the current independent Trustees are
Trustees of all the Putnam funds and receive fees for their services
from each Putnam fund. Mr. Putnam also receives the foregoing fees for
his service as Trustee of each Putnam fund.

The Trustees periodically review their fees to ensure 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
Trustees meet monthly over a two-day period, except in August. 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.

HIGH INCOME BOND FUND

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 Committee                   31

HIGH INCOME OPPORTUNITIES TRUST

Audit and Pricing Committee                      16
Board Policy and Nominating Committee             6
Brokerage and Custody Committee                   4
Communication, Service and Marketing Committee   10
Contract Committee                               15
Distributions Committee                           6
Executive Committee                               1
Investment Oversight Committees                  30

The following table shows the year each Trustee was first elected a Trustee
of the Putnam funds, the fees paid to each Trustee by each fund for its
most recent fiscal year, and the fees paid to each Trustee by all of the
Putnam funds during calendar year 2003:

<TABLE>
<CAPTION>

                                                                Pension or
                               Pension or                       retirement
                               retirement      Aggregate         benefits
                Aggregate       benefits      Compensation      accrued as     Estimated annual      Total
               Compensation    accrued as      from High       part of High     benefits from     compensation
                from High     part of High      Income           Income          all Putnam        from all
               Income Bond    Income Bond    Opportunities    Opportunities       funds upon         Putnam
Trustees/Year    Fund (1)    Fund expenses     Trust (1)      Trust expenses    retirement (2)    funds (3)(4)
- -----------------------------------------------------------------------------------------------------------------
<S>              <C>           <C>             <C>              <C>              <C>               <C>
Jameson A. Baxter/
1994 (5)          $871          $231            $628            $191              $100,000          $215,500

Charles B. Curtis/
2001              $859          $288            $619            $185              $100,000          $210,250

John A. Hill/
1985 (5)(7)     $1,346          $291          $1,022            $225              $200,000          $413,625

Ronald J. Jackson/
1996 (5)          $861          $235            $626            $180              $100,000          $214,500

Paul L. Joskow/
1997 (5)          $852          $168            $621            $128              $100,000          $215,250

Elizabeth T. Kennan/
1992              $868          $299            $614            $232              $100,000          $207,000

Lawrence J. Lasser/
1992 (8)            --           $36              --             $88               $93,333                $0

John H. Mullin, III/
1997 (5)          $861          $258            $619            $198              $100,000          $208,750

Robert E. Patterson/
1984              $849          $162            $622            $127              $100,000          $206,500

George Putnam, III/
1984 (7)        $1,062          $134            $771            $104              $125,000          $260,500

A.J.C. Smith/
1986 (6)            --          $312              --            $241                    --                $0

W. Thomas Stephens/
1997 (5)          $852          $235            $613            $179              $100,000          $206,500

W. Nicholas Thorndike/
1992 (9)          $672          $385            $622            $300              $100,000          $212,250

</TABLE>

(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 2003.

(3) As of December 31, 2003, there were 101 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 $2,000 to $11,000 per Trustee) for
which the Putnam funds were reimbursed by Putnam Management for special
Board and committee meetings 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.

(6) Marsh & McLennan Companies, Inc. compensates Mr. Smith for his service
as Trustee. Mr. Smith has waived any retirement benefits that he is
entitled to receive under the Retirement Plan for Trustees of the Putnam
funds.

(7) Includes additional compensation to Messrs. Hill and Putnam for
service as Chairman of the Trustees and President of the funds,
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 resigned from the Board of Trustees of the Putnam
funds on June 30, 2004.

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 a 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.

For additional information concerning the Trustees, see "Management."

Share ownership

At August 31, 2004, the officers and Trustees of High Income Bond Fund as a
group owned less than 1% of the outstanding shares of the fund, and no
person owned of record or to the knowledge of the fund beneficially 5% or
more of the shares of the fund. At August 31, 2004 the officers and
Trustees of High Income Opportunities Trust as a group owned less than 1%
of the outstanding shares of the fund, and no person owned of record or to
the knowledge of the fund beneficially 5% or more of the shares of the
fund.

Investor servicing and custody fees and expenses

During its most recent fiscal year, each fund incurred the following fees
and out-of-pocket expenses for investor servicing and custody services
provided by Putnam Fiduciary Trust Company:

HIGH INCOME BOND FUND                 $194,952
HIGH INCOME OPPORTUNITIES TRUST       $162,222

MISCELLANEOUS INVESTMENTS, INVESTMENT PRACTICES AND RISKS

In addition to the principal investment strategies and principal risks
described in the Prospectus, each fund may employ other investment
practices and may be subject to other risks, which are described below.
Certain investment strategies and risks that are described briefly in the
Prospectus are described in greater detail below.

Foreign Investments

Foreign securities are normally denominated and traded in foreign
currencies.  As a result, the value of each fund's foreign investments
and the value of its shares may be affected favorably or unfavorably by
changes in currency exchange rates relative to the U.S. dollar.  There
may be less information publicly available about a foreign issuer than
about a U.S. issuer, and foreign issuers may not be subject to
accounting, auditing and financial reporting standards and practices
comparable to those in the United States.  The securities of some
foreign issuers are less liquid and at times more volatile than
securities of comparable U.S. issuers.  Foreign brokerage commissions
and other fees are also generally higher than in the United States.
Foreign settlement procedures and trade regulations may involve certain
risks (such as delay in payment or delivery of securities or in the
recovery of the fund's assets held abroad) and expenses not present in
the settlement of investments in U.S. markets.

In addition, foreign securities may be subject to the risk of
nationalization or expropriation of assets, imposition of currency
exchange controls, foreign withholding taxes or restrictions on the
repatriation of foreign currency, confiscatory taxation, political or
financial instability and diplomatic developments which could affect the
value of the fund's investments in certain foreign countries.  Dividends
or interest on, or proceeds from the sale of, foreign securities may be
subject to foreign withholding taxes, and special U.S. tax
considerations may apply.

Legal remedies available to investors in certain foreign countries may
be more limited than those available with respect to investments in the
United States or in other foreign countries.  The laws of some foreign
countries may limit each fund's ability to invest in securities of
certain issuers organized under the laws of those foreign countries.

The risks described above, including the risks of nationalization or
expropriation of assets, typically are increased in connection with
investments in "emerging markets."   For example, political and economic
structures in these countries may be in their infancy and developing
rapidly, and such countries may lack the social, political and economic
stability characteristic of more developed countries.  Certain of these
countries have in the past failed to recognize private property rights
and have at times nationalized and expropriated the assets of private
companies.  High rates of inflation or currency devaluations may
adversely affect the economies and securities markets of such countries.
Investments in emerging markets may be considered speculative.

The currencies of certain emerging market countries have experienced
devaluations relative to the U.S. dollar, and future devaluations may
adversely affect the value of assets denominated in such currencies.
Many emerging market countries have experienced substantial, and in some
periods extremely high, rates of inflation or deflation for many years,
and future inflation may adversely affect the economies and securities
markets of such countries.

In addition, unanticipated political or social developments may affect
the value of investments in emerging markets and the availability of
additional investments in these markets.  The small size, limited
trading volume and relative inexperience of the securities markets in
these countries may make investments in securities traded in emerging
markets illiquid and more volatile than investments in securities traded
in more developed countries, and each fund may be required to establish
special custodial or other arrangements before making investments in
securities traded in emerging markets.  There may be little financial or
accounting information available with respect to issuers of emerging
market securities, and it may be difficult as a result to assess the
value of prospects of an investment in such securities.

Certain of the foregoing risks may also apply to some extent to
securities of U.S. issuers that are denominated in foreign currencies or
that are traded in foreign markets, or securities of U.S. issuers having
significant foreign operations.

Foreign Currency Transactions

To manage its exposure to foreign currencies, each fund may engage in
foreign currency exchange transactions, including purchasing and selling
foreign currency, foreign currency options, foreign currency forward
contracts and foreign currency futures contracts and related options. In
addition, each fund may write covered call and put options on foreign
currencies for the purpose of increasing its current return.

Generally, each fund may engage in both "transaction hedging" and
"position hedging."  Each fund may also engage in foreign currency
transactions for non-hedging purposes, subject to applicable law.  When
it engages in transaction hedging, a fund enters into foreign currency
transactions with respect to specific receivables or payables, generally
arising in connection with the purchase or sale of portfolio securities.

Each fund will engage in transaction hedging when it desires to "lock
in" the U.S. dollar price of a security it has agreed to purchase or
sell, or the U.S. dollar equivalent of a dividend or interest payment in
a foreign currency.  By transaction hedging a fund will attempt to
protect itself against a possible loss resulting from an adverse change
in the relationship between the U.S. dollar and the applicable foreign
currency during the period between the date on which the security is
purchased or sold, or on which the dividend or interest payment is
earned, and the date on which such payments are made or received.

Each fund may purchase or sell a foreign currency on a spot (or cash)
basis at the prevailing spot rate in connection with the settlement of
transactions in portfolio securities denominated in that foreign
currency. If conditions warrant, for transaction hedging purposes a fund
may also enter into contracts to purchase or sell foreign currencies at
a future date ("forward contracts") and purchase and sell foreign
currency futures contracts.  A foreign currency forward contract is a
negotiated agreement to exchange currency at a future time at a rate or
rates that may be higher or lower than the spot rate.  Foreign currency
futures contracts are standardized exchange-traded contracts and have
margin requirements.

For transaction hedging purposes a fund may also purchase or sell
exchange-listed and over-the-counter call and put options on foreign
currency futures contracts and on foreign currencies.  A put option on a
futures contract gives a fund the right to assume a short position in
the futures contract until the expiration of the option.  A put option
on a currency gives a fund the right to sell the currency at an exercise
price until the expiration of the option.  A call option on a futures
contract gives a fund the right to assume a long position in the futures
contract until the expiration of the option.  A call option on a
currency gives a fund the right to purchase the currency at the exercise
price until the expiration of the option.

Each fund may engage in position hedging to protect against a decline in
the value relative to the U.S. dollar of the currencies in which its
portfolio securities are denominated or quoted (or an increase in the
value of the currency in which the securities a fund intends to buy are
denominated, when a fund holds cash or short-term investments). For
position hedging purposes, a fund may purchase or sell, on exchanges or
in over-the-counter markets, foreign currency futures contracts, foreign
currency forward contracts and options on foreign currency futures
contracts and on foreign currencies.  In connection with position
hedging, a fund may also purchase or sell foreign currency on a spot
basis.

It is impossible to forecast with precision the market value of
portfolio securities at the expiration or maturity of a forward or
futures contract.  Accordingly, it may be necessary for a fund to
purchase additional foreign currency on the spot market (and bear the
expense of such purchase) if the market value of the security or
securities being hedged is less than the amount of foreign currency the
fund is obligated to deliver and a decision is made to sell the security
or securities and make delivery of the foreign currency.  Conversely, it
may be necessary to sell on the spot market some of the foreign currency
received upon the sale of the portfolio security or securities if the
market value of such security or securities exceeds the amount of
foreign currency a fund is obligated to deliver.

Transaction and position hedging do not eliminate fluctuations in the
underlying prices of the securities that a fund owns or intends to
purchase or sell.  They simply establish a rate of exchange which one
can achieve at some future point in time.  Additionally, although these
techniques tend to minimize the risk of loss due to a decline in the
value of the hedged currency, they tend to limit any potential gain
which might result from the increase in value of such currency.  See
"Risk factors in options transactions."

Each fund may seek to increase its current return or to offset some of
the costs of hedging against fluctuations in current exchange rates by
writing covered call options and covered put options on foreign
currencies.  A fund receives a premium from writing a call or put
option, which increases a fund's current return if the option expires
unexercised or is closed out at a net profit.  A fund may terminate an
option that it has written prior to its expiration by entering into a
closing purchase transaction in which it purchases an option having the
same terms as the option written.

A fund's currency hedging transactions may call for the delivery of one
foreign currency in exchange for another foreign currency and may at
times not involve currencies in which its portfolio securities are then
denominated.  Putnam Management will engage in such "cross hedging"
activities when it believes that such transactions provide significant
hedging opportunities for a fund.  Cross hedging transactions by a fund
involve the risk of imperfect correlation between changes in the values
of the currencies to which such transactions relate and changes in the
value of the currency or other asset or liability which is the subject
of the hedge.

Each fund may also engage in non-hedging currency transactions.  For
example, Putnam Management may believe that exposure to a currency is in
a fund's best interest but that securities denominated in that currency
are unattractive.  In that case a fund may purchase a currency forward
contract or option in order to increase its exposure to the currency.
In accordance with SEC regulations, a fund will segregate liquid assets
in its portfolio to cover forward contracts used for non-hedging
purposes.

The value of any currency, including U.S. dollars and foreign
currencies, may be affected by complex political and economic factors
applicable to the issuing country.  In addition, the exchange rates of
foreign currencies (and therefore the values of foreign currency
options, forward contracts and futures contracts) may be affected
significantly, fixed, or supported directly or indirectly by U.S. and
foreign government actions.  Government intervention may increase risks
involved in purchasing or selling foreign currency options, forward
contracts and futures contracts, since exchange rates may not be free to
fluctuate in response to other market forces.

The value of a foreign currency option, forward contract or futures
contract reflects the value of an exchange rate, which in turn reflects
relative values of two currencies -- the U.S. dollar and the foreign
currency in question.  Because foreign currency transactions occurring
in the interbank market involve substantially larger amounts than those
that may be involved in the exercise of foreign currency options,
forward contracts and futures contracts, investors may be disadvantaged
by having to deal in an odd-lot market for the underlying foreign
currencies in connection with options at prices that are less favorable
than for round lots.  Foreign governmental restrictions or taxes could
result in adverse changes in the cost of acquiring or disposing of
foreign currencies.

There is no systematic reporting of last sale information for foreign
currencies and there is no regulatory requirement that quotations
available through dealers or other market sources be firm or revised on
a timely basis.  Available quotation information is generally
representative of very large round-lot transactions in the interbank
market and thus may not reflect exchange rates for smaller odd-lot
transactions (less than $1 million) where rates may be less favorable.
The interbank market in foreign currencies is a global, around-the-clock
market.  To the extent that options markets are closed while the markets
for the underlying currencies remain open, significant price and rate
movements may take place in the underlying markets that cannot be
reflected in the options markets.

The decision as to whether and to what extent a fund will engage in
foreign currency exchange transactions will depend on a number of
factors, including prevailing market conditions, the composition of the
fund's portfolio and the availability of suitable transactions.
Accordingly, there can be no assurance that a fund will engage in
foreign currency exchange transactions at any given time or from time to
time.

Currency forward and futures contracts.  A forward foreign currency
contract involves an obligation to purchase or sell a specific currency
at a future date, which may be any fixed number of days from the date of
the contract as agreed by the parties, at a price set at the time of the
contract.  In the case of a cancelable forward contract, the holder has
the unilateral right to cancel the contract at maturity by paying a
specified fee.  The contracts are traded in the interbank market
conducted directly between currency traders (usually large commercial
banks) and their customers.  A forward contract generally has no deposit
requirement, and no commissions are charged at any stage for trades.  A
foreign currency futures contract is a standardized contract for the
future delivery of a specified amount of a foreign currency at a price
set at the time of the contract.  Foreign currency futures contracts
traded in the United States are designed by and traded on exchanges
regulated by the CFTC, such as the New York Mercantile Exchange.

Forward foreign currency exchange contracts differ from foreign currency
futures contracts in certain respects.  For example, the maturity date
of a forward contract may be any fixed number of days from the date of
the contract agreed upon by the parties, rather than a predetermined
date in a given month.  Forward contracts may be in any amount agreed
upon by the parties rather than predetermined amounts.  Also, forward
foreign exchange contracts are traded directly between currency traders
so that no intermediary is required.  A forward contract generally
requires no margin or other deposit.

At the maturity of a forward or futures contract, a fund either may
accept or make delivery of the currency specified in the contract, or at
or prior to maturity enter into a closing transaction involving the
purchase or sale of an offsetting contract.  Closing transactions with
respect to forward contracts are usually effected with the currency
trader who is a party to the original forward contract.  Closing
transactions with respect to futures contracts are effected on a
commodities exchange; a clearing corporation associated with the
exchange assumes responsibility for closing out such contracts.

Positions in the foreign currency futures contracts may be closed out
only on an exchange or board of trade which provides a secondary market
in such contracts.  Although each fund intends to purchase or sell
foreign currency futures contracts only on exchanges or boards of trade
where there appears to be an active secondary market, there is no
assurance that a secondary market on an exchange or board of trade will
exist for any particular contract or at any particular time.  In such
event, it may not be possible to close a futures position and, in the
event of adverse price movements, a fund would continue to be required
to make daily cash payments of variation margin.

Foreign currency options.  In general, options on foreign currencies
operate similarly to options on securities and are subject to many of
the risks described above.  Foreign currency options are traded
primarily in the over-the-counter market, although options on foreign
currencies are also listed on several exchanges.  Options are traded not
only on the currencies of individual nations, but also on the euro, the
joint currency of most countries in the European Union.

Each fund will only purchase or write foreign currency options when
Putnam Management believes that a liquid secondary market exists for
such options.  There can be no assurance that a liquid secondary market
will exist for a particular option at any specific time.  Options on
foreign currencies are affected by all of those factors which influence
foreign exchange rates and investments generally.

Settlement procedures.  Settlement procedures relating to a fund's
investments in foreign securities and to a fund's foreign currency
exchange transactions may be more complex than settlements with respect
to investments in debt or equity securities of U.S. issuers, and may
involve certain risks not present in a fund's domestic investments. For
example, settlement of transactions involving foreign securities or
foreign currencies may occur within a foreign country, and a fund may be
required to accept or make delivery of the underlying securities or
currency in conformity with any applicable U.S. or foreign restrictions
or regulations, and may be required to pay any fees, taxes or charges
associated with such delivery.  Such investments may also involve the
risk that an entity involved in the settlement may not meet its
obligations.

Foreign currency conversion.  Although foreign exchange dealers do not
charge a fee for currency conversion, they do realize a profit based on
the difference (the "spread") between prices at which they are buying
and selling various currencies.  Thus, a dealer may offer to sell a
foreign currency to a fund at one rate, while offering a lesser rate of
exchange should the fund desire to resell that currency to the dealer.

Options on Securities

Writing covered options.  Each fund may write covered call options and
covered put options on optionable securities held in its portfolio or that
it has an absolute and immediate right to acquire without additional cash
consideration (or, if additional cash consideration is required, cash or
other assets determined to be liquid by Putnam Management in accordance
with procedures established by the Trustees, in such amount are segregated
by its custodian), when in the opinion of Putnam Management such
transactions are consistent with the fund's investment objective(s) and
policies.  Call options written by a fund give the purchaser the right to
buy the underlying securities from the fund at a stated exercise price; put
options give the purchaser the right to sell the underlying securities to
the fund at a stated price.

Each fund may write only covered options, which means that, so long as the
fund is obligated as the writer of a call option, it will own the
underlying securities subject to the option (or comparable securities
satisfying the cover requirements of securities exchanges) or have an
absolute and immediate right to acquire without additional cash
consideration (or, if additional cash consideration is required, cash or
other assets determined to be liquid by Putnam Management in accordance
with procedures established by the Trustees, in such amount are segregated
by its custodian).  In the case of put options, a fund will segregate
assets determined to be liquid by Putnam Management in accordance with
procedures established by the Trustees equal to the price to be paid if the
option is exercised.  In addition, a fund will be considered to have
covered a put or call option if and to the extent that it holds an option
that offsets some or all of the risk of the option it has written.  A fund
may write combinations of covered puts and calls on the same underlying
security.

A fund will receive a premium from writing a put or call option, which
increases the fund's return on the underlying security in the event the
option expires unexercised or is closed out at a profit.  The amount of
the premium reflects, among other things, the relationship between the
exercise price and the current market value of the underlying security,
the volatility of the underlying security, the amount of time remaining
until expiration, current interest rates, and the effect of supply and
demand in the options market and in the market for the underlying
security.  By writing a call option, if the fund holds the security, the
fund limits its opportunity to profit from any increase in the market
value of the underlying security above the exercise price of the option
but continues to bear the risk of a decline in the value of the
underlying security.  If the fund does not hold the underlying security,
the fund bears the risk that, if the market price exceeds the option
strike price, the fund will suffer a loss equal to the difference at the
time of exercise. By writing a put option, a fund assumes the risk that
it may be required to purchase the underlying security for an exercise
price higher than its then-current market value, resulting in a
potential capital loss unless the security subsequently appreciates in
value.

A fund may terminate an option that it has written prior to its
expiration by entering into a closing purchase transaction, in which it
purchases an offsetting option.  A fund realizes a profit or loss from
a closing transaction if the cost of the transaction (option premium
plus transaction costs) is less or more than the premium received from
writing the option.  If a fund writes a call option but does not own the
underlying security, and when it writes a put option, the fund may be
required to deposit cash or securities with its broker as "margin," or
collateral, for its obligation to buy or sell the underlying security.
As the value of the underlying security varies, the fund may have to
deposit additional margin with the broker.  Margin requirements are
complex and are fixed by individual brokers, subject to minimum
requirements currently imposed by the Federal Reserve Board and by stock
exchanges and other self-regulatory organizations.

Purchasing put options.  Each fund may purchase put options to protect
its portfolio holdings in an underlying security against a decline in
market value.  Such protection is provided during the life of the put
option since a fund, as holder of the option, is able to sell the
underlying security at the put exercise price regardless of any decline
in the underlying security's market price.  In order for a put option to
be profitable, the market price of the underlying security must decline
sufficiently below the exercise price to cover the premium and
transaction costs. By using put options in this manner, a fund will
reduce any profit it might otherwise have realized from appreciation of
the underlying security by the premium paid for the put option and by
transaction costs.

Purchasing call options.  Each fund may purchase call options to hedge
against an increase in the price of securities that a fund wants
ultimately to buy.  Such hedge protection is provided during the life of
the call option since a fund, as holder of the call option, is able to
buy the underlying security at the exercise price regardless of any
increase in the underlying security's market price.  In order for a call
option to be profitable, the market price of the underlying security
must rise sufficiently above the exercise price to cover the premium and
transaction costs.

Risk Factors in Options Transactions

The successful use of a fund's options strategies depends on the ability
of Putnam Management to forecast correctly interest rate and market
movements.  For example, if a fund were to write a call option based on
Putnam Management's expectation that the price of the underlying
security would fall, but the price were to rise instead, the fund could
be required to sell the security upon exercise at a price below the
current market price.  Similarly, if a fund were to write a put option
based on Putnam Management's expectation that the price of the
underlying security would rise, but the price were to fall instead, the
fund could be required to purchase the security upon exercise at a price
higher than the current market price.

When a fund purchases an option, it runs the risk that it will lose its
entire investment in the option in a relatively short period of time,
unless the fund exercises the option or enters into a closing sale
transaction before the option's expiration.  If the price of the
underlying security does not rise (in the case of a call) or fall (in
the case of a put) to an extent sufficient to cover the option premium
and transaction costs, the fund will lose part or all of its investment
in the option.  This contrasts with an investment by the fund in the
underlying security, since the fund will not realize a loss if the
security's price does not change.

The effective use of options also depends on a fund's ability to
terminate option positions at times when Putnam Management deems it
desirable to do so.  There is no assurance that a fund will be able to
effect closing transactions at any particular time or at an acceptable
price.

If a secondary market in options were to become unavailable, a fund
could no longer engage in closing transactions.  Lack of investor
interest might adversely affect the liquidity of the market for
particular options or series of options.  A market may discontinue
trading of a particular option or options generally.  In addition, a
market could become temporarily unavailable if unusual events -- such as
volume in excess of trading or clearing capability -- were to interrupt
its normal operations.

A market may at times find it necessary to impose restrictions on
particular types of options transactions, such as opening transactions.
For example, if an underlying security ceases to meet qualifications
imposed by the market or the Options Clearing Corporation, new series of
options on that security will no longer be opened to replace expiring
series, and opening transactions in existing series may be prohibited.
If an options market were to become unavailable, a fund as a holder of
an option would be able to realize profits or limit losses only by
exercising the option, and the fund, as option writer, would remain
obligated under the option until expiration or exercise.

Disruptions in the markets for the securities underlying options
purchased or sold by a fund could result in losses on the options.  If
trading is interrupted in an underlying security, the trading of options
on that security is normally halted as well.  As a result, a fund as
purchaser or writer of an option will be unable to close out its
positions until options trading resumes, and it may be faced with
considerable losses if trading in the security reopens at a
substantially different price.  In addition, the Options Clearing
Corporation or other options markets may impose exercise restrictions.
If a prohibition on exercise is imposed at the time when trading in the
option has also been halted, a fund as purchaser or writer of an option
will be locked into its position until one of the two restrictions has
been lifted.  If the Options Clearing Corporation were to determine that
the available supply of an underlying security appears insufficient to
permit delivery by the writers of all outstanding calls in the event of
exercise, it may prohibit indefinitely the exercise of put options.  A
fund, as holder of such a put option, could lose its entire investment
if the prohibition remained in effect until the put option's expiration.

Foreign-traded options are subject to many of the same risks presented
by internationally-traded securities.  In addition, because of time
differences between the United States and various foreign countries, and
because different holidays are observed in different countries, foreign
options markets may be open for trading during hours or on days when
U.S. markets are closed.  As a result, option premiums may not reflect
the current prices of the underlying interest in the United States.

Over-the-counter ("OTC") options purchased by a fund and assets held to
cover OTC options written by the fund may, under certain circumstances,
be considered illiquid securities for purposes of any limitation on the
fund's ability to invest in illiquid securities.

Investments in Miscellaneous Fixed-Income Securities

If a fund may invest in inverse floating obligations, premium securities, or
interest-only or principal-only classes of mortgage-backed securities (IOs
and POs), it may do so without limit. Each fund, however, currently does not
intend to invest more than 15% of its assets in inverse floating obligations
or more than 35% of its assets in IOs and POs under normal market conditions.

Lower-rated Securities

Each fund may invest in lower-rated fixed-income securities (commonly known
as "junk bonds").  The lower ratings of certain securities held by a fund
reflect a greater possibility that adverse changes in the financial condition
of the issuer or in general economic conditions, or both, or an unanticipated
rise in interest rates, may impair the ability of the issuer to make payments
of interest and principal.  The inability (or perceived inability) of issuers
to make timely payment of interest and principal would likely make the values
of securities held by a fund more volatile and could limit the fund's ability
to sell its securities at prices approximating the values the fund had placed
on such securities.  In the absence of a liquid trading market for securities
held by it, a fund at times may be unable to establish the fair value of such
securities.

Securities ratings are based largely on the issuer's historical financial
condition and the rating agencies' analysis at the time of rating.
Consequently, the rating assigned to any particular security is not
necessarily a reflection of the issuer's current financial condition, which
may be better or worse than the rating would indicate. In addition, the
rating assigned to a security by Moody's Investors Service, Inc. or Standard
& Poor's (or by any other nationally recognized securities rating agency)
does not reflect an assessment of the volatility of the security's market
value or the liquidity of an investment in the security.  See "Securities
ratings."

Like those of other fixed-income securities, the values of lower-rated
securities fluctuate in response to changes in interest rates.  A
decrease in interest rates will generally result in an increase in the
value of a fund's assets.  Conversely, during periods of rising interest
rates, the value of a fund's assets will generally decline. The values
of lower-rated securities may often be affected to a greater extent by
changes in general economic conditions and business conditions affecting
the issuers of such securities and their industries.  Negative publicity
or investor perceptions may also adversely affect the values of
lower-rated securities.  Changes by nationally recognized securities
rating agencies in their ratings of any fixed-income security and
changes in the ability of an issuer to make payments of interest and
principal may also affect the value of these investments.  Changes in
the value of portfolio securities generally will not affect income
derived from these securities, but will affect a fund's net asset value.
A fund will not necessarily dispose of a security when its rating is
reduced below its rating at the time of purchase.  However, Putnam
Management will monitor the investment to determine whether its
retention will assist in meeting a fund's investment objective(s).

Issuers of lower-rated securities are often highly leveraged, so that
their ability to service their debt obligations during an economic
downturn or during sustained periods of rising interest rates may be
impaired.  Such issuers may not have more traditional methods of
financing available to them and may be unable to repay outstanding
obligations at maturity by refinancing.  The risk of loss due to default
in payment of interest or repayment of principal by such issuers is
significantly greater because such securities frequently are unsecured
and subordinated to the prior payment of senior indebtedness.

At times, a substantial portion of a fund's assets may be invested in an
issue of which the fund, by itself or together with other funds and
accounts managed by Putnam Management or its affiliates, holds all or a
major portion.  Although Putnam Management generally considers such
securities to be liquid because of the availability of an institutional
market for such securities, it is possible that, under adverse market or
economic conditions or in the event of adverse changes in the financial
condition of the issuer, a fund could find it more difficult to sell
these securities when Putnam Management believes it advisable to do so
or may be able to sell the securities only at prices lower than if they
were more widely held.  Under these circumstances, it may also be more
difficult to determine the fair value of such securities for purposes of
computing a fund's net asset value.  In order to enforce its rights in
the event of a default, a fund may be required to participate in various
legal proceedings or take possession of and manage assets securing the
issuer's obligations on such securities.  This could increase the fund's
operating expenses and adversely affect the fund's net asset value.  The
ability of a holder of a tax-exempt security to enforce the terms of
that security in a bankruptcy proceeding may be more limited than would
be the case with respect to securities of private issuers.  In addition,
a fund's intention to qualify as a "regulated investment company" under
the Internal Revenue Code may limit the extent to which the fund may
exercise its rights by taking possession of such assets.

Certain securities held by a fund may permit the issuer at its option to
"call," or redeem, its securities.  If an issuer were to redeem
securities held by a fund during a time of declining interest rates, the
fund may not be able to reinvest the proceeds in securities providing
the same investment return as the securities redeemed.

Each fund may invest without limit in so-called "zero-coupon" bonds and
"payment-in-kind" bonds.  Zero-coupon bonds are issued at a significant
discount from their principal amount in lieu of paying interest
periodically.  Payment-in-kind bonds allow the issuer, at its option, to
make current interest payments on the bonds either in cash or in
additional bonds.  Because zero-coupon and payment-in-kind bonds do not
pay current interest in cash, their value is subject to greater
fluctuation in response to changes in market interest rates than bonds
that pay interest currently.  Both zero-coupon and payment-in-kind bonds
allow an issuer to avoid the need to generate cash to meet current
interest payments.  Accordingly, such bonds may involve greater credit
risks than bonds paying interest currently in cash.  Each fund is
required to accrue interest income on such investments and to distribute
such amounts at least annually to shareholders even though such bonds do
not pay current interest in cash.  Thus, it may be necessary at times
for a fund to liquidate investments in order to satisfy its dividend
requirements.

To the extent a fund invests in securities in the lower rating
categories, the achievement of the fund's goals is more dependent on
Putnam Management's investment analysis than would be the case if the
fund were investing in securities in the higher rating categories.  This
also may be true with respect to tax-exempt securities, as the amount of
information about the financial condition of an issuer of tax-exempt
securities may not be as extensive as that which is made available by
corporations whose securities are publicly traded.

Loan Participations and Other Floating Rate Loans

Each fund may invest in "loan participations."  By purchasing a loan
participation, a fund acquires some or all of the interest of a bank or
other lending institution in a loan to a particular borrower.  Many such
loans are secured, and most impose restrictive covenants which must be
met by the borrower.  These loans are typically made by a syndicate of
banks, represented by an agent bank which has negotiated and structured
the loan and which is responsible generally for collecting interest,
principal, and other amounts from the borrower on its own behalf and on
behalf of the other lending institutions in the syndicate, and for
enforcing its and their other rights against the borrower.  Each of the
lending institutions, including the agent bank, lends to the borrower a
portion of the total amount of the loan, and retains the corresponding
interest in the loan.

A fund's ability to receive payments of principal and interest and other
amounts in connection with loan participations held by it will depend
primarily on the financial condition of the borrower.  The failure by a
fund to receive scheduled interest or principal payments on a loan
participation would adversely affect the income of the fund and would
likely reduce the value of its assets, which would be reflected in a
reduction in the fund's net asset value.  Banks and other lending
institutions generally perform a credit analysis of the borrower before
originating a loan or participating in a lending syndicate.  In
selecting the loan participations in which a fund will invest, however,
Putnam Management will not rely solely on that credit analysis, but will
perform its own investment analysis of the borrowers.  Putnam
Management's analysis may include consideration of the borrower's
financial strength and managerial experience, debt coverage, additional
borrowing requirements or debt maturity schedules, changing financial
conditions, and responsiveness to changes in business conditions and
interest rates.  Putnam Management will be unable to access non-public
information to which other investors in syndicated loans may have
access.  Because loan participations in which a fund may invest are not
generally rated by independent credit rating agencies, a decision by the
fund to invest in a particular loan participation will depend almost
exclusively on Putnam Management's, and the original lending
institution's, credit analysis of the borrower.  Investments in loan
participations may be of any quality, including "distressed" loans, and
will be subject to a fund's credit quality policy.

Loan participations may be structured in different forms, including
novations, assignments and participating interests.  In a novation, a
fund assumes all of the rights of a lending institution in a loan,
including the right to receive payments of principal and interest and
other amounts directly from the borrower and to enforce its rights as a
lender directly against the borrower.  The fund assumes the position of
a co-lender with other syndicate members.  As an alternative, a fund may
purchase an assignment of a portion of a lender's interest in a loan.
In this case, the fund may be required generally to rely upon the
assigning bank to demand payment and enforce its rights against the
borrower, but would otherwise be entitled to all of such bank's rights
in the loan.  A fund may also purchase a participating interest in a
portion of the rights of a lending institution in a loan.  In such case,
it will be entitled to receive payments of principal, interest and
premium, if any, but will not generally be entitled to enforce its
rights directly against the agent bank or the borrower, and must rely
for that purpose on the lending institution.  A fund may also acquire a
loan participation directly by acting as a member of the original
lending syndicate.

A fund will in many cases be required to rely upon the lending
institution from which it purchases the loan participation to collect
and pass on to the fund such payments and to enforce the fund's rights
under the loan.  As a result, an insolvency, bankruptcy or
reorganization of the lending institution may delay or prevent a fund
from receiving principal, interest and other amounts with respect to the
underlying loan.  When a fund is required to rely upon a lending
institution to pay to the fund principal, interest and other amounts
received by it, Putnam Management will also evaluate the
creditworthiness of the lending institution.

The borrower of a loan in which a fund holds a participation interest
may, either at its own election or pursuant to terms of the loan
documentation, prepay amounts of the loan from time to time.  There is
no assurance that a fund will be able to reinvest the proceeds of any
loan prepayment at the same interest rate or on the same terms as those
of the original loan participation.

Corporate loans in which a fund may purchase a loan participation are
made generally to finance internal growth, mergers, acquisitions, stock
repurchases, leveraged buy-outs and other corporate activities.  Under
current market conditions, most of the corporate loan participations
purchased by a fund will represent interests in loans made to finance
highly leveraged corporate acquisitions, known as "leveraged buy-out"
transactions.  The highly leveraged capital structure of the borrowers
in such transactions may make such loans especially vulnerable to
adverse changes in economic or market conditions.  In addition, loan
participations generally are subject to restrictions on transfer, and
only limited opportunities may exist to sell such participations in
secondary markets.  As a result, a fund may be unable to sell loan
participations at a time when it may otherwise be desirable to do so or
may be able to sell them only at a price that is less than their fair
market value.

Certain of the loan participations acquired by a fund may involve
revolving credit facilities under which a borrower may from time to time
borrow and repay amounts up to the maximum amount of the facility.  In
such cases, a fund would have an obligation to advance its portion of
such additional borrowings upon the terms specified in the loan
participation.  To the extent that a fund is committed to make
additional loans under such a participation, it will at all times hold
and maintain in a segregated account liquid assets in an amount
sufficient to meet such commitments.  Certain of the loan participations
acquired by a fund may also involve loans made in foreign currencies. A
fund's investment in such participations would involve the risks of
currency fluctuations described above with respect to investments in the
foreign securities.

With respect to its management of investments in floating rate loans,
Putnam will normally seek to avoid receiving material, non-public
information ("Confidential Information") about the issuers of floating
rate loans being considered for acquisition by a fund or held in a
fund's portfolio.  In many instances, issuers may offer to furnish
Confidential Information to prospective purchasers, and to holders, of
the issuer's floating rate loans.  Putnam's decision not to receive
Confidential Information may place Putnam at a disadvantage relative to
other investors in floating rate loans (which could have an adverse
effect on the price a fund pays or receives when buying or selling
loans).  Also, in instances where holders of floating rate loans are
asked to grant amendments, waivers or consent, Putnam's ability to
assess their significance or desirability may be adversely affected. For
these and other reasons, it is possible that Putnam's decision not to
receive Confidential Information under normal circumstances could
adversely affect a fund's investment performance.

Notwithstanding its intention generally not to receive material,
non-public information with respect to its management of investments in
floating rate loans, Putnam may from time to time come into possession
of material, non-public information about the issuers of loans that may
be held in a fund's portfolio.  Possession of such information may in
some instances occur despite Putnam's efforts to avoid such possession,
but in other instances Putnam may choose to receive such information
(for example, in connection with participation in a creditors' committee
with respect to a financially distressed issuer).  As, and to the
extent, required by applicable law, Putnam's ability to trade in these
loans for the account of a fund could potentially be limited by its
possession of such information.  Such limitations on Putnam's ability to
trade could have an adverse effect on a fund by, for example, preventing
the fund from selling a loan that is experiencing a material decline in
value.  In some instances, these trading restrictions could continue in
effect for a substantial period of time.

In some instances, other accounts managed by Putnam may hold other
securities issued by borrowers whose floating rate loans may be held in
a fund's portfolio.  These other securities may include, for example,
debt securities that are subordinate to the floating rate loans held in
a fund's portfolio, convertible debt or common or preferred equity
securities.  In certain circumstances, such as if the credit quality of
the issuer deteriorates, the interests of holders of these other
securities may conflict with the interests of the holders of the
issuer's floating rate loans.  In such cases, Putnam may owe conflicting
fiduciary duties to a fund and other client accounts.  Putnam will
endeavor to carry out its obligations to all of its clients to the
fullest extent possible, recognizing that in some cases certain clients
may achieve a lower economic return, as a result of these conflicting
client interests, than if Putnam's client accounts collectively held
only a single category of the issuer's securities.

Floating Rate and Variable Rate Demand Notes

Floating rate and variable rate demand notes and bonds may have a stated
maturity in excess of one year, but may have features that permit a
holder to demand payment of principal plus accrued interest upon a
specified number of days notice. Frequently, such obligations are
secured by letters of credit or other credit support arrangements
provided by banks. The issuer has a corresponding right, after a given
period, to prepay in its discretion the outstanding principal of the
obligation plus accrued interest upon a specific number of days notice
to the holders. The interest rate of a floating rate instrument may be
based on a known lending rate, such as a bank's prime rate, and is reset
whenever such rate is adjusted. The interest rate on a variable rate
demand note is reset at specified intervals at a market rate.

Mortgage Related and Asset-backed Securities

Mortgage-backed securities, including collateralized mortgage
obligations ("CMOs") and certain stripped mortgage-backed securities
represent a participation in, or are secured by, mortgage loans.
Asset-backed securities are structured like mortgage-backed securities,
but instead of mortgage loans or interests in mortgage loans, the
underlying assets  may include such items as motor vehicle installment
sales or installment loan contracts, leases of various types of real and
personal property and receivables from credit card agreements.  The
ability of an issuer of asset-backed securities to enforce its security
interest in the underlying assets may be limited.

Mortgage-backed securities have yield and maturity characteristics
corresponding to the underlying assets.  Unlike traditional debt
securities, which may pay a fixed rate of interest until maturity, when
the entire principal amount comes due, payments on certain
mortgage-backed securities include both interest and a partial repayment
of principal.  Besides the scheduled repayment of principal, repayments
of principal may result from the voluntary prepayment, refinancing or
foreclosure of the underlying mortgage loans.  If property owners make
unscheduled prepayments of their mortgage loans, these prepayments will
result in early payment of the applicable mortgage-related securities.
In that event a fund may be unable to invest the proceeds from the early
payment of the mortgage-related securities in an investment that
provides as high a yield as the mortgage-related securities.
Consequently, early payment associated with mortgage-related securities
may cause these securities to experience significantly greater price and
yield volatility than that experienced by traditional fixed-income
securities.  The occurrence of mortgage prepayments is affected by
factors including the level of interest rates, general economic
conditions, the location and age of the mortgage and other social and
demographic conditions.  During periods of falling interest rates, the
rate of mortgage prepayments tends to increase, thereby tending to
decrease the life of mortgage-related securities.  During periods of
rising interest rates, the rate of mortgage prepayments usually
decreases, thereby tending to increase the life of mortgage-related
securities.  If the life of a mortgage-related security is inaccurately
predicted, a fund may not be able to realize the rate of return it
expected.

Mortgage-backed and asset-backed securities are less effective than
other types of securities as a means of "locking in" attractive
long-term interest rates.  One reason is the need to reinvest
prepayments of principal; another is the possibility of significant
unscheduled prepayments resulting from declines in interest rates. These
prepayments would have to be reinvested at lower rates.  As a result,
these securities may have less potential for capital appreciation during
periods of declining interest rates than other securities of comparable
maturities, although they may have a similar risk of decline in market
value during periods of rising interest rates. Prepayments may also
significantly shorten the effective maturities of these securities,
especially during periods of declining interest rates.

Conversely, during periods of rising interest rates, a reduction in
prepayments may increase the effective maturities of these securities,
subjecting them to a greater risk of decline in market value in response
to rising interest rates than traditional debt securities, and,
therefore, potentially increasing the volatility of a fund.

Prepayments may cause losses on securities purchased at a premium.  At
times, some mortgage-backed and asset-backed securities will have higher
than market interest rates and therefore will be purchased at a premium
above their par value.

CMOs may be issued by a U.S. government agency or instrumentality or by
a private issuer.  Although payment of the principal of, and interest
on, the underlying collateral securing privately issued CMOs may be
guaranteed by the U.S. government or its agencies or instrumentalities,
these CMOs represent obligations solely of the private issuer and are
not insured or guaranteed by the U.S. government, its agencies or
instrumentalities or any other person or entity.

Prepayments could cause early retirement of CMOs.  CMOs are designed to
reduce the risk of prepayment for investors by issuing multiple classes
of securities, each having different maturities, interest rates and
payment schedules, and with the principal and interest on the underlying
mortgages allocated among the several classes in various ways.  Payment
of interest or principal on some classes or series of CMOs may be
subject to contingencies or some classes or series may bear some or all
of the risk of default on the underlying mortgages.  CMOs of different
classes or series are generally retired in sequence as the underlying
mortgage loans in the mortgage pool are repaid.  If enough mortgages are
repaid ahead of schedule, the classes or series of a CMO with the
earliest maturities generally will be retired prior to their maturities.

Thus, the early retirement of particular classes or series of a CMO
would have the same effect as the prepayment of mortgages underlying
other mortgage-backed securities. Conversely, slower than anticipated
prepayments can extend the effective maturities of CMOs, subjecting them
to a greater risk of decline in market value in response to rising
interest rates than traditional debt securities, and, therefore,
potentially increasing their volatility.

Prepayments could result in losses on stripped mortgage-backed
securities. Stripped mortgage-backed securities are usually structured
with two classes that receive different portions of the interest and
principal distributions on a pool of mortgage loans.  The yield to
maturity on an interest only or "IO" class of stripped mortgage-backed
securities is extremely sensitive not only to changes in prevailing
interest rates but also to the rate of principal payments (including
prepayments) on the underlying assets.  A rapid rate of principal
prepayments may have a measurable adverse effect on a fund's yield to
maturity to the extent it invests in IOs.  If the assets underlying the
IO experience greater than anticipated prepayments of principal, a fund
may fail to recoup fully its initial investment in these securities.
Conversely, principal only or "POs" tend to increase in value if
prepayments are greater than anticipated and decline if prepayments are
slower than anticipated.

The secondary market for stripped mortgage-backed securities may be more
volatile and less liquid than that for other mortgage-backed securities,
potentially limiting a fund's ability to buy or sell those securities at
any particular time.

Hybrid Instruments

These instruments are generally considered derivatives and include
indexed or structured securities, and combine the elements of futures
contracts or options with those of debt, preferred equity or a
depository instrument.  A hybrid instrument may be a debt security,
preferred stock, warrant, convertible security, certificate of deposit
or other evidence of indebtedness on which a portion of or all interest
payments, and/or the principal or stated amount payable at maturity,
redemption or retirement, is determined by reference to prices, changes
in prices, or differences between prices, of securities, currencies,
intangibles, goods, articles or commodities (collectively, "underlying
assets"), or by another objective index, economic factor or other
measure, including interest rates, currency exchange rates, or
commodities or securities indices (collectively, "benchmarks").  Hybrid
instruments may take a number of forms, including, but not limited to,
debt instruments with interest or principal payments or redemption terms
determined by reference to the value of an index at a future time,
preferred stock with dividend rates determined by reference to the value
of a currency, or convertible securities with the conversion terms
related to a particular commodity.

The risks of investing in hybrid instruments reflect a combination of
the risks of investing in securities, options, futures and currencies.
An investment in a hybrid instrument may entail significant risks that
are not associated with a similar investment in a traditional debt
instrument that has a fixed principal amount, is denominated in U.S.
dollars or bears interest either at a fixed rate or a floating rate
determined by reference to a common, nationally published benchmark. The
risks of a particular hybrid instrument will depend upon the terms of
the instrument, but may include the possibility of significant changes
in the benchmark(s) or the prices of the underlying assets to which the
instrument is linked.  Such risks generally depend upon factors
unrelated to the operations or credit quality of the issuer of the
hybrid instrument, which may not be foreseen by the purchaser, such as
economic and political events, the supply and demand of the underlying
assets and interest rate movements.  Hybrid instruments may be highly
volatile and their use by a fund may not be successful.

Hybrid instruments may bear interest or pay preferred dividends at below
market (or even relatively nominal) rates.  Alternatively, hybrid
instruments may bear interest at above market rates but bear an
increased risk of principal loss (or gain).  The latter scenario may
result if "leverage" is used to structure the hybrid instrument.
Leverage risk occurs when the hybrid instrument is structured so that a
given change in a benchmark or underlying asset is multiplied to produce
a greater value change in the hybrid instrument, thereby magnifying the
risk of loss as well as the potential for gain.

Hybrid instruments can be an efficient means of creating exposure to a
particular market, or segment of a market, with the objective of
enhancing total return.  For example, a fund may wish to take advantage
of expected declines in interest rates in several European countries,
but avoid the transaction costs associated with buying and
currency-hedging the foreign bond positions.  One solution would be to
purchase a U.S. dollar-denominated hybrid instrument whose redemption
price is linked to the average three year interest rate in a designated
group of countries.  The redemption price formula would provide for
payoffs of less than par if rates were above the specified level.
Furthermore, a fund could limit the downside risk of the security by
establishing a minimum redemption price so that the principal paid at
maturity could not be below a predetermined minimum level if interest
rates were to rise significantly.  The purpose of this arrangement,
known as a structured security with an embedded put option, would be to
give the fund the desired European bond exposure while avoiding currency
risk, limiting downside market risk, and lowering transaction costs.  Of
course, there is no guarantee that the strategy will be successful and a
fund could lose money if, for example, interest rates do not move as
anticipated or credit problems develop with the issuer of the hybrid
instrument.

Hybrid instruments are potentially more volatile and carry greater
market risks than traditional debt instruments.  Depending on the
structure of the particular hybrid instrument, changes in a benchmark
may be magnified by the terms of the hybrid instrument and have an even
more dramatic and substantial effect upon the value of the hybrid
instrument.  Also, the prices of the hybrid instrument and the benchmark
or underlying asset may not move in the same direction or at the same
time.

Hybrid instruments may also carry liquidity risk since the instruments
are often "customized" to meet the portfolio needs of a particular
investor, and therefore, the number of investors that are willing and
able to buy such instruments in the secondary market may be smaller than
that for more traditional debt securities.  Under certain conditions,
the redemption value of such an investment could be zero.  In addition,
because the purchase and sale of hybrid investments could take place in
an over-the-counter market without the guarantee of a central clearing
organization, or in a transaction between the fund and the issuer of the
hybrid instrument, the creditworthiness of the counterparty of the
issuer of the hybrid instrument would be an additional risk factor a
fund would have to consider and monitor.  Hybrid instruments also may
not be subject to regulation by the CFTC, which generally regulates the
trading of commodity futures by U.S. persons, the SEC, which regulates
the offer and sale of securities by and to U.S. persons, or any other
governmental regulatory authority.

Structured investments. A structured investment is a security having a
return tied to an underlying index or other security or asset class.
Structured investments generally are individually negotiated agreements
and may be traded over-the-counter.  Structured investments are
organized and operated to restructure the investment characteristics of
the underlying security.  This restructuring involves the deposit with
or purchase by an entity, such as a corporation or trust, or specified
instruments (such as commercial bank loans) and the issuance by that
entity or one or more classes of securities ("structured securities")
backed by, or representing interests in, the underlying instruments. The
cash flow on the underlying instruments may be apportioned among the
newly issued structured securities to create securities with different
investment characteristics, such as varying maturities, payment
priorities and interest rate provisions, and the extent of such payments
made with respect to structured securities is dependent on the extent of
the cash flow on the underlying instruments.  Because structured
securities typically involve no credit enhancement, their credit risk
generally will be equivalent to that of the underlying instruments.
Investments in structured securities are generally of a class of
structured securities that is either subordinated or unsubordinated to
the right of payment of another class.  Subordinated structured
securities typically have higher yields and present greater risks than
unsubordinated structured securities.  Structured securities are
typically sold in private placement transactions, and there currently is
no active trading market for structured securities.  Investments in
government and government-related and restructured debt instruments are
subject to special risks, including the inability or unwillingness to
repay principal and interest, requests to reschedule or restructure
outstanding debt and requests to extend additional loan amounts.

Securities of Other Investment Companies.  Securities of other
investment companies, including shares of closed-end investment
companies, unit investment trusts and open-end investment companies,
represent interests in professionally managed portfolios that may invest
in any type of instrument.  These types of instruments are often
structured to perform in a similar fashion to a broad based securities
index.  Investing in these types of securities involves substantially
the same risks as investing directly in the underlying instruments, but
may involve additional expenses at the investment company-level, such as
portfolio management fees and operating expenses.  In addition, these
types of investments involve the risk that they will not perform in
exactly the same fashion, or in response to the same factors, as the
index or underlying instruments.  Certain types of investment companies,
such as closed-end investment companies, issue a fixed number of shares
that trade on a stock exchange or over-the-counter at a premium or a
discount to their net asset value.  Others are continuously offered at
net asset value, but may also be traded in the secondary market.  The
extent to which a fund can invest in securities of other investment
companies is limited by federal securities laws.

Tax-exempt Securities

General description.  As used in this SAI, the term "Tax-exempt
securities" includes debt obligations issued by a state, its political
subdivisions (for example, counties, cities, towns, villages, districts
and authorities) and their agencies, instrumentalities or other
governmental units, the interest from which is, in the opinion of bond
counsel, exempt from federal income tax and the corresponding state's
personal income tax.  Such obligations are issued to obtain funds for
various public purposes, including the construction of a wide range of
public facilities, such as airports, bridges, highways, housing,
hospitals, mass transportation, schools, streets and water and sewer
works.  Other public purposes for which Tax-exempt securities may be
issued include the refunding of outstanding obligations or the payment
of general operating expenses.

Short-term Tax-exempt securities are generally issued by state and local
governments and public authorities as interim financing in anticipation
of tax collections, revenue receipts or bond sales to finance such
public purposes.

In addition, certain types of "private activity" bonds may be issued by
public authorities to finance projects such as privately operated
housing facilities; certain local facilities for supplying water, gas or
electricity; sewage or solid waste disposal facilities; student loans;
or public or private institutions for the construction of educational,
hospital, housing and other facilities.  Such obligations are included
within the term Tax-exempt securities if the interest paid thereon is,
in the opinion of bond counsel, exempt from federal income tax and state
personal income tax (such interest may, however, be subject to federal
alternative minimum tax).  Other types of private activity bonds, the
proceeds of which are used for the construction, repair or improvement
of, or to obtain equipment for, privately operated industrial or
commercial facilities, may also constitute Tax-exempt securities,
although the current federal tax laws place substantial limitations on
the size of such issues.

Stand-by commitments.  When a fund purchases Tax-exempt securities, it
has the authority to acquire stand-by commitments from banks and
broker-dealers with respect to those Tax-exempt securities.  A stand-by
commitment may be considered a security independent of the Tax-exempt
security to which it relates.  The amount payable by a bank or dealer
during the time a stand-by commitment is exercisable, absent unusual
circumstances, would be substantially the same as the market value of
the underlying Tax-exempt security to a third party at any time.  A fund
expects that stand-by commitments generally will be available without
the payment of direct or indirect consideration.  A fund does not expect
to assign any value to stand-by commitments.

Yields.  The yields on Tax-exempt securities depend on a variety of
factors, including general money market conditions, effective marginal
tax rates, the financial condition of the issuer, general conditions of
the Tax-exempt security market, the size of a particular offering, the
maturity of the obligation and the rating of the issue.  The ratings of
nationally recognized securities rating agencies represent their
opinions as to the credit quality of the Tax-exempt securities which
they undertake to rate.  It should be emphasized, however, that ratings
are general and are not absolute standards of quality.  Consequently,
Tax-exempt securities with the same maturity and interest rate but with
different ratings may have the same yield.  Yield disparities may occur
for reasons not directly related to the investment quality of particular
issues or the general movement of interest rates and may be due to such
factors as changes in the overall demand or supply of various types of
Tax-exempt securities or changes in the investment objectives of
investors.  Subsequent to purchase by a fund, an issue of Tax-exempt
securities or other investments may cease to be rated, or its rating may
be reduced below the minimum rating required for purchase by the fund.
Neither event will require the elimination of an investment from a
fund's portfolio, but Putnam Management will consider such an event in
its determination of whether a fund should continue to hold an
investment in its portfolio.

"Moral obligation" bonds.  Each fund does not currently intend to
invest in so-called "moral obligation" bonds, where repayment is backed
by a moral commitment of an entity other than the issuer, unless the
credit of the issuer itself, without regard to the "moral obligation,"
meets the investment criteria established for investments by a fund.

Municipal leases.  Each fund may acquire participations in lease
obligations or installment purchase contract obligations (collectively,
"lease obligations") of municipal authorities or entities. Lease
obligations do not constitute general obligations of the municipality
for which the municipality's taxing power is pledged. Certain of these
lease obligations contain "non-appropriation" clauses, which provide
that the municipality has no obligation to make lease or installment
purchase payments in future years unless money is appropriated for such
purpose on a yearly basis. In the case of a "non-appropriation" lease, a
fund's ability to recover under the lease in the event of
non-appropriation or default will be limited solely to the repossession
of the leased property, and in any event, foreclosure of that property
might prove difficult.

Inverse Floaters have variable interest rates that typically move in the
opposite direction from movements in prevailing short-term interest rate
levels - rising when prevailing short-term interest rate fall, and vice
versa.  The prices of inverse floaters can be considerably more volatile
than the prices of bonds with comparable maturities.

Additional risks.  Securities in which a fund may invest, including
Tax-exempt securities, are subject to the provisions of bankruptcy,
insolvency and other laws affecting the rights and remedies of
creditors, such as the federal Bankruptcy Code (including special
provisions related to municipalities and other public entities), and
laws, if any, that may be enacted by Congress or state legislatures
extending the time for payment of principal or interest, or both, or
imposing other constraints upon enforcement of such obligations.  There
is also the possibility that, as a result of litigation or other
conditions, the power, ability or willingness of issuers to meet their
obligations for the payment of interest and principal on their
Tax-exempt securities may be materially affected.

From time to time, proposals have been introduced before Congress for
the purpose of restricting or eliminating the federal income tax
exemption for interest on debt obligations issued by states and their
political subdivisions.  Federal tax laws limit the types and amounts of
tax-exempt bonds issuable for certain purposes, especially industrial
development bonds and private activity bonds.  Such limits may affect
the future supply and yields of these types of Tax-exempt securities.
Further proposals limiting the issuance of Tax-exempt securities may
well be introduced in the future.  If it appeared that the availability
of Tax-exempt securities for investment by a fund and the value of a
fund's portfolio could be materially affected by such changes in law,
the Trustees of a fund would reevaluate its investment objective and
policies and consider changes in the structure of a fund or its
dissolution.

Convertible Securities

Convertible securities include bonds, debentures, notes, preferred
stocks and other securities that may be converted into or exchanged for,
at a specific price or formula within a particular period of time, a
prescribed amount of common stock or other equity securities of the same
or a different issuer.  Convertible securities entitle the holder to
receive interest paid or accrued on debt or dividends paid or accrued on
preferred stock until the security matures or is redeemed, converted or
exchanged.

