About EDGAR Online | Login
 
Enter your Email for a Free Trial:
The following is an excerpt from a DEF 14A SEC Filing, filed by PUTNAM HIGH INCOME CONVERTIBLE & BOND FUND on 6/13/2002.
Next Section Next Section Previous Section Previous Section
PUTNAM HIGH INCOME SECURITIES FUND - DEF 14A - 20020613 - NOTICE_OF_ANNUAL_MEETING

Notice of Annual Meeting of Shareholders

* This is the formal agenda for your fund's shareholder meeting. It tells you what matters will be voted on and the time and place of the meeting, if you can attend in person.

To the Shareholders of Putnam High Income Convertible and Bond Fund:

The Annual Meeting of Shareholders of your fund will be held on August 15, 2002 at 11:00 a.m., Boston time, on the eighth floor of the principal offices of the fund, located at One Post Office Square, Boston, Massachusetts, to consider the following:

1. Fixing the number of Trustees and electing Trustees;

2. Amending the fund's investment policies to eliminate the requirement that the Fund invest at least 40% of its assets in convertible securities and related equities and at least 40% of its assets in non-convertible high yield fixed income securities under normal market conditions; and

3. A shareholder proposal recommending the termination of the fund's investment management agreement with Putnam at the expiration of the contract and the solicitation of new bids.

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
Lawrence J. Lasser
John H. Mullin, III
Robert E. Patterson
A.J.C. Smith
W. Thomas Stephens
W. Nicholas Thorndike

We urge you to mark, sign, date, and mail the enclosed proxy in the postage-paid envelope provided or record your voting instructions via the Internet so you will be represented at the meeting.

June 13, 2002

Proxy statement

This document will give you the information you need to vote on the matters listed on the previous pages. Much of the information in the proxy statement is required under rules of the Securities and Exchange Commission ("SEC"); some of it is technical. If there is anything you don't understand, please contact us at our special toll-free number, 1-800-225-1581 or call your financial advisor.

* Who is asking for your vote?

The enclosed proxy is solicited by the Trustees of Putnam High Income Convertible and Bond Fund for use at the Annual Meeting of Shareholders of the fund to be held on August 15, 2002, and, if your fund's meeting is adjourned, at any later meetings, for the purposes stated in the Notice of Annual Meeting (see previous pages). The Notice of Annual Meeting, the proxy and the Proxy Statement are being mailed on or about June 10, 2002.

* How do your fund's Trustees recommend that shareholders vote on these proposals?

The Trustees recommend that you vote

1. For fixing the number of Trustees as proposed and the election of all nominees;

2. For amending the fund's investment policies to eliminate the requirement that the fund invest at least 40% of its assets in convertible securities and related equities and at least 40% in non-convertible high yield fixed income securities under normal market conditions; and

3. Against a shareholder proposal recommending the termination of the fund's investment management agreement with Putnam at the expiration of the contract and the solicitation of new bids.

* Who is eligible to vote?

Shareholders of record at the close of business on May 17, 2002 are entitled to be present and to vote at the meeting or any adjourned meeting.

Each share is entitled to one vote. Shares represented by duly executed proxies will be voted in accordance with your instructions. If you sign the proxy, but don't fill in a vote, your shares will be voted in accordance with the Trustees' recommendations. If any other business is brought before your fund's meeting, your shares will be voted at the Trustees' discretion.

The Proposals

I. Election of Trustees

* Who are the nominees for trustees?

The Board Policy and Nominating Committee of the Trustees of your fund makes recommendations concerning the Trustees of that fund. The Board Policy and Nominating Committee consists solely of Trustees who are not "interested persons" (as defined in the Investment Company Act of 1940) of your fund or of Putnam Investment Management, LLC, your fund's investment manager ("Putnam Management").

The Board Policy and Nominating Committee of the Trustees of your fund recommends that the number of Trustees be fixed at thirteen and that you vote for the election of the nominees described below. Each nominee is currently a Trustee of your fund and of the other Putnam funds. The 13 nominees for election as Trustees at the shareholder meeting of your fund who receive the greatest number of votes will be elected as Trustees of your fund.

The nominees for Trustees and their backgrounds are shown in the table below. The table discloses each nominee's name, date of birth, principal occupation(s) during the past 5 years, and other information about the nominee's professional background, including other directorships the nominee holds. Each nominee currently serves as a Trustee. Each Trustee oversees all of the Putnam funds and serves for an indefinite term until his or her resignation, death or removal. The address of all of the Trustees is One Post Office Square, Boston, Massachusetts 02109. At December 31, 2001, there were 123 Putnam funds.

Jameson Adkins Baxter (9/6/43)
Trustee since 1994

[GRAPHIC OMITTED: PHOTO OF JAMESON ADKINS BAXTER]

Ms. Baxter is the President of Baxter Associates, Inc., a management consulting and private investment firm that she founded in 1986.

Ms. Baxter also serves as a Director of ASHTA Chemicals, Inc., Banta Corporation (a printing and digital imaging firm), Intermatic Corporation (manufacturer of energy control products) and Ryerson Tull, Inc. (a steel service corporation), Advocate Health Care and 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. Ms. Baxter has also held various positions in investment banking and corporate finance, including Vice President and Principal of the Regency Group, Inc. and Consultant to First Boston Corporation. She is a graduate of Mount Holyoke College.

Charles B. Curtis (4/27/40)
Trustee since 2001

[GRAPHIC OMITTED: PHOTO OF CHARLES B. CURTIS]

Mr. Curtis is President and Chief Operating Officer, Nuclear Threat Initiative, a private foundation dedicated to reducing the threat of weapons of mass destruction. Mr. Curtis also serves as Senior Advisor to the United Nations Foundation.

Mr. Curtis is a Member of the Council on Foreign Relations, the Electric Power Research Institute Advisory Council, the University of Chicago Board of Governors for Argonne National Laboratory, and the Board of Directors of the Environment and Natural Resources Program Steering Committee, John F. Kennedy School of Government, Harvard University. He has over fifteen years of law practice experience and eighteen years in government service. Until 2002, Mr. Curtis was a Member of the Board of Directors of the Gas Technology Institute, and until the 2001, he was a Member of the Department of Defense Policy Board and Director of EG&G Technical Services, Inc. (provider of technical services to the Department of Defense and the Department of Energy). Prior to May 1997, Mr. Curtis was Deputy Secretary of Energy. Mr. Curtis holds B.S. and B.A. degrees from the University of Massachusetts at Amherst and a J.D. from Boston University School of Law.

John A. Hill (1/31/42)
Trustee since 1985 and Chairman since 2000

[GRAPHIC OMITTED: PHOTO OF JOHN A. HILL]

Mr. Hill is Vice-Chairman and Managing Director, First Reserve Corporation, a registered investment adviser investing in companies in the world-wide energy industry on behalf of institutional investors.

Mr. Hill is also a Director of Devon Energy Corporation (formerly known as Snyder Oil Corporation), TransMontaigne Oil Company, Continuum Health Partners of New York, Sarah Lawrence College and various private companies controlled by First Reserve Corporation. He is also a Trustee of TH Lee, Putnam Investment Trust, a closed-end investment company. Prior to acquiring First Reserve in 1983, Mr. Hill held executive positions with several advisory firms and various positions with the federal government, including Associate Director of the Office of Management and Budget and Deputy Director of the Federal Energy Administration. He is active in various business associations, including the Economic Club of New York, and lectures on energy issues in the United States and Europe. Mr. Hill is a graduate of Southern Methodist University.

Ronald J. Jackson (12/17/43)
Trustee since 1996

[GRAPHIC OMITTED: PHOTO OF RONALD J. JACKSON]
Mr. Jackson is a private investor.