The market value of a convertible security is a function of its
"investment value" and its "conversion value."  A security's "investment
value" represents the value of the security without its conversion
feature (i.e., a nonconvertible fixed income security).  The investment
value may be determined by reference to its credit quality and the
current value of its yield to maturity or probable call date.  At any
given time, investment value is dependent upon such factors as the
general level of interest rates, the yield of similar nonconvertible
securities, the financial strength of the issuer and the seniority of
the security in the issuer's capital structure. A security's "conversion
value" is determined by multiplying the number of shares the holder is
entitled to receive upon conversion or exchange by the current price of
the underlying security.

If the conversion value of a convertible security is significantly below
its investment value, the convertible security will trade like
nonconvertible debt or preferred stock and its market value will not be
influenced greatly by fluctuations in the market price of the underlying
security.  Conversely, if the conversion value of a convertible security
is near or above its investment value, the market value of the
convertible security will be more heavily influenced by fluctuations in
the market price of the underlying security.

A fund's investments in convertible securities may at times include
securities that have a mandatory conversion feature, pursuant to which
the securities convert automatically into common stock or other equity
securities at a specified date and a specified conversion ratio, or that
are convertible at the option of the issuer.  Because conversion of the
security is not at the option of the holder, a fund may be required to
convert the security into the underlying common stock even at times when
the value of the underlying common stock or other equity security has
declined substantially.

A fund's investments in convertible securities, particularly securities
that are convertible into securities of an issuer other than the issuer
of the convertible security, may be illiquid.  A fund may not be able to
dispose of such securities in a timely fashion or for a fair price,
which could result in losses to the fund.

Alternative Investment Strategies

Under normal market conditions, each fund seeks to remain fully invested
and to minimize its cash holdings.  However, at times Putnam Management
may judge that market conditions make pursuing a fund's investment
strategies inconsistent with the best interests of its shareholders.
Putnam Management then may temporarily use alternative strategies that
are mainly designed to limit the fund's losses.  In implementing these
strategies, the funds may invest primarily in debt securities, preferred
stocks, U.S. Government and agency obligations, cash or money market
instruments, or any other securities Putnam Management considers
consistent with such defensive strategies.

Money market instruments, or short-term debt instruments, consist of
obligations such as commercial paper, bank obligations (i.e.,
certificates of deposit and bankers' acceptances), repurchase agreements
and various government obligations, such as Treasury bills.  These
instruments have a remaining maturity of one year or less and are
generally of high credit quality.  Money market instruments may be
structured to be, or may employ a trust or other form so that they are,
eligible investments for money market funds.  For example, put features
can be used to modify the maturity of a security or interest rate
adjustment features can be used to enhance price stability.  If a
structure fails to function as intended, adverse tax or investment
consequences may result.  Neither the Internal Revenue Service (IRS) nor
any other regulatory authority has ruled definitively on certain legal
issues presented by certain structured securities.  Future tax or other
regulatory determinations could adversely affect the value, liquidity,
or tax treatment of the income received from these securities or the
nature and timing of distributions made by the funds.

Private Placements and Restricted Securities

A fund may invest in securities that are purchased in private placements
and, accordingly, are subject to restrictions on resale as a matter of
contract or under federal securities laws. Because there may be
relatively few potential purchasers for such investments, especially
under adverse market or economic conditions or in the event of adverse
changes in the financial condition of the issuer, a fund could find it
more difficult to sell such securities when Putnam Management believes
it advisable to do so or may be able to sell such securities only at
prices lower than if such securities were more widely held.  At times,
it may also be more difficult to determine the fair value of such
securities for purposes of computing the fund's net asset value.

While such private placements may often offer attractive opportunities
for investment not otherwise available on the open market, the
securities so purchased are often "restricted  securities,"  i.e.,
securities  which cannot be sold to the public without registration
under the Securities Act of 1933 or the availability of an exemption
from registration (such as Rules 144 or 144A), or which are "not readily
marketable" because they are subject to other legal or contractual
delays in or restrictions on resale.

The absence of a trading market can make it difficult to ascertain a
market value for illiquid investments.  Disposing of illiquid
investments may involve time-consuming negotiation and legal expenses,
and it may be difficult or impossible for a fund to sell them promptly
at an acceptable price.  A fund may have to bear the extra expense of
registering such securities for resale and the risk of substantial delay
in effecting such registration.  Also market quotations are less readily
available. The judgment of Putnam Management may at times play a greater
role in valuing these securities than in the case of publicly traded
securities.

Generally speaking, restricted securities may be sold only to qualified
institutional buyers, or in a privately negotiated transaction to a
limited number of purchasers, or in limited quantities after they have
been held for a specified period of time and other conditions are met
pursuant to an exemption from registration, or in a public offering for
which a registration statement is in effect under the Securities Act of
1933.  A fund may be deemed to be an "underwriter" for purposes of the
Securities Act of 1933 when selling restricted securities to the public,
and in such event the fund may be liable to purchasers of such
securities if the registration statement prepared by the issuer, or the
prospectus forming a part of it, is materially inaccurate or misleading.

The SEC Staff currently takes the view that any delegation by the
Trustees of the authority to determine that a restricted security is
readily marketable (as described in the investment restrictions of the
funds) must be pursuant to written procedures established by the
Trustees and the Trustees have delegated such authority to Putnam
Management.

Futures Contracts and Related Options

Subject to applicable law each fund may invest without limit in futures
contracts and related options for hedging and non-hedging purposes, such
as to manage the effective duration of the fund's portfolio or as a
substitute for direct investment.  A financial futures contract sale
creates an obligation by the seller to deliver the type of financial
instrument called for in the contract in a specified delivery month for
a stated price.  A financial futures contract purchase creates an
obligation by the purchaser to take delivery of the type of financial
instrument called for in the contract in a specified delivery month at a
stated price.  The specific instruments delivered or taken,
respectively, at settlement date are not determined until on or near
that date.  The determination is made in accordance with the rules of
the exchange on which the futures contract sale or purchase was made.
Futures contracts are traded in the United States only on commodity
exchanges or boards of trade -- known as "contract markets" -- approved
for such trading by the Commodity Futures Trading Commission (the
"CFTC"), and must be executed through a futures commission merchant or
brokerage firm which is a member of the relevant contract market.

Although futures contracts (other than index futures) by their terms
call for actual delivery or acceptance of commodities or securities, in
most cases the contracts are closed out before the settlement date
without the making or taking of delivery.  Closing out a futures
contract sale is effected by purchasing a futures contract for the same
aggregate amount of the specific type of financial instrument or
commodity with the same delivery date.  If the price of the initial sale
of the futures contract exceeds the price of the offsetting purchase,
the seller is paid the difference and realizes a gain.  Conversely, if
the price of the offsetting purchase exceeds the price of the initial
sale, the seller realizes a loss.  If a fund is unable to enter into a
closing transaction, the amount of the fund's potential loss is
unlimited.  The closing out of a futures contract purchase is effected
by the purchaser's entering into a futures contract sale.  If the
offsetting sale price exceeds the purchase price, the purchaser realizes
a gain, and if the purchase price exceeds the offsetting sale price, he
realizes a loss.  In general, 40% of the gain or loss arising from the
closing out of a futures contract traded on an exchange approved by the
CFTC is treated as short-term gain or loss, and 60% is treated as
long-term gain or loss.

Unlike when a fund purchases or sells a security, no price is paid or
received by a fund upon the purchase or sale of a futures contract. Upon
entering into a contract, a fund is required to deposit with its
custodian in a segregated account in the name of the futures broker an
amount of liquid assets.  This amount is known as "initial margin."  The
nature of initial margin in futures transactions is different from that
of margin in security transactions in that futures contract margin does
not involve the borrowing of funds to finance the transactions.  Rather,
initial margin is similar to a performance bond or good faith deposit
which is returned to a fund upon termination of the futures contract,
assuming all contractual obligations have been satisfied.  Futures
contracts also involve brokerage costs.

Subsequent payments, called "variation margin" or "maintenance margin,"
to and from the broker (or the custodian) are made on a daily basis as
the price of the underlying security or commodity fluctuates, making the
long and short positions in the futures contract more or less valuable,
a process known as "marking to the market."  For example, when a fund
has purchased a futures contract on a security and the price of the
underlying security has risen, that position will have increased in
value and the fund will receive from the broker a variation margin
payment based on that increase in value.  Conversely, when a fund has
purchased a security futures contract and the price of the underlying
security has declined, the position would be less valuable and the fund
would be required to make a variation margin payment to the broker.

A fund may elect to close some or all of its futures positions at any
time prior to their expiration in order to reduce or eliminate a hedge
position then currently held by the fund.  The fund may close its
positions by taking opposite positions which will operate to terminate
the fund's position in the futures contracts.  Final determinations of
variation margin are then made, additional cash is required to be paid
by or released to the fund, and the fund realizes a loss or a gain. Such
closing transactions involve additional commission costs.

Each fund does not intend to purchase or sell futures or related options
for other than hedging purposes, if, as a result, the sum of the initial
margin deposits on a fund's existing futures and related options
positions and premiums paid for outstanding options on futures contracts
would exceed 5% of a fund's net assets.

Each fund has claimed an exclusion from the definition of the term
"commodity pool operator" under the Commodity Exchange Act (the "CEA"),
and therefore, is not subject to registration or regulation as a pool
operator under the CEA.

Options on futures contracts.  Each fund may purchase and write call and
put options on futures contracts it may buy or sell and enter into
closing transactions with respect to such options to terminate existing
positions.  In return for the premium paid, options on futures contracts
give the purchaser the right to assume a position in a futures contract
at the specified option exercise price at any time during the period of
the option.  A fund may use options on futures contracts in lieu of
writing or buying options directly on the underlying securities or
purchasing and selling the underlying futures contracts.  For example,
to hedge against a possible decrease in the value of its portfolio
securities, a fund may purchase put options or write call options on
futures contracts rather than selling futures contracts.  Similarly, a
fund may purchase call options or write put options on futures contracts
as a substitute for the purchase of futures contracts to hedge against a
possible increase in the price of securities which the fund expects to
purchase.  Such options generally operate in the same manner as options
purchased or written directly on the underlying investments.

As with options on securities, the holder or writer of an option may
terminate his position by selling or purchasing an offsetting option.
There is no guarantee that such closing transactions can be effected.

A fund will be required to deposit initial margin and maintenance margin
with respect to put and call options on futures contracts written by it
pursuant to brokers' requirements similar to those described above in
connection with the discussion of futures contracts.

Risks of transactions in futures contracts and related options.
Successful use of futures contracts by a fund is subject to Putnam
Management's ability to predict movements in various factors affecting
securities markets, including interest rates.  Compared to the purchase
or sale of futures contracts, the purchase of call or put options on
futures contracts involves less potential risk to a fund because the
maximum amount at risk is the premium paid for the options (plus
transaction costs).  However, there may be circumstances when the
purchase of a call or put option on a futures contract would result in a
loss to a fund when the purchase or sale of a futures contract would
not, such as when there is no movement in the prices of the hedged
investments.  The writing of an option on a futures contract involves
risks similar to those risks relating to the sale of futures contracts.

The use of options and futures strategies also involves the risk of
imperfect correlation among movements in the prices of the securities
underlying the futures and options purchased and sold by a fund, of the
options and futures contracts themselves, and, in the case of hedging
transactions, of the securities which are the subject of a hedge.  The
successful use of these strategies further depends on the ability of
Putnam Management to forecast interest rates and market movements
correctly.

There is no assurance that higher than anticipated trading activity or
other unforeseen events might not, at times, render certain market
clearing facilities inadequate, and thereby result in the institution by
exchanges of special procedures which may interfere with the timely
execution of customer orders.

To reduce or eliminate a position held by a fund, a fund may seek to
close out such a position.  The ability to establish and close out
positions will be subject to the development and maintenance of a liquid
secondary market.  It is not certain that this market will develop or
continue to exist for a particular futures contract or option.  Reasons
for the absence of a liquid secondary market on an exchange include the
following:  (i) there may be insufficient trading interest in certain
contracts or options; (ii) restrictions may be imposed by an exchange on
opening transactions or closing transactions or both; (iii) trading
halts, suspensions or other restrictions may be imposed with respect to
particular classes or series of contracts or options, or underlying
securities; (iv) unusual or unforeseen circumstances may interrupt
normal operations on an exchange; (v) the facilities of an exchange or a
clearing corporation may not at all times be adequate to handle current
trading volume; or (vi) one or more exchanges could, for economic or
other reasons, decide or be compelled at some future date to discontinue
the trading of contracts or options (or a particular class or series of
contracts or options), in which event the secondary market on that
exchange for such contracts or options (or in the class or series of
contracts or options) would cease to exist, although outstanding
contracts or options on the exchange that had been issued by a clearing
corporation as a result of trades on that exchange would continue to be
exercisable in accordance with their terms.

U.S. Treasury security futures contracts and options.  U.S. Treasury
security futures contracts require the seller to deliver, or the
purchaser to take delivery of, the type of U.S. Treasury security called
for in the contract at a specified date and price.  Options on U.S.
Treasury security futures contracts give the purchaser the right in
return for the premium paid to assume a position in a U.S. Treasury
security futures contract at the specified option exercise price at any
time during the period of the option.

Successful use of U.S. Treasury security futures contracts by a fund is
subject to Putnam Management's ability to predict movements in the
direction of interest rates and other factors affecting markets for debt
securities.  For example, if a fund has sold U.S. Treasury security
futures contracts in order to hedge against the possibility of an
increase in interest rates which would adversely affect securities held
in its portfolio, and the prices of the fund's securities increase
instead as a result of a decline in interest rates, the fund will lose
part or all of the benefit of the increased value of its securities
which it has hedged because it will have offsetting losses in its
futures positions.  In addition, in such situations, if a fund has
insufficient cash, it may have to sell securities to meet daily
maintenance margin requirements at a time when it may be disadvantageous
to do so.

There is also a risk that price movements in U.S. Treasury security
futures contracts and related options will not correlate closely with
price movements in markets for particular securities.  For example, if a
fund has hedged against a decline in the values of tax-exempt securities
held by it by selling Treasury security futures and the values of
Treasury securities subsequently increase while the values of its
tax-exempt securities decrease, the fund would incur losses on both the
Treasury security futures contracts written by it and the tax-exempt
securities held in its portfolio.

Index futures contracts.  An index futures contract is a contract to buy
or sell units of an index at a specified future date at a price agreed
upon when the contract is made.  Entering into a contract to buy units
of an index is commonly referred to as buying or purchasing a contract
or holding a long position in the index.  Entering into a contract to
sell units of an index is commonly referred to as selling a contract or
holding a short position.  A unit is the current value of the index.  A
fund may enter into stock index futures contracts, debt index futures
contracts, or other index futures contracts appropriate to its
objective(s).  A fund may also purchase and sell options on index
futures contracts.

For example, the Standard & Poor's 500 Composite Stock Price Index ("S&P
500") is composed of 500 selected common stocks, most of which are
listed on the New York Stock Exchange.  The S&P 500 assigns relative
weightings to the common stocks included in the Index, and the value
fluctuates with changes in the market values of those common stocks.  In
the case of the S&P 500, contracts are to buy or sell 500 units.  Thus,
if the value of the S&P 500 were $150, one contract would be worth
$75,000 (500 units x $150).  The stock index futures contract specifies
that no delivery of the actual stocks making up the index will take
place.  Instead, settlement in cash must occur upon the termination of
the contract, with the settlement being the difference between the
contract price and the actual level of the stock index at the expiration
of the contract.  For example, if a fund enters into a futures contract
to buy 500 units of the S&P 500 at a specified future date at a contract
price of $150 and the S&P 500 is at $154 on that future date, the fund
will gain $2,000 (500 units x gain of $4).  If a fund enters into a
futures contract to sell 500 units of the stock index at a specified
future date at a contract price of $150 and the S&P 500 is at $152 on
that future date, the fund will lose $1,000 (500 units x loss of $2).

There are several risks in connection with the use by a fund of index
futures.  One risk arises because of the imperfect correlation between
movements in the prices of the index futures and movements in the prices
of securities which are the subject of the hedge.  Putnam Management
will, however, attempt to reduce this risk by buying or selling, to the
extent possible, futures on indices the movements of which will, in its
judgment, have a significant correlation with movements in the prices of
the securities sought to be hedged.

Successful use of index futures by a fund is also subject to Putnam
Management's ability to predict movements in the direction of the
market.  For example, it is possible that, where a fund has sold futures
to hedge its portfolio against a decline in the market, the index on
which the futures are written may advance and the value of securities
held in the fund's portfolio may decline.  If this occurred, a fund
would lose money on the futures and also experience a decline in value
in its portfolio securities.  It is also possible that, if a fund has
hedged against the possibility of a decline in the market adversely
affecting securities held in its portfolio and securities prices
increase instead, the fund will lose part or all of the benefit of the
increased value of those securities it has hedged because it will have
offsetting losses in its futures positions.  In addition, in such
situations, if a fund has insufficient cash, it may have to sell
securities to meet daily variation margin requirements at a time when it
is disadvantageous to do so.

In addition to the possibility that there may be an imperfect
correlation, or no correlation at all, between movements in the index
futures and the portion of the portfolio being hedged, the prices of
index futures may not correlate perfectly with movements in the
underlying index due to certain market distortions.  First, all
participants in the futures market are subject to margin deposit and
maintenance requirements.  Rather than meeting additional margin deposit
requirements, investors may close futures contracts through offsetting
transactions which could distort the normal relationship between the
index and futures markets.  Second, margin requirements in the futures
market are less onerous than margin requirements in the securities
market, and as a result the futures market may attract more speculators
than the securities market does.  Increased participation by speculators
in the futures market may also cause temporary price distortions.  Due
to the possibility of price distortions in the futures market and also
because of the imperfect correlation between movements in the index and
movements in the prices of index futures, even a correct forecast of
general market trends by Putnam Management may still not result in a
profitable position over a short time period.

Options on stock index futures.  Options on index futures are similar to
options on securities except that options on index futures give the
purchaser the right, in return for the premium paid, to assume a
position in an index futures contract (a long position if the option is
a call and a short position if the option is a put) at a specified
exercise price at any time during the period of the option.  Upon
exercise of the option, the delivery of the futures position by the
writer of the option to the holder of the option will be accompanied by
delivery of the accumulated balance in the writer's futures margin
account which represents the amount by which the market price of the
index futures contract, at exercise, exceeds (in the case of a call) or
is less than (in the case of a put) the exercise price of the option on
the index future.  If an option is exercised on the last trading day
prior to its expiration date, the settlement will be made entirely in
cash equal to the difference between the exercise price of the option
and the closing level of the index on which the future is based on the
expiration date.  Purchasers of options who fail to exercise their
options prior to the exercise date suffer a loss of the premium paid.

Options on Indices

As an alternative to purchasing call and put options on index futures,
each fund may purchase and sell call and put options on the underlying
indices themselves.  Such options would be used in a manner identical to
the use of options on index futures.

Index Warrants

Each fund may purchase put warrants and call warrants whose values vary
depending on the change in the value of one or more specified securities
indices ("index warrants").  Index warrants are generally issued by
banks or other financial institutions and give the holder the right, at
any time during the term of the warrant, to receive upon exercise of the
warrant a cash payment from the issuer based on the value of the
underlying index at the time of exercise.  In general, if the value of
the underlying index rises above the exercise price of the index
warrant, the holder of a call warrant will be entitled to receive a cash
payment from the issuer upon exercise based on the difference between
the value of the index and the exercise price of the warrant; if the
value of the underlying index falls, the holder of a put warrant will be
entitled to receive a cash payment from the issuer upon exercise based
on the difference between the exercise price of the warrant and the
value of the index.  The holder of a warrant would not be entitled to
any payments from the issuer at any time when, in the case of a call
warrant, the exercise price is greater than the value of the underlying
index, or, in the case of a put warrant, the exercise price is less than
the value of the underlying index.  If a fund were not to exercise an
index warrant prior to its expiration, then the fund would lose the
amount of the purchase price paid by it for the warrant.

A fund will normally use index warrants in a manner similar to its use
of options on securities indices.  The risks of a fund's use of index
warrants are generally similar to those relating to its use of index
options. Unlike most index options, however, index warrants are issued
in limited amounts and are not obligations of a regulated clearing
agency, but are backed only by the credit of the bank or other
institution which issues the warrant.  Also, index warrants generally
have longer terms than index options.  Although a fund will normally
invest only in exchange-listed warrants, index warrants are not likely
to be as liquid as certain index options backed by a recognized clearing
agency.  In addition, the terms of index warrants may limit a fund's
ability to exercise the warrants at such time, or in such quantities, as
the fund would otherwise wish to do.

Short-term Trading

In seeking each fund's objective(s), Putnam Management will buy or sell
portfolio securities whenever Putnam Management believes it appropriate
to do so.  From time to time a fund will buy securities intending to
seek short-term trading profits.  A change in the securities held by a
fund is known as "portfolio turnover" and generally involves some
expense to the fund.  This expense may include brokerage commissions or
dealer markups and other transaction costs on both the sale of
securities and the reinvestment of the proceeds in other securities.  If
sales of portfolio securities cause a fund to realize net short-term
capital gains, such gains will be taxable as ordinary income.  As a
result of a fund's investment policies, under certain market conditions
a fund's portfolio turnover rate may be higher than that of other mutual
funds.  Portfolio turnover rate for a fiscal year is the ratio of the
lesser of purchases or sales of portfolio securities to the monthly
average of the value of portfolio securities -- excluding securities
whose maturities at acquisition were one year or less.  A fund's
portfolio turnover rate is not a limiting factor when Putnam Management
considers a change in a fund's portfolio.

Securities Loans

Each fund may make secured loans of its portfolio securities, on either
a short-term or long-term basis, amounting to not more than 25% of its
total assets, thereby realizing additional income.  The risks in lending
portfolio securities, as with other extensions of credit, consist of
possible delay in recovery of the securities or possible loss of rights
in the collateral should the borrower fail financially.  As a matter of
policy, securities loans are made to broker-dealers pursuant to
agreements requiring that the loans be continuously secured by
collateral consisting of cash or short-term debt obligations at least
equal at all times to the value of the securities on loan,
"marked-to-market" daily.  The borrower pays to a fund an amount equal
to any dividends or interest received on securities lent.  The fund
retains all or a portion of the interest received on investment of the
cash collateral or receives a fee from the borrower.  Although voting
rights, or rights to consent, with respect to the loaned securities may
pass to the borrower, the fund retains the right to call the loans at
any time on reasonable notice, and it will do so to enable the fund to
exercise voting rights on any matters materially affecting the
investment.  The fund may also call such loans in order to sell the
securities.

Repurchase Agreements

Each fund may enter into repurchase agreements, amounting to not more than
25% of its total assets.  Money market funds may invest without limit in
repurchase agreements.  A repurchase agreement is a contract under which a
fund acquires a security for a relatively short period (usually not more
than one week) subject to the obligation of the seller to repurchase and
the fund to resell such security at a fixed time and price (representing
the fund's cost plus interest).  It is each fund's present intention to
enter into repurchase agreements only with commercial banks and registered
broker-dealers and only with respect to obligations of the U.S. government
or its agencies or instrumentalities.  Repurchase agreements may also be
viewed as loans made by a fund which are collateralized by the securities
subject to repurchase.  Putnam Management will monitor such transactions to
ensure that the value of the underlying securities will be at least equal
at all times to the total amount of the repurchase obligation, including
the interest factor.  If the seller defaults, a fund could realize a loss
on the sale of the underlying security to the extent that the proceeds of
the sale including accrued interest are less than the resale price provided
in the agreement including interest.  In addition, if the seller should be
involved in bankruptcy or insolvency proceedings, a fund may incur delay
and costs in selling the underlying security or may suffer a loss of
principal and interest if the fund is treated as an unsecured creditor and
required to return the underlying collateral to the seller's estate.

Pursuant to an exemptive order issued by the Securities and Exchange
Commission, a fund may transfer uninvested cash balances into a joint
account, along with cash of other Putnam funds and certain other
accounts.  These balances may be invested in one or more repurchase
agreements and/or short-term money market instruments.

Forward Commitments

Each fund may enter into contracts to purchase securities for a fixed
price at a future date beyond customary settlement time ("forward
commitments") if a fund sets aside, on the books and records of its
custodian, liquid assets in an amount sufficient to meet the purchase
price, or if a fund enters into offsetting contracts for the forward
sale of other securities it owns.  In the case of to-be-announced
("TBA") purchase commitments, the unit price and the estimated principal
amount are established when a fund enters into a contract, with the
actual principal amount being within a specified range of the estimate.
Forward commitments may be considered securities in themselves, and
involve a risk of loss if the value of the security to be purchased
declines prior to the settlement date, which risk is in addition to the
risk of decline in the value of a fund's other assets.  Where such
purchases are made through dealers, a fund relies on the dealer to
consummate the sale.  The dealer's failure to do so may result in the
loss to the fund of an advantageous yield or price.  Although a fund
will generally enter into forward commitments with the intention of
acquiring securities for its portfolio or for delivery pursuant to
options contracts it has entered into, the fund may dispose of a
commitment prior to settlement if Putnam Management deems it appropriate
to do so.  A fund may realize short-term profits or losses upon the sale
of forward commitments.

Each fund may enter into TBA sale commitments to hedge its portfolio
positions or to sell securities it owns under delayed delivery
arrangements.  Proceeds of TBA sale commitments are not received until
the contractual settlement date.  During the time a TBA sale commitment
is outstanding, equivalent deliverable securities, or an offsetting TBA
purchase commitment deliverable on or before the sale commitment date,
are held as "cover" for the transaction.  Unsettled TBA sale commitments
are valued at current market value of the underlying securities.  If the
TBA sale commitment is closed through the acquisition of an offsetting
purchase commitment, the fund realizes a gain or loss on the commitment
without regard to any unrealized gain or loss on the underlying
security.  If a fund delivers securities under the commitment, the fund
realizes a gain or loss from the sale of the securities based upon the
unit price established at the date the commitment was entered into.

Swap Agreements

Each fund may enter into swap agreements and other types of
over-the-counter transactions with broker-dealers or other financial
institutions.  Depending on their structures, swap agreements may
increase or decrease a fund's exposure to long-or short-term interest
rates (in the United States or abroad), foreign currency values,
mortgage securities, corporate borrowing rates, or other factors such as
security prices or inflation rates.  The value of a fund's swap
positions would increase or decrease depending on the changes in value
of the underlying rates, currency values, or other indices or measures.
A fund's ability to engage in certain swap transactions may be limited
by tax considerations.

A fund's ability to realize a profit from such transactions will depend
on the ability of the financial institutions with which it enters into
the transactions to meet their obligations to the fund.  Under certain
circumstances, suitable transactions may not be available to a fund, or
a fund may be unable to close out its position under such transactions
at the same time, or at the same price, as if it had purchased
comparable publicly traded securities.

Derivatives

Certain of the instruments in which a fund may invest, such as futures
contracts, options and forward contracts, are considered to be
"derivatives."  Derivatives are financial instruments whose value
depends upon, or is derived from, the value of an underlying asset, such
as a security or an index.  Further information about these instruments
and the risks involved in their use is included elsewhere in the
Prospectus or in this SAI.  A fund's use of derivatives may cause the
fund to recognize higher amounts of short-term capital gains, generally
taxed to shareholders at ordinary income tax rates.  Investments in
derivatives may be applied toward meeting a requirement to invest in a
particular kind of investment if the derivatives have economic
characteristics similar to that investment.

Industry and Sector Groups

Putnam uses a customized set of industry and sector groups for
classifying securities ("Putnam Investment Codes").  The Putnam
Investment Codes are based on an expanded Standard & Poor's industry
classification model, modified to be more representative of global
investing and more applicable to both large and small capitalization
securities.

TAXES

The following discussion of U.S. Federal income tax consequences is
based on the Internal Revenue Code of 1986, as amended (the "Code"),
existing U.S. Treasury regulations, and other applicable authority, as
of the date of this SAI.  These authorities are subject to change by
legislative or administrative action, possibly with retroactive effect.
The following discussion is only a summary of some of the important U.S.
Federal tax considerations generally applicable to investments in each
fund.  There may be other tax considerations applicable to particular
shareholders.  Shareholders should consult their own tax advisers
regarding their particular situation and the possible application of
foreign, state and local tax laws.

Taxation of the funds.  Each fund intends to qualify each year as a
regulated investment company under Subchapter M of the Code.  In order
to qualify for the special tax treatment accorded regulated investment
companies and their shareholders, a fund must, among other things:

(a) derive at least 90% of its gross income from dividends, interest,
payments with respect to certain securities loans, and gains from the
sale of stock, securities and foreign currencies, or other income
(including but not limited to gains from options, futures, or forward
contracts) derived with respect to its business of investing in such
stock, securities, or currencies;

(b) distribute with respect to each taxable year at least 90% of the sum
of its taxable net investment income, its net tax-exempt income, and the
excess, if any, of net short-term capital gains over net long-term
capital losses for such year; and

(c) diversify its holdings so that, at the end of each fiscal quarter,
(i) at least 50% of the market value of the fund's assets is represented
by cash and cash items, U.S. government securities, securities of other
regulated investment companies, and other securities limited in respect
of any one issuer to a value not greater than 5% of the value of the
fund's total assets and to not more than 10% of the outstanding voting
securities of such issuer, and (ii) not more than 25% of the value of
its assets is invested in the securities (other than those of the U.S.
Government or other regulated investment companies) of any one issuer or
of two or more issuers which the fund controls and which are engaged in
the same, similar, or related trades or businesses.

If a fund qualifies as a regulated investment company that is accorded
special tax treatment, the fund will not be subject to federal income
tax on income distributed in a timely manner, to its shareholders in the
form of dividends (including capital gain dividends).

If a fund failed to qualify as a regulated investment company accorded
special tax treatment in any taxable year, the fund would be subject to
tax on its taxable income at corporate rates, and all distributions from
earnings and profits, including any distributions of net tax-exempt
income and net long-term capital gains, would be taxable to shareholders
as ordinary income.  In addition, the fund could be required to
recognize unrealized gains, pay substantial taxes and interest and make
substantial distributions before requalifying as a regulated investment
company that is accorded special tax treatment.

If a fund fails to distribute in a calendar year substantially all of
its ordinary income for such year and substantially all of its capital
gain net income for the one-year period ending October 31 (or later if
the fund is permitted so to elect and so elects), plus any retained
amount from the prior year, the fund will be subject to a 4% excise tax
on the undistributed amounts.  A dividend paid to shareholders by the
fund in January of a year generally is deemed to have been paid by the
fund on December 31 of the preceding year, if the dividend was declared
and payable to shareholders of record on a date in October, November or
December of that preceding year.  Each fund intends generally to make
distributions sufficient to avoid imposition of the 4% excise tax.

Fund distributions.  Distributions from each fund (other than
exempt-interest dividends, as discussed below) will be taxable to
shareholders as ordinary income to the extent derived from the fund's
investment income and net short-term capital gains.  Distributions of
net capital gains (that is, the excess of net gains from the sale of
capital assets held more than one year over net losses from the sale of
capital assets held for not more than one year) will be taxable to
shareholders as such, regardless of how long a shareholder has held the
shares in a fund.

For taxable years beginning on or before December 31, 2008, "qualified
dividend income" received by an individual will be taxed at the rates
applicable to long-term capital gain.  In order for some portion of the
dividends received by a fund shareholder to be qualified dividend
income, a fund must meet holding period and other requirements with
respect to some portion of the dividend paying stocks in its portfolio
and the shareholder must meet holding period and other requirements with
respect to a fund's shares.  A dividend will not be treated as qualified
dividend income (at either the fund or shareholder level) (1) if the
dividend is received with respect to any share of stock held for fewer
than 61 days during the 120-day period beginning on the date which is 60
days before the date on which such share becomes ex-dividend with
respect to such dividend (or, in the case of certain preferred stock, 91
days during the 180-day period beginning 90 days before such date), (2)
to the extent that the recipient is under an obligation (whether
pursuant to a short sale or otherwise) to make related payments with
respect to positions in substantially similar or related property, (3)
if the recipient elects to have the dividend income treated as
investment income for purposes of the limitation on deductibility of
investment interest, or (4) if the dividend is received from a foreign
corporation that is (a) not eligible for the benefits of a comprehensive
income tax treaty with the United States (with the exception of
dividends paid on stock of such a foreign corporation readily tradable
on an established securities market in the United States) or (b) treated
as a foreign personal holding company, foreign investment company, or
passive foreign investment company.

In general, distributions of investment income designated by a fund as
derived from qualified dividend income will be treated as qualified
dividend income by a shareholder taxed as an individual provided the
shareholder meets the holding period and other requirements described
above with respect to the fund's shares.  Only qualified dividend income
received by a fund after December 31, 2002 is eligible for pass-through
treatment.  If the aggregate qualified dividends received by a fund
during any taxable year are 95% or more of its gross income, then 100%
of the fund's dividends (other than properly designated capital gain
dividends) will be eligible to be treated as qualified dividend income.
For this purpose, the only gain included in the term "gross income" is
the excess of net short-term capital gain over net long-term capital
loss.

Long-term capital gain rates applicable to individuals have been
temporarily reduced--in general, to 15% with lower rates applying to
taxpayers in the 10% and 15% rate brackets-- for taxable years beginning
on or before December 31, 2008.

Exempt-interest dividends.  Each fund will be qualified to pay
exempt-interest dividends to its shareholders only if, at the close of
each quarter of a fund's taxable year, at least 50% of the total value
of the fund's assets consists of obligations the interest on which is
exempt from federal income tax.  Distributions that a fund properly
designates as exempt-interest dividends are treated as interest
excludable from shareholders' gross income for federal income tax
purposes but may be taxable for federal alternative minimum tax purposes
and for state and local purposes.  If a fund intends to be qualified to
pay exempt-interest dividends, the fund may be limited in its ability to
enter into taxable transactions involving forward commitments,
repurchase agreements, financial futures and options contracts on
financial futures, tax-exempt bond indices and other assets.

Part or all of the interest on indebtedness, if any, incurred or
continued by a shareholder to purchase or carry shares of a fund paying
exempt-interest dividends is not deductible.  The portion of interest
that is not deductible is equal to the total interest paid or accrued on
the indebtedness, multiplied by the percentage of a fund's total
distributions (not including distributions from net long-term capital
gains) paid to the shareholder that are exempt-interest dividends.
Under rules used by the Internal Revenue Service to determine when
borrowed funds are considered used for the purpose of purchasing or
carrying particular assets, the purchase of shares may be considered to
have been made with borrowed funds even though such funds are not
directly traceable to the purchase of shares.

In general, exempt-interest dividends, if any, attributable to interest
received on certain private activity obligations and certain industrial
development bonds will not be tax-exempt to any shareholders who are
"substantial users" of the facilities financed by such obligations or
bonds or who are "related persons" of such substantial users.

A fund that is qualified to pay exempt-interest dividends will inform
investors within 60 days of the fund's fiscal year-end of the percentage
of its income distributions designated as tax-exempt.  The percentage is
applied uniformly to all distributions made during the year.  The
percentage of income designated as tax-exempt for any particular
distribution may be substantially different from the percentage of the
fund's income that was tax-exempt during the period covered by the
distribution.

Hedging transactions.  If a fund engages in hedging transactions,
including hedging transactions in options, futures contracts, and
straddles, or other similar transactions, it will be subject to special
tax rules (including constructive sale, mark-to-market, straddle, wash
sale, and short sale rules), the effect of which may be to accelerate
income to the fund, defer losses to the fund, cause adjustments in the
holding periods of the fund's securities, convert long-term capital
gains into short-term capital gains or convert short-term capital losses
into long-term capital losses.  These rules could therefore affect the
amount, timing and character of distributions to shareholders.  Each
fund will endeavor to make any available elections pertaining to such
transactions in a manner believed to be in the best interests of the
fund.

Certain of a fund's hedging activities (including its transactions, if
any, in foreign currencies or foreign currency-denominated instruments)
are likely to produce a difference between its book income and its
taxable income.  If a fund's book income exceeds its taxable income, the
distribution (if any) of such excess will be treated as (i) a dividend
to the extent of the fund's remaining earnings and profits (including
earnings and profits arising from tax-exempt income), (ii) thereafter as
a return of capital to the extent of the recipient's basis in the
shares, and (iii) thereafter as gain from the sale or exchange of a
capital asset.  If a fund's book income is less than its taxable income,
(or, for tax-exempt funds, the sum of its net tax-exempt and taxable
income), the fund could be required to make distributions exceeding book
income to qualify as a regulated investment company that is accorded
special tax treatment.

Return of capital distributions.  If a fund makes a distribution to you
in excess of its current and accumulated "earnings and profits" in any
taxable year, the excess distribution will be treated as a return of
capital to the extent of your tax basis in your shares, and thereafter
as capital gain.  A return of capital is not taxable, but it reduces
your tax basis in your shares, thus reducing any loss or increasing any
gain on a subsequent taxable disposition by you of your shares.

Dividends and distributions on a fund's shares are generally subject to
federal income tax as described herein to the extent they do not exceed
the fund's realized income and gains, even though such dividends and
distributions may economically represent a return of a particular
shareholder's investment.  Such distributions are likely to occur in
respect of shares purchased at a time when a fund's net asset value
reflects gains that are either unrealized, or realized but not
distributed.  Distributions are taxable to a shareholder even if they
are paid from income or gains earned by a fund prior to the
shareholder's investment (and thus included in the price paid by the
shareholder).

Securities issued or purchased at a discount.  A fund's investment in
securities issued at a discount and certain other obligations will (and
investments in securities purchased at a discount may) require the fund
to accrue and distribute income not yet received.  In order to generate
sufficient cash to make the requisite distributions, a fund may be
required to sell securities in its portfolio that it otherwise would
have continued to hold.

Capital loss carryover.  Distributions from capital gains are generally
made after applying any available capital loss carryovers.  The amounts
and expiration dates of any capital loss carryovers available to a fund
are shown in Note 1 (Federal income taxes) to the financial statements
included in this SAI or incorporated by reference into this SAI.

Foreign currency-denominated securities and related hedging
transactions.  A fund's transactions in foreign currencies, foreign
currency-denominated debt securities and certain foreign currency
options, futures contracts and forward contracts (and similar
instruments) may give rise to ordinary income or loss to the extent such
income or loss results from fluctuations in the value of the foreign
currency concerned.

If more than 50% of a fund's assets at year end consists of the
securities of foreign corporations, the fund may elect to permit
shareholders to claim a credit or deduction on their income tax returns
for their pro rata portion of qualified taxes paid by the fund to
foreign countries in respect of foreign securities the fund has held for
at least the minimum period specified in the Code.  In such a case,
shareholders will include in gross income from foreign sources their pro
rata shares of such taxes.  A shareholder's ability to claim a foreign
tax credit or deduction in respect of foreign taxes paid by a fund may
be subject to certain limitations imposed by the Code, as a result of
which a shareholder may not get a full credit or deduction for the
amount of such taxes.  In particular, shareholders must hold their fund
shares (without protection from risk of loss) on the ex-dividend date
and for at least 15 additional days during the 30-day period surrounding
the ex-dividend date to be eligible to claim a foreign tax credit with
respect to a given dividend.  Shareholders who do not itemize on their
federal income tax returns may claim a credit (but no deduction) for
such foreign taxes.

Investment by a fund in "passive foreign investment companies" could
subject the fund to a U.S. federal income tax or other charge on the
proceeds from the sale of its investment in such a company; however,
this tax can be avoided by making an election to mark such investments
to market annually or to treat the passive foreign investment company as
a "qualified electing fund."

A "passive foreign investment company" is any foreign corporation: (i)
75 percent or more of the income of which for the taxable year is
passive income, or (ii) the average percentage of the assets of which
(generally by value, but by adjusted tax basis in certain cases) that
produce or are held for the production of passive income is at least 50
percent.  Generally, passive income for this purpose means dividends,
interest (including income equivalent to interest), royalties, rents,
annuities, the excess of gains over losses from certain property
transactions and commodities transactions, and foreign currency gains.
Passive income for this purpose does not include rents and royalties
received by the foreign corporation from active business and certain
income received from related persons.

Sale or redemption of shares.  The sale of fund shares may give rise to a
gain or loss.  In general, any gain or loss realized upon a taxable
disposition of shares will be treated as long-term capital gain or loss if
the shares have been held for more than 12 months.  Otherwise the gain or
loss on the sale of fund shares will be treated as short-term capital gain
or loss. However, if a shareholder sells shares at a loss within six months
of purchase, any loss will be disallowed for Federal income tax purposes to
the extent of any exempt-interest dividends received on such shares. In
addition, any loss (not already disallowed as provided in the preceding
sentence) realized upon a taxable disposition of shares held for six months
or less will be treated as long-term, rather than short-term, to the extent
of any long-term capital gain distributions received by the shareholder
with respect to the shares.  All or a portion of any loss realized upon a
taxable disposition of fund shares will be disallowed if other shares of
the same fund are purchased within 30 days before or after the disposition.
 In such a case, the basis of the newly purchased shares will be adjusted
to reflect the disallowed loss.

Shares purchased through tax-qualified plans.  Special tax rules apply
to investments though defined contribution plans and other tax-qualified
plans.  Shareholders should consult their tax advisers to determine the
suitability of shares of a fund as an investment through such plans and
the precise effect of an investment on their particular tax situation.

Backup withholding.  Each fund generally is required to withhold and
remit to the U.S. Treasury a percentage of the taxable dividends and
other distributions paid to any individual shareholder who fails to
furnish the fund with a correct taxpayer identification number (TIN),
who has under-reported dividends or interest income, or who fails to
certify to the fund that he or she is not subject to such withholding.
The back-up withholding tax rate is 28% for amounts paid through 2010.
This legislation will expire and the back-up withholding rate will be
31% for amounts paid after December 31, 2010, unless Congress enacts tax
legislation providing otherwise.

In order for a foreign investor to qualify for exemption from the
back-up withholding tax rates and for reduced withholding tax rates
under income tax treaties, the foreign investor must comply with special
certification and filing requirements.  Foreign investors in a fund
should consult their tax advisers in this regard.

Tax shelter reporting regulations.  Under U.S. Treasury regulations
issued on February 28, 2003, if a shareholder realizes a loss on
disposition of fund shares of $2 million or more for an individual
shareholder or $10 million or more for a corporate shareholder, the
shareholder must file with the Internal Revenue Service a disclosure
statement on Form 8886.  Direct shareholders of portfolio securities are
in many cases excepted from this reporting requirement, but under
current guidance, shareholders of a regulated investment company are not
excepted.  Future guidance may extend the current exception from this
reporting requirement to shareholders of most or all regulated
investment companies.

<TABLE>
<CAPTION>

MANAGEMENT

Trustees
- -----------------------------------------------------------------------------------------------------------
Name, Address (1), Date of
Birth, Position(s) Held
with Fund and Length of            Principal
Service as a Putnam Fund       Occupation(s) During        Other Directorships
Trustee (2)                       Past 5 Years             Held by Trustee
- -----------------------------------------------------------------------------------------------------------
<S>                            <C>                        <C>
Jameson A. Baxter               President of Baxter        Director of ASHTA Chemicals, Inc., Banta
(9/6/43), Trustee since 1994    Associates, Inc.,          Corporation (a printing and digital
                                a private investment firm  imaging firm), Ryerson Tull, Inc.
                                that she founded in 1986.  (a steel service corporation),
                                                           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).
- -----------------------------------------------------------------------------------------------------------
Charles B. Curtis               President and Chief        Member of the Council on Foreign
(4/27/40), Trustee since 2001   Operating Officer,         Relations and the Trustee Advisory Council
                                Nuclear Threat Initiative  of the Applied Physics Laboratory, Johns
                                (a private foundation      Hopkins University. Until 2003, Mr. Curtis was
                                dealing with national      a Member of the Electric Power Research
                                security issues) and       Institute Advisory Council and the University
                                serves as Senior Advisor   of Chicago Board of Governors for Argonne
                                to the United Nations      National Laboratory. Prior to 2002, Mr. Curtis
                                Foundaton. From August     was a Member of the Board of Directors of the
                                1997 to December 1999,     Gas Technology Institute and the Board of
                                Mr. Curtis was a partner   Directors of the Environment and Natural
                                at Hogan & Hartson         Resources Program Steering Committee, John F.
                                L.L.P., a Washington, DC   Kennedy School of Government, Harvard
                                law firm.                  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).
- -----------------------------------------------------------------------------------------------------------
John A. Hill                    Vice Chairman, First       Director of Devon Energy Corporation,
(1/31/42),                      Reserve Corporation (a     TransMontaigne Oil Company, Continuum
Trustee since 1985 and          private equity buyout      Health Partners of New York and various
Chairman since 2000             firm that specializes      private companies controlled by First
                                in energy investments      Reserve Corporation, as well as a Trustee
                                in the diversified         of TH Lee Putnam Investment Trust (a
                                world-wide energy          closed-end investment company advised by an
                                industry).                 affiliate of Putnam Management).  He is also
                                                           a Trustee of Sarah Lawrence College.
- -----------------------------------------------------------------------------------------------------------
Ronald J. Jackson               Private investor.          President of the Kathleen and Ronald J. Jackson
(12/17/43),                                                Foundation (a charitable trust).  He is also
Trustee since 1996                                         a Member of the Board of Overseers of WGBH (a
                                                           public television and radio station) as well as
                                                           a Member of the Board of Overseers of the
                                                           Peabody Essex Museum.
- -----------------------------------------------------------------------------------------------------------
Paul L. Joskow (6/30/47),       Elizabeth and James        Director of National Grid Transco (a UK-based
Trustee since 1997              Killian Professor of       holding company with interests in electric and
                                Economics and Management   gas transmission and distribution and
                                and Director of the        telecommunications infrastructure) and
                                Center for Energy and      TransCanada Corporation (an energy company
                                Environmental Policy       focused on natural gas transmission and power
                                Research at the            services). He also serves on the board of the
                                Massachusetts Institute    Whitehead Institute for Biomedical Research
                                of Technology.             (a non-profit research institution) and has
                                                           been President of the Yale University Council
                                                           since 1993. 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).
- -----------------------------------------------------------------------------------------------------------
Elizabeth T. Kennan             Partner in Cambus-Kenneth  Lead Director of Northeast Utilities and is a
(2/25/38), Trustee              Farm (thoroughbred horse   Director of Talbots, Inc. (a distributor of
since 1992                      and cattle breeding).      women's apparel). She is a Trustee of National
                                She is President Emeritus  Trust for Historic Preservation, of Centre
                                of Mount Holyoke College.  College and of Midway College (in Midway,
                                                           Kentucky). She is also a Member of The Trustees
                                                           of Reservations. Prior to 2001, Dr. Kennan
                                                           served on the oversight committee of the Folger
                                                           Shakespeare Library. Prior to September 2000,
                                                           she was a Director of Chastain Real Estate;
                                                           prior to June 2000, she was a Director of Bell
                                                           Atlantic Corp.; and prior to November 1999,
                                                           she was a Director of Kentucky Home Life
                                                           Insurance Co.
- -----------------------------------------------------------------------------------------------------------
John H. Mullin, III             Chairman and CEO of        Director of The Liberty Corporation (a
(6/15/41), Trustee              Ridgeway Farm (a limited   broadcasting company), Progress Energy, Inc. (a
since 1997                      liability company engaged  utility company, formerly known as Carolina
                                in timber and farming).    Power & Light) and Sonoco Products, Inc. (a
                                                           packaging company).  Mr. Mullin is Trustee
                                                           Emeritus of The National Humanitites Center and
                                                           Washington & Lee University, where he served as
                                                           Chairman of the Investment Committee. Until
                                                           February 2004 and May 2001, he was a Director
                                                           of Alex Brown Realty, Inc. and Graphic
                                                           Packaging International Corp., respectively.
- -----------------------------------------------------------------------------------------------------------
Robert E. Patterson             Senior Partner of Cabot    Chairman of the Joslin Diabetes Center and a
(3/15/45), Trustee              Properties, L.P. and       Director of Brandywine Trust Company. Prior to
since 1984                      Chairman of Cabot          June 2003 and December 2001, Mr. Patterson
                                Properties, Inc. (a        served as a Trustee of Sea Education Association
                                private equity firm        and Cabot Industrial Trust, respectively.
                                specializing in real
                                estate investments).
                                Prior to December 2001,
                                he was President of Cabot
                                Industrial Trust (a
                                publicly traded real
                                estate investment
                                trust).
- -----------------------------------------------------------------------------------------------------------
W. Thomas Stephens              Serves on a number         Director of Xcel Energy Incorporated (a public
(9/2/42), Trustee               of corporate boards.       utility company) and TransCanada Pipelines
since 1997                                                 Limited. Until 2004, Mr. Stephens was a Director
                                                           of Qwest Communications and Norske Canada, Inc.
                                                           (a paper manufacturer).  Until 2003, Mr.
                                                           Stephens was a Director of Mail-Well, Inc. (a
                                                           diversified printing company). Prior to July
                                                           2001, Mr. Stephens was Chairman of Mail-Well;
                                                           and prior to October 1999, he was CEO of
                                                           MacMillan-Bloedel, Ltd. (a forest products
                                                           company).
- -----------------------------------------------------------------------------------------------------------


Interested Trustees
- -----------------------------------------------------------------------------------------------------------
*George Putnam III              President of New           Director of The Boston Family Office, L.L.C.
(8/10/51), Trustee              Generation Research, Inc.  (a registered investment advisor), and a Trustee
since 1984 and                  (a publisher of financial  of St. Mark's School and Shore Country Day School.
President since                 advisory and other         Until 2002, Mr. Putnam was a Trustee of the Sea
2000                            research services) and     Education Association.
                                of New Generation
                                Advisers, Inc. (a
                                registered investment
                                adviser to private funds).
                                Both firms he founded
                                in 1986.
- -----------------------------------------------------------------------------------------------------------
*A.J.C. Smith                   Chairman of Putnam         Director of Trident Corp. (a limited partnership
(4/13/34), Trustee              Investments and Director   with over thirty institutional investors).  He
since 1986                      of and Consultant to       is also a Trustee of the Carnegie Hall Society,
                                Marsh & McLennan           the Educational Broadcasting Corporation and the
                                Companies, Inc. Prior      National Museums of Scotland.  He is Chairman of
                                to May 2000 and November   the Central Park Conservancy and a Member of the
                                1999, Mr. Smith was        Board of Overseers of the Joan and Sanford I.
                                Chairman and CEO,          Weill Graduate School of Medical Sciences of
                                respectively, of Marsh     Cornell University.
                                & McLennan Companies, Inc.
- -----------------------------------------------------------------------------------------------------------

1 The address of each Trustee is One Post Office Square, Boston, MA
  02109.  As of December 31, 2003, there were 101 Putnam funds.

2 Each Trustee serves for an indefinite term, until his or her
  resignation, retirement at age 72, death or removal.

* Trustees who are or may be deemed to be "interested persons" (as defined
  in the Investment Company Act of 1940) of the funds, Putnam Management,
  Putnam Retail Management or Marsh & McLennan Companies, Inc., the parent
  company of Putnam Investments and its affiliated companies.  Messrs.
  Putnam, III, and Smith are deemed "interested persons" by virtue of their
  positions as officers of the funds, Putnam Management, Putnam Retail
  Management or Marsh & McLennan Companies, Inc. and as shareholders of Marsh
  & McLennan Companies, Inc. Mr. Putnam, III is the President of each fund
  and each of the other Putnam funds.  Mr. Smith is Chairman of Putnam
  Investments and serves as Director of and Consultant to Marsh & McLennan
  Companies, Inc.

</TABLE>


<TABLE>
<CAPTION>

Officers

In addition to George Putnam, III, the other officers of the fund are shown below:

- -----------------------------------------------------------------------------------------------------------
Name, Address (1), Date of
Birth, Position(s) Held       Length of service with
with Fund                     the Putnam Funds           Principal Occupation(s) During Past 5 Years
- -----------------------------------------------------------------------------------------------------------
<S>                          <C>                        <C>
Charles E. Porter             Since 1989                 Managing Director, Putnam Investments and
(7/26/38), Executive                                     Putnam Management.
Vice President, Associate
Treasurer and Principal
Executive Officer
- -----------------------------------------------------------------------------------------------------------
Jonathan S. Horwitz           Since 2004                 Managing Director, Putnam Investments.
(6/4/55), Senior Vice
President and Treasurer
- -----------------------------------------------------------------------------------------------------------
Steven D. Krichmar            Since 2002                 Senior Managing Director, Putnam Investments.
(6/27/58), Vice President                                Prior to 2001, Mr. Krichmar was a partner at
and Principal Financial                                  PricewaterhouseCoopers LLP.
Officer
- -----------------------------------------------------------------------------------------------------------
Michael T. Healy              Since 2000                 Managing Director, Putnam Investments.
(1/24/58), Assistant
Treasurer and Principal
Accounting Officer
- -----------------------------------------------------------------------------------------------------------
Beth S. Mazor                 Since 2002                 Senior Vice President, Putnam Investments.
(4/6/58), Vice President
- -----------------------------------------------------------------------------------------------------------
Daniel T. Gallagher           Since 2004                 Vice President, Putnam Investments. Prior to 2004,
(2/27/62), Vice President                                Mr. Gallagher was an attorney for Ropes & Gray
and Legal and Compliance                                 LLP; prior to 2000, he was a law clerk for the
Liaison Officer                                          Massachusetts Supreme Judicial Court.
- -----------------------------------------------------------------------------------------------------------
Mark C. Trenchard             Since 2002                 Senior Vice President, Putnam Investments.
(6/5/62), Vice President
and BSA Compliance Officer
- -----------------------------------------------------------------------------------------------------------
Francis J. McNamara, III      Since 2004                 Senior Managing Director, Putnam Investments,
(8/19/55), Vice President                                Putnam Management and Putnam Retail Management.
and Chief Legal Officer                                  Prior to 2004, Mr. McNamara was General Counsel
                                                         of State Street Research & Management Company.
- -----------------------------------------------------------------------------------------------------------
Charles A. Ruys de Perez      Since 2004                 Managing Director, Putnam Investments.
(6/17/57), Vice President
and Chief Compliance
Officer
- -----------------------------------------------------------------------------------------------------------
James P. Pappas               Since 2004                 Managing Director, Putnam Investments and Putnam
(2/24/53), Vice President                                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         Since 2004                 Senior Managing Director, Putnam Investments,
(3/30/60), Vice President                                Putnam Management and Putnam Retail Management.
                                                         Prior to 2003, Mr. Robie was Senior Vice President
                                                         of United Asset Management Corporation.
- -----------------------------------------------------------------------------------------------------------
Judith Cohen                  Since 1993                 Clerk and Assistant Treasurer, The Putnam Funds.
(6/7/45), Clerk and
Assistant Treasurer
- -----------------------------------------------------------------------------------------------------------
1 The address of each Officer is One Post Office Square, Boston, MA 02109.

</TABLE>

Except as stated above, the principal occupations of the officers and
Trustees for the last five years have been with the employers as shown
above, although in some cases they have held different positions with
such employers.

Committees of the Board of Trustees

Audit and Pricing Committee.  The Audit and Pricing Committee provides
oversight on matters relating to the preparation of the funds' financial
statements, compliance matters and Code of Ethics issues.  This oversight
is discharged by regularly meeting with management and the funds'
independent registered public accounting firms and keeping current on
industry developments.  Duties of this Committee also include the review
and evaluation of all matters and relationships pertaining to the funds'
independent registered public accounting firms, including their
independence.  The members of the Committee include only Trustees who are
not "interested persons" of the funds 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 the funds' policies and procedures for achieving
accurate and timely pricing of the funds' shares, including oversight of
fair value determinations of individual securities made by Putnam
Management or other designated agents of the funds.  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 Drs.
Joskow (Chairperson) and Kennan, and Messrs. Patterson and Stephens.

Board Policy and Nominating Committee.  The Board Policy and Nominating
Committee reviews 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
evaluates and recommends all candidates for election as Trustees and
recommends the appointment of members and chairs of each board
committee.  The Committee also reviews policy matters affecting the
operation of the Board and its independent staff and makes
recommendations to the Board as appropriate.  The Committee consists
only of Trustees who are not "interested persons" of the funds or Putnam
Management.  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 Board Policy and Nominating Committee
currently consists of Dr. Kennan (Chairperson), Ms. Baxter and Messrs.
Hill, Mullin and Patterson.  The Board Policy and Nominating Committee
will consider nominees for trustee recommended by shareholders of a fund
provided shareholders submit their recommendations by the date disclosed
in the fund's proxy statement and provided the shareholders'
recommendations otherwise comply with applicable securities laws,
including Rule 14a-8 under the Securities Exchange Act of 1934.

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.  The Committee also reviews and
evaluates matters relating to the funds' custody arrangements.  The
Committee currently consists of Messrs. Jackson (Chairperson), 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, this Committee oversees marketing and sales communications of
the funds' distributor.  The Committee currently consists of Messrs.
Putnam (Chairperson), Smith 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 Investment 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 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 Investment Management and its
affiliates or where Putnam Investment Management or its affiliates have
a material interest.  The Committee recommends to the Trustees such
changes in arrangements that 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.  The Committee is comprised exclusively 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 the management of the closed-end funds.  In regard to distributions,
the Committee approves the amount and timing of distributions paid by
all the funds to the shareholders when the Trustees are not in session.
This Committee also meets regularly with representatives of Putnam
Investments to review distribution levels and the funds' distribution
policies.  Its oversight of the closed-end funds includes (i) investment
performance, (ii) trading activity, (iii) determinations with respect to
sunroof provisions, (iv) disclosure practices, and (v) the use of
leverage.  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 insure coordination of all efforts between the Trustees and Putnam
Investments 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 Investment Management to review the
investment performance and strategies of the Putnam funds in light of
their stated investment objectives and policies.  Investment Oversight
Committee A currently consists of Ms. Baxter (Acting Chairperson), and
Mr. Smith.  Investment Oversight Committee B currently consists of
Messrs. Curtis (Chairperson), Hill and Stephens.  Investment Committee C
currently consists of Messrs. Mullin (Chairperson) and Putnam, and Dr.
Kennan. Investment Oversight Committee D currently consists of Messrs.
Patterson (Chairperson) and Jackson and Dr. Joskow.

Each independent Trustee of the funds receives a fee for his or her
services to each fund. Each independent Trustee of a fund also receives
fees for serving as Trustee of other Putnam funds. Each independent
Trustee of the Putnam funds receives an annual retainer fee and an
additional meeting fee for each Trustees' 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. All of the current independent Trustees are
Trustees of all the Putnam funds and receive fees for their services
from each Putnam fund. Mr. Putnam also receives the foregoing fees for
his service as Trustee of each Putnam fund. For details of Trustees'
fees paid by each fund and information concerning retirement guidelines
for the Trustees, see "Charges and expenses."

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 by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of his or her duties.
Each fund, at its expense, provides liability insurance for the benefit
of its Trustees and officers.

Putnam Management and its affiliates

Putnam Management is one of America's oldest and largest money
management firms.  Putnam Management's staff of experienced portfolio
managers and research analysts selects securities and constantly
supervises the fund's portfolio.  By pooling an investor's money with
that of other investors, a greater variety of securities can be
purchased than would be the case individually; the resulting
diversification helps reduce investment risk.  Putnam Management has
been managing mutual funds since 1937.

Putnam Management is a subsidiary of Putnam Management Trust, a
Massachusetts business trust owned by Putnam LLC, which is also the
parent company of Putnam Retail Management, Putnam Advisory Company, LLC
(a wholly-owned subsidiary of The Putnam Advisory Company Trust) and
Putnam Fiduciary Trust Company.  Putnam LLC, which generally conducts
business under the name Putnam Investments, is a wholly-owned subsidiary
of Putnam Investments Trust, a holding company that, except for a
minority stake owned by employees, is owned by Marsh & McLennan
Companies, Inc., a publicly-owned holding company whose principal
businesses are international insurance and reinsurance brokerage,
employee benefit consulting and investment management.

Trustees and officers of the funds who are also officers of Putnam
Management or its affiliates or who are stockholders of Marsh & McLennan
Companies, Inc. will benefit from the advisory fees, sales commissions,
distribution fees, custodian fees and transfer agency fees paid or
allowed by each fund.

The 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 the fund and makes investment decisions on behalf of the fund.
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 the fund's net asset value, but excluding shareholder
accounting services) and places all orders for the purchase and sale of
the fund's portfolio securities.  Putnam Management may place fund
portfolio transactions with broker-dealers that furnish Putnam
Management, without cost to it, certain research, statistical and
quotation services of value to Putnam Management and its affiliates in
advising the 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 the Management
Contract, see "Charges and expenses."  Putnam Management's compensation
under the 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 the 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.  The expenses subject to this limitation are
exclusive of brokerage commissions, interest, taxes, deferred
organizational and extraordinary expenses and, if the fund has a
distribution plan, payments required under such plan.  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.  The
terms of any such expense limitation from time to time in effect are
described in the Prospectus.

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.

The amount of this reimbursement for each fund's most recent fiscal year
is included in "Charges and Expenses."  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.

The 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.

The 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.  The Management Contract also terminates without
payment of any penalty in the event of its assignment.  The 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.

In considering the Management Contract, the Trustees consider numerous
factors they believe to be relevant, including the advisor's research
and decision-making processes, the methods adopted to assure compliance
with the fund's investment objectives, policies and restrictions; the
level of research required to select the securities appropriate for
investment by the fund; the education, experience and number of advisory
personnel; the level of skill and effort required to manage a fund; the
value of services provided by the advisor; the economies and
diseconomies of scale reflected in the management fee; the advisor's
profitability; the financial condition and stability of the advisor; the
advisor's trade allocation methods; the standards and performance in
seeking best execution; allocation for brokerage and research and use of
soft dollars; and a fund's total return performance compared with its
peers.  Putnam has established several management fee categories to fit
the particular characteristics of different types of funds.

The nature and complexity of international and global funds generally
makes these funds more research intensive than funds that invest mainly
in U.S. companies, due to the greater difficulty of obtaining
information regarding the companies in which a fund invests, and the
governmental, economic and market conditions of the various countries
outside of the U.S.  In addition, trade execution and settlement may be
more costly than in the U.S.

Conversely, the research intensity for a U.S. money market or bond fund
is typically less than for a international or global fund or a U.S.
equity fund due to the more ready availability of information regarding
the issuer, the security, the accessibility of the trading market and
the typically lower trading and execution costs.  See "Portfolio
Transactions - Brokerage and Research Services."

The Administrative Services Contract

High Income Opportunities Trust pays Putnam Management a quarterly
administrative service fee at the annual rate of 0.25% of its average net
asset value pursuant to an Administrative Services Contract between the
fund and Putnam Management. Under the terms and conditions of the
Administrative Services Contract, the 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.

Portfolio Transactions

Investment decisions.  Investment decisions for a fund and for the other
investment advisory clients of Putnam Management and its affiliates are
made with a view to achieving their respective investment objectives.
Investment decisions are the product of many factors in addition to
basic suitability for the particular client involved.  Thus, a
particular security may be bought or sold for certain clients even
though it could have been bought or sold for other clients at the same
time.  Likewise, a particular security may be bought for one or more
clients when one or more other clients are selling the security.  In
some instances, one client may sell a particular security to another
client.  It also sometimes happens that two or more clients
simultaneously purchase or sell the same security, in which event each
day's transactions in such security are, insofar as possible, averaged
as to price and allocated between such clients in a manner which in
Putnam Management's opinion is equitable to each and in accordance with
the amount being purchased or sold by each.  There may be circumstances
when purchases or sales of portfolio securities for one or more clients
will have an adverse effect on other clients.

Brokerage and research services.  Transactions on U.S. stock exchanges,
commodities markets and futures markets and other agency transactions
involve the payment by a fund of negotiated brokerage commissions. Such
commissions vary among different brokers.  A particular broker may
charge different commissions according to such factors as the difficulty
and size of the transaction.  Transactions in foreign investments often
involve the payment of fixed brokerage commissions, which may be higher
than those in the United States.  Each fund pays commissions on certain
securities traded in the over-the-counter markets.  In underwritten
offerings, the price paid by a fund includes a disclosed, fixed
commission or discount retained by the underwriter or dealer.  It is
anticipated that most purchases and sales of securities by funds
investing primarily in tax-exempt securities and certain other
fixed-income securities will be with the issuer or with underwriters of
or dealers in those securities, acting as principal.  Accordingly, those
funds would not ordinarily pay significant brokerage commissions with
respect to securities transactions.  See "Charges and expenses" for
information concerning commissions paid by each fund.

It has for many years been a common practice in the investment advisory
business for advisers of investment companies and other institutional
investors to receive brokerage and research services (as defined in the
Securities Exchange Act of 1934, as amended (the "1934 Act")) from
broker-dealers that execute portfolio transactions for the clients of
such advisers and from third parties with which such broker-dealers have
arrangements. Consistent with this practice, Putnam Management receives
brokerage and research services and other similar services from many
broker-dealers with which Putnam Management places the fund's portfolio
transactions and from third parties with which these broker-dealers have
arrangements.  These services include such matters as economic analysis,
investment research and database services, industry and company reviews,
evaluations of investments, recommendations as to the purchase and sale
of investments, performance measurement services, subscriptions, pricing
services, quotation services, news services and computer equipment
(investment-related hardware and software) utilized by Putnam
Management's managers and analysts.  Where the services referred to
above are used by Putnam Management not exclusively for research
purposes, Putnam Management, based upon its own allocations of expected
use, bears that portion of the cost of these services which directly
relates to their non-research use. Some of these services are of value
to Putnam Management and its affiliates in advising various of their
clients (including the fund), although not all of these services are
necessarily useful and of value in managing the fund.  The management
fee paid by a fund is not reduced because Putnam Management and its
affiliates receive these services even though Putnam Management might
otherwise be required to purchase some of these services for cash.

Putnam Management places all orders for the purchase and sale of
portfolio investments for each fund and buys and sells investments for
each fund through a substantial number of brokers and dealers.  In so
doing, Putnam Management uses its best efforts to obtain for the fund
the most favorable price and execution available, except to the extent
it may be permitted to pay higher brokerage commissions as described
below.  In seeking the most favorable price and execution, Putnam
Management, having in mind each fund's best interests, considers all
factors it deems relevant, including, by way of illustration, price, the
size of the transaction, the nature of the market for the security or
other investment, the amount of the commission, the timing of the
transaction taking into account market prices and trends, the
reputation, experience and financial stability of the broker-dealer
involved and the quality of service rendered by the broker-dealer in
other transactions.

As permitted by Section 28(e) of the 1934 Act, and by the Management
Contract, Putnam Management may cause a fund to pay a broker-dealer
which provides "brokerage and research services" (as defined in the 1934
Act) to Putnam Management an amount of disclosed commission for
effecting securities transactions on stock exchanges and other
transactions for the fund on an agency basis in excess of the commission
which another broker-dealer would have charged for effecting that
transaction.  Putnam Management's authority to cause a fund to pay any
such greater commissions is subject to such policies as the Trustees may
adopt from time to time.  Putnam Management does not currently intend to
cause the funds to make such payments. It is the position of the staff
of the Securities and Exchange Commission that Section 28(e) does not
apply to the payment of such greater commissions in "principal"
transactions. Accordingly Putnam Management will use its best effort to
obtain the most favorable price and execution available with respect to
such transactions, as described above.

The Management Contract provides that commissions, fees, brokerage or
similar payments received by Putnam Management or an affiliate in
connection with the purchase and sale of portfolio investments of each
fund, less any direct expenses approved by the Trustees, shall be
recaptured by the fund through a reduction of the fee payable by the
fund under the Management Contract.  Putnam Management seeks to
recapture for the fund soliciting dealer fees on the tender of the
fund's portfolio securities in tender or exchange offers.  Any such fees
which may be recaptured are likely to be minor in amount.

Personal Investments by Employees of Putnam Management and Officers and
Trustees of the Funds

Employees of Putnam Management and officers and Trustees of the funds
are subject to significant restrictions on engaging in personal
securities transactions. These restrictions are set forth in the Codes
of Ethics adopted by Putnam Management (The Putnam Investments' Code of
Ethics) and by the funds (the Putnam Funds' Code of Ethics). The Putnam
Investments' Code of Ethics and the Putnam Funds' Code of Ethics, in
accordance with Rule 17j-1 of the Investment Company Act of 1940, as
amended, contain provisions and requirements designed to identify and
address certain conflicts of interest between personal investment
activities and the interests of the fund.

The Putnam Investments' Code of Ethics does not prohibit personnel from
investing in securities that may be purchased or held by the funds.
However, the Putnam Investments' Code, consistent with standards
recommended by the Investment Company Institute's Advisory Group on
Personal Investing and requirements established by Rule 17j-1, among
other things, prohibits personal securities investments without
pre-clearance, imposes time periods during which personal transactions
may not be made in certain securities by employees with access to
investment information, and requires the timely submission of broker
confirmations and quarterly reporting of personal securities
transactions.  Additional restrictions apply to portfolio managers,
traders, research analysts and others involved in the investment
advisory process.

The Putnam Funds' Code of Ethics incorporates and applies the
restrictions of Putnam Investments' Code of Ethics to officers and
Trustees of the funds who are affiliated with Putnam Investments. The
Putnam Funds' Code does not prohibit unaffiliated officers and Trustees
from investing in securities that may be held by the funds; however, the
Putnam Funds' Code regulates the personal securities transactions of
unaffiliated Trustees of the funds, including limiting the time periods
during which they may personally buy and sell certain securities and
requiring them to submit reports of personal securities transactions
under certain circumstances.

The funds' Trustees, in compliance with Rule 17j-1, approved Putnam
Investments' and the Putnam Funds' Codes of Ethics and are required to
approve any material changes to these Codes. The Trustees also provide
continued oversight of personal investment policies and annually evaluate
the implementation and effectiveness of the Codes of Ethics. You may review
and copy the Codes of Ethics at the SEC's public reference room at 450
Fifth Street, NW, Washington, D.C. You may call the SEC at 1-800-SEC-0330
for information about the operation of the public reference room. You may
obtain copies of this information, with payment of a duplication fee, by
electronic request at the following e-mail address: publicinfo@sec.gov, or
by writing the SEC's Public Reference Section, Washington, D.C. 20549-0102.
You may also access this information on the EDGAR Database on the SEC's
Internet site at http://www.sec.gov.

Investor Servicing Agent and Custodian

Putnam Investor Services, a division of Putnam Fiduciary Trust Company
("PFTC"), is the funds' investor servicing agent (transfer, plan and
dividend disbursing agent), for which it receives fees that are paid
monthly by each fund as an expense of each fund's shareholders.  The fee
paid to Putnam Investor Services is determined on the basis of the
number of shareholder accounts and the assets of each fund.

PFTC is the custodian of each fund's assets.  In carrying out its duties
under its custodian contract, PFTC may employ one or more subcustodians
whose responsibilities include safeguarding and controlling each fund's
cash and securities, handling the receipt and delivery of securities and
collecting interest and dividends on each fund's investments.  PFTC and
any subcustodians employed by it have a lien on the securities of each
fund (to the extent permitted by each fund's investment restrictions) to
secure charges and any advances made by such subcustodians at the end of
any day for the purpose of paying for securities purchased by a fund.
Each fund expects that such advances will exist only in unusual
circumstances.  Neither PFTC nor any subcustodian determines the
investment policies of each fund or decides which securities each fund
will buy or sell.  PFTC pays the fees and other charges of any
subcustodians employed by it.  Each fund pays PFTC an annual fee based
on each fund's assets, securities transactions and securities holdings
and reimburses PFTC for certain out-of-pocket expenses incurred by it or
any subcustodian employed by it in performing custodial services.

Each fund may from time to time pay custodial or investor servicing
agent expenses in full or in part through the placement by Putnam
Management of each fund's portfolio transactions with the subcustodians
or with a third party broker having an agreement with the subcustodians.
See "Charges and expenses" for information on fees and reimbursements
for investor servicing and custody received by PFTC.  The fees may be
reduced by credits allowed by PFTC.

Counsel to the Funds and the Independent Trustees

Ropes & Gray LLP serves as counsel to the funds and the independent
Trustees, and is located at One International Place, Boston,
Massachusetts 02110.

PROXY VOTING GUIDELINES AND PROCEDURES

The Trustees of the Putnam funds have established proxy voting guidelines
and procedures that govern the voting of proxies for the securities held in
the funds' portfolios.  The proxy voting guidelines summarize the funds'
positions on various issues of concern to investors, and provide direction
to the proxy voting service used by the funds as to how fund portfolio
securities should be voted on proposals dealing with particular issues.
The proxy voting procedures explain the role of the Trustees, Putnam
Management, the proxy voting service and the funds' proxy coordinator in
the proxy voting process, describe the procedures for referring matters
involving investment considerations to the investment personnel of Putnam
Management and describe the procedures for handling potential conflicts of
interest.  The Putnam funds' proxy voting guidelines and procedures are
included in this SAI as Appendix A.  Information regarding how the funds
voted proxies relating to portfolio securities during the 12-month period
ended June 30, 2004 is available on the Putnam Individual Investor Web
site, www.putnam.com/individual, and on the SEC's Web site at www.sec.gov.
If you have questions about finding forms on the SEC's Web site, you may
call the SEC at 1-800-SEC-0330. You may also obtain the Putnam funds' proxy
voting guidelines and procedures by calling Putnam's Shareholder Services
at 1-800-225-1581.

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS AND FINANCIAL STATEMENTS

PricewaterhouseCoopers LLP, 125 High Street, Boston, Massachusetts
02110, is the independent registered public accounting firm for High
Income Bond Fund, providing audit services, tax return review and other
tax consulting services and assistance and consultation in connection
with the review of various Securities and Exchange Commission filings
for High Income Bond Fund. KPMG LLP, 99 High Street, Boston,
Massachusetts 02110, is the independent registered public accounting
firm for High Income Opportunities Trust, providing audit services, tax
return review and other tax consulting services and assistance and
consultation in connection with the review of various Securities and
Exchange Commission filings for High Income Opportunities Trust. The
following documents are incorporated by reference into this Statement of
Additional Information:  (1) the Report of Independent Registered Public
Accounting Firm and financial statements included in High Income Bond
Fund's Annual Report for the fiscal year ended August 31, 2003, filed
electronically on October 29, 2003 (File No. 811-05133), (ii) the unaudited
financial highlights and financial statements included in High Income
Bond Fund's Semi-Annual Report for the six months ended February 29,
2004, filed electronically on May 4, 2004 (File No. 811-05133) and (iii)
the Report of Independent Registered Public Accounting Firm and
financial statements included in High Income Opportunities Trust's
Annual Report for the fiscal year ended February 29, 2004, filed
electronically on May 4, 2004 (File No. 811-07253). The audited
financial statements for High Income Bond Fund and High Income
Opportunities Trust incorporated by reference into this Statement of
Additional Information have been so included and incorporated in
reliance upon the reports of PricewaterhouseCoopers LLP and KPMG LLP,
respectively, given on their authority as experts in auditing and
accounting.

Putnam High Income Opportunities Trust

and

Putnam High Income Bond Fund

Proforma Combining Financial Statements
(Unaudited)

The accompanying unaudited proforma combining investment portfolio and
statement of assets and liabilities assumes that the exchange described
in the next paragraph occurred as of February 29, 2004, and the
unaudited proforma combining statement of operations for the twelve
months ended February 29, 2004 presents the results of operations of
Putnam High Income Bond Fund as if the combination with Putnam High
Income Opportunities Trust had been consummated at March 1, 2003.  The
proforma results of operations are not necessarily indicative of future
operations or the actual  results that would have occurred had the
combination been consummated at March 1, 2003.  These historical
statements have been derived from Putnam High Income Bond Fund's and
Putnam High Income Opportunities Trust's books and records utilized in
calculating daily net asset value at February 29, 2004, and for the
twelve month period then ended.

The proforma statements give effect to the proposed transfer of all of the
assets of Putnam High Income Opportunities Trust to Putnam High Income Bond
Fund in exchange for the assumption by Putnam High Income Bond Fund of all
of the liabilities of Putnam High Income Opportunities Trust and for a
number of Putnam High Income Bond Fund's shares equal in value to the value
of the net assets of Putnam High Income Opportunities Trust transferred to
Putnam High Income Bond Fund.  Under U.S. generally accepted accounting
principles, the historical cost of investment securities will be carried
forward to the surviving entity and the results of operations of Putnam
High Income Bond Fund for pre-combination periods will not be restated.
The proforma statement of operations does not reflect the expenses of
either fund in carrying out its obligations under the Agreement and Plan of
Reorganization.

The unaudited proforma combining statements should be read in
conjunction with the separate financial statements of Putnam High Income
Bond Fund and Putnam High Income Opportunities Trust incorporated by
reference in this statement of additional information.

<TABLE>
<CAPTION>

Putnam High Income Bond Fund
(Unaudited)

Pro Forma Combining
Statement of Assets and Liabilities
2/29/04

                                                                   Putnam
                                                    Putnam           High
                                                      High         Income
                                               Income Bond  Opportunities       Pro Forma       Pro Forma
                                                      Fund          Trust     Adjustments        Combined
- ---------------------------------------------------------------------------------------------------------
<S>                                           <C>             <C>               <C>           <C>
Assets
  Investments in securities, at value         $120,865,185    $75,317,156                    $196,182,341
  Cash                                             290,964         63,810                         354,774
  Dividends, interest and other receivables      1,310,228        841,634                       2,151,862
  Receivable for securities sold                   275,772        185,468                         461,240
  Receivable for open forward currency contracts     1,440            878                           2,318
  Receivable for closed forward currency
  contracts                                          3,906          2,500                           6,406

  Total assets                                 122,747,495     76,411,446                     199,158,941

Liabilities
  Distributions payable to shareholders            637,975        426,972                       1,064,947
  Payable for securities purchased                 550,560        354,732                         905,292
  Payable for compensation of Manager              213,469        243,975                         457,444
  Payable for investor servicing and
  custodian fees                                    31,983         26,480                          58,463
  Payable for Trustee compensation and expenses     27,485         25,219                          52,704
  Payable for administrative services                1,104            737                           1,841
  Payable for open forward currency contracts           12              7                              19
  Payable for closed forward currency contracts     19,890         12,149                          32,039
  Collateral on securities loaned, at value      2,796,349        518,764                       3,315,113
  Other accrued expenses                            56,976         24,380          84,639 B       165,995

  Total liabilities                              4,335,803      1,633,415          84,639       6,053,857

  Net assets                                  $118,411,692    $74,778,031         (84,639)   $193,105,084

- ---------------------------------------------------------------------------------------------------------
  Common Shares
  Net assets                                  $118,411,692    $74,778,031         (84,639) B $193,105,084
  Shares outstanding                            13,825,527      3,712,567       5,021,046  C   22,559,140
  Net asset value per share                          $8.56         $20.14                           $8.56
- ---------------------------------------------------------------------------------------------------------
  Cost of investments                         $110,242,660    $69,504,531                    $179,747,191
  Value of securities on loan                    2,704,897        504,669                       3,209,566
- ---------------------------------------------------------------------------------------------------------

</TABLE>


<TABLE>
<CAPTION>

Proforma Combining
Statement of Operations
Twelve months ended February 29, 2004
(Unaudited)

                                                              Putnam High
                                               Putnam High         Income
                                               Income Bond  Opportunities       Pro Forma       Pro Forma
                                                      Fund          Trust     Adjustments        Combined
- ---------------------------------------------------------------------------------------------------------
<S>                                           <C>             <C>               <C>           <C>
Investment Income
Interest                                         7,447,217     $5,033,320                     $12,480,537
Dividends                                        1,709,390      1,069,886                       2,779,276
Securities lending                                   2,328          5,970                           8,298
Total investment income                          9,158,935      6,109,176                      15,268,111

Expenses:
Compensation of Manager                            809,138        929,310       $(289,525) A    1,448,923
Investor servicing and custodian fees              205,335        162,222         (81,056) A      286,501
Compensation of Trustees and expenses               16,165         11,103          (5,010) A       22,258
Administrative Services                              6,730          4,656                          11,386
Auditing                                            65,127         39,765         (26,175) A       78,717
Other Expenses                                      86,407         82,929         (30,305) A      139,031
- ---------------------------------------------------------------------------------------------------------
Total Expenses                                   1,188,902      1,229,985        (432,071)      1,986,816
- ---------------------------------------------------------------------------------------------------------
Expense reduction                                   (2,083)        (2,543)             --          (4,626)
- ---------------------------------------------------------------------------------------------------------
Net expenses                                     1,186,819      1,227,442        (432,071)      1,982,190
- ---------------------------------------------------------------------------------------------------------
Net investment income                            7,972,116      4,881,734         432,071      13,285,921
- ---------------------------------------------------------------------------------------------------------
Net realized gain on investments                 3,506,020      2,177,134                       5,683,154
Net realized loss on credit default contracts     (139,322)       (89,702)                       (229,024)
Net realized loss on foreign currency
transactions                                       (48,164)       (30,543)                        (78,707)
Net unrealized appreciation of assets and
liabilities in foreign currency during
the year                                             2,447          1,670                           4,117
Net unrealized appreciation of investments
and credit default contracts during the year    19,331,223     11,911,511                      31,242,734
- ---------------------------------------------------------------------------------------------------------
Net gain on investments                         22,652,204     13,970,070                      36,622,274
- ---------------------------------------------------------------------------------------------------------
Net increase in net assets
resulting from operations                      $30,624,320    $18,851,804        $432,071     $49,908,195
- ---------------------------------------------------------------------------------------------------------

</TABLE>


<TABLE>
<CAPTION>

The Proforma Combining Investment Portfolio of Putnam High
Income Bond Fund and Putnam High Income Opportunities Trust
February 29, 2004 (unaudited)
                                                                      Putnam                  Putnam
                                                                   High Income              High Income             Profoma
                                                                    Bond Fund           Opportunities Trust         Combined

Corporate bonds and notes (a)                                                 41.0%                   42.2%                 41.5%
                                                               Principal     Value    Principal      Value   Principal     Value
                                                                amount                 amount                 amount

Basic Materials                                                                3.9%                   3.9%                   3.9%
                                                              -------------------------------------------------------------------
<S>                                                            <C>         <C>         <C>        <C>        <C>        <C>
 Abitibi-Consolidated Finance LP company guaranty 7 7/8s, 2009  $1,000       $1,078     $1,000      $1,078     $2,000      $2,156
 Acetex Corp. sr. notes 10 7/8s, 2009 (Canada)                  95,000      104,500     55,000      60,500    150,000     165,000
 AK Steel Corp. company guaranty 7 3/4s, 2012                   10,000        8,600     10,000       8,600     20,000      17,200
 AK Steel Corp. company guaranty 7 7/8s, 2009                  110,000       97,350     51,000      45,135    161,000     142,485
 Appleton Papers, Inc. company guaranty Ser. B, 12 1/2s, 2008   80,000       91,000     50,000      56,875    130,000     147,875
 Armco, Inc. sr. notes 8 7/8s, 2008                             40,000       35,200     40,000      35,200     80,000      70,400
 Avecia Group PLC company guaranty 11s, 2009 (United Kingdom)   55,000       47,025     35,000      29,925     90,000      76,950
 Better Minerals & Aggregates Co. company guaranty 13s, 2009    75,000       54,000     45,000      32,400    120,000      86,400
 Compass Minerals Group, Inc. company guaranty 10s, 2011       100,000      114,000     70,000      79,800    170,000     193,800
 Compass Minerals International Inc. stepped-coupon zero % (12
 3/4s, 12/15/07), 2012 (STP)                                   110,000       89,100     70,000      56,700    180,000     145,800
 Equistar Chemicals LP notes 8 3/4s, 2009                       32,000       32,720     21,000      21,473     53,000      54,193
 Equistar Chemicals LP/Equistar Funding Corp. company
 guaranty 10 1/8s, 2008                                        219,000      237,600    133,000     144,305    352,000     381,905
 Equistar Chemicals LP/Equistar Funding Corp. sr. notes 10
 5/8s, 2011                                                     55,000       59,675     40,000      43,400     95,000     103,075
 Four M Corp. sr. notes Ser. B, 12s, 2006                       55,000       55,000     35,000      35,000     90,000      90,000
 Georgia-Pacific Corp. bonds 7 3/4s, 2029                       60,000       58,800     35,000      34,300     95,000      93,100
 Georgia-Pacific Corp. debs. 7.7s, 2015                         55,000       58,025     32,000      33,760     87,000      91,785
 Georgia-Pacific Corp. sr. notes 7 3/8s, 2008                    4,000        4,320         --          --      4,000       4,320
 Gerdau Ameristeel Corp. sr. notes 10 3/8s, 2011 (Canada)       95,000      106,875     60,000      67,500    155,000     174,375
 Hercules, Inc. company guaranty 11 1/8s, 2007                 238,000      283,200    161,000     191,590    399,000     474,790
 HMP Equity Holdings Corp. 144A sr. disc. notes zero %, 2008   161,000       85,330    103,000      54,590    264,000     139,920
 Huntsman Advanced Materials, LLC 144A sec. notes 11s, 2010     75,000       84,375     45,000      50,625    120,000     135,000
 Huntsman ICI Chemicals, Inc. company guaranty 10 1/8s, 2009   165,000      167,877    105,000     106,838    270,000     274,715
 Huntsman ICI Holdings sr. disc. notes zero %, 2009            180,000       84,600    125,000      58,750    305,000     143,350
 Huntsman International, LLC sr. sub. notes Ser. EXCH, 10
 1/8s, 2009                                                EUR  10,000       11,926      5,000       5,963     15,000      17,889
 Huntsman LLC 144A sec. notes 11 5/8s, 2010                    $55,000       57,475     40,000      41,800     95,000      99,275
 ISP Chemco, Inc. company guaranty Ser. B, 10 1/4s, 2011       170,000      191,250    114,000     128,250    284,000     319,500
 ISP Holdings, Inc. sec. sr. notes Ser. B, 10 5/8s, 2009        35,000       38,675     28,000      30,940     63,000      69,615
 Kaiser Aluminum & Chemical Corp. sr. notes Ser. B, 10
 7/8s, 2006 (In default) (NON)                                  10,000        8,950     10,000       8,950     20,000      17,900
 Kaiser Aluminum & Chemical Corp. sr. sub. notes 12 3/4s,
 2003 (In default) (NON)(DEF)                                  120,000       17,700     85,000      12,538    205,000      30,238
 Louisiana-Pacific Corp. sr. sub. notes 10 7/8s, 2008            4,000        4,690      4,000       4,690      8,000       9,380
 Lyondell Chemical Co. bonds 11 1/8s, 2012                      10,000       10,900     10,000      10,900     20,000      21,800
 Lyondell Chemical Co. company guaranty 9 1/2s, 2008            15,000       15,600     10,000      10,400     25,000      26,000
 Lyondell Chemical Co. notes Ser. A, 9 5/8s, 2007              270,000      283,500    163,000     171,150    433,000     454,650
 MDP Acquisitions PLC sr. notes 9 5/8s, 2012 (Ireland)         100,000      112,500     60,000      67,500    160,000     180,000
 MDP Acquisitions PLC sub. notes 15 1/2s, 2013
 (Ireland) (PIK)                                                49,559       56,993     32,637      37,533     82,196      94,526
 Millennium America, Inc. 144A sr. notes 9 1/4s, 2008           20,000       21,700     10,000      10,850     30,000      32,550
 Millennium America, Inc. company guaranty 7 5/8s, 2026         25,000       23,750     15,000      14,250     40,000      38,000
 Millennium America, Inc. company guaranty 9 1/4s, 2008        155,000      168,175    100,000     108,500    255,000     276,675
 Nalco Co. 144A sr. notes 7 3/4s, 2011                     EUR  10,000       12,547      5,000       6,274     15,000      18,821
 Nalco Co. 144A sr. notes 7 3/4s, 2011                         $40,000       41,600     25,000      26,000     65,000      67,600
 Nalco Co. 144A sr. sub. notes 8 7/8s, 2013                    175,000      183,750    120,000     126,000    295,000     309,750
 Nalco Co. 144A sr. sub. notes 9s, 2013                    EUR  10,000       12,547      5,000       6,274     15,000      18,821
 Noveon International company guaranty Ser. B, 11s, 2011       $30,000       34,350     20,000      22,900     50,000      57,250
 OM Group, Inc. company guaranty 9 1/4s, 2011                    2,000        2,100      1,000       1,050      3,000       3,150
 Pacifica Papers, Inc. sr. notes 10s, 2009 (Canada)             45,000       47,306     30,000      31,538     75,000      78,844
 PCI Chemicals Canada sec. sr. notes 10s, 2008 (Canada)         75,504       73,616     73,318      71,485    148,822     145,101
 Pioneer Cos., Inc. sec. FRN 4.663s, 2006 (acquired
 various dates from 9/11/97 to 1/7/00, cost $43,530,
 $41,317, and $84,847, respectively)(RES)                       23,909       23,311     23,216      22,636     47,125      45,947
 Potlatch Corp. company guaranty 10s, 2011                     128,000      144,000     92,000     103,500    220,000     247,500
 Resolution Performance Products, LLC 144A sec. notes 8s,
 2009                                                           25,000       25,250     15,000      15,150     40,000      40,400
 Resolution Performance Products, LLC sr. notes 9 1/2s, 2010    30,000       30,000     20,000      20,000     50,000      50,000
 Rhodia SA unsub. Ser. EMTN, 6 1/4s, 2005 (France)         EUR  30,000       36,524     20,000      24,349     50,000      60,873
 Salt Holdings Corp. 144A sr. disc. notes stepped-
 coupon zero % (12s, 6/1/06), 2013 (STP)                       $40,000       30,400     25,000      19,000     65,000      49,400
 SGL Carbon SA 144A sr. notes 8 1/2s, 2012 (Luxembourg)    EUR  65,000       82,970     40,000      51,059    105,000     134,029
 Steel Dynamics, Inc. company guaranty 9 1/2s, 2009            $80,000       88,800     55,000      61,050    135,000     149,850
 Sterling Chemicals, Inc. sec. notes 10s, 2007 (PIK)                --           --     17,046      16,449     17,046      16,449
 Stone Container Corp. sr. notes 8 3/8s, 2012                   45,000       48,881     50,000      54,313     95,000     103,194
 Stone Container Corp. sr. notes 9 3/4s, 2011                  120,000      133,800     50,000      55,750    170,000     189,550
 Tembec Industries, Inc. company guaranty 8 5/8s,
 2009 (Canada)                                                      --           --      3,000       2,955      3,000       2,955
 Texas Petrochemical Corp. sr. sub. notes 11 1/8s,
 2006 (In default) (NON)                                        30,000       12,900     20,000       8,600     50,000      21,500
 Ucar Finance, Inc. company guaranty 10 1/4s, 2012             305,000      347,700     85,000      96,900    390,000     444,600
 United Agri Products 144A sr. notes 8 1/4s, 2011               55,000       56,925     35,000      36,225     90,000      93,150
 United States Steel Corp. sr. notes 9 3/4s, 2010               80,000       90,200     50,000      56,375    130,000     146,575
 WCI Steel, Inc. sr. notes Ser. B, 10s, 2004
 (In default) (NON)                                            130,000       63,700     90,000      44,100    220,000     107,800
 Weirton Steel Corp. sr. notes 10s, 2008 (In default) (NON)      5,500        1,980      5,500       1,980     11,000       3,960
 Wheeling-Pittsburgh Steel Corp. sr. notes 5s, 2011             11,459        7,563     11,459       7,563     22,918      15,126
 Wheeling-Pittsburgh Steel Corp. sr. notes 6s, 2010              5,729        3,724      5,729       3,724     11,458       7,448
 WHX Corp. sr. notes 10 1/2s, 2005                              40,000       36,400     40,000      36,400     80,000      72,800
                                                                       ------------            -----------            -----------
                                                                          4,656,878              2,942,157              7,599,035

Capital Goods                                                                  4.4%                   4.7%                   4.5%
 AEP Industries, Inc. sr. sub. notes 9 7/8s, 2007              115,000      118,163     73,000      75,008    188,000     193,171
 AGCO Corp. company guaranty 9 1/2s, 2008                      190,000      208,050    120,000     131,400    310,000     339,450
 Air2 US 144A sinking fund Ser. D, 12.266s, 2020
 (In default) (NON)                                             96,410            1     96,410           1    192,820           2
 Allied Waste North America, Inc. 144A sec. notes 6 1/2s,
 2010                                                           75,000       76,125     45,000      45,675    120,000     121,800
 Allied Waste North America, Inc. company guaranty
 Ser. B, 7 5/8s, 2006                                          120,000      127,200    110,000     116,600    230,000     243,800
 Allied Waste North America, Inc. company guaranty
 Ser. B, 8 1/2s, 2008                                          177,000      197,355    116,000     129,340    293,000     326,695
 Allied Waste North America, Inc. company guaranty
 Ser. B, 9 1/4s, 2012                                          230,000      259,325    163,000     183,783    393,000     443,108
 Argo-Tech Corp. company guaranty 8 5/8s, 2007                 124,000      123,690     81,000      80,798    205,000     204,488
 Argo-Tech Corp. company guaranty Ser. D, 8 5/8s, 2007         150,000      149,625    100,000      99,750    250,000     249,375
 BE Aerospace, Inc. sr. notes 8 1/2s, 2010                      30,000       32,550     20,000      21,700     50,000      54,250
 BE Aerospace, Inc. sr. sub. notes 9 1/2s, 2008                 85,000       84,788     40,000      39,900    125,000     124,688
 BE Aerospace, Inc. sr. sub. notes Ser. B, 8 7/8s, 2011         47,000       45,943     49,000      47,898     96,000      93,841
 BE Aerospace, Inc. sr. sub. notes Ser. B, 8s, 2008             40,000       38,000     30,000      28,500     70,000      66,500
 Berry Plastics Corp. company guaranty 10 3/4s, 2012            32,000       37,120     17,000      19,720     49,000      56,840
 Blount, Inc. company guaranty 13s, 2009                       105,000      113,400     68,000      73,440    173,000     186,840
 Blount, Inc. company guaranty 7s, 2005                        125,000      127,500     81,000      82,620    206,000     210,120
 Briggs & Stratton company guaranty 8 7/8s, 2011               111,000      131,535     72,000      85,320    183,000     216,855
 Browning-Ferris Industries, Inc. debs. 7.4s, 2035              40,000       38,600     25,000      24,125     65,000      62,725
 Browning-Ferris Industries, Inc. sr. notes 6 3/8s, 2008        40,000       41,200     30,000      30,900     70,000      72,100
 Buhrmann US, Inc. company guaranty 12 1/4s, 2009               90,000      100,800     60,000      67,200    150,000     168,000
 Crown Holdings SA notes 10 7/8s, 2013 (France)                 70,000       81,550     45,000      52,425    115,000     133,975
 Crown Holdings SA notes 9 1/2s, 2011 (France)                 240,000      270,000    155,000     174,375    395,000     444,375
 Decrane Aircraft Holdings Co. company guaranty Ser. B,
 12s, 2008                                                      60,000       39,600     60,000      39,600    120,000      79,200
 Earle M. Jorgensen Co. sec. notes 9 3/4s, 2012                109,000      120,990     90,000      99,900    199,000     220,890
 FIMEP SA sr. notes 10 1/2s, 2013 (France)                     100,000      119,250     55,000      65,588    155,000     184,838
 Flender Holdings 144A sr. notes 11s, 2010 (Denmark)      EUR   50,000       71,743     30,000      43,046     80,000     114,789
 Flowserve Corp. company guaranty 12 1/4s, 2010                $78,000       89,700     51,000      58,650    129,000     148,350
 Fonda Group, Inc. sr. sub. notes Ser. B, 9 1/2s, 2007          15,000       15,300     10,000      10,200     25,000      25,500
 Hexcel Corp. sr. sub. notes 9 3/4s, 2009                      130,000      136,175     85,000      89,038    215,000     225,213
 Impress Metal Packaging Holding NV sr. sub. notes 9 7/8s,
 2007 (Netherlands)                                       DEM   95,000       56,118     60,000      35,443    155,000      91,561
 Invensys, PLC notes 9 7/8s, 2011 (United Kingdom)            $105,000      103,054     65,000      63,796    170,000     166,850
 Invensys, PLC sr. unsub. notes 5 1/2s, 2005 (United
 Kingdom)                                                 EUR   35,000       44,307     20,000      25,318     55,000      69,625
 K&F Industries, Inc. sr. sub. notes Ser. B, 9 1/4s, 2007      $16,000       16,520     12,000      12,390     28,000      28,910
 K&F Industries, Inc. sr. sub. notes Ser. B, 9 5/8s, 2010       70,000       78,225     45,000      50,288    115,000     128,513
 L-3 Communications Corp. company guaranty 6 1/8s, 2013         40,000       41,100     40,000      41,100     80,000      82,200
 L-3 Communications Corp. company guaranty 7 5/8s, 2012         50,000       55,500     50,000      55,500    100,000     111,000
 Laidlaw International, Inc. 144A sr. notes 10 3/4s, 2011      195,000      223,763    125,000     143,438    320,000     367,201
 Legrand SA debs. 8 1/2s, 2025 (France)                         35,000       37,800     35,000      37,800     70,000      75,600
 Manitowoc Co., Inc. (The) company guaranty 10 1/2s, 2012       12,000       13,650      9,000      10,238     21,000      23,888
 Manitowoc Co., Inc. (The) company guaranty 10 3/8s, 2011 EUR   25,000       34,629     20,000      27,703     45,000      62,332
 Manitowoc Co., Inc. (The) sr. notes 7 1/8s, 2013              $30,000       31,500     20,000      21,000     50,000      52,500
 Motors and Gears, Inc. sr. notes Ser. D, 10 3/4s, 2006         47,000       41,125     25,000      21,875     72,000      63,000
 Owens-Brockway Glass company guaranty 7 3/4s, 2011             70,000       74,200     45,000      47,700    115,000     121,900
 Owens-Brockway Glass company guaranty 8 1/4s, 2013             75,000       78,938     50,000      52,625    125,000     131,563
 Owens-Brockway Glass company guaranty 8 7/8s, 2009              5,000        5,450         --          --      5,000       5,450
 Owens-Brockway Glass sr. sec. notes 8 3/4s, 2012              102,000      111,945     70,000      76,825    172,000     188,770
 Pliant Corp. sec. notes 11 1/8s, 2009                          70,000       72,975     45,000      46,913    115,000     119,888
 Roller Bearing Company of America company guaranty Ser.
 B, 9 5/8s, 2007                                                75,000       73,875     55,000      54,175    130,000     128,050
 Sensus Metering Systems Inc. 144A sr. sub. notes
 8 5/8s, 2013                                                  105,000      106,706     65,000      66,056    170,000     172,762
 Sequa Corp. sr. notes Ser. B, 8 7/8s, 2008                    175,000      192,500    110,000     121,000    285,000     313,500
 Siebe PLC 144A notes 7 1/8s, 2007 (United Kingdom)             20,000       19,750     15,000      14,813     35,000      34,563
 Siebe PLC 144A sr. unsub. 6 1/2s, 2010 (United Kingdom)            --           --      5,000       4,463      5,000       4,463
 Solo Cup Co. 144A sr. sub. notes 8 1/2s, 2014                  65,000       67,763     40,000      41,700    105,000     109,463
 TD Funding Corp. company guaranty 8 3/8s, 2011                 70,000       73,850     45,000      47,475    115,000     121,325
 Tekni-Plex, Inc. 144A sr. sec. notes 8 3/4s, 2013              65,000       67,763     40,000      41,700    105,000     109,463
 Tekni-Plex, Inc. company guaranty Ser. B, 12 3/4s, 2010       170,000      183,600    110,000     118,800    280,000     302,400
 Terex Corp. company guaranty 9 1/4s, 2011                      25,000       28,000     15,000      16,800     40,000      44,800
 Terex Corp. company guaranty Ser. B, 10 3/8s, 2011             46,000       52,095     36,000      40,770     82,000      92,865
 Titan Corp. (The) 144A sr. sub. notes 8s, 2011                 75,000       85,500     55,000      62,700    130,000     148,200
 Trimas Corp. company guaranty 9 7/8s, 2012                     88,000       95,040     51,000      55,080    139,000     150,120
 Vought Aircraft Industries Inc. 144A sr. notes 8s, 2011        50,000       51,750     30,000      31,050     80,000      82,800
                                                                       ------------            -----------            -----------
                                                                          5,214,269              3,503,034              8,717,303


Communication Services                                                         3.6%                   3.7%                   3.6%
 Alamosa Delaware, Inc. 144A sr. notes 8 1/2s, 2012            105,000      100,275     65,000      62,075    170,000     162,350
 Alamosa Delaware, Inc. company guaranty 11s, 2010              58,000       62,205     45,000      48,263    103,000     110,468
 American Cellular Corp. company guaranty 9 1/2s, 2009
 (In default) (NON)                                             25,000       23,250     20,000      18,600     45,000      41,850
 American Cellular Corp. sr. notes Ser. B, 10s, 2011           120,000      120,600     80,000      80,400    200,000     201,000
 American Tower Corp. 144A sr. notes 7 1/2s, 2012               55,000       52,800     35,000      33,600     90,000      86,400
 American Tower Corp. sr. notes 9 3/8s, 2009                   230,000      243,800    145,000     153,700    375,000     397,500
 American Towers, Inc. 144A sr. sub. notes 7 1/4s, 2011        100,000      102,250     65,000      66,463    165,000     168,713
 Asia Global Crossing, Ltd. sr. notes 13 3/8s, 2010
 (Bermuda) (In default) (NON)                                   30,000        3,375     30,000       3,375     60,000       6,750
 Centennial Cellular Operating Co. company guaranty 10
 1/8s, 2013                                                    240,000      252,000    160,000     168,000    400,000     420,000
 Cincinnati Bell Telephone Co. company guaranty 6.3s, 2028      20,000       18,900     15,000      14,175     35,000      33,075
 Cincinnati Bell, Inc. company guaranty 7 1/4s, 2013           100,000      103,000     65,000      66,950    165,000     169,950
 Cincinnati Bell, Inc. notes 7 1/4s, 2023                       50,000       50,000     30,000      30,000     80,000      80,000
 Cincinnati Bell, Inc. sr. sub. notes 8 3/8s, 2014              60,000       63,150     35,000      36,838     95,000      99,988
 Crown Castle International Corp. sr. notes 9 3/8s, 2011       121,000      133,100     86,000      94,600    207,000     227,700
 Dobson Communications Corp. sr. notes 8 7/8s, 2013            185,000      159,563     95,000      81,938    280,000     241,501
 Eircom Funding notes 8 1/4s, 2013 (Ireland)                    35,000       38,850     25,000      27,750     60,000      66,600
 Fairpoint Communications, Inc. sr. sub. notes 12 1/2s, 2010    50,000       54,000     35,000      37,800     85,000      91,800
 Inmarsat Finance PLC 144A company guaranty 7 5/8s, 2012
 (United Kingdom)                                              125,000      131,250     80,000      84,000    205,000     215,250
 iPCS, Inc. sr. disc. notes stepped-coupon zero % (14s,
 7/15/05), 2010 (In default) (NON)(STP)                        140,000       38,150    130,000      35,425    270,000      73,575
 IWO Holdings, Inc. company guaranty 14s, 2011
 (In default) (NON)                                             40,000       10,800     33,000       8,910     73,000      19,710
 Level 3 Communications, Inc. sr. notes 9 1/8s, 2008            10,000        8,325      5,000       4,163     15,000      12,488
 Level 3 Financing Inc. 144A sr. notes 10 3/4s, 2011           165,000      165,825    105,000     105,525    270,000     271,350
 Madison River Capital Corp. sr. notes 13 1/4s, 2010            95,000      104,500     65,000      71,500    160,000     176,000
 Nextel Communications, Inc. sr. notes 7 3/8s, 2015            210,000      226,275    130,000     140,075    340,000     366,350
 Nextel Communications, Inc. sr. notes 9 1/2s, 2011             53,000       59,493     45,000      50,513     98,000     110,006
 Nextel Communications, Inc. sr. notes 9 3/8s, 2009              5,000        5,431      2,000       2,173      7,000       7,604
 Nextel Partners, Inc. sr. notes 11s, 2010                      75,000       83,063     45,000      49,838    120,000     132,901
 Nextel Partners, Inc. sr. notes 12 1/2s, 2009                  41,000       47,560     27,000      31,320     68,000      78,880
 Nextel Partners, Inc. sr. notes 8 1/8s, 2011                  175,000      184,625    115,000     121,325    290,000     305,950
 PanAmSat Corp. company guaranty 8 1/2s, 2012                   74,000       76,960     46,000      47,840    120,000     124,800
 Qwest Communications International, Inc. 144A sr.
 notes 7 1/2s, 2014                                            180,000      170,100    115,000     108,675    295,000     278,775
 Qwest Corp. 144A notes 8 7/8s, 2012                           370,000      421,800    245,000     279,248    615,000     701,048
 Qwest Services Corp. 144A notes 14s, 2014                      50,000       60,500     35,000      42,350     85,000     102,850
 Rogers Cantel, Ltd. debs. 9 3/8s, 2008 (Canada)                 5,000        5,250      5,000       5,250     10,000      10,500
 Rogers Wireless, Inc. sec. notes 9 5/8s, 2011 (Canada)         65,000       79,300     45,000      54,900    110,000     134,200
 Rural Cellular Corp. sr. sub. notes Ser. B, 9 5/8s, 2008       45,000       43,200         --          --     45,000      43,200
 SBA Communications Corp. sr. notes 10 1/4s, 2009               25,000       25,063     15,000      15,038     40,000      40,101
 SBA Telecommunications Inc. 144A sr. disc. notes
 stepped-coupon zero % (9 3/4s, 12/15/07), 2011 (STP)           45,000       31,050     30,000      20,700     75,000      51,750
 Telus Corp. notes 7 1/2s, 2007 (Canada)                        49,000       55,384     28,000      31,648     77,000      87,032
 Telus Corp. notes 8s, 2011 (Canada)                           184,000      219,725    120,000     143,299    304,000     363,024
 Time Warner Telecom, Inc. 144A sr. notes 9 1/4s, 2014          50,000       49,625     35,000      34,738     85,000      84,363
 TSI Telecommunication Services, Inc. company guaranty
 Ser. B, 12 3/4s, 2009                                          80,000       88,400     50,000      55,250    130,000     143,650
 UbiquiTel Operating Co. 144A sr. notes 9 7/8s, 2011            50,000       48,625     35,000      34,038     85,000      82,663
 UbiquiTel Operating Co. bonds stepped-coupon zero %
 (14s, 4/15/05), 2010 (STP)                                     52,000       48,880     35,000      32,900     87,000      81,780
 US UnWired, Inc. company guaranty stepped-coupon Ser.
 B, zero % (13 3/8s, 11/1/04), 2009 (STP)                       60,000       55,500     35,000      32,375     95,000      87,875
 Western Wireless Corp. sr. notes 9 1/4s, 2013                 145,000      152,250     95,000      99,750    240,000     252,000
                                                                       ------------            -----------            -----------
                                                                          4,278,027              2,767,293              7,045,320


Conglomerates                                                                  0.4%                   0.4%                   0.4%
 Tyco International Group SA 144A sr. notes 6s,
 2013 (Luxembourg)                                              35,000       36,620     20,000      20,926     55,000      57,546
 Tyco International Group SA company guaranty 6
 3/4s, 2011 (Luxembourg)                                        20,000       22,093     12,000      13,256     32,000      35,349
 Tyco International Group SA company guaranty
 6 3/8s, 2005 (Luxembourg)                                       1,000        1,050      1,000       1,050      2,000       2,100
 Tyco International Group SA company guaranty
 6 7/8s, 2029 (Luxembourg)                                     165,000      172,771     90,000      94,239    255,000     267,010
 Tyco International Group SA company guaranty
 7s, 2028 (Luxembourg)                                         153,000      162,453    107,000     113,611    260,000     276,064
 Tyco International Group SA notes 6 3/8s, 2011
 (Luxembourg)                                                   38,000       41,054     36,000      38,893     74,000      79,947
                                                                       ------------            -----------            -----------
                                                                            436,041                281,975                718,016