Mr. Jackson is former Chairman of the Board, President and Chief Executive Officer of Fisher-Price, Inc., a major toy manufacturer from which he retired in 1993. He also previously served as President and Chief Executive Officer of Stride-Rite, Inc., a manufacturer and distributor of footwear, and of Kenner Parker Toys, Inc., a major toy and game manufacturer. He has also held financial and marketing positions with such companies as General Mills, Inc., Parker Brothers, a toy and game company, and Talbots, a distributor of women's apparel, where he served as President of the company. Mr. Jackson currently serves as President of the Kathleen and Ronald J. Jackson Foundation (charitable trust). He is a member of the Board of Overseers of WGBH (public television and radio) and the Peabody Essex Museum. Mr. Jackson is a graduate of Michigan State University Business School.

Paul L. Joskow (6/30/47)
Trustee since 1997

[GRAPHIC OMITTED: PHOTO OF PAUL L. JOSKOW]

Dr. Joskow is Elizabeth and James Killian Professor of Economics and Management and Director of the Center for Energy and Environmental Policy Research, Massachusetts Institute of Technology.

Dr. Joskow serves as a Director of National Grid Group, a UK based holding company with interests in electric power and telecommunications networks and the Whitehead Institute for Biomedical Research, a non-profit research institution. He has been President of the Yale University Council since 1993. Prior to February 2002, March 2000 and September 1998, Dr. Joskow was a Director of State Farm Indemnity Company, an automobile insurance company, a Director of New England Electric System, a public utility holding company, and a consultant to National Economic Research Associates, respectively. He has published five books and numerous articles on topics in industrial organization, government regulation of industry and competition policy and is active on industry restructuring, environmental, energy, competition, and privatization policies, serving as an advisor to governments and corporations worldwide. Dr. Joskow is a graduate of Cornell University and Yale University, and is a Fellow of the Econometric Society and the American Academy of Arts and Sciences.

Elizabeth T. Kennan (2/25/38)
Trustee since 1992

[GRAPHIC OMITTED: PHOTO OF ELIZABETH T. KENNAN]

Dr. Kennan is President Emeritus of Mount Holyoke College and Chairman of Cambus-Kenneth Bloodstock, a limited liability company involved in thoroughbred horse breeding and farming, and serves on the boards of various organizations.

Dr. Kennan serves as a Director of both Northeast Utilities and Talbots, a distributor of women's apparel. She also serves as a Trustee of Centre College. Until 1995 she was a Trustee of the University of Notre Dame, and until 2001 she was a Member of the Oversight Committee of the Folger Shakespeare Library. Prior to September 2000, June 2000, and November 1999, Dr. Kennan was a Director of Chastain Real Estate, Bell Atlantic and Kentucky Home Life Insurance, respectively. For twelve years, Dr. Kennan was on the faculty of Catholic University, where she taught history and published numerous articles, and directed the post-doctoral program in Patristic and Medieval Studies. Active in various educational and civic associations, she is a graduate of Mount Holyoke College, the University of Washington, and St. Hilda's College, Oxford University. She holds several honorary doctorates.

John H. Mullin, III(6/15/41)
Trustee since 1997

[GRAPHIC OMITTED: PHOTO OF John H. Mullin, III

Mr. Mullin is the Chairman and CEO of Ridgeway Farm, a limited liability company engaged in timber and farming.

Mr. Mullin is a Director of Alex. Brown Realty, Inc., The Liberty Corporation (a company engaged in the broadcasting industry) and Progress Energy, Inc. (a utility company, formerly known as Carolina Power & Light). Prior to October 1997, January 1998 and May 2001, he was a Director of Dillon, Read and Co. Inc., The Ryland Group, Inc. and Graphic Packaging International Corp., respectively. Mr. Mullin is a Trustee Emeritus of Washington & Lee University where he served as Chairman of the Investment Committee. He is a graduate of Washington & Lee University and The Wharton Graduate School at the University of Pennsylvania.

Robert E. Patterson (3/15/45)
Trustee since 1984

[GRAPHIC OMITTED: PHOTO OF ROBERT E. PATTERSON]

Mr. Patterson is Senior Partner of Cabot Properties, LLP and Chairman of Cabot Properties, Inc. Prior to December 2001, he served as President and Trustee of Cabot Industrial Trust, a publicly traded real estate investment trust.

Mr. Patterson is Chairman of the Joslin Diabetes Center, a Trustee of SEA Education Association and a Director of Brandywine Trust Company. Prior to February 1998, Mr. Patterson was Executive Vice President and Director of Acquisitions of Cabot Partners Limited Partnership, a registered investment advisor that managed real estate investments for institutional investors. Prior to 1990, he was Executive Vice President of Cabot, Cabot & Forbes Realty Advisors, Inc., the predecessor company of Cabot Partners, and prior to that was Senior Vice President of the Beal Companies, a real estate management, investment and development firm. He also worked as an attorney and held various positions in state government, including the founding Executive Director of the Massachusetts Industrial Finance Agency. Mr. Patterson is a graduate of Harvard College and Harvard Law School.

W. Thomas Stephens (9/2/42)
Trustee since 1997

[GRAPHIC OMITTED: PHOTO OF W. THOMAS STEPHENS]

Mr. Stephens is a director of various corporations. Until 1999, he was the President and Chief Executive Officer of MacMillan Bloedel Limited, a forest products and building materials company.

Mr. Stephens is a Director of Mail-Well, a printing and envelope company, Qwest Communications, Xcel Energy Incorporated, a public utility company, TransCanada Pipelines and Norske Skog Canada, Inc., a paper manufacturer. Mr. Stephens retired as Chairman of the Board of Directors, President and Chief Executive Officer of Johns Manville Corporation in 1996 and as Chairman of Mail-Well in 2001. He holds B.S. and M.S. degrees from the University of Arkansas.

W. Nicholas Thorndike (3/28/33)
Trustee since 1992

[GRAPHIC OMITTED: PHOTO OF W. NICHOLAS THORNDIKE]

Mr. Thorndike is a Director of various corporations and charitable organizations, including Courier Corporation, a book binding and printing company, and The Providence Journal Co., a newspaper publisher.

Mr. Thorndike is a Trustee of Northeastern University and an Honorary Trustee of Massachusetts General Hospital, where he previously served as Chairman and President. Prior to September 2000, April 2000, and December 2001, Mr. Thorndike was a Director of Bradley Real Estate, Inc., a Trustee of Eastern Utilities Associates, and a Trustee of Cabot Industrial Trust, respectively. He has also served as Chairman of the Board and Managing Partner of Wellington Management Company/Thorndike, Doran, Paine & Lewis, a registered investment advisor that manages mutual funds and institutional assets, as a Trustee of the Wellington Group of Funds (currently The Vanguard Group) and as the Chairman and a Director of Ivest Fund, Inc. Mr. Thorndike is a graduate of Harvard College.

* Interested trustees

Lawrence J. Lasser* (11/1/42)
Trustee since 1992 and Vice President since 1981

[GRAPHIC OMITTED: PHOTO OF LAWRENCE J. LASSER*]

Mr. Lasser is the President and Chief Executive Officer of Putnam Investments, LLC and Putnam Investment Management, LLC. He has been President and Chief Executive Officer since 1985, having begun his career there in 1969.

Mr. Lasser is a Director of Marsh & McLennan Companies, Inc. and the United Way of Massachusetts Bay. He also serves as a Member of the Board of Governors of the Investment Company Institute, as a Trustee of the Museum of Fine Arts, Boston, and as a Trustee and Member of the Finance and Executive Committees of Beth Israel Deaconess Medical Center, Boston. He is a Member of the CareGroup Board of Managers Investment Committee, the Council on Foreign Relations and the Commercial Club of Boston. Mr. Lasser is a graduate of Antioch College and Harvard Business School.

George Putnam III* (8/10/51)
Trustee since 1984 and President since 2000

[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM III*]

Mr. Putnam is the President of New Generation Research, Inc., a publisher of financial advisory and other research services relating to bankrupt and distressed companies, and of New Generation Advisers, Inc., a registered investment adviser that provides advice to private funds specializing in investments in such companies. He founded New Generation in 1985.