Consumer Cyclicals                                                             9.9%                   9.9%                   9.9%
 Ameristar Casinos, Inc. company guaranty 10 3/4s, 2009        100,000      115,000     70,000      80,500    170,000     195,500
 Argosy Gaming Co. 144A sr. sub. notes 7s, 2014                 95,000       97,256     60,000      61,425    155,000     158,681
 Argosy Gaming Co. sr. sub. notes 9s, 2011                      50,000       55,750     10,000      11,150     60,000      66,900
 ArvinMeritor, Inc. notes 8 3/4s, 2012                          40,000       44,800     25,000      28,000     65,000      72,800
 Asbury Automotive Group, Inc. 144A sr. sub. notes 8s, 2014     65,000       65,163     40,000      40,100    105,000     105,263
 Autonation, Inc. company guaranty 9s, 2008                    160,000      184,800    100,000     115,500    260,000     300,300
 Beazer Homes USA, Inc. 144A sr. notes 6 1/2s, 2013             15,000       15,263     10,000      10,175     25,000      25,438
 Beazer Homes USA, Inc. company guaranty 8 3/8s, 2012           20,000       22,200     15,000      16,650     35,000      38,850
 Beazer Homes USA, Inc. company guaranty 8 5/8s, 2011           60,000       66,600     50,000      55,500    110,000     122,100
 Building Materials Corp. company guaranty 8s, 2008             40,000       40,000     30,000      30,000     70,000      70,000
 CanWest Media, Inc. sr. sub. notes 10 5/8s, 2011 (Canada)      40,000       45,300     50,000      56,625     90,000     101,925
 Chumash Casino & Resort Enterprise 144A sr. notes 9s, 2010     50,000       54,688     35,000      38,281     85,000      92,969
 Coinmach Corp. sr. notes 9s, 2010                             158,000      168,270     99,000     105,435    257,000     273,705
 Collins & Aikman Products company guaranty 10 3/4s, 2011      115,000      112,125     75,000      73,125    190,000     185,250
 D.R. Horton, Inc. sr. notes 5 7/8s, 2013                      130,000      131,300     85,000      85,850    215,000     217,150
 D.R. Horton, Inc. sr. notes 6 7/8s, 2013                       20,000       21,350     15,000      16,013     35,000      37,363
 D.R. Horton, Inc. sr. notes 7 7/8s, 2011                       30,000       34,350     20,000      22,900     50,000      57,250
 Dana Corp. notes 10 1/8s, 2010                                 20,000       23,300     15,000      17,475     35,000      40,775
 Dana Corp. notes 6 1/4s, 2004                                  30,000       30,000     20,000      20,000     50,000      50,000
 Dana Corp. notes 7s, 2029                                      20,000       19,700      5,000       4,925     25,000      24,625
 Dana Corp. notes 9s, 2011                                     100,000      120,250     66,000      79,365    166,000     199,615
 Dayton Superior Corp. 144A sec. notes 10 3/4s, 2008           105,000      110,250     70,000      73,500    175,000     183,750
 Delco Remy International, Inc. company guaranty 10 5/8s, 2006  65,000       65,325     31,000      31,155     96,000      96,480
 Delco Remy International, Inc. company guaranty 11s, 2009      20,000       21,100     24,000      25,320     44,000      46,420
 Dex Media West, LLC 144A sr. notes 8 1/2s, 2010               150,000      167,625     95,000     106,163    245,000     273,788
 Dex Media, Inc. 144A disc. notes stepped-coupon zero % (9s,
 11/15/08), 2013 (STP)                                          70,000       46,725     45,000      30,038    115,000      76,763
 Dex Media, Inc. 144A notes 8s, 2013                            80,000       80,000     50,000      50,000    130,000     130,000
 Dura Operating Corp. 144A sr. notes 8 5/8s, 2012               25,000       26,875     15,000      16,125     40,000      43,000
 Dura Operating Corp. company guaranty Ser. D, 9s, 2009         81,000       82,620     53,000      54,060    134,000     136,680
 FelCor Lodging LP company guaranty 9 1/2s, 2008 (R)           130,000      138,125     55,000      58,438    185,000     196,563
 Gap, Inc. (The) notes 6.9s, 2007                               56,000       61,880     36,000      39,780     92,000     101,660
 Gaylord Entertainment Co. 144A sr. notes 8s, 2013              95,000      100,581     65,000      68,819    160,000     169,400
 Goodyear Tire & Rubber Co. (The) notes 6 3/8s, 2008            30,000       25,800     15,000      12,900     45,000      38,700
 Goodyear Tire & Rubber Co. (The) notes 7.857s, 2011           205,000      174,250    130,000     110,500    335,000     284,750
 Herbst Gaming, Inc. sec. notes Ser. B, 10 3/4s, 2008          129,000      144,803     82,000      92,045    211,000     236,848
 Hilton Hotels Corp. notes 7 5/8s, 2012                        125,000      141,250     83,000      93,790    208,000     235,040
 HMH Properties, Inc. company guaranty Ser. B, 7 7/8s, 2008    224,000      231,840     85,000      87,975    309,000     319,815
 Hollinger Participation Trust 144A sr. notes 12 1/8s, 2010
 (Canada) (PIK)                                                 97,329      112,172     28,748      33,132    126,077     145,304
 Hollywood Entertainment Corp. sr. sub. notes 9 5/8s, 2011      85,000       87,550     55,000      56,650    140,000     144,200
 Hollywood Park, Inc. company guaranty Ser. B, 9 1/4s, 2007     92,000       94,990     64,000      66,080    156,000     161,070
 Horseshoe Gaming Holdings company guaranty 8 5/8s, 2009       215,000      226,556    140,000     147,525    355,000     374,081
 Host Marriott LP company guaranty Ser. G, 9 1/4s, 2007 (R)     30,000       33,225     30,000      33,225     60,000      66,450
 Host Marriott LP sr. notes 7 1/8s, 2013 (R)                    30,000       30,975     15,000      15,488     45,000      46,463
 Host Marriott LP sr. notes Ser. E, 8 3/8s, 2006 (R)            75,000       79,875     53,000      56,445    128,000     136,320
 Icon Health & Fitness company guaranty 11 1/4s, 2012          131,000      149,995     88,000     100,760    219,000     250,755
 IESI Corp. company guaranty 10 1/4s, 2012                      99,000      107,910     66,000      71,940    165,000     179,850
 Inn of the Mountain Gods 144A sr. notes 12s, 2010              65,000       70,688     45,000      48,938    110,000     119,626
 Interface, Inc. 144A sr. sub. notes 9 1/2s, 2014               30,000       29,700     20,000      19,800     50,000      49,500
 ITT Corp. debs. 7 3/8s, 2015                                   65,000       69,225     45,000      47,925    110,000     117,150
 ITT Corp. notes 6 3/4s, 2005                                  100,000      104,750     65,000      68,088    165,000     172,838
 JC Penney Co., Inc. debs. 7 1/8s, 2023                        130,000      140,725     90,000      97,425    220,000     238,150
 JC Penney Co., Inc. debs. 7.65s, 2016                          11,000       12,320     17,000      19,040     28,000      31,360
 JC Penney Co., Inc. debs. 7.95s, 2017                          90,000      101,700     60,000      67,800    150,000     169,500
 JC Penney Co., Inc. notes 8s, 2010                              5,000        5,775      5,000       5,775     10,000      11,550
 JC Penney Co., Inc. notes 9s, 2012                             75,000       91,500     55,000      67,100    130,000     158,600
 John Q. Hammons Hotels LP/John Q. Hammons Hotels Finance
 Corp. III 1st mtge. Ser. B, 8 7/8s, 2012                      180,000      195,750    120,000     130,500    300,000     326,250
 Jostens Holding Corp. 144A sr. disc. notes stepped-coupon
 zero % (10 1/4s, 12/1/08), 2013 (STP)                         135,000       89,775     85,000      56,525    220,000     146,300
 Jostens, Inc. sr. sub. notes 12 3/4s, 2010                     80,000       91,200     62,000      70,680    142,000     161,880
 K. Hovnanian Enterprises, Inc. 144A sr. notes 6 3/8s, 2014     55,000       54,588     35,000      34,738     90,000      89,326
 K. Hovnanian Enterprises, Inc. company guaranty 10 1/2s, 2007  60,000       70,500     40,000      47,000    100,000     117,500
 K. Hovnanian Enterprises, Inc. company guaranty 8 7/8s, 2012   75,000       82,313     55,000      60,363    130,000     142,676
 K. Hovnanian Enterprises, Inc. company guaranty 8s, 2012       30,000       32,550     15,000      16,275     45,000      48,825
 K. Hovnanian Enterprises, Inc. sr. notes 6 1/2s, 2014          40,000       40,500     20,000      20,250     60,000      60,750
 KB Home sr. sub. notes 9 1/2s, 2011                             2,000        2,250         --          --      2,000       2,250
 Lamar Media Corp. company guaranty 7 1/4s, 2013                80,000       86,400     50,000      54,000    130,000     140,400
 Lear Corp. company guaranty Ser. B, 7.96s, 2005               340,000      362,100    220,000     234,300    560,000     596,400
 Lear Corp. company guaranty Ser. B, 8.11s, 2009                32,000       37,600     19,000      22,325     51,000      59,925
 Lear Corp. sr. notes 8 1/8s, 2008                         EUR  30,000       42,300     15,000      21,150     45,000      63,450
 Levi Strauss & Co. notes 7s, 2006                                 $--           --      2,000       1,380      2,000       1,380
 Levi Strauss & Co. sr. notes 12 1/4s, 2012                    191,000      131,790    128,000      88,320    319,000     220,110
 Mandalay Resort Group sr. notes 6 1/2s, 2009                   60,000       63,300     35,000      36,925     95,000     100,225
 Medianews Group Inc. 144A sr. sub. notes 6 7/8s, 2013         140,000      144,200     85,000      87,550    225,000     231,750
 Meristar Hospitality Corp. company guaranty 9 1/8s, 2011 (R)   70,000       72,450     45,000      46,575    115,000     119,025
 Meristar Hospitality Corp. company guaranty 9s, 2008 (R)       80,000       82,600     50,000      51,625    130,000     134,225
 Meritage Corp. company guaranty 9 3/4s, 2011                   40,000       44,800     25,000      28,000     65,000      72,800
 Meritor Automotive, Inc. notes 6.8s, 2009                      55,000       57,063     35,000      36,313     90,000      93,376
 Metaldyne Corp. 144A sr. notes 10s, 2013                       85,000       87,975     55,000      56,925    140,000     144,900
 MGM Mirage, Inc. company guaranty 8 1/2s, 2010                 65,000       75,888     40,000      46,700    105,000     122,588
 MGM Mirage, Inc. company guaranty 8 3/8s, 2011                  1,000        1,153      1,000       1,153      2,000       2,306
 Mohegan Tribal Gaming Authority sr. notes 8 1/8s, 2006         95,000      102,125     20,000      21,500    115,000     123,625
 Mohegan Tribal Gaming Authority sr. sub. notes 6 3/8s, 2009    65,000       67,925     75,000      78,375    140,000     146,300
 Mohegan Tribal Gaming Authority sr. sub. notes 8 3/8s, 2011    30,000       33,075     20,000      22,050     50,000      55,125
 Nortek Holdings, Inc. 144A sr. notes stepped-coupon zero %
 (10s, 11/15/07), 2011 (STP)                                    80,000       59,000     45,000      33,188    125,000      92,188
 Nortek, Inc. 144A sr. notes Ser. B, 9 1/8s, 2007               20,000       20,608     20,000      20,608     40,000      41,216
 Nortek, Inc. sr. sub. notes Ser. B, 9 7/8s, 2011               55,000       61,325     40,000      44,600     95,000     105,925
 Oxford Industries, Inc. 144A sr. notes 8 7/8s, 2011            60,000       63,900     40,000      42,600    100,000     106,500
 Park Place Entertainment Corp. sr. notes 7 1/2s, 2009          25,000       27,813      5,000       5,563     30,000      33,376
 Park Place Entertainment Corp. sr. notes 7s, 2013              65,000       70,688     45,000      48,938    110,000     119,626
 Park Place Entertainment Corp. sr. sub. notes 8 7/8s, 2008    161,000      182,333    117,000     132,503    278,000     314,836
 Penn National Gaming, Inc. company guaranty Ser. B,
 11 1/8s, 2008                                                 110,000      123,475     85,000      95,413    195,000     218,888
 Penn National Gaming, Inc. sr. sub. notes 8 7/8s, 2010        132,000      141,900     68,000      73,100    200,000     215,000
 Phillips-Van Heusen Corp. 144A sr. notes 7 1/4s, 2011          30,000       30,150     20,000      20,100     50,000      50,250
 Pinnacle Entertainment, Inc. 144A sr. sub. notes 8 1/4s, 2012  65,000       64,533     40,000      39,713    105,000     104,246
 Pinnacle Entertainment, Inc. sr. sub. notes 8 3/4s, 2013       75,000       77,438     45,000      46,463    120,000     123,901
 PRIMEDIA, Inc. 144A sr. notes 8s, 2013                        150,000      150,375    110,000     110,275    260,000     260,650
 PRIMEDIA, Inc. company guaranty 7 5/8s, 2008                  140,000      140,000     60,000      60,000    200,000     200,000
 PRIMEDIA, Inc. company guaranty 8 7/8s, 2011                   30,000       30,975     40,000      41,300     70,000      72,275
 Reader's Digest Association, Inc. (The) 144A sr. notes
 6 1/2s, 2011                                                   55,000       55,000     35,000      35,000     90,000      90,000
 Resorts International Hotel and Casino, Inc. company
 guaranty 11 1/2s, 2009                                        103,000      113,815     55,000      60,775    158,000     174,590
 RH Donnelley Finance Corp. I 144A sr. notes 8 7/8s,
 2010                                                          134,000      151,420     89,000     100,570    223,000     251,990
 RH Donnelley Finance Corp. I 144A sr. sub. notes
 10 7/8s, 2012                                                  77,000       91,630     52,000      61,880    129,000     153,510
 RH Donnelley Finance Corp. I company guaranty 8 7/8s, 2010     15,000       16,950     10,000      11,300     25,000      28,250
 Riviera Holdings Corp. company guaranty 11s, 2010              80,000       84,000     50,000      52,500    130,000     136,500
 Russell Corp. company guaranty 9 1/4s, 2010                    82,000       86,510     52,000      54,860    134,000     141,370
 Saks, Inc. 144A company guaranty 7s, 2013                     175,000      182,438    111,000     115,718    286,000     298,156
 Samsonite Corp. sr. sub. notes 10 3/4s, 2008                  246,000      256,455    164,000     170,970    410,000     427,425
 Schuler Homes, Inc. company guaranty 10 1/2s, 2011             64,000       74,640     40,000      46,650    104,000     121,290
 Sealy Mattress Co. sr. sub. notes Ser. B, 9 7/8s, 2007        265,000      274,275    135,000     139,725    400,000     414,000
 Service Corp. International notes 6 1/2s, 2008                 21,000       21,525     14,000      14,350     35,000      35,875
 Service Corp. International notes 6 7/8s, 2007                  5,000        5,225         --          --      5,000       5,225
 Service Corp. International notes 6s, 2005                    194,000      198,850    135,000     138,375    329,000     337,225
 Service Corp. International notes 7.2s, 2006                   10,000       10,475      5,000       5,238     15,000      15,713
 Service Corp. International notes Ser. *, 7.7s, 2009           25,000       26,750     16,000      17,120     41,000      43,870
 Starwood Hotels & Resorts Worldwide, Inc. company
 guaranty 7 3/8s, 2007                                          71,000       76,858     50,000      54,125    121,000     130,983
 Starwood Hotels & Resorts Worldwide, Inc. company
 guaranty 7 7/8s, 2012                                          79,000       88,085      5,000       5,575     84,000      93,660
 Station Casinos, Inc. 144A sr. sub. notes 6 7/8s, 2016         75,000       75,750     45,000      45,450    120,000     121,200
 Station Casinos, Inc. sr. notes 8 3/8s, 2008                  169,000      181,675    109,000     117,175    278,000     298,850
 Technical Olympic USA, Inc. company guaranty 10 3/8s, 2012     45,000       51,075     30,000      34,050     75,000      85,125
 Technical Olympic USA, Inc. company guaranty 9s, 2010          40,000       43,300     25,000      27,063     65,000      70,363
 Tenneco Automotive, Inc. company guaranty Ser. B,
 11 5/8s, 2009                                                  30,000       32,400     20,000      21,600     50,000      54,000
 Tenneco Automotive, Inc. sec. notes Ser. B, 10
 1/4s, 2013                                                    100,000      116,500     60,000      69,900    160,000     186,400
 Tommy Hilfiger USA, Inc. company guaranty 6.85s, 2008          60,000       62,100     40,000      41,400    100,000     103,500
 Trump Atlantic City Associates company guaranty 11 1/4s, 2006 283,000      232,060    143,000     117,260    426,000     349,320
 Trump Casino Holdings, LLC company guaranty 11 5/8s, 2010     209,000      207,433    135,000     133,988    344,000     341,421
 United Auto Group, Inc. company guaranty 9 5/8s, 2012          70,000       77,350     40,000      44,200    110,000     121,550
 Venetian Casino Resort, LLC company guaranty 11s, 2010        101,000      116,150     82,000      94,300    183,000     210,450
 Vertis, Inc. company guaranty Ser. B, 10 7/8s, 2009           115,000      117,300     76,000      77,520    191,000     194,820
 Vertis, Inc. sec. notes 9 3/4s, 2009                           65,000       69,225     35,000      37,275    100,000     106,500
 Vertis, Inc. sub. notes 13 1/2s, 2009                         100,000       98,750     60,000      59,250    160,000     158,000
 Von Hoffman Press, Inc. company guaranty 10 1/4s, 2009         75,000       78,000     50,000      52,000    125,000     130,000
 Von Hoffman Press, Inc. company guaranty 10 3/8s, 2007         40,000       39,400     10,000       9,850     50,000      49,250
 Von Hoffman Press, Inc. debs. 13s, 2009 (PIK)                  59,035       52,836     55,529      49,698    114,564     102,534
 WCI Communities, Inc. company guaranty 10 5/8s, 2011           21,000       23,573     16,000      17,960     37,000      41,533
 WCI Communities, Inc. company guaranty 9 1/8s, 2012           101,000      110,595     70,000      76,650    171,000     187,245
 William Carter Holdings Co. (The) company guaranty
 Ser. B, 10 7/8s, 2011                                          59,000       68,440     40,000      46,400     99,000     114,840
 WRC Media Corp. sr. sub. notes 12 3/4s, 2009                   35,000       35,306     25,000      25,219     60,000      60,525
                                                                       ------------            -----------            -----------
                                                                         11,736,947              7,411,538             19,148,485


Consumer Staples                                                               6.1%                   6.3%                   6.2%
 Adelphia Communications Corp. notes Ser. B, 9 7/8s, 2005
 (In default) (NON)                                             10,000        9,650     10,000       9,650     20,000      19,300
 Adelphia Communications Corp. sr. notes 10 1/4s, 2011
 (In default) (NON)                                                 --           --     60,000      59,700     60,000      59,700
 Adelphia Communications Corp. sr. notes 10 7/8s, 2010
 (In default) (NON)                                             20,000       19,500     20,000      19,500     40,000      39,000
 Adelphia Communications Corp. sr. notes Ser. B, 9 7/8s,
 2007 (In default) (NON)                                       235,000      226,775     55,000      53,075    290,000     279,850
 Affinity Group Inc. 144A sr. sub. notes 9s, 2012               80,000       83,000     50,000      51,875    130,000     134,875
 AMC Entertainment, Inc. 144A sr. sub. notes 8s, 2014           80,000       79,800     50,000      49,875    130,000     129,675
 AMC Entertainment, Inc. sr. sub. notes 9 1/2s, 2009           160,000      164,200    105,000     107,756    265,000     271,956
 AMC Entertainment, Inc. sr. sub. notes 9 1/2s, 2011            29,000       30,378     15,000      15,713     44,000      46,091
 AMC Entertainment, Inc. sr. sub. notes 9 7/8s, 2012            40,000       44,100     30,000      33,075     70,000      77,175
 Armkel, LLC/Armkel Finance sr. sub. notes 9 1/2s, 2009        148,000      163,910    104,000     115,180    252,000     279,090
 Atlantic Broadband Finance LLC 144A sr. sub. notes
 9 3/8s, 2014                                                   60,000       60,150     35,000      35,088     95,000      95,238
 Brand Services, Inc. company guaranty 12s, 2012               136,000      159,120     88,000     102,960    224,000     262,080
 British Sky Broadcasting PLC company guaranty 6 7/8s,
 2009 (United Kingdom)                                              --           --     20,000      22,724     20,000      22,724
 Capital Records, Inc. 144A company guaranty 8 3/8s,
 2009                                                           90,000       95,285     55,000      58,230    145,000     153,515
 Charter Communications Holdings, LLC/Capital Corp. sr.
 disc. notes stepped-coupon zero % (11 3/4s, 1/15/05),
 2010 (STP)                                                     35,000       28,525     25,000      20,375     60,000      48,900
 Charter Communications Holdings, LLC/Capital Corp. sr.
 disc. notes stepped-coupon zero % (11 3/4s, 5/15/06),
 2011 (STP)                                                     19,000       12,445     75,000      49,125     94,000      61,570
 Charter Communications Holdings, LLC/Capital Corp. sr.
 notes 10 1/4s, 2010                                            60,000       52,050     40,000      34,700    100,000      86,750
 Charter Communications Holdings, LLC/Capital Corp. sr.
 notes 10 3/4s, 2009                                            70,000       61,600     50,000      44,000    120,000     105,600
 Charter Communications Holdings, LLC/Capital Corp. sr.
 notes 10s, 2011                                               120,000      100,200    120,000     100,200    240,000     200,400
 Charter Communications Holdings, LLC/Capital Corp. sr.
 notes 11 1/8s, 2011                                           365,000      323,938    170,000     150,875    535,000     474,813
 Charter Communications Holdings, LLC/Capital Corp. sr.
 notes 8 5/8s, 2009                                             61,000       50,783     13,000      10,823     74,000      61,606
 Charter Communications Holdings, LLC/Capital Corp. sr.
 notes 9 5/8s, 2009                                             63,000       53,708     54,000      46,035    117,000      99,743
 Cinemark USA, Inc. sr. sub. notes 9s, 2013                     90,000      100,575     55,000      61,463    145,000     162,038
 Cinemark USA, Inc. sr. sub. notes Ser. B, 8 1/2s, 2008         70,000       72,800     70,000      72,800    140,000     145,600
 Constellation Brands, Inc. company guaranty Ser. B, 8s, 2008   35,000       38,850     25,000      27,750     60,000      66,600
 Constellation Brands, Inc. sr. sub. notes Ser. B, 8 1/8s,
 2012                                                            5,000        5,425      5,000       5,425     10,000      10,850
 CSC Holdings, Inc. debs. Ser. B, 8 1/8s, 2009                   3,000        3,270         --          --      3,000       3,270
 CSC Holdings, Inc. sr. notes 7 7/8s, 2007                     412,000      443,930    172,000     185,330    584,000     629,260
 CSC Holdings, Inc. sr. sub. debs. 10 1/2s, 2016                60,000       68,850     70,000      80,325    130,000     149,175
 Dean Foods Co. sr. notes 6 5/8s, 2009                          30,000       31,800     15,000      15,900     45,000      47,700
 Del Monte Corp. company guaranty Ser. B, 9 1/4s, 2011          40,000       44,300     30,000      33,225     70,000      77,525
 Del Monte Corp. sr. sub. notes 8 5/8s, 2012                    80,000       88,400     50,000      55,250    130,000     143,650
 DirecTV Holdings, LLC sr. notes 8 3/8s, 2013                  175,000      199,063    110,000     125,125    285,000     324,188
 Diva Systems Corp. sr. disc. notes Ser. B, 12 5/8s, 2008
 (In default) (NON)                                            271,000       16,938    193,000      12,063    464,000      29,001
 Doane Pet Care Co. sr. sub. debs. 9 3/4s, 2007                155,000      141,050    110,000     100,100    265,000     241,150
 Dole Food Co. sr. notes 8 5/8s, 2009                           25,000       26,875     20,000      21,500     45,000      48,375
 Dole Food Co. sr. notes 8 7/8s, 2011                           35,000       37,538     20,000      21,450     55,000      58,988
 Domino's, Inc. sr. sub. notes 8 1/4s, 2011                     90,000       96,750     55,000      59,125    145,000     155,875
 Eagle Family Foods company guaranty Ser. B, 8 3/4s, 2008       20,000       16,000     15,000      12,000     35,000      28,000
 Echostar DBS Corp. 144A sr. notes 6 3/8s, 2011                220,000      233,200    145,000     153,700    365,000     386,900
 Echostar DBS Corp. sr. notes 10 3/8s, 2007                     30,000       32,775     20,000      21,850     50,000      54,625
 Echostar DBS Corp. sr. notes 9 1/8s, 2009                      42,000       47,460     36,000      40,680     78,000      88,140
 Elizabeth Arden, Inc. 144A company guaranty 7 3/4s, 2014       35,000       36,138     25,000      25,813     60,000      61,951
 Fleming Cos., Inc. company guaranty 10 1/8s, 2008
 (In default) (NON)                                            154,000       25,410     99,000      16,335    253,000      41,745
 Fleming Cos., Inc. sr. notes 9 1/4s, 2010 (In default) (NON)    9,000        1,485      6,000         990     15,000       2,475
 Granite Broadcasting Corp. 144A sec. notes 9 3/4s, 2010       210,000      206,325    135,000     132,638    345,000     338,963
 Gray Television, Inc. company guaranty 9 1/4s, 2011            52,000       57,850     35,000      38,938     87,000      96,788
 Hasbro, Inc. notes 5.6s, 2005                                 110,000      114,923     70,000      73,133    180,000     188,056
 Knology, Inc. 144A sr. notes 12s, 2009 (PIK)                    2,287        2,321      2,287       2,321      4,574       4,642
 Land O'Lakes, Inc. sr. notes 8 3/4s, 2011                      71,000       61,770     39,000      33,930    110,000      95,700
 Mediacom LLC/Mediacom Capital Corp. sr. notes 9 1/2s, 2013     50,000       50,750     30,000      30,450     80,000      81,200
 North Atlantic Trading Co. 144A sr. notes 9 1/4s, 2012         55,000       56,375     35,000      35,875     90,000      92,250
 ONO Finance PLC sr. notes 13s, 2009 (United Kingdom)           15,000       15,900     10,000      10,600     25,000      26,500
 ONO Finance PLC sr. notes 14s, 2011 (United Kingdom)           35,000       39,025     20,000      22,300     55,000      61,325
 ONO Finance PLC sr. notes Ser. REGS, 14s, 2011
 (United Kingdom)                                          EUR  20,000       27,331     10,000      13,665     30,000      40,996
 Pegasus Communications Corp. sr. notes Ser. B,
 9 3/4s, 2006                                                  $10,000         9,100        --          --     10,000       9,100
 Pegasus Satellite sr. notes 12 3/8s, 2006                      75,000       69,750     55,000      51,150    130,000     120,900
 Pinnacle Foods Holding Corp. 144A sr. sub. notes
 8 1/4s, 2013                                                   55,000       57,613     35,000      36,663     90,000      94,276
 Playtex Products, Inc. 144A secd. notes 8s, 2011              110,000      114,400     70,000      72,800    180,000     187,200
 Playtex Products, Inc. company guaranty 9 3/8s, 2011          206,000      191,065    132,000     122,430    338,000     313,495
 Premier International Foods PLC sr. notes 12s, 2009
 (United Kingdom)                                               80,000       86,800     60,000      65,100    140,000     151,900
 Quebecor Media, Inc. sr. disc. notes stepped-coupon
 zero % (13 3/4s, 7/15/06), 2011 (Canada) (STP)                 25,000       22,125     35,000      30,975     60,000      53,100
 Quebecor Media, Inc. sr. notes 11 1/8s, 2011 (Canada)         196,000      223,440    121,000     137,940    317,000     361,380
 Regal Cinemas, Inc. company guaranty Ser. B, 9 3/8s, 2012      49,000       55,125     26,000      29,250     75,000      84,375
 Remington Arms Co., Inc. company guaranty 10 1/2s, 2011        95,000       99,275     70,000      73,150    165,000     172,425
 Revlon Consumer Products sr. notes 9s, 2006                    40,000       42,200     30,000      31,650     70,000      73,850
 Rite Aid Corp. 144A notes 6 1/8s, 2008                        125,000      120,313     80,000      77,000    205,000     197,313
 Rite Aid Corp. 144A notes 6s, 2005                              5,000        4,988      5,000       4,988     10,000       9,976
 Rite Aid Corp. company guaranty 9 1/2s, 2011                   80,000       89,200     50,000      55,750    130,000     144,950
 Rite Aid Corp. debs. 6 7/8s, 2013                               5,000        4,750      5,000       4,750     10,000       9,500
 Rite Aid Corp. notes 7 1/8s, 2007                              10,000       10,050      5,000       5,025     15,000      15,075
 Sbarro, Inc. company guaranty 11s, 2009                       120,000       99,000     75,000      61,875    195,000     160,875
 Scotts Co. (The) 144A sr. sub. notes 6 5/8s, 2013              35,000       36,225     20,000      20,700     55,000      56,925
 Six Flags, Inc. 144A sr. notes 9 5/8s, 2014                   125,000      131,875     80,000      84,400    205,000     216,275
 Six Flags, Inc. sr. notes 8 7/8s, 2010                        364,000      374,465    251,000     258,216    615,000     632,681
 TeleWest Communications PLC debs. 11s, 2007 (United Kingdom)
 (In default) (NON)                                            290,000      192,850    200,000     133,000    490,000     325,850
 Videotron Ltee company guaranty 6 7/8s, 2014 (Canada)          40,000       41,900     25,000      26,188     65,000      68,088
 Vivendi Universal SA sr. notes 6 1/4s, 2008 (France)          135,000      144,788     90,000      96,525    225,000     241,313
 Vivendi Universal SA sr. notes 9 1/4s, 2010 (France)           90,000      105,975     55,000      64,763    145,000     170,738
 Williams Scotsman, Inc. company guaranty 9 7/8s, 2007         114,000      112,005     73,000      71,723    187,000     183,728
 Young Broadcasting, Inc. 144A sr. sub. notes 8 3/4s, 2014      50,000       51,750     35,000      36,225     85,000      87,975
 Young Broadcasting, Inc. company guaranty 10s, 2011           203,000      217,210    136,000     145,520    339,000     362,730
 Yum! Brands, Inc. sr. notes 7.65s, 2008                       105,000      120,225     60,000      68,700    165,000     188,925
 Yum! Brands, Inc. sr. notes 7.7s, 2012                        105,000      122,850     90,000     105,300    195,000     228,150
 Yum! Brands, Inc. sr. notes 8 1/2s, 2006                       39,000       43,485     25,000      27,875     64,000      71,360
 Yum! Brands, Inc. sr. notes 8 7/8s, 2011                       20,000       24,700         --          --     20,000      24,700
                                                                       ------------            -----------            -----------
                                                                          7,280,066              4,732,214             12,012,280

Energy                                                                         3.0%                   3.1%                   3.0%
 Arch Western Finance, LLC 144A sr. notes 6 3/4s, 2013         110,000      116,050     65,000      68,575    175,000     184,625
 Belden & Blake Corp. company guaranty Ser. B, 9 7/8s, 2007     90,000       89,100     60,000      59,400    150,000     148,500
 BRL Universal Equipment sec. notes 8 7/8s, 2008                90,000       96,075     50,000      53,375    140,000     149,450
 Chesapeake Energy Corp. company guaranty 7 3/4s, 2015          35,000       38,238     25,000      27,313     60,000      65,551
 Chesapeake Energy Corp. company guaranty 9s, 2012              54,000       62,303     37,000      42,689     91,000     104,992
 Chesapeake Energy Corp. sr. notes 7 1/2s, 2013                135,000      147,488     85,000      92,863    220,000     240,351
 Comstock Resources, Inc. sr. notes 6 7/8s, 2012                75,000       75,844     45,000      45,506    120,000     121,350
 Dresser, Inc. company guaranty 9 3/8s, 2011                   100,000      108,500     65,000      70,525    165,000     179,025
 El Paso Energy Partners LP company guaranty Ser. B,
 8 1/2s, 2011                                                   16,000       17,920      7,000       7,840     23,000      25,760
 Encore Acquisition Co. company guaranty 8 3/8s, 2012           80,000       85,600     50,000      53,500    130,000     139,100
 Exco Resources, Inc. 144A company guaranty 7 1/4s, 2011        80,000       82,200     50,000      51,375    130,000     133,575
 Forest Oil Corp. company guaranty 7 3/4s, 2014                105,000      110,250     80,000      84,000    185,000     194,250
 Forest Oil Corp. sr. notes 8s, 2008                            62,000       66,960     32,000      34,560     94,000     101,520
 Hanover Compressor Co. sr. notes 8 5/8s, 2010                  50,000       52,500     35,000      36,750     85,000      89,250
 Hanover Compressor Co. sub. notes zero %, 2007                 75,000       56,813     50,000      37,875    125,000      94,688
 Hanover Equipment Trust sec. notes Ser. A, 8 1/2s, 2008        50,000       53,000     35,000      37,100     85,000      90,100
 Hornbeck Offshore Services, Inc. sr. notes 10 5/8s, 2008       68,000       75,310     49,000      54,268    117,000     129,578
 Key Energy Services, Inc. sr. notes 6 3/8s, 2013               40,000       41,600     25,000      26,000     65,000      67,600
 Leviathan Gas Corp. company guaranty Ser. B,
 10 3/8s, 2009                                                   5,000        5,263     18,000      18,945     23,000      24,208
 Massey Energy Co. 144A sr. notes 6 5/8s, 2010                  75,000       77,250     45,000      46,350    120,000     123,600
 Newfield Exploration Co. sr. notes 7 5/8s, 2011                80,000       90,000     70,000      78,750    150,000     168,750
 Offshore Logistics, Inc. company guaranty 6 1/8s, 2013         65,000       63,050     45,000      43,650    110,000     106,700
 Parker & Parsley Co. sr. notes 8 1/4s, 2007                    20,000       22,862     20,000      22,862     40,000      45,724
 Parker Drilling Co. company guaranty Ser. B, 10
 1/8s, 2009                                                     90,000       99,000     60,000      66,000    150,000     165,000
 Pemex Project Funding Master Trust company guaranty
 7 3/8s, 2014                                                  250,000      271,250    160,000     173,600    410,000     444,850
 Petro Geo-Services notes 10s, 2010 (Norway)                    80,000       86,800     50,000      54,250    130,000     141,050
 Pioneer Natural Resources Co. company guaranty 7.2s, 2028      16,000       17,647     11,000      12,132     27,000      29,779
 Pioneer Natural Resources Co. company guaranty 9 5/8s, 2010   210,000      267,511    140,000     178,341    350,000     445,852
 Plains All American Pipeline LP/Plains All American
 Finance Corp. company guaranty 7 3/4s, 2012                    55,000       64,488     37,000      43,383     92,000     107,871
 Plains Exploration & Production Co. company guaranty
 Ser. B, 8 3/4s, 2012                                           80,000       89,400     50,000      55,875    130,000     145,275
 Plains Exploration & Production Co. sr. sub. notes 8 3/4s,
 2012                                                           65,000       72,638     40,000      44,700    105,000     117,338
 Pogo Producing Co. sr. sub. notes Ser. B, 8 1/4s, 2011        115,000      128,225     80,000      89,200    195,000     217,425
 Pride International, Inc. sr. notes 10s, 2009                  10,000       10,663     10,000      10,663     20,000      21,326
 Pride Petroleum Services, Inc. sr. notes 9 3/8s, 2007         113,000      115,966     73,000      74,916    186,000     190,882
 Seabulk International, Inc. company guaranty 9 1/2s, 2013      80,000       84,000     50,000      52,500    130,000     136,500
 Star Gas Partners LP/Star Gas Finance Co. 144A sr. notes
 10 1/4s, 2013                                                  25,000       27,750     15,000      16,650     40,000      44,400
 Star Gas Partners LP/Star Gas Finance Co. sr. notes
 10 1/4s, 2013                                                 105,000      116,550     70,000      77,700    175,000     194,250
 Swift Energy Co. sr. sub. notes 9 3/8s, 2012                   25,000       27,875     20,000      22,300     45,000      50,175
 Trico Marine Services, Inc. company guaranty 8 7/8s, 2012     125,000       88,750     77,000      54,670    202,000     143,420
 Universal Compression, Inc. sr. notes 7 1/4s, 2010             20,000       21,400     15,000      16,050     35,000      37,450
 Vintage Petroleum, Inc. sr. notes 8 1/4s, 2012                     --           --      7,000       7,665      7,000       7,665
 Vintage Petroleum, Inc. sr. sub. notes 7 7/8s, 2011            24,000       25,440     16,000      16,960     40,000      42,400
 Westport Resources Corp. 144A company guaranty 8 1/4s, 2011    70,000       77,350     45,000      49,725    115,000     127,075
 Westport Resources Corp. company guaranty 8 1/4s, 2011         90,000       99,450     60,000      66,300    150,000     165,750
 XTO Energy, Inc. sr. notes 6 1/4s, 2013                        45,000       49,106     25,000      27,281     70,000      76,387
 XTO Energy, Inc. sr. notes 7 1/2s, 2012                        52,000       60,710     37,000      43,198     89,000     103,908
                                                                       ------------            -----------            -----------
                                                                          3,536,145              2,348,130              5,884,275

Financial                                                                      0.7%                   0.7%                   0.7%
 Crescent Real Estate Equities LP notes 7 1/2s, 2007 (R)        35,000       36,925     25,000      26,375     60,000      63,300
 Crescent Real Estate Equities LP sr. notes 9 1/4s, 2009 (R)   110,000      121,138     70,000      77,088    180,000     198,226
 Finova Group, Inc. notes 7 1/2s, 2009                         685,000      429,838    455,000     285,513  1,140,000     715,351
 iStar Financial, Inc. sr. notes 6s, 2010 (R)                   60,000       62,100     40,000      41,400    100,000     103,500
 iStar Financial, Inc. sr. notes 7s, 2008 (R)                   10,000       10,750     15,000      16,125     25,000      26,875
 iStar Financial, Inc. sr. notes 8 3/4s, 2008 (R)               65,000       73,613     40,000      45,300    105,000     118,913
 Western Financial Bank sub. debs. 9 5/8s, 2012                 70,000       80,150     50,000      57,250    120,000     137,400
                                                                       ------------            -----------            -----------
                                                                            814,514                549,051              1,363,565

Health Care                                                                    2.3%                   2.5%                   2.4%
 Alderwoods Group, Inc. company guaranty 12 1/4s, 2009         189,000      210,026    121,000     134,460    310,000     344,486
 Alliance Imaging, Inc. sr. sub. notes 10 3/8s, 2011            52,000       52,390     36,000      36,270     88,000      88,660
 AmerisourceBergen Corp. company guaranty 7 1/4s, 2012          82,000       88,150     55,000      59,125    137,000     147,275
 AmerisourceBergen Corp. sr. notes 8 1/8s, 2008                160,000      178,000    100,000     111,250    260,000     289,250
 Ardent Health Services 144A sr. sub. notes 10s, 2013          135,000      149,850     90,000      99,900    225,000     249,750
 Beverly Enterprises, Inc. sr. notes 9 5/8s, 2009               70,000       79,100     50,000      56,500    120,000     135,600
 Biovail Corp. sr. sub. notes 7 7/8s, 2010 (Canada)             60,000       60,000     40,000      40,000    100,000     100,000
 Dade Behring, Inc. company guaranty 11.91s, 2010               29,863       34,454     20,230      23,340     50,093      57,794
 Extendicare Health Services, Inc. company guaranty 9 1/2s,
 2010                                                           60,000       66,600     40,000      44,400    100,000     111,000
 Hanger Orthopedic Group, Inc. company guaranty
 10 3/8s, 2009                                                  70,000       79,013     45,000      50,794    115,000     129,807
 HCA, Inc. debs. 7.19s, 2015                                    10,000       11,159     57,000      63,604     67,000      74,763
 HCA, Inc. sr. notes 6.95s, 2012                                40,000       44,017     30,000      33,013     70,000      77,030
 Healthsouth Corp. notes 7 5/8s, 2012                          175,000      167,563    114,000     109,155    289,000     276,718
 Healthsouth Corp. sr. notes 8 1/2s, 2008                       37,000       36,538     26,000      25,675     63,000      62,213
 Healthsouth Corp. sr. notes 8 3/8s, 2011                       37,000       36,723     24,000      23,820     61,000      60,543
 IASIS Healthcare Corp. company guaranty 13s, 2009              61,000       68,320     41,000      45,920    102,000     114,240
 IASIS Healthcare Corp. company guaranty 8 1/2s, 2009           10,000       10,700      5,000       5,350     15,000      16,050
 Insight Health Services Corp. 144A company guaranty
 9 7/8s, 2011                                                   55,000       55,825     35,000      35,525     90,000      91,350
 Magellan Health Services, Inc. sr. notes Ser. A,
 9 3/8s, 2008                                                   39,220       41,769     30,816      32,819     70,036      74,588
 Mediq, Inc. debs. 13s, 2009 (In default) (NON)                 90,000            9     85,000           9    175,000          18
 MedQuest, Inc. company guaranty Ser. B, 11 7/8s, 2012         106,000      119,780     69,000      77,970    175,000     197,750
 Multicare Companies, Inc. sr. sub. notes 9s, 2007
 (In default) (NON)                                            255,000            1    245,000           1    500,000           2
 NeighborCare, Inc. 144A sr. sub. notes 6 7/8s, 2013            50,000       52,000     30,000      31,200     80,000      83,200
 Omnicare, Inc. sr. sub. notes 6 1/8s, 2013                     90,000       92,250     65,000      66,625    155,000     158,875
 Owens & Minor, Inc. company guaranty 8 1/2s, 2011              70,000       76,650     40,000      43,800    110,000     120,450
 PacifiCare Health Systems, Inc. company guaranty
 10 3/4s, 2009                                                 100,000      117,250     66,000      77,385    166,000     194,635
 Province Healthcare Co. sr. sub. notes 7 1/2s, 2013            90,000       92,925     60,000      61,950    150,000     154,875
 Stewart Enterprises, Inc. notes 10 3/4s, 2008                  60,000       66,900     60,000      66,900    120,000     133,800
 Tenet Healthcare Corp. notes 7 3/8s, 2013                      45,000       41,625     35,000      32,375     80,000      74,000
 Tenet Healthcare Corp. sr. notes 5 3/8s, 2006                 195,000      185,250     95,000      90,250    290,000     275,500
 Tenet Healthcare Corp. sr. notes 6 1/2s, 2012                  10,000        8,825      5,000       4,413     15,000      13,238
 Tenet Healthcare Corp. sr. notes 6 3/8s, 2011                 170,000      150,875     90,000      79,875    260,000     230,750
 Triad Hospitals, Inc. 144A sr. sub. notes 7s, 2013            150,000      155,250    100,000     103,500    250,000     258,750
 Universal Hospital Services, Inc. 144A sr. notes
 10 1/8s, 2011                                                  75,000       80,063     45,000      48,038    120,000     128,101
 Ventas Realty LP/Capital Corp. company guaranty
 9s, 2012                                                       40,000       45,500     25,000      28,438     65,000      73,938
                                                                       ------------            -----------            -----------
                                                                          2,755,350              1,843,649              4,598,999

Other                                                                          1.4%                   1.5%                   1.5%
 DJ TRAC-X NA HY T1 144A notes 7 3/8s, 2009                  1,680,000    1,686,871  1,130,000   1,134,622  2,810,000   2,821,493

Technology                                                                     1.4%                   1.5%                   1.4%
 AMI Semiconductor, Inc. company guaranty 10 3/4s, 2013         64,000       75,200     39,000      45,825    103,000     121,025
 DigitalNet Holdings Inc. sr. notes 9s, 2010                    68,000       73,270     46,000      49,565    114,000     122,835
 Getronics NV sub. notes 13s, 2008 (Netherlands)          EUR  105,000       62,612     65,000      38,760    170,000     101,372
 Iron Mountain, Inc. company guaranty 8 5/8s, 2013            $211,000      229,990    144,000     156,960    355,000     386,950
 Lucent Technologies, Inc. debs. 6.45s, 2029                   135,000      110,363     90,000      73,575    225,000     183,938
 Lucent Technologies, Inc. notes 5 1/2s, 2008                    5,000        4,813      5,000       4,813     10,000       9,626
 Nortel Networks Corp. notes 6 1/8s, 2006 (Canada)             170,000      175,950    100,000     103,500    270,000     279,450
 ON Semiconductor Corp. company guaranty 13s, 2008              69,000       82,455     46,000      54,970    115,000     137,425
 Peregrine Systems, Inc. 144A sr. notes 6 1/2s, 2007           141,555      137,308     90,595      87,877    232,150     225,185
 SCG Holding & Semiconductor Corp. company guaranty 12s,
 2009                                                           75,000       81,469     45,000      48,881    120,000     130,350
 SCG Holding Corp. 144A notes zero %, 2011                      45,000       63,450     30,000      42,300     75,000     105,750
 Seagate Technology Hdd Holdings company guaranty 8s, 2009
 (Cayman Islands)                                               85,000       92,013     60,000      64,950    145,000     156,963
 Viasystems, Inc. 144A sr. sub. notes 10 1/2s, 2011             55,000       59,950     35,000      38,150     90,000      98,100
 Xerox Capital Trust I company guaranty 8s, 2027               105,000      102,900     70,000      68,600    175,000     171,500
 Xerox Corp. company guaranty 9 3/4s, 2009                      18,000       20,970     10,000      11,650     28,000      32,620
 Xerox Corp. notes Ser. MTN, 7.2s, 2016                         55,000       56,650     35,000      36,050     90,000      92,700
 Xerox Corp. sr. notes 7 1/8s, 2010                             95,000      101,413     65,000      69,388    160,000     170,801
 Xerox Corp. sr. notes 7 5/8s, 2013                            144,000      153,360     87,000      92,655    231,000     246,015
                                                                       ------------            -----------            -----------
                                                                          1,684,136              1,088,469              2,772,605


Transportation                                                                 0.7%                   0.8%                   0.7%
 Allied Holdings, Inc. company guaranty Ser. B,
 8 5/8s, 2007                                                   69,000       66,930     46,000      44,620    115,000     111,550
 American Airlines, Inc. pass-through certificates
 Ser. 01-1, 6.817s, 2011                                        70,000       67,200     50,000      48,000    120,000     115,200
 Calair, LLC/Calair Capital Corp. company guaranty
 8 1/8s, 2008                                                  140,000      124,600    100,000      89,000    240,000     213,600
 Delta Air Lines, Inc. notes 7.9s, 2009                         60,000       44,100     40,000      29,400    100,000      73,500
 Delta Air Lines, Inc. pass-through certificates
 Ser. 00-1, 7.779s, 2005                                        50,000       46,582     40,000      37,266     90,000      83,848
 Kansas City Southern Railway Co. company guaranty
 7 1/2s, 2009                                                   25,000       25,750     15,000      15,450     40,000      41,200
 Kansas City Southern Railway Co. company guaranty
 9 1/2s, 2008                                                  185,000      206,275    115,000     128,225    300,000     334,500
 Navistar International Corp. company guaranty
 Ser. B, 9 3/8s, 2006                                           97,000      107,428     60,000      66,450    157,000     173,878
 Navistar International Corp. sr. notes Ser. B,
 8s, 2008                                                       20,000       20,450     15,000      15,338     35,000      35,788
 Northwest Airlines, Inc. company guaranty 7
 5/8s, 2005                                                     60,000       58,950     50,000      49,125    110,000     108,075
 Northwest Airlines, Inc. company guaranty 8.52s,
 2004                                                               --           --     10,000       9,988     10,000       9,988
 Travel Centers of America, Inc. company guaranty
 12 3/4s, 2009                                                  20,000       23,500     20,000      23,500     40,000      47,000
 US Air, Inc. pass-through certificates Ser. 93-A3,
 10 3/8s, 2013 (In default) (NON)                               85,055       27,218     56,704      18,145    141,759      45,363
                                                                       ------------            -----------            -----------
                                                                            818,983                574,507              1,393,490


Utilities & Power                                                              3.1%                   3.2%                   3.1%
 AES Corp. (The) 144A sec. notes 8 3/4s, 2013                  150,000      165,188     90,000      99,113    240,000     264,301
 AES Corp. (The) 144A sec. notes 9s, 2015                      105,000      116,025     70,000      77,350    175,000     193,375
 AES Corp. (The) sr. notes 8 3/4s, 2008                          6,000        6,300      8,000       8,400     14,000      14,700
 AES Corp. (The) sr. notes 8 7/8s, 2011                         22,000       23,485         --          --     22,000      23,485
 Allegheny Energy Supply 144A bonds 8 1/4s, 2012               130,000      128,700     80,000      79,200    210,000     207,900
 Allegheny Energy Supply 144A sec. notes 10 1/4s, 2007          45,000       48,375     25,000      26,875     70,000      75,250
 Calpine Canada Energy Finance company guaranty 8 1/2s,
 2008 (Canada)                                                  32,000       24,720     15,000      11,588     47,000      36,308
 Calpine Corp. 144A sec. notes 8 1/2s, 2010                    338,000      310,960    172,000     158,240    510,000     469,200
 Calpine Corp. sr. notes 7 7/8s, 2008                          105,000       79,800    100,000      76,000    205,000     155,800
 Calpine Corp. sr. notes 8 3/4s, 2007                           10,000        8,125     20,000      16,250     30,000      24,375
 Calpine Corp. sr. notes 8 5/8s, 2010                           10,000        7,625      5,000       3,813     15,000      11,438
 CenterPoint Energy Resources Corp. debs. 6 1/2s, 2008          35,000       37,744     25,000      26,960     60,000      64,704
 CenterPoint Energy Resources Corp. sr. notes Ser. B,
 7 7/8s, 2013                                                   20,000       22,981      5,000       5,745     25,000      28,726
 CMS Energy Corp. 144A sr. notes 7 3/4s, 2010                   25,000       25,875     15,000      15,525     40,000      41,400
 CMS Energy Corp. pass-through certificates 7s, 2005            20,000       20,350     15,000      15,263     35,000      35,613
 CMS Energy Corp. sr. notes 8 1/2s, 2011                        55,000       58,988     15,000      16,088     70,000      75,076
 CMS Energy Corp. sr. notes 8.9s, 2008                          30,000       32,513     30,000      32,513     60,000      65,026
 Dynegy Holdings, Inc. 144A sec. notes 10 1/8s, 2013           190,000      211,850    125,000     139,375    315,000     351,225
 Dynegy Holdings, Inc. sr. notes 6 7/8s, 2011                   15,000       13,088     10,000       8,725     25,000      21,813
 Dynegy-Roseton Danskamme company guaranty Ser. A,
 7.27s, 2010                                                    50,000       50,000     40,000      40,000     90,000      90,000
 Dynegy-Roseton Danskamme company guaranty Ser. B,
 7.67s, 2016                                                    75,000       71,250     50,000      47,500    125,000     118,750
 Edison Mission Energy sr. notes 9 7/8s, 2011                  110,000      115,500     75,000      78,750    185,000     194,250
 El Paso Corp. sr. notes 7 3/8s, 2012                           55,000       47,850     35,000      30,450     90,000      78,300
 El Paso Corp. sr. notes Ser. MTN, 7 3/4s, 2032                115,000       92,288     85,000      68,213    200,000     160,501
 El Paso Natural Gas Co. debs. 8 5/8s, 2022                     25,000       26,313     15,000      15,788     40,000      42,101
 El Paso Natural Gas Co. sr. notes Ser. A, 7 5/8s,
 2010                                                           25,000       25,563     15,000      15,338     40,000      40,901
 El Paso Production Holding Co. company guaranty 7
 3/4s, 2013                                                    160,000      150,400    100,000      94,000    260,000     244,400
 Kansas Gas & Electric debs. 8.29s, 2016                        30,000       31,050     20,000      20,700     50,000      51,750
 Midland Funding II Corp. debs. Ser. A, 11 3/4s, 2005           69,650       74,525     54,987      58,836    124,637     133,361
 Mirant Americas Generation, Inc. sr. notes 7.2s,
 2008 (In default) (NON)                                       110,000       88,550     70,000      56,350    180,000     144,900
 Mission Energy Holding Co. sec. notes 13 1/2s, 2008            40,000       41,500     25,000      25,938     65,000      67,438
 Nevada Power Co. 144A 2nd mtge. 9s, 2013                       90,000       99,900     55,000      61,050    145,000     160,950
 Northwest Pipeline Corp. company guaranty 8 1/8s,
 2010                                                          135,000      147,150     90,000      98,100    225,000     245,250
 NRG Energy, Inc. 144A sr. sec. notes 8s, 2013                 260,000      268,450    165,000     170,363    425,000     438,813
 Orion Power Holdings, Inc. sr. notes 12s, 2010                 75,000       91,500     50,000      61,000    125,000     152,500
 PG&E Corp. 144A sec. notes 6 7/8s, 2008                       115,000      123,625     75,000      80,625    190,000     204,250
 PG&E Gas Transmission Northwest sr. notes 7.1s,
 2005                                                           20,000       20,400     15,000      15,300     35,000      35,700
 PSEG Energy Holdings, Inc. notes 7 3/4s, 2007                  80,000       83,900     55,000      57,681    135,000     141,581
 SEMCO Energy, Inc. sr. notes 7 3/4s, 2013                      65,000       68,900     45,000      47,700    110,000     116,600
 Teco Energy, Inc. notes 10 1/2s, 2007                          40,000       46,350     25,000      28,969     65,000      75,319
 Teco Energy, Inc. notes 7.2s, 2011                             25,000       26,375     10,000      10,550     35,000      36,925
 Teco Energy, Inc. notes 7s, 2012                               70,000       72,713     40,000      41,550    110,000     114,263
 Teco Energy, Inc. sr. notes 7 1/2s, 2010                       50,000       53,813     30,000      32,288     80,000      86,101
 Tennessee Gas Pipeline Co. debs. 7s, 2028                      10,000        9,350      5,000       4,675     15,000      14,025
 Transcontinental Gas Pipeline Corp. debs. 7 1/4s,
 2026                                                           15,000       15,300     10,000      10,200     25,000      25,500
 Utilicorp Canada Finance Corp. company guaranty
 7 3/4s, 2011 (Canada)                                          85,000       81,600     55,000      52,800    140,000     134,400
 Utilicorp United, Inc. sr. notes 9.95s, 2011                   25,000       26,500     20,000      21,200     45,000      47,700
 Western Resources, Inc. sr. notes 9 3/4s, 2007                 70,000       80,500     50,000      57,500    120,000     138,000
 Williams Cos., Inc. (The) notes 7 5/8s, 2019                   25,000       25,375     25,000      25,375     50,000      50,750
 Williams Cos., Inc. (The) notes 8 1/8s, 2012                   20,000       21,800     15,000      16,350     35,000      38,150
 Williams Cos., Inc. (The) notes 8 3/4s, 2032                   20,000       21,500     10,000      10,750     30,000      32,250
 Williams Cos., Inc. (The) notes Ser. A, 6 3/4s, 2006            4,000        4,135      3,000       3,101      7,000       7,236
 Williams Cos., Inc. (The) sr. notes 8 5/8s, 2010               95,000      103,550     60,000      65,400    155,000     168,950
 Williams Holdings Of Delaware notes 6 1/2s, 2008               50,000       51,250     30,000      30,750     80,000      82,000
                                                                       ------------            -----------            -----------
                                                                          3,701,417              2,372,163              6,073,580

Total Corporate bonds and notes (cost $46,500,339,
$30,456,311 and $76,956,650)                                            $48,599,644            $31,548,802            $80,148,446


Convertible preferred stocks (a)                                             26.9%                  26.8%                  26.9%

                                                               Number of    Value     Number of    Value      Number of    Value
                                                                shares                 shares                  shares

Basic Materials                                                                2.8%                   2.7%                   2.7%
 Hercules Trust II 6.50% units cum. cv. pfd.                     1,240     $961,000        780    $604,500      2,020  $1,565,500
 IMC Global, Inc. Ser. MEDS, $3.75 cv. pfd.                     12,604    1,019,664      7,873     636,926     20,477   1,656,590
 Smurfit-Stone Container Corp. Ser. A, $1.75 cum. cv. pfd.      52,400    1,277,250     32,720     797,550     85,120   2,074,800
                                                                       ------------            -----------            -----------
                                                                          3,257,914              2,038,976              5,296,890

Capital Goods                                                                  3.3%                   3.3%                   3.3%
 Northrop Grumman Corp. Ser. B, $7.00 cum. cv. pfd.             19,600    2,616,600     12,300   1,642,050     31,900   4,258,650
 Owens-Illinois, Inc. $2.375 cv. pfd.                           39,100    1,334,288     24,670     841,864     63,770   2,176,152
                                                                       ------------            -----------            -----------
                                                                          3,950,888              2,483,914              6,434,802

Communication Services                                                         1.4%                   1.4%                   1.4%
 CenturyTel, Inc. $1.719 cv. pfd.                               35,020      871,123     21,874     544,116     56,894   1,415,239
 Crown Castle International Corp. $3.125 cv. pfd.               16,123      735,612     10,091     460,402     26,214   1,196,014
 Microcell Telecommunications, Inc. Ser. D, 9.00% cv. pfd.
 (Canada)                                                          417        7,363        278       4,909        695      12,272
 Pegasus Communications Corp. Ser. C, 6.50% cum. cv. pfd.           --           --        487      17,349        487      17,349
                                                                       ------------            -----------            -----------
                                                                          1,614,098              1,026,776              2,640,874

Consumer Cyclicals                                                             4.1%                   4.0%                   4.1%
 Baker Hughes, Inc. $7.00 cv. pfd.                           1,500,000            2         --          --  1,500,000           2
 Radio One, Inc. 6.50% cum. cv. pfd.                             1,350    1,442,223        850     908,066      2,200   2,350,289
 Sinclair Broadcast Group, Inc. Ser. D, $3.00 cv. pfd.          25,200    1,165,500     15,900     735,375     41,100   1,900,875
 Tower Automotive Capital Trust $3.375 cv. pfd.                 31,700      895,525     19,800     559,350     51,500   1,454,875
 TXI Capital Trust I $2.75 cv. pfd.                             30,300    1,318,050     18,800     817,800     49,100   2,135,850
                                                                       ------------            -----------            -----------
                                                                          4,821,300              3,020,591              7,841,891

Consumer Staples                                                               0.5%                   0.5%                   0.5%
 Constellation Brands, Inc. Ser. A, $1.438 cv. pfd.             20,120      601,085     12,567     375,439     32,687     976,524

Energy                                                                         1.7%                   1.7%                   1.7%
 Amerada Hess Corp. $3.50 cv. pfd.                              16,950    1,055,138     10,587     659,041     27,537   1,714,179
 Hanover Compressor Capital Trust $3.625 cv. pfd.               19,700      938,213     12,300     585,788     32,000   1,524,001
                                                                       ------------            -----------            -----------
                                                                          1,993,351              1,244,829              3,238,180

Financial                                                                      6.5%                   6.4%                   6.5%
 Capital One Financial Corp. $3.125 cv. pfd.                    19,200      998,400     12,000     624,000     31,200   1,622,400
 Chubb Corp. (The) $1.75 cv. pfd.                               22,300      655,063     14,000     411,250     36,300   1,066,313
 Decs Trust IX $6.75 cv. pfd.                                   44,996      545,577     28,105     340,773     73,101     886,350
 FelCor Lodging Trust, Inc. Ser. A, $1.95 cum.
 cv. pfd. (R)                                                   60,700    1,502,325     38,500     952,875     99,200   2,455,200
 Hartford Financial Services Group, Inc. (The)
 $3.50 cv. pfd.                                                 15,403    1,008,897      9,621     630,176     25,024   1,639,073
 Host Marriott Financial Trust $3.375 cv. pfd.                  28,600    1,512,225     18,120     958,095     46,720   2,470,320
 Provident Finance Group $2.25 units cv. pfd.                   21,130      763,321     13,420     484,798     34,550   1,248,119
 UnumProvident Corp. $2.063 cv. pfd.                            20,500      656,000     12,850     411,200     33,350   1,067,200
                                                                       ------------            -----------            -----------
                                                                          7,641,808              4,813,167             12,454,975

Technology                                                                     1.7%                   1.7%                   1.7%
 Solectron Corp. $1.813 units cv. pfd.                          33,168      576,294     20,697     359,610     53,865     935,904
 Xerox Corp. 6.25% cv. pfd.                                     10,800    1,425,600      6,800     897,600     17,600   2,323,200
                                                                       ------------            -----------            -----------
                                                                          2,001,894              1,257,210              3,259,104

Transportation                                                                 0.8%                   0.8%                   0.8%
 Teekay Shipping Corp. $1.813 cv. pfd. (Marshall
 Islands)                                                       25,869    1,002,424     16,158     626,123     42,027   1,628,547

Utilities & Power                                                              4.2%                   4.2%                   4.2%
 El Paso Energy Capital Trust I $2.375 cv. pfd.                 25,250      795,375     13,700     431,550     38,950   1,226,925
 ONEOK, Inc. $2.125 units cv. pfd.                              20,000      617,500     14,000     432,250     34,000   1,049,750
 Public Service Enterprise Group, Inc. $5.125 cv. pfd.           9,000      574,875      5,640     360,255     14,640     935,130
 Sempra Energy $2.125 units cv. pfd.                            40,900    1,175,875     25,800     741,750     66,700   1,917,625
 Sierra Pacific Resources $4.50 units cum. cv. pfd.             17,200      652,568     10,700     405,958     27,900   1,058,526
 Williams Cos., Inc. (The) $2.25 cv. pfd.                       44,400      577,200     28,029     364,377     72,429     941,577
 Williams Cos., Inc. (The) 144A $2.75 cv. pfd.                   9,830      626,663      6,160     392,700     15,990   1,019,363
                                                                       ------------            -----------            -----------
                                                                          5,020,056              3,128,840              8,148,896

Total Convertible preferred stocks (cost $27,042,848,
$17,187,025 and $44,229,873)                                            $31,904,818            $20,015,865            $51,920,683




Convertible bonds and notes (a)                                               23.5%                  23.0%                  23.3%
                                                             Principal       Value    Principal    Value    Principal     Value
                                                              amount                   amount                 amount

Communication Services                                                         1.6%                   1.7%                   1.6%
 Cybernet Internet Services International, Inc. 144A cv.
 sr. disc. notes stepped-coupon zero
 % (13s, 8/15/04) 2009 (Denmark) (In default) (NON)(STP)      $400,000           $4   $380,000          $4   $780,000          $8
 Nextel Communications, Inc. cv. sr. notes 6s, 2011             81,000       95,175     52,000      61,100    133,000     156,275
 United States Cellular Corp. cv. liquid yield option
 notes (LYON) zero %, 2015                                   3,580,000    1,852,650  2,270,000   1,174,725  5,850,000   3,027,375
                                                                       ------------            -----------             -----------
                                                                          1,947,829              1,235,829              3,183,658

Conglomerates                                                                  1.1%                   1.1%                   1.1%
 GenCorp, Inc. cv. sub. notes 5 3/4s, 2007                   1,250,000    1,275,000    780,000     795,600  2,030,000   2,070,600

Consumer Cyclicals                                                             3.9%                   3.8%                   3.9%
 Amazon.com, Inc. cv. sub. debs. 4 3/4s, 2009                  612,000      624,240    396,000     403,920  1,008,000   1,028,160
 Grey Global Group, Inc. 144A cv. debs. 5s, 2033               300,000      315,563    200,000     210,375    500,000     525,938
 Meristar Hospitality Corp. cv. notes 9 1/2s, 2010             614,000      743,708    386,000     467,543  1,000,000   1,211,251
 Service Corp. International cv. sub. notes 6 3/4s, 2008     1,760,000    1,942,600  1,100,000   1,214,125  2,860,000   3,156,725
 Tower Automotive, Inc. cv. sub. notes 5s, 2004              1,036,000    1,036,000    572,000     572,000  1,608,000   1,608,000
                                                                       ------------            -----------             -----------
                                                                          4,662,111              2,867,963              7,530,074

Consumer Staples                                                               2.4%                   2.2%                   2.3%
 Charter Communications, Inc. cv. sr. notes 5 3/4s, 2005     1,300,000    1,217,125    800,000     749,000  2,100,000   1,966,125
 CKE Restaurants, Inc. cv. sub. notes 4 1/4s, 2004             193,000      193,483    170,000     170,425    363,000     363,908
 Rite Aid Corp. 144A cv. sr. notes 4 3/4s, 2006                     --           --    264,000     302,610    264,000     302,610
 Rite Aid Corp. cv. notes 4 3/4s, 2006                       1,260,000    1,444,275    400,000     458,500  1,660,000   1,902,775
                                                                       ------------            -----------             -----------
                                                                          2,854,883              1,680,535              4,535,418

Energy                                                                         0.8%                   0.8%                   0.8%
 Parker Drilling Co. cv. sub. bonds 5 1/2s, 2004             1,000,000    1,003,750    600,000     602,250  1,600,000   1,606,000

Financial                                                                      1.7%                   1.7%                   1.7%
 E*Trade Group, Inc. cv. sub. notes 6s, 2007                   620,000      633,175    400,000     408,500  1,020,000   1,041,675
 Providian Financial Corp. cv. sr. notes 3 1/4s, 2005        1,410,000    1,387,088    900,000     885,375  2,310,000   2,272,463
                                                                       ------------            -----------             -----------
                                                                          2,020,263              1,293,875              3,314,138

Health Care                                                                    0.5%                   0.5%                   0.5%
 LifePoint Hospitals, Inc. cv. notes 4 1/2s, 2009              610,000      641,263    390,000     409,988  1,000,000   1,051,251

Technology                                                                    8.20%                  8.10%                  8.20%
 Amkor Technologies, Inc. cv. notes 5 3/4s, 2006               750,000      743,438    465,000     460,931  1,215,000   1,204,369
 Aspen Technology, Inc. cv. sub. debs. 5 1/4s, 2005          1,297,000    1,271,060    801,000     784,980  2,098,000   2,056,040
 Avaya, Inc. cv. LYON zero %, 2021                             980,000      683,550    620,000     432,450  1,600,000   1,116,000
 Kulicke & Soffa Industries, Inc. cv. sub. notes 5 1/4s, 2006  680,000      690,200    420,000     426,300  1,100,000   1,116,500
 Lucent Technologies, Inc. cv. sub. debs. 8s, 2031           1,200,000    1,449,000    750,000     905,625  1,950,000   2,354,625
 Manugistics Group, Inc. cv. sub. notes 5s, 2007               930,000      924,188    570,000     566,438  1,500,000   1,490,626
 Safeguard Scientifics, Inc. 144A cv. sub. notes 5s, 2006           --           --     86,000      85,248     86,000      85,248
 Safeguard Scientifics, Inc. cv. sub. notes 5s, 2006         1,509,000    1,495,796    850,000     842,563  2,359,000   2,338,359
 Sanmina Corp. cv. sub. debs. zero %, 2020                   2,180,000    1,122,700  1,380,000     710,700  3,560,000   1,833,400
 Silicon Graphics Corp. cv. notes 6 1/2s, 2009                 280,000      743,400    170,000     451,350    450,000   1,194,750
 Solectron Corp. cv. LYON zero %, 2020                       1,065,000      620,363    650,000     378,625  1,715,000     998,988
                                                                       ------------            -----------             -----------
                                                                          9,743,695              6,045,210             15,788,905

Transportation                                                                 0.6%                   0.5%                   0.6%
 Continental Airlines, Inc. cv. notes 4 1/2s, 2007             750,000      665,625    450,000     399,375  1,200,000   1,065,000

Utilities & Power                                                              2.6%                   2.5%                   2.5%
 AES Corp. (The) cv. sub. notes 4 1/2s, 2005                   620,000      612,250    385,000     380,188  1,005,000     992,438
 El Paso Corp. cv. debs. zero %, 2021                        1,400,000      647,500    900,000     416,250  2,300,000   1,063,750
 Sierra Pacific Resources 144A cv. notes 7 1/4s, 2010          526,000    1,074,355    324,000     661,770    850,000   1,736,125
 XCEL Energy, Inc. 144A cv. notes 7 1/2s, 2007                 440,000      689,700    280,000     438,900    720,000   1,128,600
                                                                       ------------            -----------            -----------
                                                                         $3,023,805             $1,897,108             $4,920,913

Total Convertible bonds and notes (cost $22,582,893,
$13,717,163 and $36,300,056)                                            $27,838,224            $17,227,733            $45,065,957

Common stocks (a)                                                              1.7%                   1.8%                   1.7%
                                                               Number of    Value      Number of    Value    Number of    Value
                                                                shares                  shares                shares

 AboveNet, Inc. (NON)                                              214      $10,058        179      $8,413        393     $18,471
 Altria Group, Inc.                                             14,000      805,700      8,800     506,440     22,800   1,312,140
 AMRESCO Creditor Trust (acquired various dates from
 9/20/00 to 10/16/02, cost $38,655,
 $18,344 and $56,999, respectively) (RES)(NON)(R)(RES)          50,000          500     90,000         900    140,000       1,400
 Arch Wireless, Inc. Class A (NON)                                  21          468         21         468         42         936
 Aurora Foods, Inc. (NON)                                        2,125           11      1,948          10      4,073          21
 Birch Telecom, Inc. (acquired various dates from
 9/30/02 to 1/9/04, cost $ --, $ -- and $ --,
 respectively) (RES)(NON)                                          156            2        137           1        293           3
 Contifinancial Corp. Liquidating Trust Units                  293,993        2,940    280,214       2,802    574,207       5,742
 Covad Communications Group, Inc. (NON)                          2,031        6,723      1,401       4,637      3,432      11,360
 Crown Castle International Corp. (NON)                            165        1,988        106       1,277        271       3,265
 GATX Corp.                                                     28,300      665,616     17,700     416,304     46,000   1,081,920
 Genesis HealthCare Corp. (NON)                                    144        3,924        139       3,788        283       7,712
 Globix Corp. (NON)                                              3,492       10,546      2,901       8,761      6,393      19,307
 Knology, Inc. (NON)                                                16          133         16         133         32         266
 Leucadia National Corp.                                            64        3,328         38       1,976        102       5,304
 Magellan Health Services, Inc. (NON)                               96        2,592        104       2,808        200       5,400
 Mariner Health Care, Inc. (NON)                                    93        2,023         88       1,914        181       3,937
 Mediq, Inc. (NON)                                                 147          591        147         591        294       1,182
 Microcell Telecommunications, Inc. Class A
 (Canada) (NON)                                                      3           56          2          37          5          93
 Microcell Telecommunications, Inc. Class B
 (Canada) (NON)                                                    414        7,714        276       5,143        690      12,857
 Pioneer Cos., Inc. (NON)                                        1,710       11,406      2,585      17,242      4,295      28,648
 PSF Group Holdings, Inc. 144A Class A (acquired
 various dates from 3/15/96 to 3/9/01,
 cost $1,015,896, $795,593 and $1,811,489,
 respectively)(RES)(NON)                                           334      501,450        220     330,375        554     831,825
 RCN Corp. (NON)                                                   115           32        115          32        230          64
 Sterling Chemicals, Inc. (NON)                                     25          650         25         650         50       1,300
 Sun Healthcare Group, Inc. (NON)                                  102        1,219        100       1,195        202       2,414
 VS Holdings, Inc. (NON)                                        14,550        1,455     13,742       1,374     28,292       2,829
 Washington Group International, Inc. (NON)                        235        9,048        235       9,048        470      18,096
                                                                       ------------            -----------            -----------
Total Common stocks (cost $3,377,739,
$2,656,526 and $6,034,265)                                               $2,050,173             $1,326,319             $3,376,492

Preferred stocks (a)                                                           0.4%                   0.4%                  0.4%
                                                               Number of   Value       Number of   Value     Number of   Value
                                                                 shares                 shares                 shares
 Avecia Group PLC $4.00 pfd. (United Kingdom)(acquired
 various dates from 12/3/03 to 1/26/04,
 cost $53,174, $34,214 and $87,388, respectively)(RES)(PIK)      3,964      $67,388      2,550     $43,350      6,514    $110,738
 Dobson Communications Corp. 13.00% pfd. (PIK)                      70       65,100         45      41,850        115     106,950
 iStar Financial, Inc. $1.95 cum. pfd.                           1,714       44,735      1,106      28,867      2,820      73,602
 Metrocall Holdings, Inc. Ser. A, 15.00% cum. pfd.                   9          103          9         103         18         206
 Paxson Communications Corp. 13.25% cum. pfd. (PIK)                 12      113,700          7      66,325         19     180,025
 Rural Cellular Corp. 12.25% pfd. (PIK)                            181      142,085        128     100,480        309     242,565
 Rural Cellular Corp. Ser. B, 11.375% cum. pfd.                     --           --         18      16,740         18      16,740
                                                                       ------------            -----------            -----------
Total Preferred stocks (cost $451,275, $329,390 and $780,665)              $433,111               $297,715               $730,826


Foreign government bonds and notes (a)                                         0.2%                   0.2%                   0.2%
                                                              Principal      Value     Principal     Value   Principal     Value
                                                               amount                   amount                 amount

 Colombia (Republic of) notes 10 3/4s, 2013                    $25,000      $28,725    $20,000     $22,980    $45,000     $51,705
 Colombia (Republic of) unsub. 9 3/4s, 2009                     75,000       84,938     50,000      56,625    125,000     141,563
 Ecuador (Republic of) bonds stepped-coupon Ser. REGS,
 7s (8s, 8/15/04), 2030 (STP)                                   95,000       78,850     60,000      49,800    155,000     128,650
                                                                       ------------            -----------            -----------
Total Foreign government bonds and notes (cost $147,427,
$100,505 and $247,932)                                                     $192,513               $129,405               $321,918


Units (a)                                                                      0.1%                   0.1%                   0.1%
                                                               Number of     Value     Number of   Value     Number of    Value
                                                                 units                   units                 units

 Morrison Knudsen Corp.                                         80,000      $12,800     80,000     $12,800    160,000     $25,600
 XCL Equity Units                                                  208       92,328        198      87,934        406     180,262
                                                                       ------------            -----------            -----------
Total  (cost $353,608, $340,982 and $694,590)                              $105,128               $100,734               $205,862


Brady bonds (a) (cost $50,235, $31,397 and $81,632)                            0.1%                   0.1%                   0.1%
                                                              Principal      Value    Principal     Value     Principal     Value
                                                               amount                  amount                 amount

Peru (Republic of) coll. FLIRB Ser. 20YR, 4 1/2s, 2017        $80,000      $68,200    $50,000     $42,625    $130,000    $110,825

<CAPTION>

Warrants (a) (NON)                                                             0.0%                   0.0%                  0.0%
                                               Expiration        Number of    Value     Number of    Value    Number of    Value
                                                  date           Warrants                Warrants              Warrants
<S>                                            <C>               <C>        <C>           <C>     <C>           <C>       <C>
 AboveNet, Inc.                                  9/8/08             83       $2,332         59      $1,741        142      $4,073
 AboveNet, Inc.                                  9/8/10             71        2,095         69       1,939        209       4,034
 Dayton Superior Corp. 144A                     6/15/09            140            1        130           1        291           2
 Huntsman Co., LLC 144A                         5/15/11            161       22,540        103      14,420        175      36,960
 MDP Acquisitions PLC 144A (Ireland)            10/1/13             72        3,564         47       2,327        201       5,891
 Microcell Telecommunications (Canada)           5/1/05            154          643        103         430        359       1,073
 Microcell Telecommunications (Canada)           5/1/08            256        1,269        171         848        231       2,117
 Pliant Corp. 144A                               6/1/10             60            1         60           1        159           2
 Solutia, Inc. 144A                             7/15/09             99            1         79           1        319           2
 Travel Centers of America, Inc. 144A            5/1/09            240        1,200        180         900        400       2,100
 Ubiquitel, Inc. 144A                           4/15/10            220            1        200           1        344           2
 Washington Group International, Inc. Ser. A    1/25/06            144        1,656        144       1,655        309       3,311
 Washington Group International, Inc. Ser. B    1/25/06            165        1,518        165       1,518        255       3,036
 Washington Group International, Inc. Ser. C    1/25/06             90          725         90         725         90       1,450
                                                                       ------------            -----------            -----------
Total Warrants (cost $100,468, $83,781 and $184,249)                        $37,546                $26,507                $64,053

<CAPTION>

Short-term investments (a)                                                     8.1%                   6.2%                   7.4%
                                                              Principal      Value    Principal     Value   Principal      Value
                                                               amount                  amount                 amount
<S>                                                       <C>           <C>         <C>         <C>        <C>        <C>
 Short-term investments held as collateral for
 loaned securities with yields ranging from
 1.03% to 1.08% and a due date of March 1, 2004              $2,796,432   $2,796,349   $518,779    $518,764   3,315,211 $3,315,113

 Short-term investments held in Putnam commingled
 cash account with yields ranging from 1.01% to 1.07%
 and due dates ranging from March 1, 2004 to April 23, 2004   6,839,479    6,839,479  4,082,687   4,082,687  10,922,166 10,922,166
                                                                        ------------            -----------            -----------
 Total Short-term investments (cost $9,635,828,
 $4,601,451 and $14,237,279)                                              $9,635,828             $4,601,451            $14,237,279
                                                                        ------------            -----------            -----------
 Total Investments  (cost $110,242,660, $69,504,531
 and $179,747,191)                                                      $120,865,185            $75,317,156           $196,182,341

</TABLE>

Because the funds are actively managed, their porfolio holdings as of
February 29, 2004 are unlikely to reflect what their portfolio holdings
will be as of the date the merger is completed. Accordingly, no adjustments
have been made to indicate holdings that would be sold in anticipation of
the merger to accommodate the investment strategies of Putnam High Income
Bond Fund.

  (a) Percentages indicated are based on net assets as follows:

      Putnam High Income Bond Fund:            $118,411,692
      Putnam High Income Opportunities Trust:  $ 74,778,031
      Proforma Combined:                       $193,105,084

(DEF) Security is in default of principal and interest.

(NON) Non-income-producing security.

(STP) The interest rate and date shown parenthetically represent the new
      interest rate to be paid and the date the fund will begin accruing
      interest at this rate.

(RES) Restricted, excluding 144A securities, as to public resale.  The total
      market value of restricted securities held at February 29, 2004 was as
      follows:

      Putnam High Income Bond Fund: $592,651 or 0.5% of net assets
      Putnam High Income Opportunities Trust: $397,262 or 0.5% of net assets

(PIK) Income may be received in cash or additional securities at the
      discretion of the issuer.

  (R) Real Estate Investment Trust.

      144A after the name of a security represents those exempt from
      registration under Rule 144A of the Securities Act of 1933. These
      securities may be resold in transactions exempt from registration,
      normally to qualified institutional buyers.

      FLIRB represents Front Loaded Interest Reduction Bond.

      The rates shown on Floating Rate Notes (FRN) are the current interest
      rates shown at February 29, 2004.


Putnam High Income Bond Fund:
- ---------------------------------------------------------------------

Forward currency contracts to buy at February 29, 2004 (Unaudited)
(aggregate face value $29,452)

                                 Aggregate    Delivery   Unrealized
                       Value     face value     date     depreciation
- ---------------------------------------------------------------------
British Pound        $29,440     $29,452      6/16/04      ($12)
- ---------------------------------------------------------------------

Forward currency contracts to sell at February 29, 2004 (Unaudited)
(aggregate face value $482,710)

                                 Aggregate    Delivery   Unrealized
                       Value     face value     date     appreciation
- ---------------------------------------------------------------------
Euro                $481,270     $482,710     6/16/04       $1,440
- ---------------------------------------------------------------------

Putnam High Income Opportunities Trust:
- ---------------------------------------------------------------------
Forward currency contracts to buy at February 29, 2004
(aggregate face value $18,407)

                                 Aggregate    Delivery   Unrealized
                       Value     face value     date     depreciation
- ---------------------------------------------------------------------
British Pound          $18,400   $18,407       6/16/04      ($7)
- ---------------------------------------------------------------------

Forward currency contracts to sell at February 29, 2004
(aggregate face value $294,224)

                                 Aggregate    Delivery   Unrealized
                       Value     face value     date     appreciation
- ---------------------------------------------------------------------
Euro                   $293,346  $294,224     6/16/04       $878
- ---------------------------------------------------------------------


Putnam High Income Bond Fund

Notes to Proforma Combining Statements

(Unaudited)

February 29, 2004

The proforma adjustments to these proforma financial statements are
comprised of the following:

(A) Elimination and reduction of duplicative expenses as a result of the
    merger.

(B) $48,081 relates to proxy costs, which will be borne by Putnam High Income
    Bond Fund and Putnam High Income Opportunities Trust. $9,184 relates to
    SEC registration fees that will be borne by Putnam High Income Bond Fund.
    The remaining $102,000 consists of $75,000 of legal costs and $27,000 of
    accounting costs. These are related merger costs which will be allocated
    ratably between the two funds upon consummation of the merger. As set
    forth in the Agreement, Putnam Management will bear merger-related costs
    to the extent that they exceed certain limits specified for each fund.

(C) Issuance of common shares of Putnam High Income Bond Fund to the
    holders of common shares of Putnam High Income Opportunities Trust.

SECURITIES RATINGS

The ratings of securities in which each fund may invest will be measured
at the time of purchase and, to the extent a security is assigned a
different rating by one or more of the various rating agencies, Putnam
Management will use the highest rating assigned by any agency. Putnam
Management will not necessarily sell an investment if its rating is
reduced. The following rating services describe rated securities as
follows:

Moody's Investors Service, Inc.

Bonds

Aaa -- Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edged." Interest payments are protected by a large
or by an exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.

Aa -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities
or fluctuation of protective elements may be of greater amplitude or
there may be other elements present which make the long-term risk appear
somewhat larger than the Aaa securities.

A -- Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade obligations.
Factors giving security to principal and interest are considered
adequate, but elements may be present which suggest a susceptibility to
impairment sometime in the future.

Baa -- Bonds which are rated Baa are considered as medium grade
obligations, (i.e., they are neither highly protected nor poorly
secured). Interest payments and principal security appear adequate for
the present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds
lack outstanding investment characteristics and in fact have speculative
characteristics as well.

Ba -- Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well-assured. Often the protection
of interest and principal payments may be very moderate, and thereby not
well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.

B -- Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.

Caa -- Bonds which are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with respect to
principal or interest.

Ca -- Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have
other marked shortcomings.

C -- Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.

Notes

MIG 1/VMIG 1 -- This designation denotes best quality. There is present
strong protection by established cash flows, superior liquidity support
or demonstrated broad-based access to the market for refinancing.

MIG 2/VMIG 2 -- This designation denotes high quality. Margins of
protection are ample although not so large as in the preceding group.

Commercial Paper

Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1
repayment ability will often be evidenced by the following
characteristics:

- -- Leading market positions in well established industries.

- -- High rates of return on funds employed.

- -- Conservative capitalization structure with moderate reliance on debt
   and ample asset protection.

- -- Broad margins in earnings coverage of fixed financial charges and high
   internal cash generation.

- -- Well established access to a range of financial markets and assured
   sources of alternate liquidity.

Issuers rated Prime-2 (or supporting institutions) have a strong ability
for repayment of senior short-term debt obligations. This will normally
be evidenced by many of the characteristics cited above to a lesser
degree. Earnings trends and coverage ratios, while sound, may be more
subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample
alternate liquidity is maintained.

Standard & Poor's
Bonds

AAA -- An obligation rated AAA has the highest rating assigned by
Standard & Poor's. The obligor's capacity to meet its financial
commitment on the obligation is extremely strong.

AA -- An obligation rated AA differs from the highest-rated obligations
only in small degree. The obligor's capacity to meet its financial
commitment on the obligation is very strong.

A -- An obligation rated A is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
obligations in higher-rated categories. However, the obligor's capacity
to meet its financial commitment on the obligation is still strong.

BBB -- An obligation rated BBB exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity of the obligor to meet its
financial commitment on the obligation.

Obligations rated BB, B, CCC, CC and C are regarded as having
significant speculative characteristics. BB indicates the lowest degree
of speculation and C the highest. While such obligations will likely
have some quality and protective characteristics, these are outweighed
by large uncertainties or major exposures to adverse conditions.

BB -- An obligation rated BB is less vulnerable to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which
could lead to the obligor's inadequate capacity to meet its financial
commitment on the obligation.

B -- An obligation rated B is more vulnerable to nonpayment than
obligations rated BB, but the obligor currently has the capacity to meet
its financial commitment on the obligations. Adverse business,
financial, or economic conditions will likely impair the obligor's
capacity or willingness to meet its financial commitment on the
obligation.

CCC -- An obligation rated CCC is currently vulnerable to nonpayment,
and is dependent upon favorable business, financial, and economic
conditions for the obligor to meet its financial commitment on the
obligation. In the event of adverse business, financial, or economic
conditions, the obligor is not likely to have the capacity to meet its
financial commitment on the obligation.

CC -- An obligation rated CC is currently highly vulnerable to
nonpayment.

C -- The C rating may be used to cover a situation where a bankruptcy
petition has been filed, or similar action has been taken, but payments
on this obligation are being continued.

D -- An obligation rated D is in payment default. The D rating category
is used when interest payments or principal payments are not made on the
date due even if the applicable grace period has not expired, unless
Standard & Poor's believes that such payments will be made during such
grace period. The D rating also will be used upon the filing of a
bankruptcy petition, or the taking of a similar action if payments on an
obligation are jeopardized.

Notes

SP-1 -- Strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics are given a
plus (+) designation.

SP-2 -- Satisfactory capacity to pay principal and interest.

SP-3 -- Speculative capacity to pay principal and interest.

Commercial Paper

A-1 -- This highest category indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess
extremely strong safety characteristics are denoted with a plus sign (+)
designation.

A-2 -- Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as
for issues designated `A-1'.

A-3 -- Issues carrying this designation have adequate capacity for
timely payment. They are, however, more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the higher
designations.

Duff & Phelps Corporation

Long-Term Debt

AAA -- Highest credit quality. The risk factors are negligible, being
only slightly more than for risk-free U.S. Treasury debt.

AA+, AA, AA- -- High credit quality. Protection factors are strong. Risk
is modest but may vary slightly from time to time because of economic
conditions.

A+, A, A- -- Protection factors are average but adequate. However, risk
factors are more variable and greater in periods of economic stress.

BBB+, BBB, BBB- -- Below-average protection factors but still considered
sufficient for prudent investment. Considerable variability in risk
during economic cycles.

BB+, BB, BB- -- Below investment grade but deemed likely to meet
obligations when due. Present or prospective financial protection
factors fluctuate according to industry conditions or company fortunes.
Overall quality may move up or down frequently within this category.

B+, B, B- -- Below investment grade and possessing risk that obligations
will not be met when due. Financial protection factors will fluctuate
widely according to economic cycles, industry conditions and/or company
fortunes. Potential exists for frequent changes in the rating within
this category or into a higher or lower rating grade.

CCC -- Well below investment-grade securities. Considerable uncertainty
exists as to timely payment of principal, interest or preferred
dividends. Protection factors are narrow and risk can be substantial
with unfavorable economic/industry conditions, and/or with unfavorable
company developments.

DD -- Defaulted debt obligations. Issuer failed to meet scheduled
principal and/or interest payments.

Fitch Investors Service, Inc.

AAA -- Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest
and repay principal, which is unlikely to be affected by reasonably
foreseeable events.

AA -- Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is
very strong, although not quite as strong as bonds rated AAA.

A -- Bonds considered to be investment grade and of high credit quality.
The obligor's ability to pay interest and repay principal is considered
to be strong, but may be more vulnerable to adverse changes in economic
conditions and circumstances than bonds with higher ratings.

BBB -- Bonds considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in economic
conditions and circumstances, however, are more likely to have adverse
impact on these bonds, and therefore impair timely payment. The
likelihood that the ratings of these bonds will fall below investment
grade is higher than for bonds with higher ratings.

BB -- Bonds considered to be speculative. The obligor's ability to pay
interest and repay principal may be affected over time by adverse
economic changes. However, business and financial alternatives can be
identified which could assist the obligor in satisfying its debt service
requirements.

B -- Bonds are considered highly speculative. Bonds in this class are
lightly protected as to the obligor's ability to pay interest over the
life of the issue and repay principal when due.

CCC -- Bonds have certain characteristics which, with passing of time,
could lead to the possibility of default on either principal or interest
payments.

CC -- Bonds are minimally protected. Default in payment of interest
and/or principal seems probable.

C -- Bonds are in actual or imminent default in payment of interest or
principal.

DDD -- Bonds are in default and in arrears in interest and/or principal
payments. Such bonds are extremely speculative and should be valued only
on the basis of their value in liquidation or reorganization of the
obligor.


APPENDIX A

Proxy voting guidelines of the Putnam funds

The proxy voting guidelines below summarize the funds' positions on
various issues of concern to investors, and give a general indication of
how fund portfolio securities will be voted on proposals dealing with
particular issues.  The funds' proxy voting service is instructed to
vote all proxies relating to fund portfolio securities in accordance
with these guidelines, except as otherwise instructed by the Proxy
Coordinator, a member of the Office of the Trustees who is appointed to
assist in the coordination and voting of the funds' proxies.

The proxy voting guidelines are just that - guidelines.  The guidelines
are not exhaustive and do not include all potential voting issues.
Because proxy issues and the circumstances of individual companies are
so varied, there may be instances when the funds may not vote in strict
adherence to these guidelines.  For example, the proxy voting service is
expected to bring to the Proxy Coordinator's attention proxy questions
that are company-specific and of a non-routine nature and that, even if
covered by the guidelines, may be more appropriately handled on a
case-by-case basis.

Similarly, Putnam Management's investment professionals, as part of
their ongoing review and analysis of all fund portfolio holdings, are
responsible for monitoring significant corporate developments, including
proxy proposals submitted to shareholders, and notifying the Proxy
Coordinator of circumstances where the interests of fund shareholders
may warrant a vote contrary to these guidelines.  In such instances, the
investment professionals will submit a written recommendation to the
Proxy Coordinator and the person or persons designated by Putnam
Management's Legal and Compliance Department to assist in processing
referral items pursuant to the funds' "Proxy Voting Procedures."  The
Proxy Coordinator, in consultation with the funds' Senior Vice
President, Executive Vice President, and/or the Chair of the Board
Policy and Nominating Committee, as appropriate, will determine how the
funds' proxies will be voted.  When indicated, the Chair of the Board
Policy and Nominating Committee may consult with other members of the
Committee or the full Board of Trustees.

The following guidelines are grouped according to the types of proposals
generally presented to shareholders.  Part I deals with proposals that
have been put forth by management and approved and recommended by a
company's board of directors.  Part II deals with proposals submitted by
shareholders for inclusion in proxy statements.  Part III addresses
unique considerations pertaining to non-U.S. issuers.

The Putnam funds will disclose their proxy votes in accordance with the
timetable established by SEC rules (i.e., not later than August 31 of
each year for the most recent 12-month period ended June 30).

I. BOARD-APPROVED PROPOSALS

The vast majority of matters presented to shareholders for a vote
involve proposals made by a company itself (sometimes referred to as
"management proposals"), which have been approved and recommended by its
board of directors.  In view of the enhanced corporate governance
practices currently being implemented in public companies and of the
funds' intent to hold corporate boards accountable for their actions in
promoting shareholder interests, the funds' proxies generally will be
voted for the decisions reached by majority independent boards of
directors, except as otherwise indicated in these guidelines.
Accordingly, the funds' proxies will be voted for board-approved
proposals, except as follows:

Matters relating to the Board of Directors

Uncontested Election of Directors

The funds' proxies will be voted for the election of a company's
nominees for the board of directors, except as follows:

* The funds will withhold votes for the entire board of directors if

* the board does not have a majority of independent directors,

* the board has not established independent nominating, audit, and
  compensation committees, or

* the board has more than 19 members or fewer than five members, absent
  special circumstances.

* The funds will withhold votes for any nominee for director who:

* is considered an independent director by the company and who has
  received compensation from the company other than for service as a
  director (e.g., investment banking, consulting, legal, or financial
  advisory fees),

* attends less than 75% of board and committee meetings without valid
  reasons for the absences (e.g., illness, personal emergency, etc.), or

* as a director of a public company (Company A), is employed as a senior
  executive of another public company (Company B) if a director of Company
  B serves as a senior executive of Company A (commonly referred to as an
  "interlocking directorate").

Commentary:

Board independence:  Unless otherwise indicated, for the purposes of
determining whether a board has a majority of independent directors and
independent nominating, audit, and compensation committees, an
"independent director" is a director who (1) meets all requirements to
serve as an independent director of a company under the final NYSE
Corporate Governance Rules (e.g., no material business relationships
with the company and no present or recent employment relationship with
the company (including employment of an immediate family member as an
executive officer)), and (2) has not accepted directly or indirectly any
consulting, advisory, or other compensatory fee from the company other
than in his or her capacity as a member of the board of directors or any
board committee. The funds' Trustees believe that the receipt of
compensation for services other than service as a director raises
significant independence issues.

Board size:  The funds' Trustees believe that the size of the board of
directors can have a direct impact on the ability of the board to govern
effectively.  Boards that have too many members can be unwieldy and
ultimately inhibit their ability to oversee management performance.
Boards that have too few members can stifle innovation and lead to
excessive influence by management.

Time commitment:  Being a director of a company requires a significant
time commitment to adequately prepare for and attend the company's board
and committee meetings.  Directors must be able to commit the time and
attention necessary to perform their fiduciary duties in proper fashion,
particularly in times of crisis.  The funds' Trustees are concerned
about over-committed directors.  In some cases, directors may serve on
too many boards to make a meaningful contribution.  This may be
particularly true for senior executives of public companies (or other
directors with substantially full-time employment) who serve on more
than a few outside boards.  The funds may withhold votes from such
directors on a case-by-case basis where it appears that they may be
unable to discharge their duties properly because of excessive
commitments.

Interlocking directorships:  The funds' Trustees believe that
interlocking directorships are inconsistent with the degree of
independence required for outside directors of public companies.

Corporate governance practices:  Board independence depends not only on
its members' individual relationships, but also on the board's overall
attitude toward management.  Independent boards are committed to good
corporate governance practices and, by providing objective independent
judgment, enhancing shareholder value.  The funds may withhold votes on
a case-by-case basis from some or all directors who, through their lack
of independence, have failed to observe good corporate governance
practices or, through specific corporate action, have demonstrated a
disregard for the interest of shareholders.

Contested Elections of Directors

* The funds will vote on a case-by-case basis in contested elections of
  directors.

Classified Boards

* The funds will vote against proposals to classify a board, absent
  special circumstances indicating that shareholder interests would be
  better served by this structure.

Commentary:  Under a typical classified board structure, the directors
are divided into three classes, with each class serving a three-year
term.  The classified board structure results in directors serving
staggered terms, with usually only a third of the directors up for
re-election at any given annual meeting.  The funds' Trustees generally
believe that it is appropriate for directors to stand for election each
year, but recognize that, in special circumstances, shareholder
interests may be better served under a classified board structure.

Other Board-Related Proposals

The funds will generally vote for board-approved proposals that have
been approved by a majority independent board, and on a case-by-case
basis on board-approved proposals where the board fails to meet the
guidelines' basic independence standards (i.e., majority of independent
directors and independent nominating, audit, and compensation
committees).

Executive Compensation

The funds generally favor compensation programs that relate executive
compensation to a company's long-term performance.  The funds will vote
on a case-by-case basis on board-approved proposals relating to
executive compensation, except as follows:

* Except where the funds are otherwise withholding votes for the entire
  board of directors, the funds will vote for stock option plans that will
  result in an average annual dilution of 1.67% or less (based on a
  10-year plan and including all equity-based plans).

* The funds will vote against stock option plans that permit the
  replacing or repricing of underwater options (and against any proposal
  to authorize such replacement or repricing of underwater options).

* The funds will vote against stock option plans that permit issuance of
  options with an exercise price below the stock's current market price.

* Except where the funds are otherwise withholding votes for the entire
  board of directors, the funds will vote for an employee stock purchase
  plan that has the following features:  (1) the shares purchased under
  the plan are acquired for no less than 85% of their market value; (2)
  the offering period under the plan is 27 months or less; and (3)
  dilution is 10% or less.

Commentary:  Companies should have compensation programs that are
reasonable and that align shareholder and management interests over the
longer term.  Further, disclosure of compensation programs should
provide absolute transparency to shareholders regarding the sources and
amounts of, and the factors influencing, executive compensation.
Appropriately designed equity-based compensation plans can be an
effective way to align the interests of long-term shareholders with the
interests of management.  The funds may vote against executive
compensation proposals on a case-by-case basis where compensation is
excessive by reasonable corporate standards, or where a company fails to
provide transparent disclosure of executive compensation.  In voting on
a proposal relating to executive compensation, the funds will consider
whether the proposal has been approved by an independent compensation
committee of the board.

Capitalization

Many proxy proposals involve changes in a company's capitalization,
including the authorization of additional stock, the issuance of stock,
the repurchase of outstanding stock, or the approval of a stock split.
The management of a company's capital structure involves a number of
important issues, including cash flow, financing needs, and market
conditions that are unique to the circumstances of the company.  As a
result, the funds will vote on a case-by-case basis on board-approved
proposals involving changes to a company's capitalization, except that
where the funds are not otherwise withholding votes from the entire
board of directors:

* The funds will vote for proposals relating to the authorization and
  issuance of additional common stock (except where such proposals relate
  to a specific transaction).

* The funds will vote for proposals to effect stock splits (excluding
  reverse stock splits).

* The funds will vote for proposals authorizing share repurchase
  programs.

Commentary:  A company may decide to authorize additional shares of
common stock for reasons relating to executive compensation or for
routine business purposes.  For the most part, these decisions are best
left to the board of directors and senior management.  The funds will
vote on a case-by-case basis, however, on other proposals to change a
company's capitalization, including the authorization of common stock
with special voting rights, the authorization or issuance of common
stock in connection with a specific transaction (e.g., an acquisition,
merger or reorganization), or the authorization or issuance of preferred
stock.  Actions such as these involve a number of considerations that
may affect a shareholder's investment and that warrant a case-by-case
determination.

Acquisitions, Mergers, Reincorporations, Reorganizations and Other
Transactions

Shareholders may be confronted with a number of different types of
transactions, including acquisitions, mergers, reorganizations involving
business combinations, liquidations, and the sale of all or
substantially all of a company's assets, which may require their
consent.  Voting on such proposals involves considerations unique to
each transaction.  As a result, the funds will vote on a case-by-case
basis on board-approved proposals to effect these types of transactions,
except as follows:

* The funds will vote for mergers and reorganizations involving business
  combinations designed solely to reincorporate a company in Delaware.

Commentary:  A company may reincorporate into another state through a
merger or reorganization by setting up a "shell" company in a different
state and then merging the company into the new company.  While
reincorporation into states with extensive and established corporate
laws - notably Delaware - provides companies and shareholders with a
more well-defined legal framework, shareholders must carefully consider
the reasons for a reincorporation into another jurisdiction, including
especially an offshore jurisdiction.

Anti-Takeover Measures

Some proxy proposals involve efforts by management to make it more
difficult for an outside party to take control of the company without
the approval of the company's board of directors.  These include the
adoption of a shareholder rights plan, requiring supermajority voting on
particular issues, the adoption of fair price provisions, the issuance
of blank check preferred stock, and the creation of a separate class of
stock with disparate voting rights.  Such proposals may adversely affect
shareholder rights, lead to management entrenchment, or create conflicts
of interest.  As a result, the funds will vote against board-approved
proposals to adopt such anti-takeover measures, except as follows:

* The funds will vote on a case-by-case basis on proposals to ratify or
  approve shareholder rights plans (commonly referred to as "poison
  pills"); and

* The funds will vote on a case-by-case basis on proposals to adopt fair
  price provisions.

Commentary:  The funds' Trustees recognize that poison pills and fair
price provisions may enhance shareholder value under certain
circumstances.  As a result, the funds will consider proposals to
approve such matters on a case-by-case basis.

Other Business Matters

Many proxies involve approval of routine business matters, such as
changing a company's name, ratifying the appointment of auditors, and
procedural matters relating to the shareholder meeting.  For the most
part, these routine matters do not materially affect shareholder
interests and are best left to the board of directors and senior
management of the company.  The funds will vote for board-approved
proposals approving such matters, except as follows:

* The funds will vote on a case-by-case basis on proposals to amend a
  company's charter or bylaws (except for charter amendments necessary or
  to effect stock splits to change a company's name or to authorize
  additional shares of common stock).

* The funds will vote against authorization to transact other
  unidentified, substantive business at the meeting.

* The funds will vote on a case-by-case basis on other business matters
  where the funds are otherwise withholding votes for the entire board of
  directors.

Commentary:  Charter and bylaw amendments and the transaction of other
unidentified, substantive business at a shareholder meeting may directly
affect shareholder rights and have a significant impact on shareholder
value.  As a result, the funds do not view such items as routine
business matters.  Putnam Management's investment professionals and the
funds' proxy voting service may also bring to the Proxy Coordinator's
attention company-specific items that they believe to be non-routine and
warranting special consideration.  Under these circumstances, the funds
will vote on a case-by-case basis.

II. SHAREHOLDER PROPOSALS

SEC regulations permit shareholders to submit proposals for inclusion in
a company's proxy statement.  These proposals generally seek to change
some aspect of the company's corporate governance structure or to change
some aspect of its business operations.  The funds generally will vote
in accordance with the recommendation of the company's board of
directors on all shareholder proposals, except as follows:

* The funds will vote for shareholder proposals to declassify a board,
  absent special circumstances which would indicate that shareholder
  interests are better served by a classified board structure.

* The funds will vote for shareholder proposals to require shareholder
  approval of shareholder rights plans.

* The funds will vote for shareholder proposals that are consistent with
  the funds' proxy voting guidelines for board-approved proposals.

* The funds will vote on a case-by-case basis on other shareholder
  proposals where the funds are otherwise withholding votes for the entire
  board of directors.

Commentary:  In light of the substantial reforms in corporate governance
that are currently underway, the funds' Trustees believe that effective
corporate reforms should be promoted by holding boards of directors -
and in particular their independent directors - accountable for their
actions, rather than imposing additional legal restrictions on board
governance through piecemeal proposals.  Generally speaking, shareholder
proposals relating to business operations are often motivated primarily
by political or social concerns, rather than the interests of
shareholders as investors in an economic enterprise.  As stated above,
the funds' Trustees believe that boards of directors and management are
responsible for ensuring that their businesses are operating in
accordance with high legal and ethical standards and should be held
accountable for resulting corporate behavior.  Accordingly, the funds
will generally support the recommendations of boards that meet the basic
independence and governance standards established in these guidelines.
Where boards fail to meet these standards, the funds will generally
evaluate shareholder proposals on a case-by-case basis.

III.  VOTING SHARES OF NON-U.S. ISSUERS

Many of the Putnam funds invest on a global basis, and, as a result,
they may be required to vote shares held in non-U.S. issuers - i.e.,
issuers that are incorporated under the laws of foreign jurisdictions
and that are not listed on a U.S. securities exchange or the NASDAQ
stock market.  Because non-U.S. issuers are incorporated under the laws
of countries and jurisdictions outside the U.S., protection for
shareholders may vary significantly from jurisdiction to jurisdiction.
Laws governing non-U.S. issuers may, in some cases, provide
substantially less protection for shareholders.  As a result, the
foregoing guidelines, which are premised on the existence of a sound
corporate governance and disclosure framework, may not be appropriate
under some circumstances for non-U.S. issuers.

In many non-U.S. markets, shareholders who vote proxies of a non-U.S.
issuer are not able to trade in that company's stock on or around the
shareholder meeting date.  This practice is known as "share blocking."
In countries where share blocking is practiced, the funds will vote
proxies only with direction from Putnam Management's investment
professionals.

In addition, some non-U.S. markets require that a company's shares be
re-registered out of the name of the local custodian or nominee into the
name of the shareholder for the meeting.  This practice is known as
"share re-registration."  As a result, shareholders, including the
funds, are not able to trade in that company's stock until the shares
are re-registered back in the name of the local custodian or nominee. In
countries where share re-registration is practiced, the funds will
generally not vote proxies.

The funds will vote proxies of non-U.S. issuers in accordance with the
foregoing guidelines where applicable, except as follows:

Uncontested Election of Directors

Japan

* For companies that have established a U.S.-style corporate structure,
  the funds will withhold votes for the entire board of directors if

* the board does not have a majority of outside directors,

* the board has not established nominating and compensation committees
  composed of a majority of outside directors, or

* the board has not established an audit committee composed of a
  majority of independent directors.

* The funds will withhold votes for the appointment of members of a
  company's board of statutory auditors if a majority of the members of
  the board of statutory auditors is not independent.

Commentary:

Board structure:  Recent amendments to the Japanese Commercial Code give
companies the option to adopt a U.S.-style corporate structure (i.e., a
board of directors and audit, nominating, and compensation committees).
The funds will vote for proposals to amend a company's articles of
incorporation to adopt the U.S.-style corporate structure.

Definition of outside director and independent director:  Corporate
governance principles in Japan focus on the distinction between outside
directors and independent directors.  Under these principles, an outside
director is a director who is not and has never been a director,
executive, or employee of the company or its parent company,
subsidiaries or affiliates.  An outside director is "independent" if
that person can make decisions completely independent from the managers
of the company, its parent, subsidiaries, or affiliates and does not
have a material relationship with the company (i.e., major client,
trading partner, or other business relationship; familial relationship
with current director or executive; etc.).  The guidelines have
incorporated these definitions in applying the board independence
standards above.

Korea

* The funds will withhold votes for the entire board of directors if

* the board does not have a majority of outside directors,

* the board has not established a nominating committee composed of at
  least a majority of outside directors, or

* the board has not established an audit committee composed of at least
  three members and in which at least two-thirds of its members are
  outside directors.

Commentary:  For purposes of these guidelines, an "outside director" is
a director that is independent from the management or controlling
shareholders of the company, and holds no interests that might impair
performing his or her duties impartially from the company, management or
controlling shareholder.  In determining whether a director is an
outside director, the funds will also apply the standards included in
Article 415-2(2) of the Korean Commercial Code (i.e., no employment
relationship with the company for a period of two years before serving
on the committee, no director or employment relationship with the
company's largest shareholder, etc.) and may consider other business
relationships that would affect the independence of an outside director.

United Kingdom

* The funds will withhold votes for the entire board of directors if

* the board does not have at least a majority of independent
  non-executive directors,

* the board has not established nomination committees composed of a
  majority of independent non-executive directors, or

* the board has not established compensation and audit committees
  composed of (1) at least three directors (in the case of smaller
  companies, two directors) and (2) solely of independent non-executive
  directors.

* The funds will withhold votes for any nominee for director who is
  considered an independent director by the company and who has received
  compensation from the company other than for service as a director
  (e.g., investment banking, consulting, legal, or financial advisory
  fees).

Commentary:

Application of guidelines:  Although the U.K.'s Combined Code on
Corporate Governance ("Combined Code") has adopted the "comply and
explain" approach to corporate governance, the funds' Trustees believe
that the guidelines discussed above with respect to board independence
standards are integral to the protection of investors in U.K. companies.
As a result, these guidelines will be applied in a prescriptive manner.

Definition of independence:  For the purposes of these guidelines, a
non-executive director shall be considered independent if the director
meets the independence standards in section A.3.1 of the Combined Code
(i.e., no material business or employment relationships with the
company, no remuneration from the company for non-board services, no
close family ties with senior employees or directors of the company,
etc.), except that the funds do not view service on the board for more
than nine years as affecting a director's independence.

Smaller companies:  A smaller company is one that is below the FTSE 350
throughout the year immediately prior to the reporting year.

Canada

In January 2004, Canadian securities regulators issued proposed policies
that would impose new corporate governance requirements on Canadian
public companies.  The recommended practices contained in these new
corporate governance requirements mirror corporate governance reforms
that have been adopted by the NYSE and other U.S. national securities
exchanges and stock markets.  As a result, the funds will vote on
matters relating to the board of directors of Canadian issuers in
accordance with the guidelines applicable to U.S. issuers.

Commentary:  Like the U.K.'s Combined Code, the proposed policies on
corporate governance issued by Canadian securities regulators embody the
"comply and explain" approach to corporate governance.  Because the
funds' Trustees believe that the board independence standards contained
in the proxy voting guidelines are integral to the protection of
investors in Canadian companies, these standards will be applied in a
prescriptive manner.

Other Matters

* The funds will vote for shareholder proposals calling for a majority
  of a company's directors to be independent of management.

* The funds will vote for shareholder proposals seeking to increase the
  independence of board nominating, audit, and compensation committees.

* The funds will vote for shareholder proposals that implement corporate
  governance standards similar to those established under U.S. federal law
  and the listing requirements of U.S. stock exchanges, and that do not
  otherwise violate the laws of the jurisdiction under which the company
  is incorporated.

* The funds will vote on a case-by-case basis on proposals relating to
  (1) the issuance of common stock in excess of 20% of the company's
  outstanding common stock where shareholders do not have preemptive
  rights, or (2) the issuance of common stock in excess of 100% of the
  company's outstanding common stock where shareholders have preemptive
  rights.

As adopted May 14, 2004


Proxy voting procedures of the Putnam funds

The proxy voting procedures below explain the role of the funds'
Trustees, the proxy voting service and the Proxy Coordinator, as well as
how the process will work when a proxy question needs to be handled on a
case by case basis, or when there may be a conflict of interest.

The role of the funds' Trustees

The Trustees of the Putnam funds exercise control of the voting of
proxies through their Board Policy and Nominating Committee, which is
composed entirely of independent Trustees.  The Board Policy and
Nominating Committee oversees the proxy voting process and participates,
as needed, in the resolution of issues that need to be handled on a
case-by-case basis.  The Committee annually reviews and recommends, for
Trustee approval, guidelines governing the funds' proxy votes, including
how the funds vote on specific proposals and which matters are to be
considered on a case-by-case basis.  The Trustees are assisted in this
process by their independent administrative staff ("Fund
Administration"), independent legal counsel, and an independent proxy
voting service.  The Trustees also receive assistance from Putnam
Investment Management, LLC ("Putnam Management"), the funds' investment
advisor, on matters involving investment judgments.  In all cases, the
ultimate decision on voting proxies rests with the Trustees, acting as
fiduciaries on behalf of the shareholders of the funds.

The role of the proxy voting service

The funds have engaged an independent proxy voting service to assist in
the voting of proxies.  The proxy voting service is responsible for
coordinating with the funds' custodians to ensure that all proxy
materials received by the custodians relating to the funds' portfolio
securities are processed in a timely fashion.  To the extent applicable,
the proxy voting service votes all proxies in accordance with the proxy
voting guidelines established by the Trustees.  The proxy voting service
will refer proxy questions to the Proxy Coordinator (described below)
for instructions under circumstances where: (1) the application of the
proxy voting guidelines is unclear; (2) a particular proxy question is
not covered by the guidelines; or (3) the guidelines call for specific
instructions on a case-by-case basis.  The proxy voting service is also
requested to call to the Proxy Coordinator's attention specific proxy
questions that, while governed by a guideline, appear to involve unusual
or controversial issues.  The funds also utilize research services
relating to proxy questions provided by the proxy voting service and by
other firms.

The role of the Proxy Coordinator

Each year, a member of Fund Administration is appointed Proxy
Coordinator to assist in the coordination and voting of the funds'
proxies.  The Proxy Coordinator will deal directly with the proxy voting
service and, in the case of proxy questions referred by the proxy voting
service, will solicit voting recommendations and instructions from Fund
Administration, the Chair of the Board Policy and Nominating Committee,
and Putnam Management's investment professionals, as appropriate.  The
Proxy Coordinator is responsible for ensuring that these questions and
referrals are responded to in a timely fashion and for transmitting
appropriate voting instructions to the proxy voting service.

Voting procedures for referral items

As discussed above, the proxy voting service will refer proxy questions
to the Proxy Coordinator under certain circumstances.  When the
application of the proxy voting guidelines is unclear or a particular
proxy question is not covered by the guidelines (and does not involve
investment considerations), the Proxy Coordinator will assist in
interpreting the guidelines and, as appropriate, consult with the Senior
Vice President of Fund Administration, the Executive Vice President of
Fund Administration, and the Chair of the Board Policy and Nominating
Committee on how the funds' shares will be voted.

For proxy questions that require a case-by-case analysis pursuant to the
guidelines or that are not covered by the guidelines but involve
investment considerations, the Proxy Coordinator will refer such
questions, through a written request, to Putnam Management's investment
professionals for a voting recommendation.  Such referrals will be made
in cooperation with the person or persons designated by Putnam
Management's Legal and Compliance Department to assist in processing
such referral items.  In connection with each such referral item, the
Legal and Compliance Department will conduct a conflicts of interest
review, as described below under "Conflicts of Interest," and provide a
conflicts of interest report (the "Conflicts Report") to the Proxy
Coordinator describing the results of such review.  After receiving a
referral item from the Proxy Coordinator, Putnam Management's investment
professionals will provide a written recommendation to the Proxy
Coordinator and the person or persons designated by the Legal and
Compliance Department to assist in processing referral items.  Such
recommendation will set forth (1) how the proxies should be voted; (2)
the basis and rationale for such recommendation; and (3) any contacts
the investment professionals have had with respect to the referral item
with non-investment personnel of Putnam Management or with outside
parties (except for routine communications from proxy solicitors).  The
Proxy Coordinator will then review the investment professionals'
recommendation and the Conflicts Report with the Senior Vice President
and/or Executive Vice President in determining how to vote the funds'
proxies.  The Proxy Coordinator will maintain a record of all proxy
questions that have been referred to Putnam Management's investment
professionals, the voting recommendation, and the Conflicts Report.

In some situations, the Proxy Coordinator, the Senior Vice President,
and/or the Executive Vice President may determine that a particular
proxy question raises policy issues requiring consultation with the
Chair of the Board Policy and Nominating Committee, who, in turn, may
decide to bring the particular proxy question to the Committee or the
full Board of Trustees for consideration.

Conflicts of interest

Occasions may arise where a person or organization involved in the proxy
voting process may have a conflict of interest.  A conflict of interest
may exist, for example, if Putnam Management has a business relationship
with (or is actively soliciting business from) either the company
soliciting the proxy or a third party that has a material interest in
the outcome of a proxy vote or that is actively lobbying for a
particular outcome of a proxy vote.  Any individual with knowledge of a
personal conflict of interest (e.g., familial relationship with company
management) relating to a particular referral item shall disclose that
conflict to the Proxy Coordinator and the Legal and Compliance
Department and otherwise remove himself or herself from the proxy voting
process.  The Legal and Compliance Department will review each item
referred to Putnam Management's investment professionals to determine if
a conflict of interest exists and will provide the Proxy Coordinator
with a Conflicts Report for each referral item that (1) describes any
conflict of interest; (2) discusses the procedures used to address such
conflict of interest; and (3) discloses any contacts from parties
outside Putnam Management (other than routine communications from proxy
solicitors) with respect to the referral item not otherwise reported in
an investment professional's recommendation.  The Conflicts Report will
also include written confirmation that any recommendation from an
investment professional provided under circumstances where a conflict of
interest exists was made solely on the investment merits and without
regard to any other consideration.

As adopted March 14, 2003


PUTNAM HIGH INCOME BOND FUND

FORM N-14
PART C

OTHER INFORMATION

Item 15.  Indemnification

Article VIII of the Registrant's Amended and Restated Agreement and
Declaration of Trust provides as follows:

Section 1.  The Trust shall indemnify each of its Trustees and officers
(including persons who serve at the Trust's request as directors,
officers or Trustees of another organization in which the Trust has any
interest as a Shareholder, creditor or otherwise) (hereinafter referred
to as a "Covered Person") against all liabilities and expenses,
including but not limited to amounts paid in satisfaction of judgments,
in compromise or as fines and penalties, and counsel fees reasonably
incurred by any Covered Person in connection with the defense or
disposition of any action, suit or other proceeding, whether civil or
criminal, before any court or administrative or legislative body, in
which such Covered Person may be or may have been involved as a party or
otherwise or with which such Covered Person may be or may have been
threatened, while in office or thereafter, by reason of being or having
been such a Covered Person except with respect to any matter as to which
such Covered Person shall have been finally adjudicated in any such
action, suit or other proceeding (a) not to have acted in good faith in
the reasonable belief that such Covered Person's action was in the best
interests of the Trust or (b) to be liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct
of such Covered Person's office.  Expenses, including counsel fees so
incurred by any such Covered Person (but excluding amounts paid in
satisfaction of judgments, in compromise or as fines or penalties),
shall be paid from time to time by the Trust in advance of the final
disposition of any such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Covered Person to repay amounts so
paid to the Trust if it is ultimately determined that indemnification of
such expenses is not authorized under this Article, provided, however,
that either (a) such Covered Person shall have provided appropriate
security for such undertaking, (b) the Trust shall be insured against
losses arising from any such advance payments or (c) either a majority
of the disinterested Trustees acting on the matter (provided that a
majority of the disinterested Trustees then in office act on the
matter), or independent legal counsel in a written opinion, shall have
determined, based upon a review of readily available facts (as opposed
to a full trial type inquiry) that there is reason to believe that such
Covered Person will be found entitled to indemnification under this
Article.

Section 2.  As to any matter disposed of (whether by a compromise
payment, pursuant to a consent decree or otherwise) without an
adjudication by a court, or by any other body before which the
proceeding was brought, that such Covered Person either (a) did not act
in good faith in the reasonable belief that his or her action was in the
best interests of the Trust or (b) is liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct
of his or her office, indemnification shall be provided if (a) approved
as in the best interests of the Trust, after notice that it involves
such indemnification, by at least a majority of the disinterested
Trustees acting on the matter (provided that a majority of the
disinterested Trustees then in office act on the matter) upon a
determination, based upon a review of readily available facts (as
opposed to a full trial type inquiry) that such Covered Person acted in
good faith in the reasonable belief that his or her action was in the
best interests of the Trust and is not liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct
of his or her office, or (b) there has been obtained an opinion in
writing of independent legal counsel, based upon a review of readily
available facts (as opposed to a full trial type inquiry) to the effect
that such Covered Person appears to have acted in good faith in the
reasonable belief that his or her action was in the best interests of
the Trust and that such indemnification would not protect such Covered
Person against any liability to the Trust to which he or she would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct
of his or her office.  Any approval pursuant to this Section shall not
prevent the recovery from any Covered Person of any amount paid to such
Covered Person in accordance with this Section as indemnification if
such Covered Person is subsequently adjudicated by a court of competent
jurisdiction not to have acted in good faith in the reasonable belief
that such Covered Person's action was in the best interests of the Trust
or to have been liable to the Trust or its Shareholders by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of such Covered Person's office.