Mr. Putnam is a Director of The Boston Family Office, L.L.C., a registered investment advisor, a Trustee of the SEA Education Association, and a Trustee of St. Mark's School and Shore Country Day School. Mr. Putnam also worked as an attorney with the law firm of Dechert Price & Rhoads. He is a graduate of Harvard College, Harvard Business School and Harvard Law School.

A.J.C. Smith* (4/13/34)
Trustee since 1986

[GRAPHIC OMITTED: PHOTO OF A.J.C. SMITH*]

Mr. Smith is a Director of Marsh & McLennan Companies, Inc. Prior to May 2000 and November 1999, Mr. Smith was Chairman and CEO, respectively, of Marsh & McLennan.

Mr. Smith is a Director of Trident Corp., a limited partnership with over thirty institutional investors, and a Trustee of the Carnegie Hall Society, the Educational Broadcasting Corporation and the National Museums of Scotland. He is Chairman of the Central Park Conservancy and a Member of the Board of Overseers of the Joan and Sanford I. Weill Graduate School of Medical Sciences of Cornell University. He was educated in Scotland. Mr. Smith is a Fellow of the Faculty of Actuaries in Edinburgh, the Canadian Institute of Actuaries and the Conference of Actuaries, an Associate of the Society of Actuaries, and a Member of the American Academy of Actuaries, the International Actuarial Association and the International Association of Consulting Actuaries.


* Nominees who are or may be deemed to be "interested persons" (as defined in the Investment Company Act of 1940) of the fund, Putnam Management, Putnam Retail Management, or Marsh & McLennan Companies, Inc., the parent company of Putnam, LLC and its affiliated companies. Messrs. Putnam, Lasser and Smith are deemed "interested persons" by virtue of their positions as officers or shareholders of the fund or Putnam Management, Putnam Retail Management, or Marsh & McLennan Companies, Inc. George Putnam, III is the President of your Fund and each of the other Putnam funds. Lawrence J. Lasser is the President and Chief Executive Officer of Putnam Investments, LLC and Putnam Management. Mr. Lasser and Mr. Smith also serve as Directors of Marsh & McLennan Companies, Inc.

The balance of the nominees are not "interested persons."

All the nominees were elected by the shareholders on June 2001 other than Mr. Curtis who was elected by the Board of Trustees effective July 1, 2001. The nominees for election as Trustees at the shareholder meeting of your fund who receive the greatest number of votes will be elected as Trustees of your fund. The Trustees serve until their successors are elected and qualified. Each of the nominees has agreed to serve as a Trustee if elected. If any of the nominees is unavailable for election at the time of the meeting, which is not anticipated, the Trustees may vote for other nominees at their discretion, or the Trustees may fix the number of Trustees at less than 13 for your fund.

* What are the trustees' responsibilities?

Your fund's Trustees are responsible for the general oversight of your fund's affairs and for assuring that your fund is managed in the best interests of its shareholders. The Trustees regularly review your fund's investment performance as well as the quality of other services provided to your fund and its shareholders by Putnam Management and its affiliates, including administration, custody, and shareholder servicing. At least annually, the Trustees review and evaluate the fees and operating expenses paid by your fund for these services and negotiate changes that they deem appropriate. In carrying out these responsibilities, the Trustees are assisted by an independent administrative staff and by your fund's auditors, counsel and other experts as appropriate, selected by and responsible to the Trustees.

Your fund's Trustees have determined that the efficient conduct of your fund's affairs makes it desirable to delegate responsibility for certain specific matters to committees of the board. Certain committees (the Executive Committee, Distributions Committee, and Audit and Pricing Committee) are authorized to act for the Trustees as specified in their charters. The other committees review and evaluate matters specified in their charters and make recommendations to the Trustees as they deem appropriate. Each committee may utilize the resources of your fund's independent staff, counsel and auditors as well as other experts. The committees meet as often as necessary, either in conjunction with regular meetings of the Trustees or otherwise. The membership and chairman of each committee are appointed by the Trustees upon recommendation of the Board Policy and Nominating Committee.

Audit and Pricing Committee. The Audit and Pricing Committee provides oversight on matters relating to the preparation of the funds' financial statements, compliance matters and Code of Ethics issues. This oversight is discharged by regularly meeting with management and the funds' independent auditors 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 auditors, including their independence. The members of the Audit and Pricing Committee of your fund include only Trustees who are not "interested persons" of the fund or Putnam Management. Each member of the Audit and Pricing Committee is "independent" as defined in Sections 303.01(B)(2)(a) and (3) of the listing standards of the New York Stock Exchange. 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 Trustees have adopted a written charter for the Audit and Pricing Committee. The Committee currently consists of Messrs. Stephens (Chairperson) and Thorndike, and Drs. Kennan and Joskow.

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 your fund 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 fund's shareholders. The Board Policy and Nominating Committee currently consists of Dr. Kennan (Chairperson), Ms. Baxter and Messrs. Hill, Mullin, Patterson and Thorndike. 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, and reviews and evaluates matters relating to the funds' custody arrangements. The Committee currently consists of Messrs. Jackson (Chairperson), Curtis, Mullin, Thorndike, Ms. Baxter and Dr. Kennan.

Communication, Service and Marketing Committee. This Committee examines the quality, cost and levels of services provided to the shareholders of the Putnam funds. The Committee also reviews communications sent from the funds to their shareholders, including shareholder reports, prospectuses, newsletters and other materials. In addition, the Committee oversees marketing and sales communications of the funds' distributor. The Committee currently consists of Messrs. Putnam (Chairperson), Smith, Stephens, Thorndike and Dr. Joskow.

Contract Committee. The Contract Committee reviews and evaluates at least annually all arrangements pertaining to (i) the engagement of Putnam Management and its affiliates to provide services to the funds,
(ii) the expenditure of the funds' assets for distribution purposes pursuant to the Distribution Plans of the funds, and (iii) the engagement of other persons to provide material services to the funds, including in particular those instances where the cost of services is shared between the funds and Putnam Management and its affiliates or where Putnam Management or its affiliates have a material interest. The Committee recommends to the Trustees such changes in arrangements that it deems appropriate. The Committee also reviews the conversion of Class B shares into Class A shares of the open-end funds in accordance with procedures approved by the Trustees. After review and evaluation, the Committee recommends to the Trustees the proposed organization of new Fund products, and proposed structural changes to existing funds. Its oversight of the closed-end funds includes (i) investment performance,
(ii) trading activity, (iii) determinations with respect to sunroof provisions, (iv) disclosure practices, and (v) the use of leverage. The Committee is comprised exclusively of independent Trustees. The Committee currently consists of Ms. Baxter (Chairperson) and Messrs. Curtis, Jackson, Mullin and Patterson.

Distributions Committee. This Committee oversees all Fund distributions and approves the amount and timing of distributions paid by all the funds to the shareholders when the Trustees are not in session. The Committee also meets regularly with representatives of Putnam Investments to review distribution levels and the funds' distribution policies. The Committee currently consists of Messrs. Patterson (Chairperson), Jackson, Thorndike 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 Ms. Baxter and Messrs. Hill (Chairman), Jackson, Putnam, Stephens and Thorndike.

Investment Oversight Committees. These Committees regularly meet with investment personnel of Putnam Management to review the investment performance and strategies of the Putnam funds in light of their stated investment objectives and policies. Investment Oversight Committee A currently consists of Messrs. Curtis (Chairperson), Hill, and Lasser and Dr. Kennan. Investment Oversight Committee B currently consists of Dr. Joskow (Chairperson), Ms. Baxter and Mr. Putnam. Investment Committee C currently consists of Messrs. Mullin (Chairperson), Jackson and Smith. Investment Oversight Committee D currently consists of Messrs. Patterson (Chairperson), Stephens and Thorndike.