Section 3.  The right of indemnification hereby provided shall not be
exclusive of or affect any other rights to which such Covered Person may
be entitled.  As used in this Article VIII, the term "Covered Person"
shall include such person's heirs, executors and administrators and a
"disinterested Trustee" is a Trustee who is not an "interested person"
of the Trust as defined in Section 2(a)(19) of the 1940 Act (or who has
been exempted from being an "interested person" by any rule, regulation
or order of the Commission) and against whom none of such actions, suits
or other proceedings or another action, suit or other proceeding on the
same or similar grounds is then or has been pending.  Nothing contained
in this Article shall affect any rights to indemnification to which
personnel of the Trust, other than Trustees or officers and other
persons may be entitled by contract or otherwise under law, nor the
power of the Trust to purchase and maintain liability insurance on
behalf of any such person.

Item 16.  Exhibits

(1) Amended and Restated Agreement and Declaration of Trust dated August
15, 2002 - Exhibit 1.
(2)(a)  Bylaws, as amended through June 7, 1991 -- Exhibit 2.
(2)(b)  Amendment to Bylaws dated March 9, 2001 -- Exhibit 3.
(3) Not applicable.
(4) Agreement and Plan of Reorganization -- Constitutes Exhibit A to Part
A hereof.
(5)(a)  Portions of Amended and Restated Agreement and Declaration of
Trust Relating to Shareholders' Rights -- Exhibit 4.
(5)(b)  Portions of Bylaws, as amended, Relating to Shareholders' Rights
- - Exhibit 5.
(6) Management Contract dated as of July 11, 1991 -- Exhibit 6.
(7) Not applicable.
(8) Trustee Retirement Plan as adopted October 4, 1996 -- Exhibit 7.
(9) Custodian Agreement with Putnam Fiduciary Trust Company, as amended and
restated as of June 1, 2001 -- Exhibit 8.
(10) Not applicable.
(11) Opinion of Ropes & Gray LLP, including consent -- To be filed by
Pre-Effective Amendment.
(12) Opinion of Ropes & Gray LLP as to Tax Matters -- To be filed by
Post-Effective Amendment.
(13) Not applicable.
(14)(a) Consent of PricewaterhouseCoopers LLP, Independent Registered Public
Accounting Firm to Putnam High Income Bond Fund -- Exhibit 9.
(14)(b) Consent of KPMG LLP, Independent Registered Public Accounting Firm
to Putnam High Income Opportunities Trust -- Exhibit 10.
(15) Not applicable.
(16) Powers of Attorney -- Exhibit 11.
(17) Not applicable.

Item 17.  Undertakings

(a) The undersigned Registrant agrees that prior to any public
reoffering of the securities registered through the use of a prospectus
which is a part of this Registration Statement by any person or party
who is deemed to be an underwriter within the meaning of Rule 145(c)
under the Securities Act of 1933, as amended, the reoffering prospectus
will contain the information called for by the applicable registration
form for reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other items of the
applicable form.

(b) The undersigned Registrant agrees that every prospectus that is
filed under paragraph (a) above will be filed as a part of an amendment
to this Registration Statement and will not be used until the amendment
is effective, and that, in determining any liability under the Act, each
post-effective amendment shall be deemed to be a new Registration
Statement for the securities offered therein, and the offering of the
securities at that time shall be deemed to be the initial bona fide
offering of them.

(c) The Registrant agrees to file an opinion of counsel supporting the
tax consequences of the proposed reorganization as an amendment to this
Registration Statement within a reasonable time after receipt of such
opinion.


NOTICE

A copy of the Agreement and Declaration of Trust, as amended, of the
Registrant is on file with the Secretary of The Commonwealth of
Massachusetts, and notice is hereby given that this Registration
Statement has been executed on behalf of the Registrant by an officer of
the Registrant as an officer and not individually, and the obligations
of or arising out of this Registration Statement are not binding upon
any of the Trustees, officers, or shareholders of the Registrant
individually, but are binding only upon the assets and property of the
Registrant.


SIGNATURES

As required by the Securities Act of 1933, as amended, this Registration
Statement has been signed on behalf of the Registrant, in the City of
Boston and The Commonwealth of Massachusetts on the 4th day of
October, 2004.


PUTNAM HIGH INCOME BOND FUND

By: /s/ Charles E. Porter
    ----------------------------
    Executive Vice President,
    Associate Treasurer and
    Principal Executive Officer

As required by the Securities Act of 1933, as amended, this Registration
Statement has been signed by the following persons in the capacities and
on the dates indicated.

Signature             Title

John A. Hill          Chairman of the Trustees

George Putnam, III    President; Trustee

Charles E. Porter     Executive Vice President, Associate Treasurer
                      and Principal Executive Officer

Steven D. Krichmar    Vice President; Principal Financial Officer

Michael T. Healy      Principal Accounting Officer; Assistant
                      Treasurer

Jameson A. Baxter     Trustee

Charles B. Curtis     Trustee

Ronald J. Jackson     Trustee

Paul L. Joskow        Trustee

Robert E. Patterson   Trustee

A.J.C. Smith          Trustee

W. Thomas Stephens    Trustee


                      By:  Charles E. Porter,
                      as Attorney-in-Fact
                      October 4, 2004

EXHIBIT INDEX

(1) Amended and Restated Agreement and Declaration of Trust dated August
15, 2002 - Exhibit 1.
(2)(a)  Bylaws, as amended through June 7, 1991 -- Exhibit 2.
(2)(b)  Amendment to Bylaws dated March 9, 2001 -- Exhibit 3.
(5)(a)  Portions of Amended and Restated Agreement and Declaration of
Trust Relating to Shareholders' Rights -- Exhibit 4.
(5)(b)  Portions of Bylaws, as amended, Relating to Shareholders' Rights
- - Exhibit 5.
(6) Management Contract dated as of July 11, 1991 -- Exhibit 6.
(8) Trustee Retirement Plan as adopted October 4, 1996 -- Exhibit 7.
(9) Custodian Agreement with Putnam Fiduciary Trust Company, as amended and
restated as of June 1, 2001 --  Exhibit 8.
(14)(a) Consent of PricewaterhouseCoopers LLP, Independent Registered Public
Accounting Firm to Putnam High Income Bond Fund -- Exhibit 9.
(14)(b) Consent of KPMG LLP, Independent Registered Public Accounting Firm
to Putnam High Income Opportunities Trust -- Exhibit 10.
(16) Powers of Attorney - Exhibit 11.

</TEXT>
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<FILENAME>exnnoa2.txt
<DESCRIPTION>EX-99.1 CHARTER
<TEXT>

EXHIBIT 1.

PUTNAM HIGH INCOME CONVERTIBLE AND BOND FUND

AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST

This AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST made at
Boston, Massachusetts, this 15th day of August, 2002, hereby amends and
restates in its entirety the Agreement and Declaration of Trust dated
the 7th day of July, 1988, as heretofore amended.

WITNESSETH that

WHEREAS, this Trust has been formed to carry on the business of an
investment company; and

WHEREAS, the Trustees have agreed to manage all property coming into
their hands as trustees of a Massachusetts voluntary association with
transferable shares in accordance with the provisions hereinafter set
forth.

NOW, THEREFORE, the Trustees hereby declare that they will hold all
cash, securities and other assets, which they may from time to time
acquire in any manner as Trustees hereunder IN TRUST to manage and
dispose of the same upon the following terms and conditions for the pro
rata benefit of the holders from time to time of Shares in this Trust as
hereinafter set forth.


                               ARTICLE I
                          Name and Definitions

Name

Section 1.  This Trust shall be known as "Putnam High Income Bond Fund",
and the Trustees shall conduct the business of the Trust under that name
or any other name as they may from time to time determine.

Definitions

Section 2.  Whenever used herein, unless otherwise required by the
context or specifically provided:

(a) The "Trust" refers to the Massachusetts business trust established
by this Agreement and Declaration of Trust, as amended from time to
time;

(b) "Trustees" refers to the Trustees of the Trust named herein or
elected in accordance with Article IV;

(c) "Shares" means the equal proportionate transferable units of
interest into which the beneficial interest in the Trust shall be
divided from time to time;

(d) "Shareholder" means a record owner of Shares;

(e) The "1940 Act" refers to the Investment Company Act of 1940 and the
Rules and Regulations thereunder, all as amended from time to time;

(f) The terms "Affiliated Person", "Assignment", "Commission",
"Interested Person", "Principal Underwriter" and "Majority Shareholder
Vote" (the 67% or 50% requirement of the third sentence of Section
2(a)(42) of the 1940 Act, whichever may be applicable) shall have the
meanings given them in the 1940 Act;

(g) "Declaration of Trust" shall mean this Agreement and Declaration of
Trust as amended or restated from time to time; and

(h) "Bylaws" shall mean the Bylaws of the Trust as amended from time to
time.


                               ARTICLE II
                           Purpose of Trust

The purpose of the Trust is to provide investors a managed investment
primarily in securities, debt instruments and other instruments and
rights of a financial character.


                             ARTICLE III
                                Shares

Division of Beneficial Interest

Section 1.  The beneficial interest in the Trust shall at all times be
divided into Shares, without par value, each of which shall represent an
equal proportionate interest in the Trust with each other Share, none
having priority or preference over another.  The number of Shares
authorized shall be unlimited.  The Trustees may from time to time
divide or combine the Shares into a greater or lesser number without
thereby changing the proportionate beneficial interests in the Trust.

Ownership of Shares

Section 2.  The ownership of Shares shall be recorded on the books of
the Trust or a transfer or similar agent.  No certificates certifying
the ownership of Shares shall be issued except as the Trustees may
otherwise determine from time to time.  The Trustees may make such rules
as they consider appropriate for the issuance of Share certificates, the
transfer of shares and similar matters.  The record books of the Trust
as kept by the trust or any transfer or similar agent, as the case may
be, shall be conclusive as to who are the Shareholders and as to the
number of Shares held from time to time by each Shareholder.

Investment in the Trust

Section 3.  The Trustees shall accept investments in the Trust from such
persons and on such terms and for such consideration, which may consist
of cash or tangible or intangible property or a combination thereof, as
they or the Bylaws from time to time authorize.

No Preemptive Rights

Section 4.  Shareholders shall have no preemptive or other right to
subscribe to any additional Shares or other securities issued by the
Trust.

Status of Shares and Limitation of Personal Liability

Section 5.  Shares shall be deemed to be personal property giving only
the rights provided in this instrument.  Every Shareholder by virtue of
having become a Shareholder shall be held to have expressly assented and
agreed to the terms hereof and to have become a party hereto.  The death
of a shareholder during the continuance of the Trust shall not operate
to terminate the same nor entitle the representative of any deceased
Shareholder to an accounting or to take any action in court or elsewhere
against the Trust or the Trustees, but only to the rights of said
decedent under this Trust.  Ownership of Shares shall not entitle the
Shareholder to any title in or to the whole or any part of the Trust
property or right to call for a partition or division of the same or for
an accounting, nor shall the ownership of shares constitute the
Shareholders partners.  Neither the Trust nor the Trustees, nor any
officer, employee or agent of the Trust shall have any power to bind
personally any Shareholder, nor except as specifically provided herein
to call upon any Shareholder for the payment of any sum of money or
assessment whatsoever other than such as the Shareholder may at any time
personally agree to pay.


                              ARTICLE IV
                             The Trustees

Election

Section 1.  In each year beginning in 1988, at the annual meeting of
Shareholders or at any special meeting held in lieu thereof, or at any
special meeting held before 1988, the Shareholders shall fix the number
of and elect a Board of not less than three Trustees, each of whom shall
serve until the next annual meeting or special meeting in lieu thereof
and until the election and qualification of his or her successor, or
until he or she sooner dies, resigns or is removed.  The initial
Trustees, each of whom shall serve until the first meeting of
Shareholders at which Trustees are elected and until his or her
successor is elected and qualified, or until he or she sooner dies,
resigns or is removed shall be George Putnam and Alla O'Brien and such
other persons as the Trustee or Trustees then in office shall, prior to
any sale of Shares pursuant to public offering, appoint.

Effect of Death, Resignation, etc. of a Trustee

Section 2.  The death, declination, resignation, retirement, removal or
incapacity of the Trustees, or any one of them, shall not operate to
annul the Trust or to revoke any existing agency created pursuant to the
terms of this Declaration of Trust.

Powers

Section 3.  Subject to the provisions of this Declaration of Trust, the
business of the Trust shall be managed by the Trustees, and they shall
have all powers necessary or convenient to carry out that
responsibility.  Without limiting the foregoing, the Trustees may adopt
Bylaws not inconsistent with this Declaration of Trust providing for the
conduct of the business of the Trust and may amend and repeal them to
the extent that such Bylaws do not reserve that right to the
Shareholders; they may fill vacancies in or add to their number, and may
elect and remove such officers and appoint and terminate such agents as
they consider appropriate; they may appoint from their own number, and
terminate, any one or more committees consisting of two or more
Trustees, including an executive committee which may, when the Trustees
are not in session, exercise some or all of the power and authority of
the Trustees as the Trustees may determine; they may employ one or more
custodians of the assets of the Trust and may authorize such custodians
to employ subcustodians and to deposit all or any part of such assets in
a system or systems for the central handling of securities, retain a
transfer agent or a shareholder servicing agent, or both, provide for
the distribution of Shares by the Trust, through one or more principal
underwriters or otherwise, set record dates for the determination of
Shareholders with respect to various matters, and in general delegate
such authority as they consider desirable to any officer of the Trust,
to any committee of the Trustees and to any agent or employee of the
Trust or to any such custodian or underwriter.

Without limiting the foregoing, the Trustees shall have power and
authority:

(a) To invest and reinvest cash, and to hold cash uninvested;

(b) To sell, exchange, lend, pledge, mortgage, hypothecate, write
options on and lease the assets of the Trust except as otherwise
provided in Article IX, Section 5;

(c) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and
deliver proxies or powers of attorney to such person or persons as the
Trustees shall deem proper, granting to such person or persons such
power and discretion with relation to securities or property as the
Trustees shall deem proper;

(d) To exercise powers and rights of subscription or otherwise which in
any manner arise out of ownership of securities;

(e) To hold any security or property in a form not indicating any trust,
whether in bearer, unregistered or other negotiable form, or in the name
of the Trustees or of the Trust or in the name of a custodian,
subcustodian or other depositary or a nominee or nominees or otherwise;

(f) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer, any security of
which is or was held in the Trust; to consent to any contract, lease,
mortgage, purchase or sale of property by such corporation or issuer,
and to pay calls or subscriptions with respect to any security held in
the Trust;

(g) To join with other security holders in acting through a committee,
depositary, voting trustee or otherwise, and in that connection to
deposit any security with, or transfer any security to, any such
committee, depositary or trustee, and to delegate to them such power and
authority with relation to any security (whether or not so deposited or
transferred) as the Trustees shall deem proper, and to agree to pay, and
to pay, such portion of the expenses and compensation of such committee,
depositary or trustee as the Trustees shall deem proper;

(h) To compromise, arbitrate or otherwise adjust claims in favor of or
against the Trust or any matter in controversy, including but not
limited to claims for taxes;

(i) To enter into joint ventures, general or limited partnerships and
any other combinations or associations;

(j) To borrow funds;

(k) To endorse or guarantee the payment of any notes or other
obligations of any person; to make contracts of guaranty or suretyship,
or otherwise assume liability for payment thereof; and to mortgage and
pledge the Trust property or any part thereof to secure any of or all
such obligations;

(l) To purchase and pay for entirely out of Trust property such
insurance as they may deem necessary or appropriate for the conduct of
the business, including without limitation, insurance policies insuring
the assets of the Trust and payment of distributions and principal on
its portfolio investments, and insurance policies insuring the
Shareholders, Trustees, officers, employees, agents, investment advisers
or managers, principal underwriters, or independent contractors of the
Trust individually against all claims and liabilities of every nature
arising by reason of holding, being or having held any such office or
position, or by reason of any action alleged to have been taken or
omitted by any such person as Shareholder, Trustee, officer, employee,
agent, investment adviser or manager, principal underwriter, or
independent contractor, including any action taken or omitted that may
be determined to constitute negligence, whether or not the Trust would
have the power to indemnify such person against such liability; and

(m) To pay pensions for faithful service, as deemed appropriate by the
Trustees, and to adopt, establish and carry out pension, profit-sharing,
share bonus, share purchase, savings, thrift and other retirement,
incentive and benefit plans, trusts and provisions, including the
purchasing of life insurance and annuity contracts as a means of
providing such retirement and other benefits, for any or all of the
Trustees, officers, employees and agents of the Trust.

The Trustees shall not in any way be bound or limited by any present or
future law or custom in regard to investments by trustees.  Except as
otherwise provided herein or from time to time in the Bylaws, any action
to be taken by the Trustees may be taken by a majority of the Trustees
present at a meeting of Trustees (a quorum being present), within or
without Massachusetts, including any meeting held by means of a
conference telephone or other communications equipment by means of which
all persons participating in the meeting can hear each other at the same
time and participation by such means shall constitute presence in person
at a meeting, or by written consents of a majority of the Trustees then
in office.

Payment of Expenses by Trust

Section 4.  The Trustees are authorized to pay or to cause to be paid
out of the assets of the Trust, all expenses, fees, charges, taxes and
liabilities incurred or arising in connection with the Trust, or in
connection with the management thereof, including, but not limited to,
the Trustees' compensation and such expenses and charges for the
services of the Trust's officers, employees, investment adviser or
manager, principal underwriter, auditor, counsel, custodian, transfer
agent, Shareholder servicing agent, and such other agents or independent
contractors and such other expenses and charges as the Trustees may deem
necessary or proper to incur.

Ownership of Assets of the Trust

Section 5.  Title to all of the assets of the Trust shall at all times
be considered as vested in the Trustees.

Advisory, Management and Distribution

Section 6.  Subject to a favorable Majority Shareholder Vote, the
Trustees may, at any time and from time to time, contract for exclusive
or nonexclusive advisory and/or management services with any
corporation, trust, association or other organization (the "Manager"),
every such contract to comply with such requirements and restrictions as
may be set forth in the Bylaws; and any such contract may contain such
other terms interpretive of or in addition to said requirements and
restrictions as the Trustees may determine, including, without
limitation, authority to determine from time to time what investments
shall be purchased, held, sold or exchanged and what portion, if any, of
the assets of the Trust shall be held uninvested and to make changes in
the Trust's investments.  The Trustees may also, at any time and from
time to time, contract with the Manager or any other corporation, trust,
association or other organization, appointing it exclusive or
nonexclusive distributor or principal underwriter for the Shares, every
such contract to comply with such requirements and restrictions as may
be set forth in the Bylaws; and any such contract may contain such other
terms interpretive of or in addition to said requirements and
restrictions as the Trustees may determine.

The fact that:

(i) any of the Shareholders, Trustees or officers of the Trust is a
shareholder, director, officer, partner, trustee, employee, manager,
adviser, principal underwriter or distributor or agent of or for any
corporation, trust, association, or other organization, or of or for any
parent or affiliate of any organization, with which an advisory or
management contract, or principal underwriter's or distributor's
contract, or transfer, Shareholder servicing or other agency contract
may have been or may hereafter be made, or that any such organization,
or any parent or affiliate thereof, is a Shareholder or has an interest
in the Trust, or that

(ii) any corporation, trust, association or other organization with
which an advisory or management contract or principal underwriter's or
distributor's contract, or transfer, Shareholder servicing or other
agency contract may have been or may hereafter be made also has an
advisory or management contract, or transfer, Shareholder servicing or
other agency contract with one or more other corporation trusts,
associations, or other organizations, or has other business or interests
shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or
executing the same or create any liability or accountability to the
Trust or its Shareholders.


                               ARTICLE V
                 Shareholders' Voting Powers and Meetings

Voting Powers

Section 1.  The Shareholders shall have power to vote only (i) for the
election of Trustees as provided in Article IV, Section 1, (ii) with
respect to any Manager as provided in Article IV, Section 6, (iii) with
respect to any termination of this Trust to the extent and as provided
in Article IX, Section 4, (iv) with respect to any merger, consolidation
or sale of assets of the Trust to the extent and as provided in Article
IX, Section 5, (v) with respect to any conversion of the Trust as
provided in Article IX, Section 6, (vi) with respect to any amendment of
this Declaration of Trust to the extent and as provided in Article IX,
Section 9, (vii) to the same extent as the stockholders of a
Massachusetts business corporation as to whether or not court action,
proceeding or claim should or should not be brought or maintained
derivatively or as a class action on behalf of the Trust or the
Shareholders, and (viii) with respect to such additional matters
relating to the Trust as may be required by this Declaration of Trust,
the Bylaws or any registration of the Trust with the Commission (or any
successor agency) or any state, or as the Trustees may consider
necessary or desirable.  Each whole Share shall be entitled to one vote
as to any matter on which it is entitled to vote and each fractional
Share shall be entitled to a proportionate fractional vote.  There shall
be no cumulative voting in the election of Trustees.  Shares may be
voted in person or by proxy.  A proxy with respect to Shares held in the
name of two or more persons shall be valid if executed by any one of
them unless at or prior to exercise of the proxy the Trust receives a
specific written notice to the contrary from any one of them.  A proxy
purporting to be executed by or on behalf of a Shareholder shall be
deemed valid unless challenged at or prior to its exercise and the
burden of proving invalidity shall rest on the challenger.  Until Shares
are issued, the Trustees may exercise all rights of Shareholders and may
take any action required by law, this Declaration of Trust or Bylaws to
be taken by Shareholders.

Voting Power and Meetings

Section 2.  There shall be an annual meeting of the Shareholders on the
date fixed in the Bylaws at the office of the Trust in Boston,
Massachusetts, or at such other place as may be designated in the call
thereof, which call shall be made by the Trustees.  In the event that
such meeting is not held in any year on the date fixed in the Bylaws,
whether the omission be by oversight or otherwise, a subsequent special
meeting may be called by the Trustees and held in lieu of the annual
meeting with the same effect as though held on such date.  Special
meetings may also be called by the Trustees from time to time for the
purpose of taking action upon any matter requiring the vote or authority
of the Shareholders as herein provided or upon any other matter deemed
by the Trustees to be necessary or desirable.  Written notice of any
meeting of Shareholders shall be given or caused to be given by the
Trustees by mailing such notice at least seven days before such meeting,
postage prepaid, stating the time, place and purpose of the meeting, to
each Shareholder entitled to vote at such meeting at the Shareholder's
address as it appears on the records of the Trust.  If the Trustees
shall fail to call or give notice of any meeting of Shareholders for a
period of 30 days after written application by Shareholders holding at
least 25% of the then outstanding shares entitled to vote at such
meeting requesting a meeting to be called for a purpose requiring action
by the Shareholders as provided herein or in the Bylaws, then
Shareholders holding at least 25% of the then outstanding shares
entitled to vote at such meeting may call and give notice of such
meeting, and thereupon the meeting shall be held in the manner provided
for herein in case of call thereof by the Trustees.  Notice of a meeting
need not be given to any Shareholder if a written waiver of notice,
executed by him or her before or after the meeting, is filed with the
records of the meeting, or to any Shareholder who attends the meeting
without protesting prior thereto or at its commencement the lack of
notice to him or her.

Quorum and Required Vote

Section 3.  A majority of shares entitled to vote shall be a quorum for
the transaction of business at a shareholder's meeting but any lesser
number shall be sufficient for adjournments.  Any adjourned session or
sessions may be held, within a reasonable time after the date set for
the original meeting, without the necessity of further notice.  Except
when a larger vote is required by any provision of this Declaration of
Trust or the Bylaws, a majority of the Shares voted shall decide any
questions and a plurality shall elect a Trustee.

Action by Written Consent

Section 4.  Any action taken by Shareholders may be taken without a
meeting if a majority of Shareholders entitled to vote on the matter (or
such larger proportion thereof as shall be required by any express
provision of this Declaration of Trust or the Bylaws) consent to the
action in writing and such written consents are filed with the records
of the meetings of Shareholders.  Such consent shall be treated for all
purposes as a vote taken at a meeting of Shareholders.

Additional Provisions

Section 5.  The Bylaws may include further provisions of Shareholders'
votes and meeting and related matters.


                               ARTICLE VI
                             Distributions

The Trustees may each year, or more frequently if they so determine,
distribute to the Shareholders such amounts as the Trustees may
determine.  Any amounts shall be distributed pro rata in proportion to
the number of Shares held by each Shareholder.  Such distributions shall
be made in cash or Shares or a combination thereof as determined by the
Trustees.  Any such distribution paid in Shares will be paid at the net
asset value thereof as determined in accordance with the Bylaws.


                               ARTICLE VII
            Compensation and Limitation of Liability of Trustees

Compensation

Section 1.  The Trustees as such shall be entitled to reasonable
compensation from the Trust; they may fix the amount of their
compensation.  Nothing herein shall in any way prevent the employment of
any Trustee for advisory, management, legal, accounting, investment
banking or other services and payment for the same by the Trust.

Limitation of Liability

Section 2.  The Trustees shall not be responsible or liable in any event
for any neglect or wrongdoing of any officer, agent, employee, manager
or principal underwriter of the Trust, nor shall any Trustee be
responsible for the act or omission of any other Trustee, but nothing
herein contained shall protect any Trustee against any liability to
which he or she would otherwise be subject by reason of wilful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office.

Every note, bond, contract, instrument, certificate or undertaking and
every other act or thing whatsoever executed or done by or on behalf of
the trust or the Trustees or any of them in connection with the Trust
shall be conclusively deemed to have been executed or done only in or
with respect to their or his or her capacity as Trustees or Trustee, and
such Trustees or Trustee shall not be personally liable thereon.


                              ARTICLE VIII
                            Indemnification

Trustees, Officers, etc.

Section 1.  The Trust shall indemnify each of its Trustees and officers
(including persons who serve at the Trust's request as directors,
officers or Trustees of another organization in which the Trust has any
interest as a Shareholder, creditor or otherwise) (hereinafter referred
to as a "Covered Person") against all liabilities and expenses,
including but not limited to amounts paid in satisfaction of judgments,
in compromise or as fines and penalties, and counsel fees reasonably
incurred by any Covered Person in connection with the defense or
disposition of any action, suit or other proceeding, whether civil or
criminal, before any court or administrative or legislative body, in
which such Covered Person may be or may have been involved as a party or
otherwise or with which such Covered Person may be or may have been
threatened, while in office or thereafter, by reason of being or having
been such a Covered Person except with respect to any matter as to which
such Covered Person shall have been finally adjudicated in any such
action, suit or other proceeding (a) not to have acted in good faith in
the reasonable belief that such Covered Person's action was in the best
interests of the Trust or (b) to be liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct
of such Covered Person's office.  Expenses, including counsel fees so
incurred by any such Covered Person (but excluding amounts paid in
satisfaction of judgments, in compromise or as fines or penalties),
shall be paid from time to time by the Trust in advance of the final
disposition of any such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Covered Person to repay amounts so
paid to the Trust if it is ultimately determined that indemnification of
such expenses is not authorized under this Article, provided, however,
that either (a) such Covered Person shall have provided appropriate
security for such undertaking, (b) the Trust shall be insured against
losses arising from any such advance payments or (c) either a majority
of the disinterested Trustees acting on the matter (provided that a
majority of the disinterested Trustees then in office act on the
matter), or independent legal counsel in a written opinion, shall have
determined, based upon a review of readily available facts (as opposed
to a full trial type inquiry) that there is reason to believe that such
Covered Person will be found entitled to indemnification under this
Article.

Compromise Payment

Section 2.  As to any matter disposed of (whether by a compromise
payment, pursuant to a consent decree or otherwise) without an
adjudication by a court, or by any other body before which the
proceeding was brought, that such Covered Person either (a) did not act
in good faith in the reasonable belief that his or her action was in the
best interests of the Trust or (b) is liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct
of his or her office, indemnification shall be provided if (a) approved
as in the best interests of the Trust, after notice that it involves
such indemnification, by at least a majority of the disinterested
Trustees acting on the matter (provided that a majority of the
disinterested Trustees then in office act on the matter) upon a
determination, based upon a review of readily available facts (as
opposed to a full trial type inquiry) that such Covered Person acted in
good faith in the reasonable belief that his or her action was in the
best interests of the Trust and is not liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct
of his or her office, or (b) there has been obtained an opinion in
writing of independent legal counsel, based upon a review of readily
available facts (as opposed to a full trial type inquiry) to the effect
that such Covered Person appears to have acted in good faith in the
reasonable belief that his or her action was in the best interests of
the Trust and that such indemnification would not protect such Covered
Person against any liability to the Trust to which he or she would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct
of his or her office.  Any approval pursuant to this Section shall not
prevent the recovery from any Covered Person of any amount paid to such
Covered Person in accordance with this Section as indemnification if
such Covered Person is subsequently adjudicated by a court of competent
jurisdiction not to have acted in good faith in the reasonable belief
that such Covered Person's action was in the best interests of the Trust
or to have been liable to the Trust or its Shareholders by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of such Covered Person's office.

Indemnification Not Exclusive

Section 3.  The right of indemnification hereby provided shall not be
exclusive of or affect any other rights to which such Covered Person may
be entitled.  As used in this Article VIII, the term "Covered Person"
shall include such person's heirs, executors and administrators and a
"disinterested Trustee" is a Trustee who is not an "interested person"
of the Trust as defined in Section 2(a)(19) of the 1940 Act (or who has
been exempted from being an "interested person" by any rule, regulation
or order of the Commission) and against whom none of such actions, suits
or other proceedings or another action, suit or other proceeding on the
same or similar grounds is then or has been pending.  Nothing contained
in this Article shall affect any rights to indemnification to which
personnel of the Trust, other than Trustees or officers and other
persons may be entitled by contract or otherwise under law, nor the
power of the Trust to purchase and maintain liability insurance on
behalf of any such person.

Shareholders

Section 4.  In case any Shareholder or former Shareholder shall be held
to be personally liable solely by reason of his or her being or having
been a Shareholder and not because of his or her acts or omissions or
for some other reason, the Shareholder or former Shareholder (or his or
her heirs, executors, administrators or other legal representatives or
in the case of a corporation or other entity, its corporate or other
general successor) shall be entitled to be held harmless from and
indemnified against all loss and expense arising from such liability,
but only out of the assets of the particular series of Shares of which
he or she is or was a Shareholder.


                              ARTICLE IX
                            Miscellaneous

Trustees, Shareholders, etc.  Not Personally Liable; Notice

Section 1.  All persons extending credit to, contracting with or having
any claim against the Trust or a particular series of Shares shall look
only to the assets of the Trust or the assets of that particular series
of Shares for payment under such credit, contract or claim, and neither
the Shareholders nor the Trustees, nor any of the Trust's officers,
employees or agents, whether past, present or future, shall be
personally liable therefore.  Nothing in this Declaration of Trust shall
protect any Trustee against any liability to which such Trustee would
otherwise be subject  by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct
of the office of Trustee.

Every note, bond, contract, instrument, certificate or undertaking made
or issued by the Trustees or by any officer or officers shall give
notice that this Declaration of Trust is on file with the Secretary of
The Commonwealth of Massachusetts and shall recite that the same was
executed or made by or on behalf of the Trust or by them as Trustee or
Trustees or as officer or officers and not individually and that the
obligations of such instrument are not binding upon any of them or the
Shareholders individually but are binding only upon the assets and
property of the Trust, and may contain such further recital as he or she
or they may deem appropriate, but the omission thereof shall not operate
to bind any Trustee or Trustees or officer or officers or Shareholder or
Shareholders individually.

Trustee's Good Faith Action, Expert Advice, No Bond or Surety

Section 2.  The exercise by the Trustees of their powers and discretions
hereunder shall be binding upon everyone interested.  A Trustee shall be
liable for his or her own willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct
of the office of Trustee, and for nothing else, and shall not be liable
for errors of judgment or mistakes of fact or law.  The Trustees may
take advice of counsel or other experts with respect to the meaning and
operation of this Declaration of Trust, and shall be under no liability
for any act or omission in accordance with such advice or for failing to
follow such advice.  The Trustees shall not be required to give any bond
as such, nor any surety if a bond is required.

Liability of Third Persons Dealing with Trustee

Section 3.  No person dealing with the Trustees shall be bound to make
any inquiry concerning the validity of any transaction made or to be
made by the Trustees or to see to the application of any payments made
or property transferred to the Trust or upon its order.

Duration and Termination of Trust

Section 4.  Unless terminated as provided herein, the Trust shall
continue without limitation of time.  The Trust may be terminated at any
time by vote of Shareholders holding at least 66 2/3% of the Shares
entitled to vote (provided, however, if such termination is recommended
by two-thirds of the Trustees the vote of a majority of shares entitled
to vote shall be sufficient authorization) or by the Trustees by written
notice to the Shareholders.  Upon termination of the Trust, after paying
or otherwise providing for all charges, taxes, expenses and liabilities,
whether due or accrued or anticipated, of the Trust or as may be
determined by the Trustees, the Trust shall in accordance with such
procedures as the Trustees consider appropriate reduce the remaining
assets to distributable form in cash or shares or other securities, or
any combination thereof, and distribute the proceeds to the
Shareholders, ratably according to the number of Shares held by the
several Shareholders on the date of termination.

Merger, Consolidation and Sale of Assets

Section 5.  The Trust may merge or consolidate with any other
corporation, association, trust or other organization or may sell, lease
or exchange all or substantially all of its assets, including its good
will, upon such terms and conditions and for such consideration when and
as authorized at any meeting of Shareholders called for the purpose, or
may liquidate or dissolve when and as authorized, by the affirmative
vote of the holders of not less than two-thirds of the Shares entitled
to vote, provided, however, that if such merger, consolidation, sale,
lease or exchange is recommended by two-thirds of the Trustees, the vote
of the holders of a majority of Shares entitled to vote shall be
sufficient authorization.  Nothing contained herein shall be construed
as requiring approval of Shareholders for any sale of assets in the
ordinary course of business of the Trust.

Conversion

Section 6.  The Fund may be converted at any time from a "closed-end
company" to an "open-end company" as those terms are defined in Section
5(a)(2) and 5(a)(1), respectively, of the 1940 Act as in effect on
January 1, 1987, upon the approval of such a proposal, together with the
necessary amendments to the Declaration of Trust to permit such a
conversion, by the holders of two-thirds of the Fund's outstanding
Shares entitled to vote, except that if such proposal is recommended by
two-thirds of the total number of Trustees then in office or such
proposal is voted upon after the beginning of the fiscal year commencing
in 1992 such proposal may be adopted by a vote of a majority of the
Fund's outstanding Shares entitled to vote.  In addition, commencing
with the beginning of the fiscal year commencing in 1992, and in each
fiscal year thereafter, if Shares of the Fund have traded on the
principal securities exchange where listed at an average discount of
more than ten percent (10%), determined on the basis of the discount as
of the end of the last trading day in each week during the period of
twelve (12) calendar weeks preceding the beginning of each such fiscal
year, the Trustees will submit to the shareholders at the next
succeeding annual meeting, or within six months thereafter if the Fund
does not then hold annual meetings, a proposal to convert the Fund from
a "closed-end company" to an "open-end company," as those terms are
defined above, together with the necessary amendments to this
Declaration of Trust to permit such a conversion.  Upon the adoption of
such proposal and related amendments by the Fund's outstanding shares
entitled to vote, the Fund shall upon complying with any requirements of
the 1940 Act and state law, become an "open-end" investment company.
Such affirmative vote or consent shall be in addition to the vote or
consent of the holders of the Shares otherwise required by law, or any
agreement between the Trust and any national securities exchange.

Filing of Copies, References, Headings

Section 7.  The original or a copy of this instrument and of each
amendment hereto shall be kept at the office of the Trust where it may
be inspected by any Shareholder.  A copy of this instrument and of each
amendment hereto shall be filed by the Trust with the Secretary of The
Commonwealth of Massachusetts and with the Boston City Clerk, as well as
any other governmental office where such filing may from time to time be
required.  Anyone dealing with the Trust may rely on a certificate by an
officer of the Trust as to whether or not any such amendments have been
made and as to any matters in connection with the Trust hereunder, and,
with the same effect as if it were the original, may rely on a copy
certified by an officer of the Trust to be a copy of this instrument or
of any such amendments.  In this instrument and in any such amendment,
references to this instrument and all expressions like "herein",
"hereof" and "hereunder" shall be deemed to refer to this instrument as
amended or affected by any such amendments.  Headings are placed herein
for convenience of reference only and shall not be taken as a part
hereof or control or affect the meaning, construction or effect of this
instrument.  This instrument may be executed in any number of
counterparts each of which shall be deemed an original.

Applicable Law

Section 8.  This Declaration of Trust is made in The Commonwealth of
Massachusetts, and it is created under and is to be governed by and
construed and administered according to the laws of said Commonwealth.
The Trust shall be of the type commonly called a Massachusetts business
trust, and without limiting the provisions hereof, the Trust may
exercise all powers which are ordinarily exercised by such a trust.

Amendments

Section 9.  This Declaration of Trust may be amended at any time by an
instrument in writing signed by a majority of the then Trustees when
authorized to do so by vote of Shareholders holding a majority of the
Shares entitled to vote, except that an amendment amending or affecting
the provisions of Section 1 of Article IV, Sections 5 and 6 of this
Article IX or of this sentence shall require the vote of Shareholders
holding two-thirds of the Shares entitled to vote.  Amendments having
the purpose of changing the name of the Trust or of supplying any
omission, curing any ambiguity or curing, correcting or supplementing
any defective or inconsistent provision contained herein shall not
require authorization by Shareholder vote.

IN WITNESS WHEREOF, each of the undersigned has hereunto set his/her
hand and seal in the City of Boston, Massachusetts for himself/herself
and his/her assigns, as of the day and year first above written.

THE COMMONWEALTH OF MASSACHUSETTS

Suffolk, ss.                                   Boston, August 22, 2002

Then personally appeared the above-named Trustees of Putnam High Income
Bond Fund, (formerly known as Putnam High Income Convertible and Bond
Fund) and acknowledged the foregoing instrument to be his or her free
act and deed, before me,

                                          /s/ Anne B. McCarthy
                                          --------------------------------
                                          Anne B. McCarthy
                                          Notary Public
                                          My Commission Expires: 9/18/2003

The address of the Trust is One Post Office Square, Boston,
Massachusetts 02109.

IN WITNESS WHEREOF, the undersigned, being a majority of the Trustees of
the Trust, hereunto set their hands and seals in the City of Boston,
Massachusetts, for themselves and their assigns, as of the day and year
first above written.

                                                 /s/ John H. Mullin, III
- --------------------------------            --------------------------------
    Jameson A. Baxter                           John H. Mullin, III

    /s/ Charles B. Curtis                       /s/ Robert E. Patterson
- --------------------------------            --------------------------------
    Charles B. Curtis                           Robert E. Patterson

                                                /s/ W. Thomas Stephens
- --------------------------------            --------------------------------
    John A. Hill                                W. Thomas Stephens


- --------------------------------            --------------------------------
    Ronald J. Jackson                           W. Nicholas Thorndike

    /s/ Paul L. Joskow                          /s/ George Putnam, III
- --------------------------------            --------------------------------
    Paul L. Joskow                              George Putnam, III

    /s/ Elizabeth T. Kennan                     /s/ A. J. C. Smith
- --------------------------------            --------------------------------
    Elizabeth T. Kennan                         A. J. C. Smith

    /s/ Lawrence J. Lasser
- --------------------------------
    Lawrence J. Lasser



              Board of Trustees
           Putnam Investments, LLC
             Trustees Addresses

Trustee                       Residence

Jameson A. Baxter             241 Island View Lane
                              Barrington, IL  60010

Charles B. Curtis             5300 Hampden Lane
                              Bethesda, MD  20814

John A. Hill                  33 Avon Road
                              Bronxville, NY  10708

Ronald J. Jackson             35 Paine Avenue
                              Prides Crossing, MA  01965

Paul L. Joskow                7 Chilton Street
                              Brookline, MA  02446

Elizabeth T. Kennan           P.O. Box 1989
                              Danville, KY  40423

Lawrence J. Lasser            342 Warren Street
                              Brookline, MA  02445

John H. Mullin, III           700 Ridgeway Farm Lane
                              Brookneal, VA  24528

Robert E. Patterson           370 Beacon Street
                              Boston, MA  02116

George Putnam, III            52 Proctor Street
                              Manchester, MA  01944

A.J.C. Smith                  630 Park Avenue 11-C
                              New York, NY  10021

W. Thomas Stephens            3333 East Platte Avenue
                              Greenwood Village, CO  80121

W. Nicholas Thorndike         10 Walnut Place
                              Brookline, MA  02445

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2 BYLAWS
<SEQUENCE>3
<FILENAME>exnnta3.txt
<DESCRIPTION>EX-99.2 BYLAWS
<TEXT>

EXHIBIT 2.


                            BYLAWS
                              OF
        PUTNAM HIGH INCOME CONVERTIBLE AND BOND FUND,
        PUTNAM INTERMEDIATE GOVERNMENT INCOME TRUST,
                 PUTNAM MASTER INCOME TRUST,
         PUTNAM MASTER INTERMEDIATE INCOME TRUST, AND
                PUTNAM PREMIER INCOME TRUST

              (as amended through June 7, 1991)

                         ARTICLE 1
     Agreement and Declaration of Trust and Principal Office

1.1. Agreement and Declaration of Trust.  These Bylaws shall be subject
to the Agreement and Declaration of Trust, as from time to time in
effect (the "Declaration of Trust"), of the Massachusetts business trust
established by the Declaration of Trust (the "Trust").

1.2. Principal Office of the Trust.  The principal office of the Trust
shall be located in Boston, Massachusetts.


                         ARTICLE 2
                    Meetings of Trustees

2.1. Regular Meetings.  Regular meetings of the Trustees may be held
without call or notice at such places and at such times as the Trustees
may from time to time determine, provided that notice of the first
regular meeting following any such determination shall be given to
absent Trustees.

2.2. Special Meetings.  Special meetings of the Trustees may be held at
any time and at any place designated in the call of the meeting when
called by the Chairman of the Trustees, the President or the Treasurer
or by two or more Trustees, sufficient notice thereof being given to
each Trustee by the Clerk or an Assistant Clerk or by the officer or the
Trustees calling the meeting.

2.3. Notice of Special Meetings.  It shall be sufficient notice to a
Trustee of a special meeting to send notice by mail at least forty-eight
hours or by telegram at least twenty-four hours before the meeting
addressed to the Trustee at his or her usual or last known business or
residence address or to give notice to him or her in person or by
telephone at least twenty-four hours before the meeting.  Notice of a
special meeting need not be given to any Trustee if a written waiver of
notice, executed by him or her before or after the meeting, is filed
with the records of the meeting, or to any Trustee who attends the
meeting without protesting prior thereto or at its commencement the lack
of notice to him or her.  Neither notice of a meeting nor a waiver of a
notice need specify the purposes of the meeting.

2.4. Quorum.  At any meeting of the Trustees a majority of the Trustees
then in office shall constitute a quorum.  Any meeting may be adjourned
from time to time by a majority of the votes cast upon the question,
whether or not a quorum is present and the meeting may be held as
adjourned without further notice.

2.5. Notice of Certain Actions by Consent.  If in accordance with the
provisions of the Declaration of Trust any action is taken by the
Trustees by written consent of less than all of the Trustees, then
prompt notice of any such action shall be furnished to each Trustee who
did not execute such written consent, provided that the effectiveness of
such action shall not be impaired by any delay or failure to furnish
such notice.


                         ARTICLE 3
                         Officers

3.1. Enumeration; Qualification.  The officers of the Trust shall be a
Chairman of the Trustees, a President, a Treasurer, a Clerk and such
other officers, if any, as the Trustees from time to time may in their
discretion elect.  The Trust may also have such agents as the Trustees
from time to time may in their discretion appoint.  The Chairman of the
Trustees and the President shall be a Trustee and may but need not be a
shareholder; and any other officer may but need not be a Trustee or a
shareholder.  Any two or more offices may be held by the same person.  A
Trustee may but need not be a shareholder.

3.2. Election.  The Chairman of the Trustees, the President, the
Treasurer and the Clerk shall be elected by the Trustees upon the
occurrence of any vacancy in any such office.  Other officers, if any,
may be elected or appointed by the Trustees at any time.  Vacancies in
any such other office may be filled at any time.

3.3. Tenure.  The Chairman of the Trustees, the President, the Treasurer
and the Clerk shall hold office in each case until he or she dies,
resigns, is removed or becomes disqualified.  Each other officer shall
hold office and each agent shall retain authority at the pleasure of the
Trustees.

3.4. Powers.  Subject to the other provisions of these Bylaws, each
officer shall have, in addition to the duties and powers herein and in
the Declaration of Trust set forth, such duties and powers as are
commonly incident to the office occupied by him or her as if the Trust
were organized as a Massachusetts business corporation and such other
duties and powers as the Trustees may from time to time designate.

3.5. Chairman; President.  Unless the Trustees otherwise provide, the
Chairman of the Trustees or, if there is none or in the absence of the
Chairman of the Trustees, the President shall preside at all meetings of
the shareholders and of the Trustees.  Unless the Trustees otherwise
provide, the President shall be the chief executive officer.

3.6. Treasurer.  Unless the Trustees shall provide otherwise, the
Treasurer shall be the chief financial and accounting officer of the
Trust, and shall, subject to the provisions of the Declaration of Trust
and to any arrangement made by the Trustees with a custodian, investment
adviser or manager, or transfer, shareholder servicing or similar agent,
be in charge of the valuable papers, books of account and accounting
records of the Trust, and shall have such other duties and powers as may
be designated from time to time by the Trustees or by the President.

3.7. Clerk.  The Clerk shall record all proceedings of the shareholders
and the Trustees in books to be kept therefor, which books or a copy
thereof shall be kept at the principal office of the Trust.  In the
absence of the Clerk from any meeting of the shareholders or Trustees,
an Assistant Clerk, or it there be none or if he or she is absent, a
temporary Clerk chosen at such meeting shall record the proceedings
thereof in the aforesaid books.

3.8. Resignations and Removals.  Any Trustee or officer may resign at
any time by written instrument signed by him or her and delivered to the
Chairman of the Trustees, the President or the Clerk or to a meeting of
the Trustees.  Such resignation shall be effective upon receipt unless
specified to be effective at some other time.  The Trustees may remove
any officer elected by them with or without cause.  Except to the extent
expressly provided in a written agreement with the Trust, no Trustee or
officer resigning and no officer removed shall have any right to any
compensation for any period following his or her resignation or removal,
or any right to damages on account of such removal.


                         ARTICLE 4
                        Committees

4.1. Quorum; Voting.  A majority of the members of any Committee of the
Trustees shall constitute a quorum for the transaction of business, and
any action of such a Committee may be taken at a meeting by a vote of a
majority of the members present (a quorum being present) or evidenced by
one or more writings signed by such a majority.  Members of a Committee
may participate in a meeting of such Committee by means of a conference
telephone or other communications equipment by means of which all
persons participating in the meeting can hear each other at the same
time and participation by such means shall constitute presence in person
at a meeting.


                         ARTICLE 5
                          Reports

5.1. General.  The Trustees and officers shall render reports at the
time and in the manner required by the Declaration of Trust or any
applicable law.  Officers and Committees shall render such additional
reports as they may deem desirable or as may from time to time be
required by the Trustees.


                          ARTICLE 6
                         Fiscal Year

6.1. General.  Except as from time to time otherwise provided by the
Trustees, the initial fiscal year of the Trust shall end on such date as
is determined in advance or in arrears by the Treasurer, and subsequent
fiscal years shall end on such date in subsequent years.


                         ARTICLE 7
                           Seal

7.1. General.  The seal of the Trust shall consist of a flat-faced die
with the word "Massachusetts", together with the name of the Trust and
the year of its organization cut or engraved thereon but, unless
otherwise required by the Trustees, the seal shall not be necessary to
be placed on, and its absence shall not impair the validity of, any
document, instrument or other paper executed and delivered by or on
behalf of the Trust.


                         ARTICLE 8
                       Execution of Papers

8.1. General.  Except as the Trustees may generally or in particular
cases authorize the execution thereof in some other manner, all deeds,
leases, contracts, notes and other obligations made by the Trustees
shall be signed by the President, the Vice Chairman, a Vice President or
the Treasurer and need not bear the seal of the Trust.


                         ARTICLE 9
            Issuance of Shares and Share Certificates

9.1. Sale of Shares.  Except as otherwise determined by the Trustees,
the Trust will issue and sell for cash or securities from time to time,
full and fractional shares of its shares of beneficial interest, such
shares to be issued and sold at a price of not less than the par value
per share, if any, and not less than the net asset value per share as
from time to time determined in accordance with the Declaration of Trust
and these Bylaws and, in the case of fractional shares, at a
proportionate reduction in such price.  In the case of shares sold for
securities, such securities shall be valued in accordance with the
provisions for determining the value of the assets of the Trust as
stated in the Declaration of Trust and these Bylaws.  The officers of
the Trust are severally authorized to take all such actions as may be
necessary or desirable to carry out this Section 9.1.

9.2. Share Certificates.  In lieu of issuing certificates for shares,
the Trustees or the transfer agent may either issue receipts therefor or
may keep accounts upon the books of the Trust for the record holders of
such shares, who shall in either case be deemed, for all purposes
hereunder, to be the holders of certificates for such shares as if they
had accepted such certificates and shall be held to have expressly
assented and agreed to the terms hereof.

The Trustees may at any time authorize the issuance of share
certificates.  In that event, each shareholder shall be entitled to a
certificate stating the number of shares owned by him, in such form as
shall be prescribed from time to time by the Trustees.  Such certificate
shall be signed by the President or a Vice President and by the
Treasurer or an Assistant Treasurer.  Such signatures may be facsimile
if the certificate is signed by a transfer agent or by a registrar.  In
case any officer who has signed or whose facsimile signature has been
placed on such certificate shall cease to be such officer before such
certificate is issued, it may be issued by the Trust with the same
effect as if he were such officer at the time of its issue.

9.3. Loss of Certificates.  The transfer agent of the Trust, with the
approval of any two officers of the Trust, is authorized to issue and
countersign replacement certificates for the shares of the Trust which
have been lost, stolen or destroyed upon (i) receipt of an affidavit or
affidavits of loss or non-receipt and of an indemnity agreement executed
by the registered holder or his legal representative and supported by an
open penalty surety bond, said agreement and said bond in all cases to
be in form and content satisfactory to and approved by the President or
the Treasurer, or (ii) receipt of such other documents as may be
approved by the Trustees.

9.4. Issuance of New Certificate to Pledgee.  A pledgee of shares
transferred as collateral security shall be entitled to a new
certificate if the instrument of transfer substantially describes the
debt or duty that is intended to be secured thereby.  Such new
certificate shall express on its face that it is held as collateral
security, and the name of the pledgor shall be stated thereon, who alone
shall be liable as a shareholder and entitled to vote thereon.

9.5. Discontinuance of Issuance of Certificates.  The Trustees may at
any time discontinue the issuance of share certificates and may, by
written notice to each shareholder, require the surrender of share
certificates to the Trust for cancellation.  Such surrender and
cancellation shall not affect the ownership of shares in the Trust.


                         ARTICLE 10
   Provisions Relating to the Conduct of the Trust's Business

10.1. Certain Definitions.  When used herein the following words shall
have the following meanings:  "Distributor" shall mean any one or more
corporations, firms or associations which have distributor's or
principal underwriter's contracts in effect with the Trust.  "Manager"
shall mean any corporation, firm or association which may at the time
have an advisory or management contract with the Trust.

10.2. Limitations on Dealings with Officers or Trustees.  The Trust will
not lend any of its assets to the Distributor or Manager or to any
officer or director of the Distributor or Manager or any officer or
Trustee of the Trust, and shall not permit any officer or Trustee of the
Trust or any officer or director of the Distributor or Manager to deal
for or on behalf of the Trust with himself or herself as principal or
agent, or with any partnership, association or corporation in which he
or she has a financial interest; provided that the foregoing provisions
shall not prevent (a) officers and Trustees of the Trust or officers and
directors of the Distributor or Manager from buying, holding or selling
shares in the Trust or from being partners, officers or directors or
otherwise financially interested in the Distributor or the Manager; (b)
purchases or sales of securities or other property if such transaction
is permitted by or is exempt or exempted from the provisions of the
Investment Company Act of 1940 or any Rule or Regulation thereunder and
if such transaction does not involve any commission or profit to any
security dealer who is, or one or more of whose partners, shareholders,
officers or directors is, an officer or Trustee of the Trust or an
officer or director of the Distributor or Manager ; (c) employment of
legal counsel, registrar, transfer agent, shareholder servicing agent,
dividend disbursing agent or custodian who is, or has a partner,
shareholder, officer or director who is, an officer or Trustee of the
Trust or an officer or director of the Distributor or Manager; (d)
sharing statistical, research, legal and management expenses and office
hire and expenses with any other investment company in which an officer
or Trustee of the Trust or an officer or director of the Distributor or
Manager is an officer or director or otherwise financially interested.

10.3. Securities and Cash of the Trust to be held by Custodian Subject
to Certain Terms and Conditions.

(a) All securities and cash owned by the Trust shall be held by or
deposited with one or more banks or trust companies having (according to
its last published report) not less than $1,000,000 aggregate capital,
surplus and undivided profits (any such bank or trust company being
hereby designated as "Custodian"), provided such a Custodian can be
found ready and willing to act; subject to such rules, regulations and
orders, if any, as the Securities and Exchange Commission may adopt, the
Trust may, or may permit any Custodian to, deposit all or any part of
the securities owned by the Trust in a system for the central handling
of securities pursuant to which all securities of any particular class
or series of any issue deposited within the system may be transferred or
pledged by bookkeeping entry, without physical delivery.  The Custodian
may appoint, subject to the approval of the Trustees, one or more
subcustodians.

(b) The Trust shall enter into a written contract with each Custodian
regarding the powers, duties and compensation of such Custodian with
respect to the cash and securities of the Trust held by such Custodian.
Said contract and all amendments thereto shall be approved by the
Trustees.

(c) The Trust shall upon the resignation or inability to serve of any
Custodian or upon change of any Custodian:

(i) in case of such resignation or inability to serve, use its best
efforts to obtain a successor Custodian;

(ii) require that the cash and securities owned by the Trust be
delivered directly to the successor Custodian; and

(iii) in the event that no successor Custodian can be found, submit to
the shareholders, before permitting delivery of the cash and securities
owned by the Trust otherwise than to a successor Custodian, the question
whether the Trust shall be liquidated or shall function without a
Custodian.

10.4. Reports to Shareholders.  The Trust shall send to each shareholder
of record at least semi-annually a statement of the condition of the
Trust and of the results of its operations, containing all information
required by applicable laws or regulations.

10.5. Determination of Net Asset Value Per Share.  Net asset value per
share of the Trust shall mean:  (i) the value of all the assets of the
Trust; (ii) less total liabilities of the Trust; (iii) divide by the
number of shares of the Trust outstanding, in each case at the time of
such determinations.  Except as otherwise determined by the Trustees,
the net asset value per share shall be determined at least once each
week as of the close of business on the last day of the week on which
the New York Stock Exchange is open for trading, at such time or times
that the Trustees set at least annually.

In valuing the portfolio investments of the Trust for determination of
net asset value per share of the Trust, securities for which market
quotations are readily available shall be valued at prices which, in the
opinion of the Trustees or the person designated by the Trustees to make
the determination, most nearly represent the market value of such
securities, and other securities and assets shall be valued at their
fair value as determined by or pursuant to the direction of the
Trustees, which in the case of debt obligations, commercial paper and
repurchase agreements may, but need not, be on the basis of yields for
securities of comparable maturity, quality and type, or on the basis of
amortized cost.  Expenses and liabilities of the Trust shall be accrued
each day.  Liabilities may include such reserves for taxes, estimated
accrued expenses and contingencies as the Trustees or their designates
may in their sole discretion deem fair and reasonable under the
circumstances.  No accruals shall be made in respect of taxes on
unrealized appreciation of securities owned unless the Trustees shall
otherwise determine.