The Investment Company Act of 1940 requires that your fund have a minimum proportion of trustees who are not affiliated in any way with your fund's investment manager, principal underwriter from time to time or any broker-dealer. These independent trustees must vote separately to approve all financial arrangements and other agreements with your fund's investment manager and other affiliated parties. The role of independent trustees has been characterized as that of a "watchdog" charged with oversight to protect shareholders' interests against overreaching and abuse by those who are in a position to control or influence a fund. The Trustees of your fund believe that independent trustees should represent at least two-thirds of the members of the board. Your fund's independent trustees meet regularly as a group in executive session.

* How large a stake do the trustees have in the Putnam family of funds?

The Trustees believe each Trustee should have a significant investment in the Putnam funds. The Trustees allocate their investments among the approximately 123 Putnam funds based on their own investment needs. The table below shows the number of shares beneficially owned by each Trustee and the value of each Trustee's holdings in the fund and in all of the Putnam funds as of March 31, 2002.

Trustee shares table

                          Number of       Dollar Amount    Aggregate Dollar
                       shares owned            Range of     Range of Shares
                          in Putnam         Putnam High  Held in all of the
                        High Income  Income Convertible        Putnam Funds
                    Convertible and       and Bond Fund Overseen by Trustee
Name of Trustee           Bond Fund        Shares Owned               (123)
----------------------------------------------------------------------------
Jameson A. Baxter               209          $1-$10,000       over $100,000
----------------------------------------------------------------------------
Charles B. Curtis               100          $1-$10,000       over $100,000
----------------------------------------------------------------------------
John A. Hill                 32,100       over $100,000       over $100,000
----------------------------------------------------------------------------
Ronald J. Jackson               200          $1-$10,000       over $100,000
----------------------------------------------------------------------------
Paul L. Joskow                  100          $1-$10,000       over $100,000
----------------------------------------------------------------------------
Elizabeth T. Kennan             213          $1-$10,000       over $100,000
----------------------------------------------------------------------------
John H. Mullin, III             100          $1-$10,000       over $100,000
----------------------------------------------------------------------------
Robert E. Patterson             616          $1-$10,000       over $100,000
----------------------------------------------------------------------------
W. Thomas Stephens              100          $1-$10,000       over $100,000
----------------------------------------------------------------------------
W. Nicholas Thorndike           272          $1-$10,000       over $100,000
----------------------------------------------------------------------------
Lawrence J. Lasser              100          $1-$10,000       over $100,000
----------------------------------------------------------------------------
George Putnam, III              500          $1-$10,000       over $100,000
----------------------------------------------------------------------------
A.J.C. Smith                    200          $1-$10,000       over $100,000
----------------------------------------------------------------------------

At March 31, 2002, the Trustees and officers of your fund owned less than 1% of the outstanding shares of such fund on that date.

* What are some of the ways in which the trustees represent shareholder interests?

The Trustees believe that, as substantial investors in the Putnam funds, their interests are closely aligned with those of individual shareholders. Among other ways, the Trustees seek to represent shareholder interests:

* by carefully reviewing your fund's investment performance on an individual basis with your fund's managers;

* by also carefully reviewing the quality of the various other services provided to the funds and their shareholders by Putnam Management and its affiliates;

* by discussing with senior management of Putnam Management steps being taken to address any performance deficiencies;

* by conducting an in-depth review of the fees paid by each fund and by negotiating with Putnam Management to ensure that such fees remain reasonable and competitive with those of other mutual funds, while at the same time providing Putnam Management sufficient resources to continue to provide high quality services in the future;

* by reviewing brokerage costs and fees, allocations among brokers, soft dollar expenditures and similar expenses of each fund;

* by monitoring potential conflicts between the funds and Putnam Management and its affiliates to ensure that the funds continue to be managed in the best interests of their shareholders; and

* by also monitoring potential conflicts among funds to ensure that shareholders continue to realize the benefits of participation in a large and diverse family of funds.

* How often do the trustees meet?

The Trustees meet each month (except August) over a two-day period to review the operations of your fund and of the other Putnam funds. A portion of these meetings is devoted to meetings of various committees of the board which focus on particular matters. Each Trustee generally attends at least two formal committee meetings during each regular meeting of the Trustees. During 2001, the average Trustee participated in approximately 46 committee and board meetings. In addition, the Trustees meet in small groups with Chief Investment Officers and Portfolio Managers to review recent performance and the current investment climate for selected funds. These meetings ensure that each fund's performance is reviewed in detail at least twice a year. The Contract Committee typically meets on several additional occasions during the year to carry out its responsibilities. Other committees, including the Executive Committee, may also meet on special occasions as the need arises. The number of times each committee met during your fund's last fiscal year is shown in the table below:

Fiscal year ended August 31, 2001
----------------------------------------------------------
Audit and Pricing Committee*                             8
----------------------------------------------------------
Board Policy and Nominating Committee**                  7
----------------------------------------------------------
Brokerage and Custody Committee                          5
----------------------------------------------------------
Communication, Service and Marketing Committee           5
----------------------------------------------------------
Contract Committee                                      11
----------------------------------------------------------
Distributions Committee                                  3
----------------------------------------------------------
Executive Committee                                      4
----------------------------------------------------------
Investment Oversight Committee                           9
----------------------------------------------------------

* Effective February 2002, the Pricing Committee's functions were merged into the Audit and Pricing Committee. The number of meetings shown represents the number of meetings held by the Audit Committee during your fund's last fiscal year. The Pricing Committee met 5 times prior to the combination.

** Effective March 2002, the Proxy Committee's functions were merged into the Board Policy and Nominating Committee. The number of meetings shown represents the number of meetings held by the Board Policy and Nominating Committee during your fund's last fiscal year. The Proxy Committee met 4 times prior to the combination.

* What are the trustees paid for their services?

Each Trustee of your fund receives a fee for his or her services. Each Trustee also receives fees for serving as Trustee of the other Putnam funds. Each Trustee of the fund receives an annual fee and an additional fee for each Trustees' meeting attended. Trustees who are not interested persons of Putnam Management and who serve on committees of the Trustees receive additional fees for attendance at certain committee meetings and for special services rendered in that connection. All of the Trustees are Trustees of all the Putnam funds and each receives fees for his or her services.

The Trustees periodically review their fees to assure that such fees continue to be appropriate in light of their responsibilities as well as in relation to fees paid to trustees of other mutual fund complexes. The Board Policy and Nominating Committee, which consists solely of Trustees not affiliated with Putnam Management, estimates that Committee and Trustee meeting time, together with the appropriate preparation, requires the equivalent of at least three business days per Trustee meeting. The following table shows the fees paid to each Trustee by your fund for its most recent fiscal year and the fees paid to each Trustee by all of the Putnam funds during calendar year 2001:

COMPENSATION TABLE
                                                                      Estimated
                                                 Retirement              annual               Total
                              Aggregate            benefits       benefits from        compensation
                           compensation             accrued          all Putnam            from all
                               from the          as part of          funds upon              Putnam
Trustees/Year                   fund(1)       fund expenses       retirement(2)            funds(3)
---------------------------------------------------------------------------------------------------
Jameson A. Baxter/1994(4)       $700                $149             $100,000              $205,750
---------------------------------------------------------------------------------------------------
Charles B. Curtis/2001(8)        603                  --             $100,000                92,000
---------------------------------------------------------------------------------------------------
Hans H. Estin/1972(5)            676                 311              $97,904               109,000
---------------------------------------------------------------------------------------------------
John A. Hill/1985(4)(7)          947                 228              200,000               403,500
---------------------------------------------------------------------------------------------------
Ronald J. Jackson/1996(4)        699                 169              100,000               205,750
---------------------------------------------------------------------------------------------------
Paul L. Joskow/1997(4)           683                 111              100,000               201,250
---------------------------------------------------------------------------------------------------
Elizabeth T. Kennan/1992         693                 219              100,000               203,500
---------------------------------------------------------------------------------------------------
Lawrence J. Lasser/1992(6)        --                 121               92,500                    --
---------------------------------------------------------------------------------------------------
John H. Mullin, III/1997(4)      701                 167              100,000               205,500
---------------------------------------------------------------------------------------------------
Robert E. Patterson/1984         696                 109              100,000               204,750
---------------------------------------------------------------------------------------------------
George Putnam, III/1984(7)       806                  97              125,000               249,750
---------------------------------------------------------------------------------------------------
A.J.C. Smith/1986(6)              --                 221               91,833                    --
---------------------------------------------------------------------------------------------------
W. Thomas Stephens/1997(4)       685                 156              100,000               201,000
---------------------------------------------------------------------------------------------------
W. Nicholas Thorndike/1992       685                 307              100,000               202,000
---------------------------------------------------------------------------------------------------

(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 2001.

(3) As of December 31, 2001, there were 123 funds in the Putnam family.

(4) Includes compensation deferred pursuant to a Trustee Compensation Deferral Plan.

(5) Reflects retirement from the Board of Trustees of the Putnam funds on June 30, 2001.

(6) Commencing July 1, 2000, Marsh & McLennan Companies, Inc., compensates Mr. Lasser and Mr. Smith for their services as Trustees. The estimated annual retirement benefits and related fund expenses shown in this table for Messrs. Lasser and Smith reflect benefits earned under the funds' retirement plan prior to that date.

(7) Includes additional compensation for services commencing July 1, 2000.

(8) Elected by the Board of Trustees as a Trustee effective July 1, 2001. The fund will begin accruing expenses for Mr. Curtis' retirement benefits in 2002.

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, assures 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 (a committee comprised of Trustees that are not "interested persons" of the fund, as defined in the Investment Company Act of 1940) 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.

2. Amending the fund's guidelines to eliminate the requirement to invest at least 40% of the fund's assets in convertible securities and at least 40% in non-convertible high yield fixed income securities.

The Trustees are recommending that the fund's investment restriction requiring the fund to invest at least 40% of its assets in convertible securities and at least 40% in non-convertible high yield fixed income securities be eliminated. The current restriction provides:

"The fund will invest, under normal market conditions, at least 40% of its assets in each of the following categories: (1) convertible securities and related equity securities and (2) non convertible, high yielding, lower rated fixed income securities."

If shareholders approve the elimination of this restriction the Trustees would replace the policy with the following non-fundamental restriction:

"The 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 believes are of equivalent credit quality)."

This policy may in the future be changed by the Trustees without shareholder approval but shareholders would be notified in writing at least 60 days prior to any such change. The current policy can also be changed without shareholder approval. However, the Trustees decided to seek shareholder approval in light of the nature of the change and the opportunity to present this question to shareholders at a regular annual meeting.

Putnam has proposed the change in investment policy based on its belief that it would be in shareholders' best interests to eliminate the requirement to maintain any minimum level of convertible holdings. In Putnam's view convertible securities represent one of several types of portfolio investments which may be used to meet the fund's primary investment objective, high current income. However, from time to time the convertible market may become relatively unattractive as an investment matter to investors seeking high current income. However, the current policy requires the fund to hold a significant position in convertible securities even at times when they are not viewed as the most attractive means of generating high current income. Under the proposed new policy the fund could still allocate a significant portion of its assets to convertibles when Putnam found that asset class attractive but it would not be required to do so. The new policy requiring 80% of the fund's net assets to be invested in non-convertible and convertible fixed income securities rated below investment grade will provide assurance that the fund remains focused on its primary investment objective of high current income.

In addition, Putnam believes that the flexibility to reduce the fund's commitment to convertible securities and invest a greater portion in high yield, non-convertible securities may help increase the fund's investment income and potentially support a higher level of dividends. Putnam has found in recent years that, in general, the convertible sector has offered fewer opportunities for high income. Higher income and dividends may help support the trading price of the fund's shares. However, many factors affect the fund's dividend rates and stock price. There can be no assurance that the investment policy change, if approved, will result in any increases in either dividend rate or share price.

If the proposal is approved, the name of the fund would be changed to Putnam High Income Bond Fund. If the proposal is not approved Putnam will continue to manage the Fund under its current policy.

After carefully considering the recommendations of Putnam Management, your fund's Trustees approved the submission of this proposal to the fund's shareholders and recommend that shareholders vote in favor of the proposed change in investment policy.

Required vote. Approval of Proposal 2 requires the affirmative vote of the majority of the shares voted with respect to Proposal 2 at the meeting. The fund's Trustees unanimously recommend that shareholders vote FOR the proposal.

3. Shareholder Proposal

The following proposal has been submitted by a shareholder of the fund. This proposal is included in this Proxy Statement in compliance with regulations of the Securities and Exchange Commission. The fund's Trustees unanimously recommend that shareholders vote against this proposal.

RESOLVED: That the shareholders of the Putnam High Income Convertible and Bond Fund, assembled in annual meeting in person and by proxy recommend that the board of directors terminate the investment advisory agreement between Putnam Management and the Fund when the current contract expires, and at such time solicit offers from selected advisors, including Putnam, to evaluate the cost and the ability of the candidates to perform for the benefit of the shareholders.

At the same time, the board should make a comprehensive study of the cost of operating the Fund with a view to reducing compensation to any future fund manager.

* Shareholder's Supporting Statement

The shareholder proponent has submitted the following statement in support of his proposal:

The February 28, 2001 market price of our Fund was $8.29 a share, according to the semi-annual report. As of this writing, October 10, 2001, the market price is $6.96, a loss of $1.33. Dividends of 0.3815 reduce our seven month ten day loss to 94.85 cents. Barrons Lipper Mutual Fund Report dated October 8, 2001, reports a three-year annual loss of 1.8 percent for the period ending September 30, 2001.

The compensation paid to Putnam Management for the fiscal year 2001 was .75% of the average net assets of the fund according to their annual report for the year ending August 31, 2001.

One Open End Fund, Vanguard Convertible Securities Fund, has a management fee of about 0.68%.

Mr. John C. Bogle, former chairman and chief executive officer of the Vanguard Group, was quoted in the June 20, 2000 Wall Street Journal with the following statement:

Investment horizons that are too short and costs that are too high are the principal problems facing the mutual fund industry. The root cause of these failings is the industry's failure to focus on the primacy of the fund shareholder. It's called stewardship. The investment company act of 1940 warns against organizing, operating and managing funds in the interests of the investment advisors rather than the interest of the shareholder, but that warning isn't adequately heeded today. It is high time that fund managers and independent directors as well as public officials, the media and the shareholders give these issues the attention they deserve.

In brief, the board of directors have a moral and fiduciary responsibility to the shareholders to review performance, take actions to address performance deficiencies, make in-depth review of fees paid, review brokerage costs, and most importantly monitor potential conflicts between the Fund and Putnam Management.

Would the directors let us know if they have ever replaced any Putnam Management team for inferior performance.

A yes vote from active shareholders will convey to the directors that they should not renew contracts with managers just because of a long and close relationship and that the managers are good old boys.

* Trustees' Recommendation

The Trustees of the fund, including all of the Independent Trustees (none of whom are affiliated with Putnam Management), unanimously recommend that shareholders vote against this proposal.

Putnam Management sponsored the organization of the fund in 1987 and has served as the fund's investment manager since that date. The shareholder proponent's proposal recommends that the Trustees terminate the existing contract with Putnam Management and solicit bids for new advisers with a view to reducing costs. His supporting statement suggests dissatisfaction with the market performance of the fund's shares over a specified seven month period. As discussed in more detail below, the Trustees believe that the performance record of the fund compares favorably to leading convertible and high yield benchmarks and to other closed-end funds investing primarily in convertible and high yield securities and that the fund's management fees and operating expenses compare favorably to those of other closed-end funds investing in these types of securities. Accordingly, the fund's Trustees do not believe that adopting the proposal would be in the interests of shareholders.

As required by the Investment Company Act of 1940, the fund's Independent Trustees conduct an annual review of the terms of the fund's Management Contract. As part of that review, they receive and consider substantial information about the fund's investment performance and operating costs, including the fees paid to Putnam Management. They consider the performance and operating costs of comparable closed-end funds. They also consider detailed information about Putnam Management's operating expenses and profits. During the course of this contract review, which typically includes several meetings extending over a number of months, the Independent Trustees also consider a broad range of additional information about the fund and the other investment companies managed by Putnam Management. They are assisted in this process by their own independent staff and by independent legal counsel.