                         ARTICLE 11
                        Shareholders

11.1. Annual Meeting.  The annual meeting of the shareholders of the
Trust shall be held on the last Friday in April in each year or on such
other day as may be fixed by the Trustees.  The meeting shall be held at
such time as the Chairman of the Trustees or the Trustees may fix in the
notice of the meeting or otherwise.  Purposes for which an annual
meeting is to be held, additional to those prescribed by law or these
Bylaws, may be specified by the Chairman of the Trustees or by the
Trustees.

11.2. Record Dates.  For the purpose of determining the shareholders of
the Trust who are entitled to vote or act at any meeting or any
adjournment thereof, or who are entitled to receive payment of any
dividend or of any other distribution, the Trustees may from time to
time fix a time, which shall be not more than 90 days before the date of
any meeting of shareholders or more than 60 days before the date of
payment of any dividend or of any other distribution, as the record date
for determining the shareholders of the Trust having the right to notice
of and to vote at such meeting and any adjournment thereof or the right
to receive such dividend or distribution, and in such case only
shareholders of record on such record date shall have such right
notwithstanding any transfer of shares on the books of the Trust after
the record date; or without fixing such record date the Trustees may for
any such purposes close the register or transfer books for all or part
of such period.

11.3. Proxies.  The placing of a shareholder's name on a proxy pursuant
to telephone or electronically transmitted instructions obtained
pursuant to procedures reasonably designed to verify that such
instructions have been authorized by such shareholder shall constitute
execution of such proxy by or on behalf of such shareholder.


                         ARTICLE 12
                   Amendments to the Bylaws

12.1. General.  These Bylaws may be amended or repealed, in whole or in
part, by a majority of the Trustees then in office at any meeting of the
Trustees, or by one or more writings signed by such a majority.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2 BYLAWS
<SEQUENCE>4
<FILENAME>exnntb4.txt
<DESCRIPTION>EX-99.2 BYLAWS
<TEXT>

EXHIBIT 3.


         PUTNAM HIGH INCOME CONVERTIBLE AND BOND FUND,
                PUTNAM MASTER INCOME TRUST,
           PUTNAM MASTER INTERMEDIATE INCOME TRUST
              AND PUTNAM PREMIER INCOME TRUST

                    Amendment to Bylaws

WHEREAS, Article 12, Section 12.1 of the Bylaws (the "By-laws") of
Putnam High Income Convertible and Bond Fund, Putnam Master Income
Trust, Putnam Master Intermediate Income Trust and Putnam Premier Income
Trust (the "Trusts") permits the Trustees of each of the Trusts (the
"Trustees") to amend or repeal the Bylaws;


WHEREAS, the Trustees desire to amend the Bylaws by adding a new article

thereto;

NOW, THEREFORE, the Bylaws are hereby amended as follows:

1. The existing ARTICLE 12 shall be redesignated as ARTICLE 14,

2. A new ARTICLE 12 shall be added as follows; "ARTICLE 12 -
[Reserved]."

3. The content of Exhibit A attached hereto shall be added as new
ARTICLE 13.

This Amendment is effective as of March 9, 2001.

[The remainder of this page intentionally left blank.]

Exhibit A

Please see the attached.

                         ARTICLE 13
     Advance Notice of Shareholder Nominees for Trustee and
            Proposals to Fix the Number of Trustees

13.1. Advance Notice of Shareholder Nominations of Trustees and
Proposals to Fix the Number of Trustees.  Only persons who are nominated
in accordance with the following procedures shall be eligible for
election as Trustees, and no proposal to fix the number of Trustees
shall be brought before a meeting of shareholders or otherwise
transacted unless in accordance with the following procedures, except as
may be otherwise provided in the Bylaws with respect to the right of
holders of preferred shares, if any, of the Trust to nominate and elect
a specified number of Trustees in certain circumstances.

(a) Meetings of Shareholders.

(1) Nominations of persons for election to the Board of Trustees and
proposals to fix the number of Trustees may be made at an annual meeting
of shareholders or at a special meeting of shareholders in lieu of an
annual meeting only (i) pursuant to the notice of meeting given by or at
the direction of the Trustees pursuant to Article V, Section 2 of the
Declaration of Trust, (ii) by or at the direction of the Trustees (or
any duly authorized committee thereof) or the Chairman of the Trustees
or (iii) by any shareholder of the Trust who was a shareholder of record
at the time the notice provided for in this Section 13.1 is delivered to
the Clerk of the Trust, who is entitled to vote at the meeting and who
complies with the notice procedures set forth in subparagraph (2) of
this paragraph (a) of this Section 13.1.

(2) For such nominations or proposals to be properly brought before a
meeting by a shareholder pursuant to clause (iii) of paragraph (a) of
this Section 13.1, the shareholder must have given timely notice thereof
in writing to the Clerk of the Trust in accordance with paragraph (b) of
this Section 13.1.  The shareholder's notice shall contain, at a
minimum, the information set forth in paragraph (c) of this Section
13.1.

(b) Timely Notice.

(1) Annual Meeting.  To be timely, a shareholder's notice required by
subparagraph (2) of paragraph (a) of this Section 13.1 in respect of an
annual meeting shall be delivered to the Clerk at the principal
executive offices of the Trust not less than sixty (60) nor more than
ninety (90) days prior to the anniversary date of the immediately
preceding annual meeting; provided, however, that with respect to the
annual meeting to be held in the calendar year 2001, notice by the
shareholder in order to be timely must be so received not less than
thirty (30) days prior to such anniversary date; provided further,
however, if and only if the annual meeting is not scheduled to be held
on a date that is within thirty (30) days before or after such
anniversary date, notice by the shareholder in order to be timely must
be so received no later than the close of business on the tenth, (10th)
day following the earlier of the date on which notice of the date of the
annual meeting was mailed and the date on which public announcement of
the date of the annual meeting was first made.

(2) Special Meeting in Lieu of Annual Meeting.  To be timely, a
shareholder's notice required by subparagraph (2) of paragraph (a) of
this Section 13.1 in respect of a special meeting in lieu of an annual
meeting shall be delivered to the Clerk at the principal executive
offices of the Trust not later than the close of business on the tenth
(10th) day following the date on which public announcement was first
made of the date of the special meeting.

(3) General.  In no event shall an adjournment or postponement (or a
public announcement thereof) of a meeting of shareholders commence a new
time period (or extend any time period) for the giving of a
shareholder's notice as described in this paragraph (b) of this Section
13.1.

(c) Content of Shareholder's Notice.

(1) Any shareholder's notice required by this Section 13.1 shall set
forth as to each person, if any, whom the shareholder proposes to
nominate for election or re-election as a Trustee (i) the person's name,
age, date of birth, business address, residence address and nationality;
(ii) any other information regarding the person required by each of
paragraphs (a), (d), (e) and (f) of Item 401 of Regulation S-K and
paragraph (b) of Item 22 of Rule 14a-101 (Schedule 14A) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"); (iii)
any other information regarding the person that would be required to be
disclosed in a proxy statement or other filings required to be made in
connection with solicitation of proxies for election of Trustees or
directors pursuant to Section 14 of the Exchange Act and the rules and
regulations promulgated thereunder; (iv) whether the shareholder
believes the person is or will be an "interested person" of the Trust
(as defined in the Investment Company Act of 1940, as amended) and, if
not an "interested person," information regarding the person, that will
be sufficient for the Trust to make such determination; (v) the written
consent of the person to being named as a nominee and to serve as a
Trustee if elected and (vi) the class or series and number of all shares
of beneficial interest of the Trust owned beneficially or of record by
the person.  Any shareholder's notice required by this Section 13.1 in
respect of a proposal to fix the number of Trustees shall also set forth
a description and the text of the proposal, which description and text
shall state a fixed number of Trustees that otherwise complies with the
Bylaws and the Declaration of Trust.

(2) Such shareholder's notice further shall set forth as to the
shareholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination is made (i) the name and address of the
shareholder and such beneficial owner, as they appear on the Trust's
books; (ii) the class or series and number of all shares of beneficial
interest of the Trust owned beneficially and of record by the
shareholder and such beneficial owner; (iii) a description of all
arrangements or understandings between the shareholder and each proposed
nominee and any other person or persons (including their names) pursuant
to which the nomination(s) are to be made by the shareholder; (iv) a
representation that the shareholder intends to appear in person or by
proxy at the meeting to, as the case may be, (A) nominate each person
named in its notice and (B) make the proposal to fix the number of
Trustees as stated in its notice; and (v) any other information relating
to the shareholder that would be required to be disclosed in a proxy
statement or other filings required to be made in connection with
solicitation of proxies for election of Trustees or directors pursuant
to Section 14 of the Exchange Act and the rules and regulations
promulgated thereunder.

(3) The Trustees may require any proposed nominee to furnish such other
information as they may reasonably require to determine the eligibility
of such proposed nominee to serve as a Trustee.

(d) Authority to Determine Compliance with Procedures.  The person
presiding at any meeting of shareholders, in addition to making any
other determinations that may be appropriate to the conduct of the
meeting, shall have the power and duty to (i) determine whether a
nomination or proposal was made in compliance with the procedures set
forth in this Article 13 and elsewhere in the Bylaws and in the
Declaration of Trust and (ii) if any nomination or proposal is not so in
compliance to declare that such nomination or proposal shall be
disregarded.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.5 HOLDERS RTS
<SEQUENCE>5
<FILENAME>exnnfa5.txt
<DESCRIPTION>EX-99.5 HOLDERS RTS
<TEXT>

EXHIBIT 4.

             PORTIONS OF AMENDED AND RESTATED AGREEMENT
                    AND DECLARATION OF TRUST
                 RELATING TO SHAREHOLDERS' RIGHTS

                           * * *

                         ARTICLE III
                           Shares

Division of Beneficial Interest

Section 1. The beneficial interest in the Trust shall at all times be
divided into Shares, without par value, each of which shall represent an
equal proportionate interest in the Trust with each other Share, none
having priority or preference over another.  The number of Shares
authorized shall be unlimited.  The Trustees may from time to time
divide or combine the Shares into a greater or lesser number without
thereby changing the proportionate beneficial interests in the Trust.

                           * * *

No Preemptive Rights

Section 4. Shareholders shall have no preemptive or other right to
subscribe to any additional Shares or other securities issued by the
Trust.

Status of Shares and Limitation of Personal Liability

Section 5. Shares shall be deemed to be personal property giving only
the rights provided in this instrument.  Every Shareholder by virtue of
having become a Shareholder shall be held to have expressly assented and
agreed to the terms hereof and to have become a party hereto.  The death
of a shareholder during the continuance of the Trust shall not operate
to terminate the same nor entitle the representative of any deceased
Shareholder to an accounting or to take any action in court or elsewhere
against the Trust or the Trustees, but only to the rights of said
decedent under this Trust.  Ownership of Shares shall not entitle the
Shareholder to any title in or to the whole or any part of the Trust
property or right to call for a partition or division of the same or for
an accounting, nor shall the ownership of shares constitute the
Shareholders partners.  Neither the Trust nor the Trustees, nor any
officer, employee or agent of the Trust shall have any power to bind
personally any Shareholder, nor except as specifically provided herein
to call upon any Shareholder for the payment of any sum of money or
assessment whatsoever other than such as the Shareholder may at any time
personally agree to pay.


                         ARTICLE IV
                        The Trustees

Election

Section 1. In each year beginning in 1988, at the annual meeting of
Shareholders or at any special meeting held in lieu thereof, or at any
special meeting held before 1988, the Shareholders shall fix the number
of and elect a Board of not less than three Trustees, each of whom shall
serve until the next annual meeting or special meeting in lieu thereof
and until the election and qualification of his or her successor, or
until he or she sooner dies, resigns or is removed.  The initial
Trustees, each of whom shall serve until the first meeting of
Shareholders at which Trustees are elected and until his or her
successor is elected and qualified, or until he or she sooner dies,
resigns or is removed shall be George Putnam and Alla O'Brien and such
other persons as the Trustee or Trustees then in office shall, prior to
any sale of Shares pursuant to public offering, appoint.

                           * * *

Advisory, Management and Distribution

Section 6. Subject to a favorable Majority Shareholder Vote, the
Trustees may, at any time and from time to time, contract for exclusive
or nonexclusive advisory and/or management services with any
corporation, trust, association or other organization (the "Manager"),
every such contract to comply with such requirements and restrictions as
may be set forth in the Bylaws; and any such contract may contain such
other terms interpretive of or in addition to said requirements and
restrictions as the Trustees may determine, including, without
limitation, authority to determine from time to time what investments
shall be purchased, held, sold or exchanged and what portion, if any, of
the assets of the Trust shall be held uninvested and to make changes in
the Trust's investments.  The Trustees may also, at any time and from
time to time, contract with the Manager or any other corporation, trust,
association or other organization, appointing it exclusive or
nonexclusive distributor or principal underwriter for the Shares, every
such contract to comply with such requirements and restrictions as may
be set forth in the Bylaws; and any such contract may contain such other
terms interpretive of or in addition to said requirements and
restrictions as the Trustees may determine.

The fact that:

(i) any of the Shareholders, Trustees or officers of the Trust is a
shareholder, director, officer, partner, trustee, employee, manager,
adviser, principal underwriter or distributor or agent of or for any
corporation, trust, association, or other organization, with which an
advisory or management contract, or principal underwriter's or
distributor's contract, or transfer, Shareholder servicing or other
agency contract may have been or may hereafter be made, or that any such
organization, or any parent or affiliate thereof, is a Shareholder or
has an interest in the Trust, or that

(ii) any corporation, trust, association or other organization with
which an advisory or management contract or principal underwriter's or
distributor's contract, or transfer, Shareholder servicing or other
agency contract may have been or may hereafter be made also has an
advisory or management contract, or transfer, Shareholder servicing or
other agency contract with one or more other corporation, trusts,
associations, or other organizations, or has other business or interests
shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or
executing the same or create any liability or accountability to the
Trust or its Shareholders.


                            ARTICLE V
            Shareholders' Voting Powers and Meetings

Voting Powers

Section 1. The Shareholders shall have power to vote only (i) for the
election of Trustees as provided in Article IV, Section 1, (ii) with
respect to any Manager as provided in Article IV, Section 6, (iii) with
respect to any termination of this Trust to the extent and as provided
in Article IX, Section 4, (iv) with respect to any merger, consolidation
or sale of assets of the Trust to the extent and as provided in Article
IX, Section 5, (v) with respect to any conversion of the Trust as
provided in Article IX, Section 6, (vi) with respect to any amendment of
this Declaration of Trust to the extent and as provided in Article IX,
Section 9, (vii) to the same extent as the stockholders of a
Massachusetts business corporation as to whether or not court action,
proceeding or claim should or should not be brought or maintained
derivatively or as a class action on behalf of the Trust or the
Shareholders, and (viii) with respect to such additional matters
relating to the Trust as may be required by this Declaration of Trust,
the Bylaws or any registration of the Trust with the Commission (or any
successor agency) or any state, or as the Trustees may consider
necessary or desirable.  Each whole Share shall be entitled to one vote
as to any matter on which it is entitled to vote and each fractional
Share shall be entitled to a proportionate fractional vote.  There shall
be no cumulative voting in the election of Trustees.  Shares may be
voted in person or by proxy.  A proxy with respect to Shares held in the
name of two or more persons shall be valid if executed by any one of
them unless at or prior to exercise of the proxy the Trust receives a
specific written notice to the contrary from any one of them.  A proxy
purporting to be executed by or on behalf of a Shareholder shall be
deemed valid unless challenged at or prior to its exercise and the
burden of proving invalidity shall rest on the challenger.  Until Shares
are issued, the Trustees may exercise all rights of Shareholders and may
take any action required by law, this Declaration of Trust or Bylaws to
be taken by Shareholders.

Voting Power and Meetings

Section 2. There shall be an annual meeting of the Shareholders on the
date fixed in the Bylaws at the office of the Trust in Boston,
Massachusetts, or at such other place as may be designated in the call
thereof, which call shall be made by the Trustees.  In the event that
such meeting is not held in any year on the date fixed in the Bylaws,
whether the omission be by overnight or otherwise, a subsequent special
meeting may be called by the Trustees and held in lieu of the annual
meeting with the same effect as though held on such date.  Special
meetings may also be called by the Trustees from time to time for the
purpose of taking action upon any matter requiring the vote or authority
of the Shareholders as herein provided or upon any other matter deemed
by the Trustees to be necessary or desirable.  Written notice of any
meeting of Shareholders shall be given or caused to be given by the
Trustees by mailing such notice at least seven days before such meeting,
postage prepaid, stating the time, place and purpose of the meeting, to
each Shareholder entitled to vote at such meeting at the Shareholder's
address as it appears on the records of the Trust.  If the Trustees
shall fail to call or give notice of any meeting of Shareholders for a
period of 30 days after written application by Shareholders holding at
least 25% of the then outstanding shares entitled to vote at such
meeting requesting a meeting to be called for a purpose requiring action
by the Shareholders as provided herein or in the Bylaws, then
Shareholders holding at least 25% of the then outstanding shares
entitled to vote at such meeting may call and give notice of such
meeting, and thereupon the meeting shall be held in the manner provided
for herein in case of call thereof by the Trustees.  Notice of a meeting
need not be given to any Shareholder if a written waiver of notice,
executed by him or her before or after the meeting, is filed with the
records of the meeting, or, to any Shareholder who attends the meeting
without protesting prior thereto or at its commencement the lack of
notice to him or her.

Quorum and Required Vote

Section 3. A majority of Shares entitled to vote shall be a quorum for
the transaction of business at a Shareholders' meeting but any lesser
number shall be sufficient for adjournments.  Any adjourned session or
sessions may be held, within a reasonable time after the date set for
the original meeting, without the necessity of further notice.  Except
when a larger vote is required by any provision of this Declaration of
Trust or the Bylaws, a majority of the Shares voted shall decide any
questions and a plurality shall elect a Trustee.

Action by Written Consent

Section 4. Any action taken by Shareholders may be taken without a
meeting if a majority of Shareholders entitled to vote on the matter (or
such larger proportion thereof as shall be required by any express
provision of this Declaration of Trust or the Bylaws) consent to the
action in writing and such written consents are filed with the records
of the meetings of Shareholders.  Such consent shall be treated for all
purposes as a vote taken at a meeting of Shareholders.

Additional Provisions

Section 5. The Bylaws may include further provisions of Shareholders'
votes and meeting and related matters.


                        ARTICLE VI
                       Distributions

The Trustees may each year, or more frequently if they so determine,
distribute to the Shareholders such amounts as the Trustees may
determine.  Any amounts shall be distributed pro rata in proportion to
the number of Shares held by each Shareholder.  Such distributions shall
be made in cash or Shares or a combination thereof as determined by the
Trustees.  Any such distribution paid in Shares will be paid at the net
asset value thereof as determined in accordance with the Bylaws.

                            * * *

                        ARTICLE VIII
                      Indemnification
                            * * *

Shareholders

Section 4. In case any Shareholder or former Shareholder shall be held
to be personally liable solely by reason of his or her being or having
been a Shareholder and not because of his or her acts or omissions or
for some other reason, the Shareholder or former Shareholder (or his or
her heirs, executors, administrators or other legal representatives or
in the case of a corporation or other entity, its corporate or other
general successor) shall be entitled to be held harmless from and
indemnified against all loss and expense arising from such liability,
but only out of the assets of the particular series of Shares of which
he or she is or was a Shareholder.


                        ARTICLE IX
                      Miscellaneous

Trustees, Shareholders, etc.  Not Personally Liable; Notice

Section 1. All persons extending credit to, contracting with or having
any claim against the Trust or a particular series of Shares shall look
only to the assets of the Trust or the assets of that particular series
of Shares for payment under such credit, contract or claim, and neither
the Shareholders nor the Trustees, nor any of the Trust's officers,
employees or agents, whether past, present or future, shall be
personally liable therefore.  Nothing in this Declaration of Trust shall
protect any Trustee against any liability to which such Trustee would
otherwise be subject  by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct
of the office of Trustee.

Every note, bond, contract, instrument, certificate or undertaking made
or issued by the Trustees or by any officer or officers shall give
notice that this Declaration of Trust is on file with the Secretary of
The Commonwealth of Massachusetts and shall recite that the same was
executed or made by or on behalf of the Trust or by them as Trustee or
Trustees or as officer or officers and not individually and that the
obligations of such instrument are not binding upon any of them or the
Shareholders individually but are binding only upon the assets and
property of the Trust, and may contain such further recital as he or she
or they may deem appropriate, but the omission thereof shall not operate
to bind any Trustee or Trustees or officer or officers or Shareholder or
Shareholders individually.

                            * * *

Duration and Termination of Trust

Section 4. Unless terminated as provided herein, the Trust shall
continue without limitation of time.  The Trust may be terminated at any
time by vote of Shareholders holding at least 66 2/3% of the Shares
entitled to vote (provided, however, if such termination is recommended
by two-thirds of the Trustees the vote of a majority of shares entitled
to vote shall be sufficient authorization) or by the Trustees by written
notice to the Shareholders.  Upon termination of the Trust, after paying
or otherwise providing for all charges, taxes, expense and liabilities,
whether due or accrued or anticipated, of the Trust or as may be
determined by the Trustees, the Trust shall in accordance with such
procedures as the Trustees consider appropriate reduce the remaining
assets to distributable form in cash or shares or other securities, or
other combination thereof, and distribute the proceeds to the
Shareholders, ratably according to the number of Shares held by the
several Shareholders on the date of termination.

Merger, Consolidation and Sale of Assets

Section 5.  The Trust may merge or consolidate with any other
corporation, association, trust or other organization or may sell, lease
or exchange all or substantially all of its assets, including its good
will, upon such terms and conditions and for such consideration when and
as authorized at any meeting of Shareholders called for the purpose, or
may liquidate or dissolve when and as authorized, by the affirmative
vote of the holders of not less than two-thirds of the Shares entitled
to vote, provided, however, that if such merger, consolidation, sale,
lease or exchange is recommended by two-thirds of the Trustees, the vote
of the holders of a majority of the Shares entitled to vote shall be
sufficient authorization.  Nothing contained herein shall be construed
as requiring approval of the Shareholders for any sale of assets in the
ordinary course of business of the Trust.

Conversion

Section 6.  The Fund may be converted at any time from a "closed-end
company" to an "open-end company" as those terms are defined in Section
5(a)(2) and 5(a)(1), respectively, of the 1940 Act as in effect on
January 1, 1987, upon the approval of such a proposal, together with the
necessary amendments to the Declaration of Trust to permit such a
conversion, by the holders of two-thirds of the Fund's outstanding
Shares entitled to vote, except that if such proposal is recommended by
two-thirds of the total number of the Trustees then in office or such
proposal is voted upon after the beginning of the fiscal year commencing
in 1992 such proposal may be adopted by a vote of a majority of the
Fund's outstanding Shares entitled to vote.  In addition, commencing
with the beginning of the fiscal year commencing in 1992, and in each
fiscal year thereafter, if Shares of the Fund have traded on the
principal securities exchange where listed at an average discount of
more than ten percent (10%), determined on the basis of the discount as
of the end of the last trading day in each week during the period of
twelve (12) calendar weeks preceding the beginning of each such fiscal
year, the Trustees will submit to the shareholders at the next
succeeding annual meeting, or within six months thereafter if the Fund
does not then hold annual meetings, a proposal to convert the Fund from
a "closed-end company" to an "open-end company," as those terms are
defined above, together with the necessary amendments to this
Declaration of Trust to permit such a conversion.  Upon the adoption of
such proposal and related amendments by the Fund's outstanding shares
entitled to vote, the Fund shall upon complying with any requirements of
the 1940 Act and state law, become an "open-end" investment company.
Such affirmative vote or consent shall be in addition to the vote or
consent of the holders of the Shares otherwise required by law, or any
agreement between the Trust and any national securities exchange.

Filing of Copies, References, Headings

Section 7. The original or a copy of this instrument and of each
amendment hereto shall be kept at the office of the Trust where it may
be inspected by any Shareholder.  A copy of this instrument and of each
amendment hereto shall be filed by the Trust with the Secretary of The
Commonwealth of Massachusetts and with the Boston City Clerk, as well as
any other governmental office where such filing may from time to time be
required.  Anyone dealing with the Trust may rely on a certificate by an
officer of the Trust as to whether or not any such amendments have been
made and as to any matters in connection with the Trust hereunder, and,
with the same effect as if it were the original, may rely on a copy
certified by an officer of the Trust to be a copy of this instrument or
of any such amendments.  In this instrument and in any such amendment,
references to this instrument and all expressions like "herein",
"hereof" and "hereunder" shall be deemed to refer to this instrument as
amended or affected by any such amendments.  Headings are placed herein
for convenience of reference only and shall not be taken as part hereof
or control or affect the meaning, construction or effect of this
instrument.  This instrument may be executed in any number of
counterparts each of which shall be deemed an original.

                            * * *

Amendments

Section 9. This Declaration of Trust may be amended at any time by an
instrument in writing signed by a majority of the then Trustees when
authorized to do so by vote of Shareholders holding a majority of the
Shares entitled to vote, except that an amendment amending or affecting
the provisions of Section 1 of Article IV, Sections 5 and 6 of this
Article IX or of this sentence shall require the vote of Shareholders
holding two-thirds of the Shares entitled to vote.  Amendments having
the purpose of changing the name of the Trust or of supplying any
omission, curing any ambiguity or curing, correcting or supplementing
any defective or inconsistent provision contained herein shall not
require authorization by Shareholder vote.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.5 HOLDERS RTS
<SEQUENCE>6
<FILENAME>exnnfb6.txt
<DESCRIPTION>EX-99.5 HOLDERS RTS
<TEXT>

EXHIBIT 5.


              PORTIONS OF BYLAWS, AS AMENDED,
             RELATING TO SHAREHOLDERS' RIGHTS

                            * * *

ARTICLE 10

Provisions Relating to the Conduct of the Trust's Business

                            * * *

10.4 Reports to Shareholders.  The Trust shall send to each shareholder of
record at least semi-annually a statement of the condition of the Trust and
of the results of its operations, containing all information required by
applicable laws or regulations.

                            * * *

                         ARTICLE 11
                        Shareholders

11.1 Annual Meeting.  The annual meeting of the shareholders of the Trust
shall be held on the last Friday in April in each year or on such other day
as may be fixed by the Trustees.  The meeting shall be held at such time as
the Chairman of the Trustees or the Trustees may fix in the notice of the
meeting or otherwise.  Purposes for which an annual meeting is to be held,
additional to those prescribed by law or these Bylaws, may be specified by
the Chairman of the Trustees or by the Trustees.

11.2 Record Dates.  For the purpose of determining the shareholders of the
Trust who are entitled to vote or act at any meeting or any adjournment
thereof, or who are entitled to receive payment of any dividend or of any
other distribution, the Trustees may from time to time fix a time, which
shall be not more than 90 days before the date of any meeting of
shareholders or more than 60 days before the date of payment of any
dividend or of any other distribution, as the record date for determining
the shareholders of the Trust having the right to notice of and to vote at
such meeting and any adjournment thereof or the right to receive such
dividend or distribution, and in such case only shareholders of record on
such record date shall have such right notwithstanding any transfer of
shares on the books of the Trust after the record date; or without fixing
such record date the Trustees may for any such purposes close the register
or transfer books for all or part of such period.

11.3 Proxies.  The placing of a shareholder's name on a proxy pursuant to
telephone or electronically transmitted instructions obtained pursuant to
procedures reasonably designed to verify that such instructions have been
authorized by such shareholder shall constitute execution of such proxy by
or on behalf of such shareholder.

                            * * *

                         ARTICLE 13
      Advance Notice of Shareholder Nominees for Trustee and
            Proposals to Fix the Number of Trustees

13.1. Advance Notice of Shareholder Nominations of Trustees and
Proposals to Fix the Number of Trustees.  Only persons who are nominated
in accordance with the following procedures shall be eligible for
election as Trustees, and no proposal to fix the number of Trustees
shall be brought before a meeting of shareholders or otherwise
transacted unless in accordance with the following procedures, except as
may be otherwise provided in the Bylaws with respect to the right of
holders of preferred shares, if any, of the Trust to nominate and elect
a specified number of Trustees in certain circumstances.

(a) Meetings of Shareholders.

(1) Nominations of persons for election to the Board of Trustees and
proposals to fix the number of Trustees may be made at an annual meeting
of shareholders or at a special meeting of shareholders in lieu of an
annual meeting only (i) pursuant to the notice of meeting given by or at
the direction of the Trustees pursuant to Article V, Section 2 of the
Declaration of Trust, (ii) by or at the direction of the Trustees (or
any duly authorized committee thereof) or the Chairman of the Trustees
or (iii) by any shareholder of the Trust who was a shareholder of record
at the time the notice provided for in this Section 13.1 is delivered to
the Clerk of the Trust, who is entitled to vote at the meeting and who
complies with the notice procedures set forth in subparagraph (2) of
this paragraph (a) of this Section 13.1.

(2) For such nominations or proposals to be properly brought before a
meeting by a shareholder pursuant to clause (iii) of paragraph (a) of
this Section 13.1, the shareholder must have given timely notice thereof
in writing to the Clerk of the Trust in accordance with paragraph (b) of
this Section 13.1.  The shareholder's notice shall contain, at a
minimum, the information set forth in paragraph (c) of this Section
13.1.

(b) Timely Notice.

(1) Annual Meeting.  To be timely, a shareholder's notice required by
subparagraph (2) of paragraph (a) of this Section 13.1 in respect of an
annual meeting shall be delivered to the Clerk at the principal
executive offices of the Trust not less than sixty (60) nor more than
ninety (90) days prior to the anniversary date of the immediately
preceding annual meeting; provided, however, that with respect to the
annual meeting to be held in the calendar year 2001, notice by the
shareholder in order to be timely must be so received not less than
thirty (30) days prior to such anniversary date; provided further,
however, if and only if the annual meeting is not scheduled to be held
on a date that is within thirty (30) days before or after such
anniversary date, notice by the shareholder in order to be timely must
be so received no later than the close of business on the tenth, (10th)
day following the earlier of the date on which notice of the date of the
annual meeting was mailed and the date on which public announcement of
the date of the annual meeting was first made.

(2) Special Meeting in Lieu of Annual Meeting.  To be timely, a
shareholder's notice required by subparagraph (2) of paragraph (a) of
this Section 13.1 in respect of a special meeting in lieu of an annual
meeting shall be delivered to the Clerk at the principal executive
offices of the Trust not later than the close of business on the tenth
(10th) day following the date on which public announcement was first
made of the date of the special meeting.

(3) General.  In no event shall an adjournment or postponement (or a
public announcement thereof) of a meeting of shareholders commence a new
time period (or extend any time period) for the giving of a
shareholder's notice as described in this paragraph (b) of this Section
13.1.

(c) Content of Shareholder's Notice.

(1) Any shareholder's notice required by this Section 13.1 shall set
forth as to each person, if any, whom the shareholder proposes to
nominate for election or re-election as a Trustee (i) the person's name,
age, date of birth, business address, residence address and nationality;
(ii) any other information regarding the person required by each of
paragraphs (a), (d), (e) and (f) of Item 401 of Regulation S-K and
paragraph (b) of Item 22 of Rule 14a-101 (Schedule 14A) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"); (iii)
any other information regarding the person that would be required to be
disclosed in a proxy statement or other filings required to be made in
connection with solicitation of proxies for election of Trustees or
directors pursuant to Section 14 of the Exchange Act and the rules and
regulations promulgated thereunder; (iv) whether the shareholder
believes the person is or will be an "interested person" of the Trust
(as defined in the Investment Company Act of 1940, as amended) and, if
not an "interested person," information regarding the person, that will
be sufficient for the Trust to make such determination; (v) the written
consent of the person to being named as a nominee and to serve as a
Trustee if elected and (vi) the class or series and number of all shares
of beneficial interest of the Trust owned beneficially or of record by
the person.  Any shareholder's notice required by this Section 13.1 in
respect of a proposal to fix the number of Trustees shall also set forth
a description and the text of the proposal, which description and text
shall state a fixed number of Trustees that otherwise complies with the
Bylaws and the Declaration of Trust.

(2) Such shareholder's notice further shall set forth as to the
shareholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination is made (i) the name and address of the
shareholder and such beneficial owner, as they appear on the Trust's
books; (ii) the class or series and number of all shares of beneficial
interest of the Trust owned beneficially and of record by the
shareholder and such beneficial owner; (iii) a description of all
arrangements or understandings between the shareholder and each proposed
nominee and any other person or persons (including their names) pursuant
to which the nomination(s) are to be made by the shareholder; (iv) a
representation that the shareholder intends to appear in person or by
proxy at the meeting to, as the case may be, (A) nominate each person
named in its notice and (B) make the proposal to fix the number of
Trustees as stated in its notice; and (v) any other information relating
to the shareholder that would be required to be disclosed in a proxy
statement or other filings required to be made in connection with
solicitation of proxies for election of Trustees or directors pursuant
to Section 14 of the Exchange Act and the rules and regulations
promulgated thereunder.

(3) The Trustees may require any proposed nominee to furnish such other
information as they may reasonably require to determine the eligibility
of such proposed nominee to serve as a Trustee.

(d) Authority to Determine Compliance with Procedures.  The person
presiding at any meeting of shareholders, in addition to making any
other determinations that may be appropriate to the conduct of the
meeting, shall have the power and duty to (i) determine whether a
nomination or proposal was made in compliance with the procedures set
forth in this Article 13 and elsewhere in the Bylaws and in the
Declaration of Trust and (ii) if any nomination or proposal is not so in
compliance to declare that such nomination or proposal shall be
disregarded.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.6 ADVSER CONTR
<SEQUENCE>7
<FILENAME>exnns7.txt
<DESCRIPTION>EX-99.6 ADVSER CONTR
<TEXT>

EXHIBIT 6.


             PUTNAM HIGH INCOME CONVERTIBLE AND BOND FUND

                        MANAGEMENT CONTRACT


Management Contract dated as of July 11, 1991 between PUTNAM HIGH INCOME
CONVERTIBLE AND BOND FUND, a Massachusetts business trust (the "Fund"),
and THE PUTNAM MANAGEMENT COMPANY, INC., a Delaware corporation (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 add 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
o the Vice Chairman of the Fund and of persons assisting him in the
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 Vice 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 common 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 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 net asset value of
the Fund;

(b) 0.65% of the next $500 million of such average net asset value;

(c) 0.60% of the next $500 million of such average net asset value; and

(d) 0.55% of any excess over $1.5 billion of such average net asset
value.

Such average net asset value shall be determined by taking the average
of the weekly determinations of such net asset value, 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.

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 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 such
expense limitation.

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 January 31, 1993 or the expiration of one year from the
effective date of the last such continuance, whichever is later.

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 10, 1987.

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 State 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, officers or shareholders of the Fund but are
binding only upon the assets and property of the Fund.

IN WITNESS WHEREOF, PUTNAM HIGH INCOME CONVERTIBLE AND BOND FUND and THE
PUTNAM MANAGEMENT COMPANY, INC. 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.


                                   PUTNAM HIGH INCOME CONVERTIBLE AND BOND FUND

                                   By: /s/ Charles E. Porter
                                   ----------------------------

                                   THE PUTNAM MANAGEMENT COMPANY, INC.

                                   By: /s/ Gordon H. Silver
                                   ----------------------------

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.8 O&D BENEFTS
<SEQUENCE>8
<FILENAME>exnne8.txt
<DESCRIPTION>EX-99.8 O&D BENEFTS
<TEXT>

EXHIBIT 7.


                     RETIREMENT PLAN
                        FOR THE
                TRUSTEES OF THE PUTNAM FUNDS

1. General; effective date.  This Retirement Plan For The Trustees Of
The Putnam Funds is intended to provide, on the terms and conditions
specified below, cash retirement benefits to certain individuals who
have served as trustees ("Trustees") of the Funds.  Except as provided
at Section 12 below, the Plan is effective with respect to retirements
occurring on or after January 1, 1996.

2. Statement of Purpose.  The purpose of this Plan is to assist the
Funds in attracting and retaining highly qualified individuals to serve
as Trustees of the Putnam Funds by providing a form of deferred
compensation which is competitive with compensation practices of other
major investment company complexes as well as those of major business
corporations and which recognizes the benefits to the Funds and of
having Trustees with many years of experience with the affairs of the
Funds.

3. Defined terms.  When used in the Plan, the following terms shall have
the meanings set forth in this Section:

- --  "Administrator":  such committee, consisting solely of Trustees who
are not "interested persons" of the Funds within the meaning of Section
2(a)(19) of the Investment Company Act of 1940, as may be designated
from time to time by the Trustees to administer the Plan.

- --  "Service":  active service as a Trustee for one or more of the
Funds, including service prior to the Effective Date.  For purposes of
this definition, service for an entity that was a Fund at the time of
such service shall not be disregarded merely because the entity later
ceases to be a Fund.  A Participant who dies prior to retirement or who
retires by reason of total and permanent disability (as determined by
the Administrator) shall be deemed to have served at least one hundred
twenty (120) months of Service regardless of his or her actual period of
service.

- --  "Effective Date":  the date specified in the second sentence of
Section 1.

- --  "Final Average Remuneration":  the quotient obtained by dividing (i)
a Participant's total retainer and meeting fees paid to the individual
by the Funds for the last thirty-six (36) months of the individual's
service as a Trustee, by (ii) three.

- --  "Fund":  any of the Putnam Funds, other than any such Fund that has
either (i) elected by vote  of a majority of its Trustees who are not
"interested persons" of the Fund (as defined above) not to participate
in the Plan, or (ii) terminated its participation in the Plan in
accordance with Section 14(c).

- --  "Participant":  a Trustee with at least sixty (60) months of
Service.

- --  "Plan":  the Retirement Plan For The Trustees Of The Putnam Funds
set forth herein, as the same may from time to time be amended and in
effect.

- --  "Retirement":  ceasing to be an active Trustee (regardless of
whether service to one or more Funds continues in a capacity other than
as a Trustee) for any reason other than (i) termination for cause as
determined by the Administrator, or (ii) death.  The terms "retire,"
"retires" and "retired" shall be similarly construed.

- --  "Trustee":  a trustee of any of the Funds.

4. Eligibility for retirement benefit.  Each Participant shall receive
the normal retirement benefit specified in Section 5 below commencing in
the calendar year next following the date of retirement.

5. Form and amount of retirement benefit.  The retirement benefit
payable to a Participant shall be an annual cash payment equal to fifty
percent (50%) of the Participant's Final Average Remuneration.  Such
retirement benefit shall be paid on January 15 of each calendar year
commencing with the year specified in Section 4 above and continuing for
the lesser of (i) a number of years equal to the Participant's years of
Service (rounded to the nearest whole year) or (ii) the lifetime of the
Participant.

6. Death benefit.  The only death benefits payable under the Plan shall
be those described in this Section:

(a) If a Participant dies after retirement but before ten (10) annual
retirement benefit payments have been made, the Participant's designated
beneficiary shall be entitled to receive an annual death benefit, in the
same amount, payable on January 15 of each year for the lesser of (i)
the remainder, if any, of the period specified in clause (i) of Section
5 above or (ii) the remainder of such 10-year period.

(b) If a Participant dies before retirement, there shall be paid to his
or her designated beneficiary an annual death benefit equal in amount to
the annual retirement benefit specified in Section 5 above.  The death
benefit described in this paragraph (b) shall be paid on January 15 of
each year commencing in the calendar year next following the
Participant's death for a number of years equal to the lesser of (i) the
period specified in clause (i) of Section 5 above or (ii) ten (10)
years.

(c) The Administrator in its discretion may commute any death benefit
under this Section to an immediate lump sum payment or may otherwise
accelerate such payments, in each case applying such reasonable discount
rates as it deems appropriate.

7. Designation of beneficiary.  For purposes of Section 6 above, a
Participant's designated beneficiary shall be such person or persons,
including a trust, as the Participant shall have designated in writing
on a form acceptable to and delivered to the Administrator.  In the
absence of an effective beneficiary designation governing the payment of
any portion of the death benefit described in Section 6 above, payment
of such portion shall be made to the Participant's estate, which shall
be deemed to be the Participant's designated beneficiary for all
purposes hereunder.  If the person designated as the beneficiary to
receive any portion of the death benefit should die prior to completion
of payments to such beneficiary without the Participant having made
effective provision (by a designation delivered to the Administrator as
hereinabove prescribed) for a successor or contingent beneficiary,
payment of such portion or the remainder thereof shall be made to the
decedent beneficiary's estate.

8. Agreement not to compete, etc.  Eligibility for and payment of
benefits under the Plan is conditioned on agreement by the Participant
(i) to refrain from engaging in any business activity in competition
with the Funds, and (ii) not to disclose any proprietary or otherwise
confidential information pertaining to the Funds.  Any breach by an
active or retired Trustee of the agreement or conditions specified in
the preceding sentence shall be grounds for termination or reduction by
the Administrator of benefits under the Plan.

9. Nature of rights.  Nothing in the Plan shall be construed as
requiring the Funds, or any of them, to set aside or to segregate any
assets of any kind to meet any of its obligations hereunder or otherwise
to fund the Plan.  The rights of persons claiming benefits under the
Plan shall be no greater than those of general unsecured creditors of a
Fund, and no such person shall have any right in or to any specific
assets of any Fund.  All rights to benefits under the Plan shall be
construed and interpreted consistent with the continued qualification of
each Fund as a registered investment company under the Investment
Company Act of 1940, as amended.

10. Rights non-assignable.  No Participant, beneficiary or other person
shall have any right to assign, pledge, encumber, or otherwise alienate
or transfer any right to receive benefits or payments hereunder or any
other interest under the Plan, in whole or in part, and any attempt by
any such person to effectuate such an assignment, pledge, encumbrance,
or other alienation or transfer shall be null and void.

11. No rights to continuation of status.  Nothing in the Plan shall be
construed as giving any individual a right to continue to serve as a
Trustee of the Funds, or any of them, or to receive any particular level
of remuneration for any such service.

12. Application of Plan to certain persons.  This Plan supersedes in its
entirety the voluntary retirement program heretofore maintained by the
Funds and any benefits previously authorized under such program but not
yet paid for periods commencing on or after January 1, 1996.  Reference
is made to those former Trustees listed on Schedule A hereto who retired
prior to the effective date of this Plan and who are currently receiving
benefits under such voluntary retirement program.  In addition,
reference is made to a current Trustee listed on Schedule B hereto who
previously received certain retirement benefits under such voluntary
retirement program following such Trustee's initial retirement from the
Funds.  Each person listed on Schedules A or B shall be entitled to a
retirement benefit in the amount and payable in accordance with the
terms of the Plan except that, to the extent inconsistent with the
generally applicable provisions of the Plan, the specific provisions of
Schedule A and B shall control.

13. Payment of benefits.  Benefits shall be paid by the Funds, in cash,
upon direction by the Administrator.  The Administrator shall allocate
the obligation to make payments with respect to a Trustee under the Plan
for any calendar year among the Funds in proportion to their respective
cumulative liabilities accrued with respect to such Trustee's
participation in the Plan for financial reporting purposes or on such
other reasonable basis as the Administrator may determine.

14. Amendment and termination.

(a) Amendment.  The Plan may be amended at any time by the
Administrator.  No amendment shall reduce the benefits or future
benefits of any Trustee who has retired, and in the case of a
participant who is still an active Trustee no amendment shall reduce the
amount such Trustee would have been entitled to receive if he or she had
ceased to serve as a Trustee immediately prior to such amendment.

(b) Termination of the Plan as a whole.  The Plan as a whole may be
terminated by the Administrator.  Upon termination of the plan as a
whole, benefits in pay status shall continue to be paid.  Any
Participant not yet in pay status shall continue to be entitled to a
benefit equal to the benefit to which he or she would have been entitled
had retirement as a Trustee occurred immediately prior to such Plan
termination.  Notwithstanding the foregoing, in its discretion the
Administrator may commute and pay as a single lump sum payment any
benefits remaining payable upon termination of the Plan as a whole, and
in determining such lump sum amounts the Administrator may apply such
reasonable discount factors and mortality assumptions as it determines
in its discretion.

(c) Termination by individual Fund.  A Fund may terminate its
participation in the Plan at any time by vote of a majority of its
Trustees who are not "interested persons" of the Fund (as defined under
"Administrator" in Section 3 above), provided that upon any such
termination such Fund shall remain liable for its allocable share of the
benefits to which Participants would have been entitled is the Plan as a
whole had been terminated as of the date of such individual termination,
as determined by the Administrator in its sole discretion.

As Adopted October 4, 1996

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.9 CUST CONTRCT
<SEQUENCE>9
<FILENAME>exnnn9.txt
<DESCRIPTION>EX-99.9 CUST CONTRCT
<TEXT>

EXHIBIT 8.

                      CUSTODIAN AGREEMENT

AGREEMENT amended and restated as of June 1, 2001, between each of the
Putnam Funds listed in Schedule A, each of such Funds acting on its own
behalf separately from all the other Funds and not jointly or jointly
and severally with any of the other Funds (each of the Funds being
hereinafter referred to as the "Fund"), and Putnam Fiduciary Trust
Company (the "Custodian").

WHEREAS, the Custodian represents to the Fund that it is eligible to
serve as a custodian and foreign custody manager for a management
investment company registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), and

WHEREAS, the Fund wishes to appoint the Custodian as the Fund's
custodian and foreign custody manager.

NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:

1. Appointment of Custodian. The Fund hereby employs and appoints the
Custodian as custodian of its assets for the term and subject to the
provisions of this Agreement. At the direction of the Custodian, the
Fund agrees to deliver to the Sub-Custodians appointed pursuant to
Section 2 below (the "Sub-Custodians") securities, funds and other
property owned by it. The Custodian shall have no responsibility or
liability for or on account of securities, funds or other property not
so delivered to the Sub-Custodians. Upon request, the Fund shall deliver
to the Custodian or to such Sub-Custodians as the Custodian may direct
such proxies, powers of attorney or other instruments as may be
reasonably necessary or desirable in connection with the performance by
the Custodian or any Sub-Custodian of their respective obligations under
this Agreement or any applicable Sub-Custodian Agreement.

2. Appointment of Sub-Custodians. The Custodian may at any time and from
time to time appoint, at its own cost and expense, as a Sub-Custodian
for the Fund any bank or trust company which meets the requirements of
the 1940 Act and the rules and regulations thereunder to act as a
custodian, provided that the Fund shall have approved any such bank or
trust company and the Custodian gives prompt notice to the Fund of any
such appointment. The agreement between the Custodian and any
Sub-Custodian shall be substantially in the form of the Sub-Custodian
agreement attached hereto as Exhibit 1 (the "Sub-Custodian Agreement")
unless otherwise approved by the Fund, provided, however, that the
agreement between the Custodian and any Sub-Custodian appointed
primarily for the purpose of holding foreign securities of the Fund
shall be substantially in the form of the Sub-Custodian Agreement
attached hereto as Exhibit 1(A) (the "Foreign Sub-Custodian Agreement";
the "Sub-Custodian Agreement" and the "Foreign Sub-Custodian Agreement"
are herein referred to collectively and each individually as the
"Sub-Custodian Agreement"). All Sub-Custodians shall be subject to the
instructions of the Custodian and not the Fund. The Custodian may, at
any time in its discretion, remove any bank or trust company which has
been appointed as a Sub-Custodian but shall in such case promptly notify
the Fund in writing of any such action.   Securities, funds and other
property of the Fund delivered pursuant to this Agreement shall be held
exclusively by Sub-Custodians appointed pursuant to the provisions of
this Section 2.

The Sub-Custodians which the Fund has approved to date are set forth in
Schedule B hereto.  Schedule B shall be amended from time to time as
Sub-Custodians are changed, added or deleted.

With respect to the securities, funds or other property held by a
Sub-Custodian, the Custodian shall be liable to the Fund if and only to
the extent that such Sub-Custodian is liable to the Custodian. The
Custodian shall nevertheless be liable to the Fund for its own
negligence in transmitting any instructions received by it from the Fund
and for its own negligence in connection with the delivery of any
securities, funds or other property of the Fund to any such
Sub-Custodian.

In the event that any Sub-Custodian appointed pursuant to the provisions
of this Section 2 fails to perform any of its obligations under the
terms and conditions of the applicable Sub-Custodian Agreement, the
Custodian shall use its best efforts to cause such Sub-Custodian to
perform such obligations. In the event that the Custodian is unable to
cause such Sub-Custodian to perform fully its obligations thereunder,
the Custodian shall forthwith terminate such Sub-Custodian and, if
necessary or desirable, appoint another Sub-Custodian in accordance with
the provisions of this Section 2. The Custodian may with the approval of
the Fund commence any legal or equitable action which it believes is
necessary or appropriate in connection with the failure by a
Sub-Custodian to perform its obligations under the applicable
Sub-Custodian Agreement.   Provided the Custodian shall not have been
negligent with respect to any such matter, such action shall be at the
expense of the Fund. The Custodian shall keep the Fund fully informed
regarding such action and the Fund may at any time upon notice to the
Custodian elect to take responsibility for prosecuting such action. In
such event the Fund shall have the right to enforce and shall be
subrogated to the Custodian's rights against any such Sub-Custodian for
loss or damage caused the Fund by such Sub-Custodian.

At the written request of the Fund, the Custodian will terminate any
Sub-Custodian appointed pursuant to the provisions of this Section 2 in
accordance with the termination provisions of the applicable
Sub-Custodian Agreement. The Custodian will not amend any Sub-Custodian
Agreement in any material manner except upon the prior written approval
of the Fund and shall in any case give prompt written notice to the Fund
of any amendment to the Sub-Custodian Agreement.

3. Duties of the Custodian with Respect to Property of the Fund Held by
Sub-Custodians.

3.1. Holding Securities - The Custodian shall cause one or more
Sub-Custodians to hold and, by book-entry or otherwise, identify as
belonging to the Fund all non-cash property delivered to such
Sub-Custodian.

3.2. Delivery of Securities - The Custodian shall cause Sub-Custodians
holding securities of the Fund to release and deliver securities owned
by the Fund held by the Sub-Custodian or in a Securities System (as
defined in Section 3.12) account of the Sub-Custodian only upon receipt
of Proper Instructions (as defined in Section 3.16), which may be
continuing instructions when deemed appropriate by the parties, and only
in the following cases:

3.2.1. Upon sale of such securities for the account of the Fund and
receipt of payment therefor; provided, however, that a Sub-Custodian may
release and deliver securities prior to the receipt of payment therefor
if (i) in the Sub-Custodian's judgment, (A) release and delivery prior
to payment is required by the terms of the instrument evidencing the
security or (B) release and delivery prior to payment is the prevailing
method of settling securities transactions between institutional
investors in the applicable market and (ii) release and delivery prior
to payment is in accordance with generally accepted trade practice and
with any applicable governmental regulations and the rules of Securities
Systems or other securities depositories and clearing agencies in the
applicable market. The Custodian agrees, upon request, to advise the
Fund of all pending transactions in which release and delivery will be
made prior to the receipt of payment therefor;

3.2.2. Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Fund;

3.2.3. In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 3.12 hereof;

3.2.4. To the depository agent in connection with tender or other
similar offers for portfolio securities of the Fund; provided that, in
any such case, the cash or other consideration is thereafter to be
delivered to the Sub-Custodian;

3.2.5. To the issuer thereof or its agent, when such securities are
called, redeemed, retired or otherwise become payable; provided that, in
any such case, the cash or other consideration is to be delivered to the
Sub-Custodian;

3.2.6. To the issuer thereof, or its agent for transfer into the name of
the Fund or into the name of any nominee or nominees of the
Sub-Custodian or into the name or nominee name of any agent appointed
pursuant to Section 3.11 or any other name permitted pursuant to Section
3.3; or for exchange for a different number of bonds, certificates or
other evidence representing the same aggregate face amount or number of
units; provided that, in any such case, the new securities are to be
delivered to the Sub-Custodian;

3.2.7. Upon the sale of such securities for the account of the Fund, to
the broker or its clearing agent, against a receipt, for examination in
accordance with "street delivery" custom; provided that in any such
case, the Sub-Custodian shall have no responsibility or liability for
any loss arising from the delivery of such securities prior to receiving
payment for such securities except as may arise from the Sub-Custodian's
own negligence or willful misconduct;

3.2.8. For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the
securities of the issuer of such securities, or pursuant to provisions
for conversion contained in such securities, or pursuant to any deposit
agreement; provided that, in any such case, the new securities and cash,
if any, are to be delivered to the Sub-Custodian;

3.2.9. In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or similar
securities or the surrender of interim receipts or temporary securities
for definitive securities; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the Sub-Custodian;

3.2.10. For delivery in connection with any loans of securities made by
the Fund;

3.2.11. For delivery as security in connection with any borrowings by
the Fund requiring a pledge of assets by the Fund, but only against
receipt of amounts borrowed;

3.2.12. Upon receipt of instructions from the transfer agent ("Transfer
Agent") for the Fund, for delivery to such Transfer Agent or to the
shareholders of the Fund in connection with distributions in kind, as
may be described from time to time in the Fund's Declaration of Trust
and currently effective registration statement, if any, in satisfaction
of requests by Fund shareholders for repurchase or redemption;

3.2.13. For delivery to another Sub-Custodian of the Fund; and

3.2.14. For any other proper corporate purpose, but only upon receipt
of, in addition to Proper Instructions, a certified copy of a resolution
of the Trustees or of the Executive Committee of the Fund signed by an
officer of the Fund and certified by its Clerk or an Assistant Clerk,
specifying the securities to be delivered, setting forth the purpose for
which such delivery is to be made, declaring such purposes to be proper
corporate purposes, and naming the person or persons to whom delivery of
such securities shall be made.

3.3. Registration of Securities.   Securities of the Fund held by the
Sub-Custodians hereunder (other than bearer securities) shall be
registered in the name of the Fund or in the name of any nominee of the
Fund or of any nominee of the Sub-Custodians or any Eligible Foreign
Custodian subject to a Contract (each as defined in Section 3.11A) or
eligible securities depository (as defined in Section 3.11B), which
nominee shall be assigned exclusively to the Fund, unless the Fund has
authorized in writing the appointment of a nominee to be used in common
with other registered investment companies having the same investment
adviser as the Fund, or in the name or nominee name of any agent
appointed pursuant to Section 3.12. Notwithstanding the foregoing, a
Sub-Custodian, agent, Eligible Foreign Custodian or eligible securities
depository may hold securities of the Fund in a nominee name which is
used for its other clients provided that such name is not used by the
Sub-Custodian, agent, Eligible Foreign Custodian or eligible securities
depository for its own securities and that securities of the Fund are,
by book-entry or otherwise, at all times identified as belonging to the
Fund and distinguished from other securities held for other clients
using the same nominee name. In addition, and notwithstanding the
foregoing, a Sub-Custodian or agent thereof or Eligible Foreign
Custodian or eligible securities depository may hold securities of the
Fund in its own name if such registration is the prevailing method in
the applicable market by which custodians register securities of
institutional clients and provided that securities of the Fund are, by
book-entry or otherwise, at all times identified as belonging to the
Fund and distinguished from other securities held for other clients or
for the Sub-Custodian or agent thereof or Eligible Foreign Custodian or
eligible securities depository.   All securities accepted by a
Sub-Custodian under the terms of a Sub-Custodian Agreement shall be in
good delivery form.

3.4. Bank Accounts.   The Custodian shall cause one or more
Sub-Custodians to open and maintain a separate bank account or accounts
in the name of the Fund or the Custodian, subject only to draft or order
by the Sub-Custodian acting pursuant to the terms of a Sub-Custodian
Contract or by the Custodian acting pursuant to this Agreement, and
shall hold in such account or accounts, subject to the provisions
hereof, all cash received by it from or for the account of the Fund,
other than cash maintained by the Fund in a bank account established and
used in accordance with Rule 17f-3 under the 1940 Act. Funds held by the
Sub-Custodian for the Fund may be deposited by it to its credit as
sub-custodian or to the Custodian's credit as custodian in the Banking
Department of the Sub-Custodian or in such other banks or trust
companies as it may in its discretion deem necessary or desirable;
provided, however, that every such bank or trust company shall be
qualified to act as a custodian under the 1940 Act and that each such
bank or trust company and the funds to be deposited with each such bank
or trust company shall be approved by vote of a majority of the Trustees
of the Fund. Such funds shall be deposited by the Sub-Custodian or the
Custodian in its capacity as sub-custodian or custodian, respectively,
and shall be withdrawable by the Sub-Custodian or the Custodian only in
that capacity. The Sub-Custodian shall be liable for actual losses
incurred by the Fund attributable to any failure on the part of the
Sub-Custodian to report accurate cash availability information with
respect to the Fund's or the Custodian's bank accounts maintained by the
Sub-Custodian or any of its agents.

3.5. Payments for Shares.  The Custodian shall cause one or more
Sub-Custodians to deposit into the Fund's account amounts received from
the Transfer Agent of the Fund for shares of the Fund issued by the Fund
and sold by its distributor.  The Custodian will provide timely
notification to the Fund of any receipt by the Sub-Custodian from the
Transfer Agent of payments for shares of the Fund.