The result of this process has been a carefully considered annual determination that continuation of the contract with Putnam Management continues to serve shareholders' interests. In 1991, the fund's Trustees negotiated a reduction in the fee payable by the fund from 0.85% to 0.75% of average net assets, the fee currently in effect. This reduction was submitted to shareholders for their approval and was overwhelmingly approved.

Investment Performance. The shareholder's supporting statement cites the market performance of the fund's shares over a seven month period. The Trustees believe that investment performance should be judged over longer periods of time, not arbitrarily selected periods. (SEC regulations, for example, generally require that funds present their investment performance by showing total return for one, five and ten year periods.) In addition, the Trustees believe that short-term fluctuations in the market price of the fund's shares are beyond Putnam Management's control and that its performance as the fund's investment manager is better judged by the fund's total return based on the net asset value of its shares. The fund's performance over various periods is shown below, based both on net asset value and market price.

Average Annual Total Return for Periods Ended March 31, 2002

                      Fund
                -----------------      Merrill Lynch
                           Market     All-Convertible      CSFB High
                NAV        Price          Index          Yield Index
--------------------------------------------------------------------
1 year         5.24%       14.34%         2.43%             3.34%
3 years        5.95         4.63          5.23              1.46
5 years        4.65         3.96          9.41              3.46
10 years       8.89         8.84         10.98              7.26
--------------------------------------------------------------------

The foregoing table also shows the investment performance over these same periods of the Merrill Lynch All-Convertible Index and the Credit Suisse First Boston High Yield Index, which are both unmanaged indexes of securities reflective of the principal sectors of the fund's investment universe. (Unlike the fund's performance, the performance of these indexes do not reflect any fees or expenses.) The fund invests in a combination of convertible securities and high yield debt securities. Since its convertible investments focus on so-called "busted" convertibles, whose conversion feature has a relatively low value under current market conditions, the Trustees believe that the high yield index is the more relevant comparison for purposes of evaluating the overall performance of the fund.

The Trustees note that the fund outperformed the CSFB High Yield Index over all time periods shown above and outperformed the Merrill Lynch All Convertible Index over the one and three-year periods ended March 31, 2002.

In addition to the foregoing information, the Trustees have also considered the comparative performance of similar closed-end funds investing primarily in convertible and/or high yield bonds. An analysis of the investment performance of 12 comparable funds prepared for the Trustees by Lipper, Inc. (See Exhibit A) indicated that the fund's performance ranked at or above median for each of the one, three, five and ten-year periods ended March 31, 2002. (Lipper, Inc. is a third-party organization that ranks mutual funds with similar investment styles based on their investment performance and expenses.)

Based on the foregoing, the Trustees believe that Putnam Management has established a satisfactory record of performance as manager of the fund over a period of many years. They find no reason to believe that engaging another manager would result in superior performance.

Fund Operating Expenses. In his supporting statement, the shareholder proponent notes that one open-end investment company, the Vanguard Convertible Securities Fund, has a management fee of 0.68% of net asset value, as compared with the fund's fee of 0.75%. In reviewing management fees and other operating expenses, the Trustees believe that it is more meaningful to examine a broad range of competitive funds, rather than a single point of comparison. They also believe that it is more appropriate to compare the fund's expenses with those of other closed-end funds, rather than open-end funds which operate in a different segment of the market. An analysis of 11 comparable closed-end funds investing primarily in convertible and/or high yield securities prepared for the Trustees by Lipper, Inc. (see Exhibit B) indicates that the fund's management fee is at the median of the group and that its total operating expenses are fourth lowest in the group.

After reviewing the foregoing data regarding performance, fees and expenses, the Trustees have concluded that seeking further fee reductions from Putnam Management (beyond the one reduction already negotiated) or embarking on a process of interviewing other investment managers would not be in the best interests of shareholders.

Conclusion. Investors have many thousands of open-end and closed-end funds to select from in making their investment decisions. The Trustees believe that most investors in the fund have chosen the fund based in large part on Putnam Management's long-standing record of providing high quality investment and shareholder services. They do not believe that it would be in shareholders' interests, absent compelling circumstances, to terminate a manager selected by the shareholders in order to engage in a competitive bidding process. They further believe that changing investment managers may result in significant disruption of a fund's long-term investment strategies and that any issues pertaining to investment performance and operating expenses are more effectively addressed through the annual contract review process.

For these reasons, the Trustees of the fund, including all of the Independent Trustees, unanimously recommend that shareholders vote AGAINST the proposal.

Required Vote. Approval of Proposal 3 requires the affirmative vote of a majority of the shares voted at the meeting. The fund will promptly furnish any shareholder of the fund who makes a written or oral request the name and address of the shareholder proponent and the number of shares owned by him.

Further information about voting and the meeting

Quorum and methods of tabulation. A majority of the shares entitled to vote--present in person or represented by proxy--constitutes a quorum for the transaction of business with respect to any proposal at the meeting (unless otherwise noted in the proxy statement). Shares represented by proxies that reflect abstentions and "broker non-votes" (i.e., shares held by brokers or nominees as to which (i) instructions have not been received from the beneficial owners or the persons entitled to vote and (ii) the broker or nominee does not have the discretionary voting power on a particular matter) will be counted as shares that are present and entitled to vote on the matter for purposes of determining the presence of a quorum, but will not have any other effect on any matter to be voted upon at the meeting. Votes cast by proxy or in person at the meeting will be counted by persons appointed by your fund as tellers for the meeting.

Other business. The Trustees know of no other business to be brought before the meeting. However, if any other matters properly come before the meeting, it is their intention that proxies that do not contain specific restrictions to the contrary will be voted on such matters in accordance with the judgment of the persons named as proxies in the enclosed form of proxy.

Simultaneous meetings. The meeting of shareholders of your fund is called to be held at the same time as the meetings of shareholders of certain of the other Putnam funds. It is anticipated that all meetings will be held simultaneously.

If any shareholder at the meeting objects to the holding of a simultaneous meeting and moves for an adjournment of the meeting to a time promptly after the simultaneous meetings, the persons named as proxies will vote in favor of such adjournment.

Solicitation of proxies. In addition to soliciting proxies by mail, Trustees of your fund and employees of Putnam Management, Putnam Fiduciary Trust Company, and Putnam Retail Management may solicit proxies in person or by telephone. Your fund may also arrange to have voting instructions recorded by telephone. The telephone voting procedure 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. Your fund has been advised by counsel that these procedures are consistent with the requirements of applicable law. If these procedures were subject to a successful legal challenge, such votes would not be counted at the meeting. Your fund is unaware of any such challenge at this time. Shareholders would be called at the phone number Putnam Investments has in its records for their accounts, and would be asked for their Social Security number or other identifying information. The shareholders would then be given an opportunity to authorize proxies to vote their shares at the meeting in accordance with their instructions. To ensure that the shareholders' instructions have been recorded correctly, they will also receive a confirmation of their instructions in the mail. A special toll-free number will be available in case the information contained in the confirmation is incorrect.

Shareholders may have the opportunity to submit their voting instructions via the Internet by utilizing a program provided by a third party vendor hired by Putnam Management. 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, you will need the control number that appears on your proxy card. To vote, please access the Internet address found on your proxy card. The Internet voting procedures are designed to authenticate shareholder identities, to allow shareholders to give their voting instructions, and to confirm that shareholders' instructions have been recorded properly. Shareholders voting via the Internet should understand that there may be costs associated with electronic access, such as usage charges from Internet access providers and telephone companies, that must be borne by the shareholders.

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

Persons holding shares as nominees will upon request be reimbursed for their reasonable expenses in soliciting instructions from their principals. Your fund has retained at its expense D. F. King & Co., Inc., 77 Water Street, New York, New York 10005, to aid in the solicitation of instructions for registered and nominee accounts, for a fee not to exceed $2,500 plus reasonable out-of-pocket expenses for mailing and phone costs. The expenses of the preparation of the proxy statements and related materials, including printing and delivery costs, are borne by the fund.

Revocation of proxies. Proxies, including proxies given by telephone or over the Internet, may be revoked at any time before they are voted either (i) by a written revocation received by the Clerk of your fund,
(ii) by properly executing a later-dated proxy, (iii) by recording later-dated voting instructions via the Internet or (iv) by attending the meeting and voting in person.

Date for receipt of shareholders' proposals for the next annual meeting. It is currently anticipated that your fund's next annual meeting of shareholders will be held in June 2003. Shareholder proposals to be included in the proxy statement for that meeting must be received by your fund before December 18, 2002. Shareholders who wish to make a proposal at the June 2003 annual meeting--other than one that will be included in the fund's proxy materials--should notify the fund no later than March 1, 2003. The Board Policy and Nominating Committee will also consider nominees recommended by shareholders of the fund to serve as Trustees, provided that shareholders submit their recommendations by the above date. If a shareholder who wishes to present a proposal fails to notify the fund by this date, the proxies solicited for the meeting will have discretionary authority to vote on the shareholder's proposal if it is properly brought before the meeting. If a shareholder makes a timely notification, the proxies may still exercise discretionary voting authority under circumstances consistent with the SEC's proxy rules. Shareholders who wish to propose one or more nominees for election as Trustees, or to make a proposal fixing the number of Trustees, at the June 2003 annual meeting must provide written notice to the fund (including all required information) so that such notice is received in good order by the fund no earlier than March 15, 2003 and no later than April 14, 2003.

Adjournment. If sufficient votes in favor of any of the proposals set forth in the Notice of the Meeting are not received by the time scheduled for the meeting, the persons named as proxies may propose adjournments of the meeting for a period or periods of not more than 60 days in the aggregate to permit further solicitation of proxies with respect to those proposals. Any adjournment will require the affirmative vote of a majority of the votes cast on the question in person or by proxy at the session of the meeting to be adjourned. The persons named as proxies will vote in favor of adjournment those proxies that they are entitled to vote in favor of such proposals. They will vote against adjournment those proxies required to be voted against such proposals. Your fund pays the costs of any additional solicitation and of any adjourned session. Any proposals for which sufficient favorable votes have been received by the time of the meeting may be acted upon and considered final regardless of whether the meeting is adjourned to permit additional solicitation with respect to any other proposal.

Financial information. Your fund will furnish to you upon request and without charge, a copy of the fund's annual report for its most recent fiscal year, and a copy of its semiannual report for any subsequent semiannual period. Such requests may be directed to Putnam Investor Services, P.O. Box 41203, Providence, RI 02940-1203 or 1-800-225-1581.

Fund information

Putnam Investments. Putnam Investment Management, LLC, the fund's investment manager, is a subsidiary of Putnam Management Trust, which is in turn owned by Putnam LLC. Putnam LLC is a wholly-owned subsidiary of Putnam Investments Trust, a holding company that, except for a minority stake owned by employees, is in turn owned by Marsh & McLennan Companies, Inc., a leading professional services firm that includes risk and insurance services, investment management and consulting businesses. Putnam Fiduciary Trust Company, the fund's investor servicing agent and custodian is also a subsidiary of Putnam LLC. The address of Putnam Investments Trust, Putnam LLC, Putnam Investment Management, LLC and Putnam Fiduciary Trust Company is One Post Office Square, Boston, Massachusetts 02109. The address of the executive offices of Marsh & McLennan Companies, Inc. is 1166 Avenue of the Americas, New York, New York 10036.

Limitation of Trustee liability. The Agreement and Declaration of Trust of the fund provides that the fund will indemnify its Trustees and officers against liabilities and expenses incurred in connection with litigation in which they may be involved because of their offices with the fund, except if it is determined in the manner specified in the Agreement and Declaration of Trust that they have not acted in good faith in the reasonable belief that their actions were in the best interests of the fund or that such indemnification would relieve any officer or Trustee of any liability to the fund or its shareholders arising by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of his or her duties. Your fund, at its expense, provides liability insurance for the benefit of its Trustees and officers.

Independent Auditors. PricewaterhouseCoopers LLP, 160 Federal Street, Boston, Massachusetts 02110, independent accountants, has been selected by the Trustees as the independent auditors of your fund for the current fiscal year. The Audit and Pricing Committee of the Board of Trustees unanimously approved the selection of PricewaterhouseCoopers LLP in September 2001, and the Trustees unanimously approved such selection in September 2001. Among the country's preeminent accounting firms, this firm also serves as the auditor for various other funds in the Putnam family. It was selected primarily on the basis of its expertise as auditors of investment companies, the quality of its audit services and the competitiveness of its fees. A representative of the independent auditors is expected to be present at the meeting to make statements and to respond to appropriate questions.

The following table sets forth the aggregate fees billed for professional services rendered by your fund's principal accountant for the fund's most recent fiscal year:

                                   Financial Information           All
                  Audit Fees for      Systems Design and         Other
Audit Fees      All Putnam Funds     Implementation Fees          Fees
----------------------------------------------------------------------
$45,000               $3,812,000                $150,000       $22,500
----------------------------------------------------------------------

The fees disclosed in the table above under the caption "Audit Fees" are the aggregate fees billed for professional services rendered for the audit of your fund's annual financial statements for the most recent fiscal year. The fees disclosed under the caption "Audit Fees for All Putnam Funds" are the aggregate fees billed for professional services rendered for the audits of all Putnam funds for which your fund's independent accountants served as auditors for each such fund's most recent fiscal year ending on or before your fund's most recent fiscal year end. The fees disclosed under the captions "Financial Information Systems Design and Implementation Fees" and "All Other Fees" include fees billed for services, if any, rendered for your fund's most recent fiscal year to your fund, to Putnam Management, the fund's investment manager, and to any entity controlling, controlled by or under common control with Putnam Management that provides services to the fund. The amounts disclosed in "All Other Fees" are related to providing tax compliance assistance for the respective fund and general information technology work.

The Audit and Pricing Committee of the Board of Trustees is responsible for making recommendations to the Trustees as to the selection of your fund's auditors. (Additional information about the Audit and Pricing Committee is included under "Election of Trustees.") The Audit and Pricing Committee has established a policy, in addition to other practices and requirements relating to the selection of the fund's auditors, that all non-audit services proposed to be performed by your fund's principal accountants for the fund, Putnam Management and certain related parties be considered and approved by the Audit and Pricing Committee or by an authorized representative of the committee in advance of the provision of such services. This pre-clearance policy calls for the consideration, among other things, of whether the provision of the proposed services would be compatible with maintaining the independence of your fund's principal accountants. The provision of services covered in the table above under "Financial Information Systems Design and Implementation Fees" and "All Other Fees" was approved in accordance with such pre-clearance policy.

The Audit and Pricing Committee of your fund has submitted the following report:

The Audit and Pricing Committee has reviewed and discussed with management of your fund the audited financial statements for the last fiscal year. The Audit and Pricing Committee has discussed with your fund's independent auditors the matters required to be discussed by Statements on Auditing Standard No. 61 (SAS 61). SAS 61 requires independent auditors to communicate to the Audit and Pricing Committee matters including, if applicable: (1) methods used to account for significant unusual transactions; (2) the effect of significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus; (3) the process used by management in formulating particularly sensitive accounting estimates and the basis for the auditor's conclusions regarding the reasonableness of those estimates and (4) disagreements with management over the application of accounting principles and certain other matters. The Audit and Pricing Committee has received the written disclosures and the letter from your fund's independent accountants required by the SEC's Independence Standards (among other things, requiring auditors to make written disclosures to and discuss with the Audit and Pricing Committee various matters relating to the auditor's independence), and has discussed with such accountants the independence of such accountants. Based on the foregoing review and discussions, the Audit and Pricing Committee recommended to the Trustees that the audited financial statements for the last fiscal year be included in your fund's annual report to shareholders for the last fiscal year.