3.6. Availability of Federal Funds.   Upon mutual agreement between the
Fund and the Custodian, the Custodian shall cause one or more
Sub-Custodians, upon the receipt of Proper Instructions, to make federal
funds available to the Fund as of specified times agreed upon from time
to time by the Fund and the Custodian with respect to amounts received
by the Sub-Custodians for the purchase of shares of the Fund.

3.7. Collection of Income.   The Custodian shall cause one or more
Sub-Custodians to collect on a timely basis all income and other
payments with respect to registered securities held hereunder, including
securities held in a Securities System, to which the Fund shall be
entitled either by law or pursuant to custom in the securities business,
and shall collect on a timely basis all income and other payments with
respect to bearer securities if, on the date of payment by the issuer,
such securities are held by the Sub-Custodian or agent thereof and shall
credit such income, as collected, to the Fund's account. Without
limiting the generality of the foregoing, the Custodian shall cause the
Sub-Custodian to detach and present for payment all coupons and other
income items requiring presentation as and when they become due and
shall collect interest when due on securities held under the applicable
Sub-Custodian Agreement.  Arranging for the collection of income due the
Fund on securities loaned pursuant to the provisions of Section 3.2.10
shall be the responsibility of the Fund.  The Custodian will have no
duty or responsibility in connection therewith, other than to provide
the Fund with such information or data as may be necessary to assist the
Fund in arranging for the timely delivery to the Sub-Custodian of the
income to which the Fund is properly entitled.

3.8. Payment of Fund Monies. Upon receipt of Proper Instructions, which
may be continuing instructions when deemed appropriate by the parties,
the Custodian shall cause one or more Sub-Custodians to pay out monies
of the Fund in the following cases only:

3.8.1. Upon the purchase of securities for the account of the Fund but
only (a) against the delivery of such securities to the Sub-Custodian
(or any bank, banking firm or trust company doing business in the United
States or abroad which is qualified under the 1940 Act, as amended, to
act as a custodian and has been designated by the Sub-Custodian as its
agent for this purpose) or any Eligible Foreign Custodian or eligible
securities depository and registered in the name of the Fund or in the
name of a nominee of the Sub-Custodian, any Eligible Foreign Custodian
or eligible securities depository referred to in Section 3.3 hereof or
in proper form for transfer; provided, however, that the Sub-Custodian
may cause monies of the Fund to be paid out prior to delivery of such
securities if (i) in the Sub-Custodian's judgment, (A) payment prior to
delivery is required by the terms of the instrument evidencing the
security or (B) payment prior to delivery is the prevailing method of
settling securities transactions between institutional investors in the
applicable market and (ii) payment prior to delivery is in accordance
with generally accepted trade practice and with any applicable
governmental regulations and the rules of Securities Systems or other
securities depositories and clearing agencies in the applicable market;
the Custodian agrees, upon request, to advise the Fund of all pending
transactions in which payment will be made prior to the receipt of
securities in accordance with the provision to the foregoing sentence;
(b) in the case of a purchase effected through a Securities System, in
accordance with the conditions set forth in Section 3.13 hereof; or
(c)(i) in the case of a repurchase agreement entered into between the
Fund and the Sub-Custodian, another bank, or a broker-dealer against
delivery of the securities either in certificate form or through an
entry crediting the Sub-Custodian's account at the Federal Reserve Bank
with such securities or (ii) in the case of a repurchase agreement
entered into between the Fund and the Sub-Custodian, against delivery of
a receipt evidencing purchase by the Fund of securities owned by the
Sub-Custodian along with written evidence of the agreement by the
Sub-Custodian to repurchase such securities from the Fund; or (d) for
transfer to a time deposit account of the Fund in any bank, whether
domestic or foreign, which transfer may be effected prior to receipt of
a confirmation of the deposit from the applicable bank or a financial
intermediary;

3.8.2. In connection with conversion, exchange or surrender of
securities owned by the Fund as set forth in Section 3.2 hereof;

3.8.3. For the redemption or repurchase of shares issued by the Fund as
set forth in Section 3.10 hereof;

3.8.4. For the payment of any expense or liability incurred by the Fund,
including but not limited to the following payments for the account of
the Fund: interest, taxes, management, accounting, transfer agent and
legal fees, including the Custodian's fee; and operating expenses of the
Fund whether or not such expenses are to be in whole or part capitalized
or treated as deferred expenses;

3.8.5. For the payment of any dividends or other distributions declared
to shareholders of the Fund;

3.8.6. For transfer to another Sub-Custodian of the Fund;

3.8.7. For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution of the
Trustees or of the Executive Committee of the Fund signed by an officer
of the Fund and certified by its Clerk or an Assistant Clerk, specifying
the amount of such payment, setting forth the purpose for which such
payment is to be made, declaring such purpose to be a proper purpose,
and naming the person or persons to whom such payments is to be made.

3.9. Liability for Payment in Advance of Receipt of Securities
Purchased. Except as otherwise provided in this Agreement, in any and
every case where payment for purchase of securities for the account of
the Fund is made by a Sub-Custodian in advance of receipt of the
securities purchased in the absence of specific written instructions
from the Fund to so pay in advance, the Custodian shall cause the
Sub-Custodian to be absolutely liable to the Fund in the event any loss
results to the Fund from the payment by the Sub-Custodian in advance of
delivery of such securities.

3.10. Payments for Repurchase or Redemptions of Shares of the Fund. From
such funds as may be available, the Custodian shall, upon receipt of
Proper Instructions, cause one or more Sub-Custodians to make funds
available for payment to a shareholder who has delivered to the Transfer
Agent a request for redemption or repurchase of shares of the Fund. In
connection with the redemption or repurchase of shares of the Fund, the
Custodian is authorized, upon receipt of Proper Instructions, to cause
one or more Sub-Custodian, to wire funds to or through a commercial bank
designated by the redeeming shareholder. In connection with the
redemption or repurchase of shares of the Fund, the Custodian, upon
receipt of Proper Instructions, shall cause one or more Sub-Custodians
to honor checks drawn on the Sub-Custodian by a shareholder when
presented to the Sub-Custodian in accordance with such procedures and
controls as are mutually agreed upon from time to time among the Fund,
the Custodian and the Sub-Custodian.

3.11. Appointment of Agents with respect to U.S. Assets.   With respect
to Fund assets maintained in the United States, the Custodian may permit
any Sub-Custodian at any time or times in its discretion to appoint (and
may at any time remove) any other bank or trust company which is itself
qualified under the 1940 Act to act as a custodian, as its agent to
carry out such of the provisions of this Section 3 as the Sub-Custodian
may from time to time direct; provided, however, that the appointment of
any agent shall not relieve the Custodian or any Sub-Custodian of its
responsibilities or liabilities hereunder and provided that any such
agent shall have been approved by vote of the Trustees of the Fund. The
agents which the Fund and the Custodian have approved to date are set
forth in Schedule B hereto.  Any Sub-Custodian Agreement shall provide
that the engagement by the Sub-Custodian of one or more agents shall not
relieve the Sub-Custodian of its responsibilities or liabilities
thereunder.

3.11A Appointment of Foreign Custody Manager.   Pursuant to Rule 17f-5
under the 1940 Act, the Fund's Trustees appoint the Custodian as foreign
custody manager and delegate to the Custodian, and the Custodian accepts
such delegation and agrees to perform, the duties set forth below
concerning the safekeeping of the Fund's assets in each of the countries
set forth in Schedule B-1, as may be amended from time to time by the Fund
and the Custodian. The Custodian agrees to exercise reasonable care,
prudence and diligence such as a person having responsibility for the
safekeeping of the Fund's foreign assets would exercise. The Fund
acknowledges that advance notice may be required before the Custodian shall
be able to perform its duties with respect to a country added to Schedule
B-1 (such advance notice to be reasonable in light of the specific facts
and circumstances attendant to performance of duties in such country). The
Custodian may at any time and from time to time appoint, at its own cost
and expense, as a sub-foreign custody manager any Sub-Custodian that meets
the requirements of the 1940 Act and the rules and regulations thereunder
to act as a foreign custody manager, provided that the Fund shall have
approved the delegation of responsibilities to such Sub-Custodian as
sub-foreign custody manager, and the Custodian gives prompt notice to the
Fund of any such appointment.  The Custodian or Sub-Custodian, as the case
may be, is authorized to take such actions on behalf of or in the name of
the Fund as are reasonably required to discharge its duties, which are as
follows:

3.11A.1 The Custodian shall cause the Sub-Custodian to place and maintain
the Fund's assets with a custodian; provided that (i) each custodian is
either an eligible foreign custodian, as defined in subparagraph (a)(1) of
Rule 17f-5 or a bank eligible to serve as a custodian under Section 17(f)
of the 1940 Act ("Eligible Foreign Custodian"); and (ii) the Sub-Custodian
shall have determined that the Fund's assets will be subject to reasonable
care, based on the standards applicable to custodians in the relevant
market, after considering all factors relevant to the safekeeping of such
assets, including, without limitation, those factors set forth in clauses
(i) through (iv) of subparagraph (c)(1) of Rule 17f-5.

3.11A.2 The foreign custody arrangements are governed by a written contract
that the Sub-Custodian has determined will provide reasonable care for the
Fund's assets based on those factors set forth in clauses (i) through (iv)
of subparagraph (c)(1) of Rule 17f-5, which contract shall include the
provisions required by clause (i) of subparagraph (c)(2) of Rule 17f-5, or
in lieu of any or all of such provisions, the contract may contain such
other provisions that the Sub-Custodian determines will provide, in their
entirety, the same or a greater level of care and protection for the Fund's
assets as the provisions set forth in such clause, in their entirety.

3.11A.3 The Sub-Custodian shall have established a system to monitor at
reasonable intervals (but at least annually) the appropriateness of
maintaining the Fund's assets with each Eligible Foreign Custodian selected
hereunder.  The Sub-Custodian shall monitor the continuing appropriateness
of placement of the Fund's assets in accordance with the criteria set forth
above.  The Sub-Custodian shall monitor the continuing performance of the
contract governing the Fund's arrangements in accordance with the criteria
set forth above.

3.11A.4 The Custodian shall provide to the Fund's Trustees at least
annually, and more frequently if requested by the Fund, written reports
specifying placement of the Fund's assets with each Eligible Foreign
Custodian selected hereunder, and shall promptly report as to any material
changes to the Fund's foreign custody arrangements.

3.11A.5 If an arrangement with a specific Eligible Foreign Custodian
selected hereunder no longer meets the requirements of this Agreement, the
Sub- Custodian shall withdraw the Fund's assets from the non-complying
arrangement as soon as reasonably practicable; provided, however, that if
in the reasonable judgment of the Sub-Custodian, such withdrawal would
require liquidation of any of the Fund's assets or would materially impair
the liquidity, value or other investment characteristics of the Fund's
assets, it shall be the duty of the Sub-Custodian to provide the Fund's
investment manager information regarding the particular circumstances and
to act only in accordance with Proper Instructions with respect to such
liquidation or other withdrawal.

If a specific Eligible Foreign Custodian fails to perform any of its
obligations under the terms and conditions of the applicable contract,
the Sub-Custodian shall use its best efforts to cause such Eligible
Foreign Custodian to perform such obligations.  If the Sub-Custodian is
unable to cause such Eligible Foreign Custodian to perform fully its
obligations thereunder, the Sub-Custodian shall terminate such Eligible
Foreign Custodian and, if necessary or desirable, appoint another
Eligible Foreign Custodian.

At the written request of the Fund, the Custodian shall cause the
Sub-Custodian to terminate any Eligible Foreign Custodian in accordance
with the termination provisions under the applicable contract.

3.11A.6 Notwithstanding the foregoing provisions, the Fund, acting through
its Trustees, its investment manager or its other authorized
representative, may direct the Custodian (and, in turn, the Custodian may
direct the Sub-Custodian) to place and maintain the Fund's assets with a
particular Eligible Foreign Custodian.  In such event, the Custodian and,
as applicable, the Sub-Custodian shall be entitled to rely on any such
instruction as a Proper Instruction under the terms of the Custodian
Agreement and the Sub-Custodian Agreement, respectively, and shall have no
duties under this Section with respect to such arrangement save those that
it may undertake specifically in writing with respect to each particular
instance.

3.11B Deposit of Fund Assets in Foreign Securities Depositories.   The
Custodian may permit any Sub-Custodian to deposit and/or maintain non-U.S.
investments of the Fund in any non-U.S. Securities Depository provided such
Securities Depository meets the requirements of an "eligible securities
depository" under Rule 17f-7 under the 1940 Act, or any successor rule or
regulation, or which by order of the Securities and Exchange Commission is
exempted therefrom. Prior to the placement of any assets of the Fund with a
non-U.S. Securities Depository, the Sub-Custodian: (a) shall provide to the
Fund's investment manager an assessment of the custody risks associated
with maintaining assets with such Securities Depository; and (b) shall have
established a system to monitor the custody risks associated with
maintaining assets with such Securities Depository.  The Sub-Custodian
shall monitor such risks on a continuing basis and promptly notify the
Fund's investment manager of any material changes in such risk. If an
arrangement with a non-U.S. Securities Depository with which the assets of
the Fund are maintained hereunder no longer meets the requirements of this
Agreement, the Sub-Custodian shall withdraw the Fund's assets from the
non-complying arrangement as soon as reasonably practicable; provided,
however, that if in the reasonable judgment of the Sub-Custodian, such
withdrawal would require liquidation of any of the Fund's assets or would
materially impair the liquidity, value or other investment characteristics
of the Fund's assets, it shall be the duty of the Sub-Custodian to provide
the Fund's investment manager with information regarding the particular
circumstances and to act only in accordance with Proper Instructions with
respect to such liquidation or other withdrawal. In performing its duties
under this subsection, the Sub-Custodian shall use reasonable care,
prudence and diligence.  The Sub-Custodian may rely on such reasonable
sources of information as may be available including but not limited to:
(i) published ratings; (ii) information supplied by a sub-custodian that is
a participant in such Securities Depository; (iii) industry surveys or
publications; (iv) information supplied by the depository itself, by its
auditors (internal or external) or by the relevant Foreign Financial
Regulatory Authority. It is acknowledged that information procured through
some or all of these sources may not be independently verifiable by the
Sub-Custodian and that direct access to Securities Depositories is limited
under most circumstances. Accordingly, the Sub-Custodian shall not be
responsible for errors or omissions in its duties hereunder provided that
it has performed its monitoring and assessment duties with reasonable care.
The risk assessment shall be provided to the Fund's investment manager by
such means as the Sub-Custodian shall reasonably establish. Notice of
material change in such assessment may be provided by the Sub-Custodian in
the manner established as customary for transmission of material market
information.

3.12. Deposit of Fund Assets in Securities Systems.  The Custodian may
permit any Sub-Custodian to deposit and/or maintain securities owned by
the Fund in a clearing agency registered with the Securities and
Exchange Commission under Section 17A of the Securities Exchange Act of
1934, which acts as a securities depository, or in the book-entry system
authorized by the U.S. Department of the Treasury and certain federal
agencies, collectively referred to herein as "Securities System" in
accordance with applicable rules and regulations (including Rule 17f-4
of the 1940 Act) and subject to the following provisions:

3.12.1. The Sub-Custodian may, either directly or through one or more
agents, keep securities of the Fund in a Securities System provided that
such securities are represented in an account ("Account") of the
Sub-Custodian in the Securities System which shall not include any
assets of the Sub-Custodian other than assets held as a fiduciary,
custodian or otherwise for customers;

3.12.2. The records of the Sub-Custodian with respect to securities of
the Fund which are maintained in a Securities System shall identify by
book-entry those securities belonging to the Fund;

3.12.3. The Sub-Custodian shall pay for securities purchased for the
account of the Fund upon (i) receipt of advice from the Securities
System that such securities have been transferred to the Account, and
(ii) the making of an entry on the records of the Sub-Custodian to
reflect such payment and transfer for the account of the Fund. The
Sub-Custodian shall transfer securities sold for the account of the Fund
upon (i) receipt of advice from the Securities System that payment for
such securities has been transferred to the Account, and (ii) the making
of an entry on the records of the Sub-Custodian to reflect such transfer
and payment for the account of the Fund. Copies of all advices from the
Securities System of transfers of securities for the account of the Fund
shall be maintained for the Fund by the Sub-Custodian or such an agent
and be provided to the Fund at its request.  The Sub-Custodian shall
furnish the Fund confirmation of each transfer to or from the account of
the Fund in the form of a written advice or notice and shall furnish to
the Fund copies of daily transaction sheets reflecting each day's
transactions in the Securities System for the account of the Fund on the
next business day;

3.12.4. The Sub-Custodian shall provide the Fund with any report
obtained by the Sub-Custodian on the Securities System's accounting
system, internal accounting controls and procedures for safeguarding
securities deposited in the Securities System;

3.12.5. The Sub-Custodian shall utilize only such Securities Systems as
are approved by the Board of Trustees of the Fund, and included on a
list maintained by the Custodian;

3.12.6. Anything to the contrary in this Agreement notwithstanding, the
Sub-Custodian shall be liable to the Fund for any loss or damage to the
Fund resulting from use of the Securities System by reason of any
negligence, misfeasance or misconduct of the Sub-Custodian or any of its
agents or of any of its or their employees or from failure of the
Sub-Custodian or any such agent to enforce effectively such rights as it
may have against the Securities System; at the election of the Fund, it
shall be entitled to be subrogated to the rights of the Sub-Custodian
with respect to any claim against the Securities System or any other
person which the Sub-Custodian may have as a consequence of any such
loss or damage if and to the extent that the Fund has not been made
whole for any such loss or damage.

3.12A Depositary Receipts.  Only upon receipt of Proper Instructions, the
Sub-Custodian shall instruct an Eligible Foreign Custodian or an agent of
the Sub-Custodian appointed pursuant to the applicable Contract (an
"Agent") to surrender securities to the depositary used by an issuer of
American Depositary Receipts or International Depositary Receipts
(hereinafter collectively referred to as "ADRs") for such securities
against a written receipt therefor adequately describing such securities
and written evidence satisfactory to the Eligible Foreign Custodian or
Agent that the depositary has acknowledged receipt of instructions to issue
with respect to such securities ADRs in the name of the Sub-Custodian, or a
nominee of the Sub-Custodian, for delivery to the Sub-Custodian.

Only upon receipt of Proper Instructions, the Sub-Custodian shall surrender
ADRs to the issuer thereof against a written receipt therefor adequately
describing the ADRs surrendered and written evidence satisfactory to the
Sub-Custodian that the issuer of the ADRs has acknowledged receipt of
instructions to cause its depository to deliver the securities underlying
such ADRs to an Eligible Foreign Custodian or an Agent.

3.12B Foreign Exchange Transactions and Futures Contracts.  Only upon
receipt of Proper Instructions, the Sub-Custodian shall enter into foreign
exchange contracts or options to purchase and sell foreign currencies for
spot and future delivery on behalf and for the account of the Fund or shall
enter into futures contracts or options on futures contracts. Such
transactions may be undertaken by the Sub-Custodian with such banking
institutions, including the Sub-Custodian and Eligible Foreign Custodian(s)
appointed pursuant to the applicable Contract, as principals, as approved
and authorized by the Fund. Foreign exchange contracts, futures contracts
and options, other than those executed with the Sub-Custodian, shall for
all purposes of this Agreement be deemed to be portfolio securities of the
Fund.

3.12C Option Transactions.  Only upon receipt of Proper Instructions, the
Sub-Custodian shall enter into option transactions in accordance with the
provisions of any agreement among the Fund, the Custodian and/or the
Sub-Custodian and a broker-dealer.

3.13. Ownership Certificates for Tax Purposes.   The Custodian shall
cause one or more Sub-Custodians as may be appropriate to execute
ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other
payments with respect to securities of the Fund held by the
Sub-Custodian and in connection with transfers of securities.

3.14. Proxies.   The Custodian shall, with respect to the securities
held by the Sub-Custodians, cause to be promptly executed by the
registered holder of such securities, if the securities are registered
other than in the name of the Fund or a nominee of the fund, all
proxies, without indication of the manner in which such proxies are to
be voted, and shall promptly deliver to the Fund such proxies, all proxy
soliciting materials and all notices relating to such securities.

3.15. Communications Relating to Fund Portfolio Securities.   The
Custodian shall cause the Sub-Custodians to transmit promptly to the
Custodian, and the Custodian shall transmit promptly to the Fund, all
written information (including, without limitation, pendency of calls
and maturities of securities and expirations of rights in connection
therewith) received by the Sub-Custodian from issuers of the securities
being held for the account of the Fund. With respect to tender or
exchange offers, the Custodian shall cause the Sub-Custodian to transmit
promptly to the Fund, all written information received by the
Sub-Custodian from issuers of the securities whose tender or exchange is
sought and from the party (or his agents) making the tender or exchange
offer. If the Fund desires to take action with respect to any tender
offer, exchange offer or any other similar transaction, the Fund shall
notify the Custodian of the action the Fund desires such Sub-Custodian
to take, provided, however, neither the Custodian nor the Sub-Custodian
shall be liable to the Fund for the failure to take any such action
unless such instructions are received by the Custodian at least four
business days prior to the date on which the Sub-Custodian is to take
such action or, in the case of foreign securities, such longer period as
shall have been agreed upon in writing by the Custodian and the
Sub-Custodian.

3.16. Proper Instructions.  Proper Instructions as used throughout this
Agreement means a writing signed or initialed by one or more person or
persons who are authorized by the Trustees of the Fund and the
Custodian. Each such writing shall set forth the specific transaction or
type of transaction involved, including a specific statement of the
purpose for which such action is requested.  Oral instructions will be
considered Proper Instructions if the Custodian or Sub-Custodian, as the
case may be, reasonably believes them to have been given by a person
authorized to give such instructions with respect to the transaction
involved. All oral instructions shall be confirmed in writing. Proper
Instructions also include communications effected directly between
electro-mechanical or electronic devices provided that the Trustees have
approved such procedures. Notwithstanding the foregoing, no Trustee,
officer, employee or agent of the Fund shall be permitted access to any
securities or similar investments of the Fund deposited with any
Sub-Custodian or any agent of any Sub-Custodian for any reason except in
accordance with the provisions of Rule 17f-2 under the 1940 Act.

3.17. Actions Permitted Without Express Authority.  The Custodian may in
its discretion, and may permit one or more Sub-Custodians in their
discretion, without express authority from the Fund to:

3.17.1. make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this
Agreement, or in the case of a Sub-Custodian, under the applicable
Sub-Custodian Agreement, provided that all such payments shall be
accounted for to the Fund;

3.17.2. surrender securities in temporary form for securities in
definitive form;

3.17.3. endorse for collection, in the name of the Fund, checks, drafts
and other negotiable instruments; and

3.17.4. in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase, transfer and
other dealings with the securities and property of the Fund except as
otherwise directed by the Trustees of the Fund.

3.18. Evidence of Authority.  The Custodian shall be protected in acting
upon any instructions, notice, request, consent, certificate or other
instrument or paper believed by it to be genuine and to have been
properly executed by or on behalf of the Fund.

3.19. Investment Limitations.  In performing its duties generally, and
more particularly in connection with the purchase, sale and exchange of
securities made by or for the Fund, the Custodian may assume, unless and
until notified in writing to the contrary, that Proper Instructions
received by it are not in conflict with or in any way contrary to any
provisions of the Fund's Declaration of Trust or By-Laws (or comparable
documents) or votes or proceedings of the shareholders or Trustees of
the Fund. The Custodian shall in no event be liable to the Fund and
shall be indemnified by the Fund for any violation of any investment
limitations to which the Fund is subject or other limitations with
respect to the Fund's powers to expend funds, encumber securities,
borrow or take similar actions affecting its portfolio.

4. Performance Standards.  The Custodian shall use its best efforts to
perform its duties hereunder in accordance with the standards set forth
in Schedule C hereto. Schedule C may be amended from time to time as
agreed to by the Custodian and the Trustees of the Fund.

5. Records.  The Custodian shall create and maintain all records
relating to the Custodian's activities and obligations under this
Agreement and cause all Sub-Custodians to create and maintain all
records relating to the Sub-Custodian's activities and obligations under
the appropriate Sub-Custodian Agreement in such manner as will meet the
obligations of the Fund under the 1940 Act, with particular attention to
Sections 17(f) and 31 thereof and Rules 17f-2, 3la-1 and 31a-2
thereunder, applicable federal and state tax laws, and any other law or
administrative rules or procedures which may be applicable to the Fund.
All such records shall be the property of the Fund and shall at all
times during the regular business hours of the Custodian or during the
regular business hours of the Sub-Custodian, as the case may be, be open
for inspection by duly authorized officers, employees or agents of the
Custodian and Fund and employees and agents of the Securities and
Exchange Commission.  At the Fund's request, the Custodian shall supply
the Fund and cause one or more Sub-Custodians to supply the Custodian
with a tabulation of securities owned by the Fund and held under this
Agreement.  When requested to do so by the Fund and for such
compensation as shall be agreed upon, the Custodian shall include and
cause one or more Sub-Custodians to include certificate numbers in such
tabulations.

6. Opinion and Reports of Fund's Independent Accountants.  The Custodian
shall take all reasonable actions, as the Fund may from time to time
request, to furnish such information with respect to its activities
hereunder as the Fund's independent public accountants may request in
connection with the accountant's verification of the Fund's securities
and similar investments as required by Rule 17f-2 under the 1940 Act,
the preparation of the Fund's registration statement and amendments
thereto, the Fund's reports to the Securities and Exchange Commission,
and with respect to any other requirements of such Commission.

The Custodian shall also direct any Sub-Custodian to take all reasonable
actions, as the Fund may from time to time request, to furnish such
information with respect to its activities under the applicable
Sub-Custodian Agreement as the Fund's independent public accountant may
request in connection with the accountant's verification of the Fund's
securities and similar investments as required by Rule 17f-2 under the
1940 Act, the preparation of the Fund's registration statement and
amendments thereto, the Fund's reports to the Securities and Exchange
Commission, and with respect to any other requirements of such
Commission.

7. Reports of Custodian's and Sub-Custodians' Independent Accountants.
The Custodian shall provide the Fund, at such times as the Fund may
reasonably require, with reports by its independent public accountant on
its accounting system, internal accounting controls and procedures for
safeguarding securities, including securities deposited and/or
maintained in Securities Systems, relating to services provided by the
Custodian under this Agreement.  The Custodian shall also cause one or
more of the Sub-Custodians to provide the Fund, at such time as the Fund
may reasonably require, with reports by independent public accountants
on their accounting systems, internal accounting controls and procedures
for safeguarding securities, including securities deposited and/or
maintained in Securities Systems, relating to services provided by those
Sub-Custodians under their respective Sub-Custody Agreements.  Such
reports, which shall be of sufficient scope and in sufficient detail as
may reasonably be required by the Fund, shall provide reasonable
assurance that any material inadequacies would be disclosed by such
examinations, and, if there is no such inadequacies, shall so state.

8. Compensation.  The Custodian shall be entitled to reasonable
compensation for its services and expenses as custodian, as agreed upon
from time to time between the Fund and the Custodian.  Such expenses
shall not include, however, the fees paid by the Custodian to any
Sub-Custodian.

9. Responsibility of Custodian.  The Custodian shall exercise reasonable
care and diligence in carrying out the provisions of this Agreement and
shall not be liable to the Fund for any action taken or omitted by it in
good faith without negligence.  So long as and to the extent that it is
in the exercise of reasonable care, neither the Custodian nor any
Sub-Custodian shall be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it
or delivered by it pursuant to this Agreement and shall be held harmless
in acting upon any notice, request, consent, certificate or other
instrument reasonably believed by it to be genuine and, if in writing,
reasonably believed by it to be signed by the proper party or parties.
It shall be entitled to rely on and may act upon advice of counsel (who
may be counsel for the Fund) on all matters, and shall be without
liability for any action reasonably taken or omitted pursuant to such
advice.  Notwithstanding the foregoing, the responsibility of the
Custodian or a Sub-Custodian with respect to redemptions effected by
check shall be in accordance with a separate Agreement entered into
between the Custodian and the Fund.

It is also understood that the Custodian shall not be liable for any
loss resulting from a Sovereign Risk or Force Majeure.  A "Sovereign
Risk" shall mean nationalization, expropriation, devaluation,
revaluation, confiscation, seizure, cancellation, destruction or similar
action by any governmental authority, de facto or de jure; or enactment,
promulgation, imposition or enforcement by any such governmental
authority of currency restrictions, exchange controls, taxes, levies or
other charges affecting the Fund's property; or acts of war, terrorism,
insurrection or revolution; or any other similar act or event beyond the
Custodian's control.  "Force Majeure" shall mean any circumstance or
event which is beyond the reasonable control of the Custodian, a
Sub-Custodian or any agent of the Custodian or a Sub-Custodian and which
adversely affects the performance by the Custodian of its obligations
hereunder, by the Sub-Custodian of its obligations under its
Sub-Custodian Agreement or by any other agent of the Custodian or the
Sub-Custodian, including any event caused by, arising out of or
involving (a) an act of God, (b) accident, fire, water damage or
explosion, (c) any computer, system or other equipment failure or
malfunction caused by any computer virus or the malfunction or failure
of any communications medium, (d) any interruption of the power supply
or other utility service, (e) any strike or other work stoppage, whether
partial or total, (f) any delay or disruption resulting from or
reflecting the occurrence of any Sovereign Risk, (g) any disruption of,
or suspension of trading in, the securities, commodities or foreign
exchange markets, whether or not resulting from or reflecting the
occurrence of any Sovereign Risk, (h) any encumbrance on the
transferability of a currency or a currency position on the actual
settlement date of a foreign exchange transaction, whether or not
resulting from or reflecting the occurrence of any Sovereign Risk, or
(i) any other cause similarly beyond the reasonable control of the
Custodian.

If the Fund requires the Custodian which in turn may require a
Sub-Custodian to take any action with respect to securities, which
action involves the payment of money or which action may, in the opinion
of the Custodian or the Sub-Custodian result in the Custodian or its
nominee or a Sub-Custodian or its nominee being liable for the payment
of money or incurring liability of some other form, the Fund, as a
prerequisite to requiring the Custodian or the Custodian requiring any
Sub-Custodian to take such action, shall provide indemnity to the
Custodian in an amount and form satisfactory to it.

The Fund agrees to indemnify and hold harmless the Custodian and its
nominee from and against all taxes, charges, expenses, assessments,
claims and liabilities (including counsel fees) incurred or assessed
against it or its nominee or any Sub-Custodian or its nominee in
connection with the performance of this Agreement, or any Sub-Custodian
Agreement except, as to the Custodian, such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful
misconduct, and as to a Sub-Custodian, such as may arise from such
Sub-Custodian's or its nominee's own negligent action, negligent failure
to act or willful misconduct.  The negligent action, negligent failure
to act or willful misconduct of the Custodian shall not diminish the
Fund's obligation to indemnify the Custodian in the amount, but only in
the amount, of any indemnity required to be paid to a Sub-Custodian
under its Sub-Custodian Agreement.  The Custodian may assign this
indemnity from the Fund directly to, and for the benefit of, any
Sub-Custodian.  The Custodian is authorized, and may authorize any
Sub-Custodian, to charge any account of the Fund for such items and such
fees.  To secure any such authorized charges and any advances of cash or
securities made by the Custodian or any Sub-Custodian to or for the
benefit of the Fund for any purpose which results in the Fund incurring
an overdraft at the end of any business day or for extraordinary or
emergency purposes during any business day, the Fund hereby grants to
the Custodian a security interest in and pledges to the Custodian
securities up to a maximum of 10% of the value of the Fund's net assets
for the purpose of securing payment of any such advances and hereby
authorizes the Custodian on behalf of the Fund to grant to any
Sub-Custodian a security interest in and pledge of securities held for
the Fund (including those which may be held in a Securities System) up
to a maximum of 10% of the value of the net assets held by such
Sub-Custodian.  The specific securities subject to such security
interest may be designated in writing from time to time by the Fund or
its investment adviser.  In the absence of any designation of securities
subject to such security interest, the Custodian or the Sub-Custodian,
as the case may be, may designate securities held by it.  Should the
Fund fail to repay promptly any authorized charges or advances of cash
or securities, the Custodian or the Sub-Custodian shall be entitled to
use such available cash and to dispose of pledged securities and
property as is necessary to repay any such authorized charges or
advances and to exercise its rights as a secured party under the U.C.C.
The Fund agrees that a Sub-Custodian shall have the right to proceed
directly against the Fund and not solely as subrogee to the Custodian
with respect to any indemnity hereunder assigned to a Sub-Custodian, and
in that regard, the Fund agrees that it shall not assert against any
Sub-Custodian proceeding against it any defense or right of set-off the
Fund may have against the Custodian arising out of the negligent action,
negligent failure to act or willful misconduct of the Custodian, and
hereby waives all rights it may have to object to the right of a
Sub-Custodian to maintain an action against it.

10. Successor Custodian.   If a successor custodian shall be appointed
by the Trustees of the Fund, the Custodian shall, upon termination,
cause to be delivered to such successor custodian, duly endorsed and in
the form for transfer, all securities, funds and other properties then
held by the Sub-Custodians and all instruments held by the
Sub-Custodians relative thereto and cause the transfer to an account of
the successor custodian all of the Fund's securities held in any
Securities System.

If no such successor custodian shall be appointed, the Custodian shall,
in like manner, upon receipt of a certified copy of a vote of the
Trustees of the Fund, cause to be delivered at the office of the
Custodian and transfer such securities, funds and other properties in
accordance with such vote.

In the event that no written order designating a successor custodian or
certified copy of a vote of the Trustees shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank
or trust company, which meets the requirements of the 1940 Act and the
rules and regulations thereunder, such securities, funds and other
properties.  Thereafter, such bank or trust company shall be the
successor of the Custodian under this Agreement.

In the event that such securities, funds and other properties remain in
the possession of the Custodian or any Sub-Custodian after the date of
termination hereof owing to failure of the Fund to procure the certified
copy of the vote referred to or of the Trustees to appoint a successor
custodian, the Custodian shall be entitled to fair compensation for its
services during such period as the Sub-Custodians retain possession of
such securities, funds and other properties and the provisions of this
Agreement relating to the duties and obligations of the Custodian shall
remain in full force and effect.

11. Effective Period, Termination and Amendment.  This Agreement shall
become effective as of its execution, shall continue in full force and
effect until terminated as hereinafter provided, may be amended at any
time by mutual agreement of the parties hereto and may be terminated by
either party by an instrument in writing delivered or mailed, postage
prepaid to the other party, such termination to take effect not sooner
than thirty (30) days after the date of such delivery or mailing;
provided either party may at any time immediately terminate this
Agreement in the event of the appointment of a conservator or receiver
for the other party or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of competent
jurisdiction.  No provision of this Agreement may be amended or
terminated except by a statement in writing signed by the party against
which enforcement of the amendment or termination is sought.

Upon termination of the Agreement, the Fund shall pay to the Custodian
such compensation as may be due as of the date of such termination and
shall likewise reimburse the Custodian and through the Custodian any
Sub-Custodian for its costs, expenses and disbursements.

12. Interpretation.  This Agreement constitutes the entire understanding
and agreement of the parties hereto with respect to the subject matter
hereof.   In connection with the operation of this Agreement, the
Custodian and the Fund may from time to time agree in writing on such
provisions interpretive of or in addition to the provisions of this
Agreement as may in their joint opinion be consistent with the general
tenor of this Agreement.   No interpretive or additional provisions made
as provided in the preceding sentence shall be deemed to be an amendment
of this Agreement.

13. Governing Law.  This instrument is executed and delivered in The
Commonwealth of Massachusetts and shall be governed by and construed
according to the internal laws of said Commonwealth, without regard to
principles of conflicts of law.

14. Notices.   Notices and other writings delivered or mailed postage
prepaid to the Fund addressed to the Fund attention:  Executive Vice
President, or to such other person or address as the Fund may have
designated to the Custodian in writing, or to the Custodian at One Post
Office Square, Boston, Massachusetts 02109 attention: Director of
Custody Services, or to such other address as the Custodian may have
designated to the Fund in writing, shall be deemed to have been properly
delivered or given hereunder to the respective addressee.

15. Binding Obligation.  This Agreement shall be binding on and shall
inure to the benefit of the Fund and the Custodian and their respective
successors and assigns, provided that neither party hereto may assign
this Agreement or any of its rights or obligations hereunder without the
prior written consent of the other party.

16. Declaration of Trust.   A copy of the Declaration of Trust of each
of the Funds 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 each of the Funds as Trustees and
not individually and that the obligations of this instrument are not
binding on any of the Trustees or officers or shareholders individually,
but are binding only on the assets and property of each Fund with
respect to its obligations hereunder.

IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf as of the day and year first above
written.

                          THE PUTNAM FUNDS LISTED IN SCHEDULE A

                          By:  /s/ Charles E. Porter
                          ----------------------------
                          Charles E. Porter
                          Executive Vice President and Treasurer

                          PUTNAM FIDUCIARY TRUST COMPANY

                          By:  /s/ Paul G. Bucuvalas
                          ----------------------------
                          Paul G. Bucuvalas
                          Managing Director and Director of Custody Services

Putnam Investment LLC ("Putnam"), the owner of the Custodian, agrees
that Putnam shall be the primary obligor with respect to compensation
due the Sub-Custodians pursuant to the Sub-Custodian Agreements in
connection with the Sub-Custodians' performance of their
responsibilities thereunder and agrees to take all actions necessary and
appropriate to assure that the Sub-Custodians shall be compensated in
the amounts and on the schedules agreed to by the Custodian and the
Sub-Custodians pursuant to those Agreements.

                          PUTNAM INVESTMENTS, LLC

                          By:  /s/ Loren M. Starr
                          ----------------------------
                          Loren M. Starr
                          Managing Director and Treasurer

Schedule A

               PUTNAM FUNDS

Putnam American Government Income Fund
Putnam Arizona Tax Exempt Income Fund
Putnam Asia Pacific Growth Fund
Putnam Asset Allocation Funds
- -Balanced Portfolio
- -Conservative Portfolio
- -Growth Portfolio
Putnam Balanced Retirement Fund
Putnam California Investment Grade Municipal Trust
Putnam California Tax Exempt Income Fund
Putnam California Tax Exempt Money Market Fund
Putnam Capital Appreciation Fund
Putnam Classic Equity Fund
Putnam Convertible Income-Growth Trust
Putnam Convertible Opportunities and Income Trust
Putnam Diversified Income Trust
Putnam Dividend Income Fund
Putnam Equity Income Fund
Putnam Europe Growth Fund
Putnam Florida Tax Exempt Income Fund
The Putnam Fund for Growth and Income
Putnam Funds Trust
- -Putnam Asia Pacific Fund II
- -Putnam Equity Fund 98
- -Putnam Equity Fund 2000
- -Putnam Financial Services Fund
- -Putnam Growth Fund
- -Putnam High Yield Trust II
- -Putnam International Core Fund
- -Putnam International Fund 2000
- -Putnam International Growth and Income Fund
- -Putnam Mid Cap Fund 2000
- -Putnam New Century Growth Fund
- -Putnam Latin America Fund
- -Putnam Technology Fund
- -Putnam U.S. Core Fund
The George Putnam Fund of Boston
Putnam Global Equity Fund
Putnam Global Governmental Income Trust
Putnam Global Growth Fund
Putnam Global Natural Resources Fund
Putnam Health Sciences Trust
Putnam High Income Convertible and Bond Fund
Putnam High Yield Advantage Fund
Putnam High Yield Municipal Trust
Putnam High Yield Trust
Putnam Income Fund
Putnam Intermediate U.S. Government Income Fund
Putnam International Growth Fund
Putnam Investment Funds
- -Putnam Balanced Fund
- -Putnam Capital Opportunities Fund
- -Putnam Emerging Markets Fund
- -Putnam Global Aggressive Growth Fund
- -Putnam Global Growth and Income Fund
- -Putnam Growth Opportunities Fund
- -Putnam International Fund
- -Putnam International Blend Fund
- -Putnam International Large Cap Growth Fund
- -Putnam International New Opportunities Fund
- -Putnam International Voyager Fund
- -Putnam Mid-Cap Value Fend
- -Putnam New Value Fund
- -Putnam Research Fund
- -Putnam Small Cap Value Fund
Putnam Investment Grade Municipal Trust
Putnam Investment Grade Municipal Trust II
Putnam Investment Grade Municipal Trust III
Putnam Investors Fund
Putnam Managed High Yield Trust
Putnam Managed Municipal Income Trust
Putnam Massachusetts Tax Exempt Income Fund
Putnam Master Income Trust
Putnam Master Intermediate Income Trust
Putnam Michigan Tax Exempt Income Fund
Putnam Minnesota Tax Exempt Income Fund
Putnam Money Market Fund
Putnam Municipal Income Fund
Putnam Municipal Opportunities Trust
Putnam New Jersey Tax Exempt Income Fund
Putnam New Opportunities Fund
Putnam New York Investment Grade Municipal Trust
Putnam New York Tax Exempt Income Fund
Putnam New York Tax Exempt Money Market Fund
Putnam New York Tax Exempt Opportunities Fund
Putnam Ohio Tax Exempt Income Fund
Putnam OTC & Emerging Growth Fund
Putnam Pennsylvania Tax Exempt Income Fund
Putnam Preferred Income Fund
Putnam Premier Income Trust
Putnam Strategic Income Fund
Putnam Tax Exempt Income Fund
Putnam Tax Exempt Money Market Fund
Putnam Tax-Free Health Care Fund
Putnam Tax-Free Income Trust
- -Tax-Free High Yield Fund
- -Tax-Free Insured Fund
Putnam Tax Smart Funds Trust
- -Putnam Tax Smart Equity Fund
Putnam US. Government Income Trust
Putnam Utilities Growth and Income Fund
Putnam Variable Trust
- -Putnam VT American Government Income Fund
- -Putnam VT Asia Pacific Growth Fund
- -Putnam VT Capital Appreciation Fund
- -Putnam VT Diversified Income Fund
- -Putnam VT Global Asset Allocation Fund
- -Putnam VT Global Growth Fund
- -Putnam VT Growth and Income Fund
- -Putnam VT Growth Opportunities Fund
- -Putnam VT Health Sciences Fund
- -Putnam VT High Yield Fund
- -Putnam VT Income Fund
- -Putnam VT Investors Fund
- -Putnam VT International Growth Fund
- -Putnam VT International Growth and Income Fund
- -Putnam VT International New Opportunities Fund
- -Putnam VT Money Market Fund
- -Putnam VT New Opportunities Fund
- -Putnam VT New Value Fund
- -Putnam VT OTC & Emerging Growth Fund
- -Putnam VT Research Fund
- -Putnam VT Small Cap Value Fund
- -Putnam VT Technology Fund
- -Putnam VT The George Putnam Fund of Boston
- -Putnam VT Utilities Growth and Income Fund
- -Putnam VT Vista Fund
- -Putnam VT Voyager Fund
- -Putnam VT Voyager Fund II
Putnam Vista Fund
Putnam Voyager Fund
Putnam Voyager Fund II

Schedule B

        Custodian / Agent Bank List

            Bank of New York
          Bankers Trust Company
    Boston Safe Deposit and Trust Company
         Brown Brothers Harriman
               Citibank
             Deutsche Bank
              Fleet Bank
              JP Morgan
        State Street Corporation
        The Northern Trust Company
          United Missouri Bank

Schedule B-1

              Country List

        Country List

JP Morgan                   Brown Brothers Harriman
Australia                   Argentina
Austria                     Bangledesh
Belguim                     Bermuda
Canada                      Botswana
Cedel                       Brazil
Denmark                     Chile
Euroclear                   China
Finland                     Colombia
France                      Czech Republic
Germany                     Egypt
Greece                      Ghana
Hong Kong                   Hungary
Ireland                     India
Italy                       Indonesia
Japan                       Israel
Luxembourg                  Kenya
Malaysia                    Korea
Netherlands                 Mexico
New Zealand                 Morocco
Norway                      Pakistan
Portugal                    Peru
Singapore                   Philippines
South Africa                Poland
Spain                       Russia
Sweden                      Slovakia
Switzerland                 Sri Lanka
Taiwan                      Swaziland
United Kingdom              Thailand
                            Turkey
                            Uruguay
                            Venezuela
                            Zambia
                            Zimbabwe


             PUTNAM FIDUCIARY TRUST COMPANY
             Domestic Custody Fee Schedule

I. Account Maintenance (per fund):

- ----------------------------------------------------------------------------
     Assets                    Basis Points              Accumulative Assets
- ----------------------------------------------------------------------------
First $100 Million           4.0 basis points              $100 Million
Next $100 Million            3.5 basis points              $200 Million
Next $200 Million            2.0 basis points              $400 Million
Over $400 Million            0.2 basis points                   ---
- ----------------------------------------------------------------------------

II. Holdings Charge and Transaction Fees:

Holdings Charge:  Per Position, per Year                            $90.00

Transaction Fees: DTC Receipt or Delivery                           $10.00
                  FBE Receipt or Delivery                            12.50
                  GNMA Receipt or Delivery                           12.50
                  Non-GNMA Physical Receipt or Delivery              25.00
                  Non-GNMA Physical Bond Maturates                   25.00
                  Short Term Maturates                               20.00
                  GNMA P&I Payments (physical)                       10.00
                  GNMA P&I Payments (PTC)                             1.00

For funds with assets $10 million and under the combined fees are capped
at 10 basis points.


             PUTNAM FIDUCIARY TRUST COMPANY
            International Custody Fee Schedule

I. Account Maintenance / Transaction Charge

                          Asset Charge      Transaction
   Market                   (b.p.)           Charge ($)

Euro/Developed
- --------------
Austria                      16.00            $ 70.00
Belgium                      16.00            $ 70.00
Finland                      12.50            $ 70.00
France                        9.00            $ 60.00
Germany                       9.00            $ 60.00
Greece                       80.00            $ 85.00
Ireland                       9.25            $ 70.00
Italy                         9.00            $ 60.00
Netherlands                   9.50            $ 60.00
Portugal                     40.00            $ 60.00
Spain                        11.25            $ 70.00
Australia                    10.00            $ 60.00
Canada                        6.50            $ 50.00
Cedel                         4.25            $ 35.00
Denmark                       7.50            $ 85.00
Euroclear                     4.25            $ 35.00
Hong Kong                     8.50            $115.00
Japan                         7.50            $ 40.00
Luxembourg                    9.50            $ 50.00
Malaysia                     10.00            $120.00
New Zealand                  10.00            $ 90.00
Norway                       12.50            $120.00
Singapore                    10.25            $100.00
South Africa                  7.50            $ 60.00
Sweden                        9.50            $110.00
Switzerland                   6.50            $105.00
Taiwan                       30.00            $110.00
United Kingdom                7.00            $ 50.00

Emerging
- --------------
Argentina                    39.00            $130.00
Bangladesh                   45.00            $150.00
Bermuda                      65.00            $125.00
Botswana                     47.00            $150.00
Brazil                       29.00            $ 88.00
Chile                        39.00            $130.00
China                        58.50            $130.00
Colombia                     47.00            $150.00
Czech Republic               40.00            $100.00
Egypt                        55.00            $150.00
Ghana                        47.00            $150.00
Hungary                      55.00            $175.00
India                        50.00            $175.00
Indonesia                    33.00            $130.00
Israel                       39.00            $105.00
Kenya                        47.00            $150.00
Korea                        20.00            $ 87.00
Mexico                       16.00            $ 88.00
Morocco                      45.00            $ 50.00
Pakistan                     45.00            $150.00
Peru                         47.00            $150.00
Philippines                  25.50            $155.00
Poland                       60.00            $150.00
Russia                      110.00            $177.00
Slovakia                     45.00            $150.00
Sri Lanka                    30.00            $100.00
Swaziland                    47.00            $150.00
Thailand                     21.50            $105.00
Turkey                       49.00            $140.00
Uruguay                      52.00            $150.00
Venezuela                    40.00            $125.00
Zambia                       47.00            $150.00
Zimbabwe                     47.00            $150.00


              I. Out-of-Pocket Expenses:

Out-of-Pocket Expenses including, but not limited to, the following:

* Telex
* Legal
* Registration Fees
* Stamp Duty
* Depository Withdrawal
* Certificate fees
* Postage and Direct Expenses
* Local Administration Fees


            PUTNAM FIDUCIARY TRUST COMPANY
                    Fee Credits

FEE CREDITS

The aggregate fees set forth in Sections I and II above shall be reduced
prospectively by crediting the Funds with such credits as the Funds have
customarily received from custodians, plus an amount equal to 50% of the
net pre-tax profits attributable to PFTC's custodian activities (before
such extraordinary items as are not properly chargeable as an expense to
purchasers of custodian services) to the extent such profits would
increase PFTC's pre-tax profit margin attributable to such activities
above 30% and by crediting the Funds an amount equal to 70% of such
profits to the extent such profits would increase such margin above 40%.

The customary credits referred to above shall be credited to the Funds
monthly as part of the normal billing process, with any unapplied credit
applied to the Funds' transfer agent fees for such month and then so
credited and applied for each succeeding month until such credit shall
have been fully applied. These credits shall be provided against the
custody and transfer agency fees charged to the Funds in respect of
which such credits are received.

With respect to the credits, if any, attributable to PFTC's pre-tax
profits, on or before the calendar quarter ending March 31 of each year,
the Custodian shall apply the appropriate credit for the preceding
calendar year against the custody fees billed to the Funds for such
quarter and it shall apply the unapplied balance, if any, of such credit
to the custody fees billed to the Fund in each successive quarter until
such credit shall have been fully applied. The Custodian's calendar
year-end financial statements (and the profit margin reflected therein)
shall be reviewed by the independent public accountants of the Funds,
and an appropriate adjustment to the credit balance, if any, due the
Funds in respect of such year will be made following the end of the next
succeeding quarter after which the amount of such adjustment is
determined. The fee credits attributable to PFTC's pre-tax profits shall
be allocated among the Funds on the basis of each Fund's pro rata share
of the aggregate custody fees billed by the Custodian (before any
reduction) or on such other basis as the Trustees of the Funds may from
time to time determine.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.14 OTH CONSENT
<SEQUENCE>10
<FILENAME>exnnfta10.txt
<DESCRIPTION>EX-99.14 OTH CONSENT
<TEXT>

EXHIBIT 9.

Consent of Independent Registered Public Accounting Firm

We hereby consent to the incorporation by reference in this Registration
Statement on Form N-14 (the "Registration Statement") of Putnam High Income
Bond Fund of our report dated October 8, 2003 relating to the financial
statements and financial highlights included in the August 31, 2003 Annual
Report of Putnam High Income Bond Fund, which financial statements and
financial highlights are incorporated by reference into such Registration
Statement. We also consent to the reference to us under the heading
"Financial Highlights" and "Independent Registered Public Accounting Firm
and Financial Statements" in such Registration Statement.

PricewaterhouseCoopers LLP

/s/  PricewaterhouseCoopers LLP
Boston, Massachusetts
October 4, 2004

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.14 OTH CONSENT
<SEQUENCE>11
<FILENAME>exnnftb11.txt
<DESCRIPTION>EX-99.14 OTH CONSENT
<TEXT>

EXHIBIT 10.

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Trustees and Shareholders
Putnam High Income Opportunities Trust:

We consent to the use of our report dated April 2, 2004 for Putnam High
Income Opportunities Trust incorporated herein by reference and to the
references to our firm under the caption "Financial Highlights" in the
Prospectus and "INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM AND
FINANCIAL STATEMENTS" in the Statement of Additional Information.

                                                        KPMG LLP

Boston, Massachusetts
October 1, 2004

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.16 PWR OF ATTY
<SEQUENCE>12
<FILENAME>exnnst12.txt
<DESCRIPTION>EX-99.16 PWR OF ATTY
<TEXT>

EXHIBIT 11.

POWER OF ATTORNEY

I, the undersigned Principal Executive Officer of each of the funds
listed on Schedule A hereto, hereby severally constitute and appoint
John A. Hill, George Putnam III, Jonathan S. Horwitz, John W. Gerstmayr,
Bryan Chegwidden and James P. Pappas, and each of them singly, my true
and lawful attorneys, with full power to them and each of them, to sign
for me, and in my name and in the capacities indicated below, the
Registration Statements on Form N-1A, Form N-2 or Form N-14 of each of
the funds listed on Schedule A hereto and any and all amendments
(including post-effective amendments) and to file the same with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto my said attorneys, and
each of them acting alone, full power and authority to do and perform
each and every act and thing requisite or necessary to be done in the
premises, as fully to all intents and purposes as he might or could do
in person, and hereby ratify and confirm all that said attorneys or any
of them may lawfully do or cause to be done by virtue thereof.

WITNESS my hand and seal on the date set forth below.

Signature                 Title                            Date

/s/ Charles E. Porter     Executive Vice President,        September 16, 2004
- ---------------------     Associate Treasurer and
Charles E. Porter         Principal Executive Officer

Schedule A
Putnam High Income Bond Fund
Putnam High Income Opportunities Trust
Putnam Master Income Trust
Putnam Premier Income Trust


POWER OF ATTORNEY

We, the undersigned Officers of each of the funds listed on Schedule A
hereto, hereby severally constitute and appoint John A. Hill, George
Putnam III, Charles E. Porter, Jonathan S. Horwitz, John W. Gerstmayr,
Bryan Chegwidden and James P. Pappas, and each of them singly, our true
and lawful attorneys, with full power to them and each of them, to sign
for us, and in our names and in the capacities indicated below, the
Registration Statements on Form N-1A, Form N-2 or Form N-14 of each of
the funds listed on Schedule A hereto and any and all amendments
(including post-effective amendments) and to file the same with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto my said attorneys, and
each of them acting alone, full power and authority to do and perform
each and every act and thing requisite or necessary to be done in the
premises, as fully to all intents and purposes as he might or could do
in person, and hereby ratify and confirm all that said attorneys or any
of them may lawfully do or cause to be done by virtue thereof.

WITNESS my hand and seal on the date set forth below.

Signature                  Title                         Date

/s/ Steven D. Krichmar     Vice President and Principal  September 17, 2004
- ---------------------      Financial Officer
Steven D. Krichmar

/s/ Michael T. Healy       Assistant Treasurer and       September 21, 2004
- ---------------------      Principal Accounting
Michael T. Healy           Officer


Schedule A
Putnam High Income Bond Fund
Putnam High Income Opportunities Trust
Putnam Master Income Trust
Putnam Premier Income Trust


POWER OF ATTORNEY

We, the undersigned Trustees of each of the funds listed on Schedule A
hereto, hereby severally constitute and appoint John A. Hill, George
Putnam III, Charles E. Porter, Jonathan S. Horwitz, John W. Gerstmayr,
Bryan Chegwidden and James P. Pappas, and each of them singly, our true
and lawful attorneys, with full power to them and each of them, to sign
for us, and in our names and in the capacities indicated below, the
Registration Statements on Form N-1A, Form N-2 or Form N-14 of each of
the funds listed on Schedule A hereto and any and all amendments
(including post-effective amendments) and to file the same with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto our said attorneys,
and each of them acting alone, full power and authority to do and
perform each and every act and thing requisite or necessary to be done
in the premises, as fully to all intents and purposes as he might or
could do in person, and hereby ratify and confirm all that said
attorneys or any of them may lawfully do or cause to be done by virtue
thereof.

WITNESS my hand and seal on the date set forth below.

Signature                     Title                         Date

/s/ John A. Hill              Chairman of the Board;        September 16, 2004
- -----------------------       Trustee
John A. Hill

/s/ George Putnam, III        President; Trustee            September 17, 2004
- -----------------------
George Putnam, III

/s/ Jameson A. Baxter         Trustee                       September 16, 2004
- -----------------------
Jameson A. Baxter

/s/ Charles B. Curtis         Trustee                       September 20, 2004
- -----------------------
Charles B. Curtis

/s/ Ronald J. Jackson         Trustee                       September 17, 2004
- -----------------------
Ronald J. Jackson

/s/ Paul L. Joskow            Trustee                       September 15, 2004
- -----------------------
Paul L. Joskow

                              Trustee
- -----------------------
Elizabeth T. Kennan

                              Trustee
- -----------------------
John H. Mullin, III

/s/ Robert E. Patterson       Trustee                       September 20, 2004
- -----------------------
Robert E. Patterson

/s/ A.J.C. Smith              Trustee                       September 17, 2004
- -----------------------
A.J.C. Smith

/s/ W. Thomas Stephens        Trustee                       September 17, 2004
- -----------------------
W. Thomas Stephens

Schedule A
Putnam High Income Bond Fund
Putnam High Income Opportunities Trust
Putnam Master Income Trust
Putnam Premier Income Trust

</TEXT>
</DOCUMENT>
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