Paul L. Joskow
Elizabeth T. Kennan
W. Nicholas Thorndike
W. Thomas Stephens (Chairman)

Officers and other information. All of the officers of your fund are employees of Putnam Management or its affiliates. Because of their positions with Putnam Management or its affiliates or their ownership of stock of Marsh & McLennan Companies, Inc., the parent corporation of Putnam Investments Trust and indirectly of Putnam Investments, LLC, Putnam Management and Putnam Fiduciary Trust Company, Messrs. Putnam, Lasser and Smith (nominees for Trustees of your fund), as well as the officers of your fund, will benefit from the management fees, underwriting commissions, custodian fees, and investor servicing fees paid or allowed by the fund. In addition to George Putnam and Lawrence J. Lasser, the other officers of your fund are as follows:

                                     Year first
Name (date of birth)                 elected       Business experience
Office with the fund                 to office     during the past 5 years
----------------------------------------------------------------------------
Charles E. Porter (7/26/38)          1989          Managing Director,
Executive Vice President,                          Putnam Investments
Treasurer & Principal                              and Putnam Management
Financial Officer
----------------------------------------------------------------------------
Patricia C. Flaherty (12/1/46)       1993          Senior Vice President,
Senior Vice President                              Putnam Investments
                                                   and Putnam Management
----------------------------------------------------------------------------
Michael T. Healy (1/24/58)           2000          Managing Director,
Assistant Treasurer &                              Putnam Investor
Principal Accounting Officer                       Services and Putnam
                                                   Investments
----------------------------------------------------------------------------
Gordon H. Silver (7/3/47)            1990          Senior Managing Director,
Vice President                                     Putnam Investments
                                                   and Putnam Management
----------------------------------------------------------------------------
Ian Ferguson (7/3/57)                1997          Senior Managing Director,
Vice President                                     Putnam Investments
                                                   and Putnam Management
----------------------------------------------------------------------------
Deborah F. Kuenstner (7/9/58)        2002          Managing Director of
Vice President                                     Putnam Management
----------------------------------------------------------------------------
Richard G. Leibovitch (10/31/63)     2000          Managing Director of
Vice President                                     Putnam Investments and
                                                   Putnam Management.
                                                   Prior to February 1999,
                                                   Managing Director at
                                                   J.P. Morgan
----------------------------------------------------------------------------
Brett C. Browchuk (2/27/63)          1994          Managing Director of
Vice President                                     Putnam Investments and
                                                   Putnam Management
----------------------------------------------------------------------------
Richard A. Monaghan* (8/25/54)       1998          Managing Director,
Vice President                                     Putnam Investments,
                                                   Putnam Management
                                                   and Putnam Retail
                                                   Management
----------------------------------------------------------------------------
John R. Verani (6/11/39)             1988          Senior Vice President,
Vice President                                     Putnam Investments
                                                   and Putnam Management
----------------------------------------------------------------------------

* President of Putnam Retail Management.

Assets and shares outstanding of your fund as of March 31, 2002

Net assets:                                                      $99,034,197
----------------------------------------------------------------------------
Common shares:                                             13,771,649 shares
----------------------------------------------------------------------------
5% beneficial ownership:                                                None
----------------------------------------------------------------------------

Exhibit A

Putnam High Income Conv and Bond Performance Analysis
(Lipper Closed End Convertible and High Yield Objectives)
Annualized NAV Return for Periods Ended March 31, 2002
------------------------------------------------------------------------------------------------------------------
                                                   1 Year            3 Year             5 Year           10 Year
Name of Fund                       Obj     Return     Rank   Return     Rank    Return    Rank    Return    Rank
------------------------------------------------------------------------------------------------------------------
Renaissance Cap G&I III            CV       20.21%     1     15.83%      1          #                 #
Salomon Bros High Inc              HY        8.15      2      4.20       5       4.88%     5          #
Lincoln Natl Conv Secs             CV        5.89      3      6.76       3       4.67      7       8.87%      6
Putnam High Inc Conv & Bd          CV        5.27      4      5.60       4       4.81      6       9.03       5
Castle Convertible Fund            CV        3.91      5      7.66       2       6.68      4       9.69       4
Ellsworth Conv Gr & Inc            CV        0.99      6      3.10       7       9.00      2      11.09       2
Bancroft Convertible Fd            CV        0.66      7      2.90       8       8.68      3      10.93       3
TCW Convertible Secs               CV       -2.43      8      3.35       6       9.63      1      11.26       1
High Income Opportunity            HY       -7.35      9     -4.12       9       0.18      9          #
Managed High Income                HY       -7.81     10     -4.13      10       0.22      8          #
Morg Stan Hi Inc Adv II            HY      -26.13     11    -24.58      13     -15.26     12      -3.59       8
Morg Stan Hi Inc Adv               HY      -26.84     12    -24.03      11     -14.95     10      -3.52       7
Morg Stan Hi Inc Adv III           HY      -27.48     13    -24.42      12     -15.19     11      -3.78       9
------------------------------------------------------------------------------------------------------------------
# Fund's first public offering date occurred after beginning of period.

Performance as calculated by Lipper may differ from performance calculated by fund sponsor due to differing assumptions as to dividend reinvestment for closed end funds.

Exhibit B

Putnam High Income Convertible and Bond Fund Expense Comparison
(Lipper Closed End Convertible and High Yield Objectives)
-------------------------------------------------------------------------------------------------
                              Total Average
                               Net Assets
                                for most         Effective
                              recent fiscal        Mgmt        Actual
                                  year            Fee at        Mgmt      Other        Total
   Name of Fund                (millions)         $100 M*       Fee*    Expenses*     Expense*
-------------------------------------------------------------------------------------------------
 1 TCW Convertible Secs           335.3            0.750       0.600      0.153       0.753
 2 Castle Convertible Fund         61.3            0.750       0.750      0.277       1.027
 3 Salomon Bros High Inc           54.6            0.700       0.700      0.359       1.059
 4 Putnam High Inc Conv & Bd      103.7            0.750       0.750      0.373       1.123
 5 Morg Stan Hi Inc Adv II         77.1            0.750       0.750      0.388       1.138
 6 Bancroft Convertible Fd         99.7            0.750       0.750      0.399       1.149
 7 Morg Stan Hi Inc Adv III        42.8            0.750       0.750      0.422       1.172
 8 Ellsworth Conv Gr & Inc         94.7            0.750       0.757      0.443       1.200
 9 Managed High Income            396.6            1.100       1.100      0.104       1.204
10 High Income Opportunity        593.0            1.150       1.150      0.103       1.253
11 Morg Stan Hi Inc Adv            51.1            0.750       0.750      0.564       1.314
12 Lincoln Natl Conv Secs #       101.4            0.875       0.654      0.888       1.542
-------------------------------------------------------------------------------------------------
# Fund has management fee waivers.

* Expressed as a percentage of average net assets.

This page intentionally left blank.

This page intentionally left blank.

PUTNAM INVESTMENTS

P.O. Box 9131
Hingham, MA 02043-9131 82923 6/02

PUTNAM INVESTMENTS

FOR YOUR CONVENIENCE YOU MAY RECORD YOUR VOTING INSTRUCTIONS VIA THE INTERNET OR BY RETURNING THIS PROXY CARD BY MAIL

Your vote is very important. If you choose to record your voting instructions via the Internet, visit the website at https://vote.proxy-direct.com. Please refer to the instructions below. Your voting instructions will be immediately confirmed if you supply your e-mail address.

To record your voting instructions on the Internet

1. Read the proxy statement.

2. Go to https://vote.proxy-direct.com

3. Enter the 14-digit control number printed on your proxy card. CONTROL NUMBER: 999 9999 9999 999

4. Follow the instructions on the site.

If you submit your voting instructions on the Internet, do not return your proxy card.

BROKERAGE PARTNERS