<Page>

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. )

Filed by the Registrant /X/

Filed by a party other than the Registrant / /

CHECK THE APPROPRIATE BOX:

/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Sec. 240.14a-11(c) or
Sec. 240.14a-12

PUTNAM CALIFORNIA INVESTMENT GRADE MUNICIPAL TRUST
PUTNAM CONVERTIBLE OPPORTUNITIES AND INCOME TRUST
PUTNAM HIGH YIELD MUNICIPAL TRUST
PUTNAM INVESTMENT GRADE MUNICIPAL TRUST
PUTNAM MANAGED HIGH YIELD TRUST
PUTNAM MANAGED MUNICIPAL INCOME TRUST
PUTNAM MASTER INCOME TRUST
PUTNAM MUNICIPAL BOND FUND
PUTNAM MUNICIPAL OPPORTUNITIES TRUST
PUTNAM NEW YORK INVESTMENT GRADE MUNICIPAL TRUST
PUTNAM TAX FREE HEALTH CARE FUND
(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than Registrant)

<Page>

Payment of Filing Fee (Check the appropriate box):

/X/ No fee required

/ / Fee computed on table below per Exchange Act Rule 14a
6(i)(1) and 0-11

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

/ / Fee paid previously with preliminary materials.

/ / Check box if any part of the fee is offset as provided
by Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date of
its filing.

(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:

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IMPORTANT INFORMATION
FOR SHAREHOLDERS IN:
PUTNAM CONVERTIBLE OPPORTUNITIES AND INCOME TRUST
PUTNAM MANAGED HIGH YIELD TRUST
PUTNAM MASTER INCOME TRUST
PUTNAM TAX-FREE HEALTH CARE FUND

THE DOCUMENT YOU HOLD IN YOUR HANDS CONTAINS YOUR PROXY STATEMENT AND
PROXY CARD. A PROXY CARD IS, IN ESSENCE, A BALLOT. WHEN YOU VOTE YOUR
PROXY, IT TELLS US HOW TO VOTE ON YOUR BEHALF ON IMPORTANT ISSUES RELATING
TO YOUR FUND. IF YOU COMPLETE AND SIGN THE PROXY, WE'LL VOTE IT EXACTLY AS
YOU TELL US. IF YOU SIMPLY SIGN THE PROXY, WE'LL VOTE IT IN ACCORDANCE
WITH THE TRUSTEES' RECOMMENDATIONS ON PAGE 3.

WE URGE YOU TO SPEND A COUPLE OF MINUTES WITH THE PROXY STATEMENT, AND
EITHER FILL OUT YOUR PROXY CARD AND RETURN IT TO US VIA THE MAIL, OR
RECORD YOUR VOTING INSTRUCTIONS VIA THE INTERNET. WHEN SHAREHOLDERS DON'T
RETURN THEIR PROXIES IN SUFFICIENT NUMBERS, WE HAVE TO INCUR THE EXPENSE
OF FOLLOW-UP SOLICITATIONS, WHICH CAN COST YOUR FUND MONEY.

WE WANT TO KNOW HOW YOU WOULD LIKE TO VOTE AND WELCOME YOUR COMMENTS.
PLEASE TAKE A FEW MOMENTS WITH THESE MATERIALS AND RETURN YOUR PROXY TO
US.

[LOGO]
<Page>
TABLE OF CONTENTS

<Table>

A Message from the Chairman 1
Notice of Shareholder Meeting 2
Trustees' Recommendations 3
</Table>

PROXY CARD ENCLOSED

If you have any questions, please contact us at (1-800-225-1581) or call
your financial advisor.
- ----------------------------------------------
<Page>
A MESSAGE FROM THE CHAIRMAN

[photo of John A. Hill]

Dear Shareholder:

I am writing to you to ask for your vote on important questions
that affect your fund. While you are, of course, welcome to join
us at your fund's meeting, most shareholders cast their vote by
either filling out and signing the enclosed proxy card or by
voting via the Internet. Instructions are listed at the top of
your proxy card. We are asking for your vote on the proposal
fixing the number of Trustees and electing your fund's Trustees.

Although we would like very much to have each shareholder attend
his or her fund's meeting, we realize this may not be possible.
Whether or not you plan to be present, we need your vote. We urge
you to record your voting instructions on the Internet or
complete, sign, and return the enclosed proxy card promptly. A
postage-paid envelope is enclosed for mailing, and Internet voting
instructions are listed at the top of your proxy card.

I'm sure that you, like most people, lead a busy life and are
tempted to put this proxy aside for another day. Please don't.
When shareholders do not return their proxies, their fund may have
to incur the expense of follow-up solicitations. All shareholders
benefit from the speedy return of proxies.

Your vote is important to us. We appreciate the time and
consideration that I am sure you will give this important matter.
If you have questions about the proposal, contact your financial
adviser or call a Putnam customer service representative at
1-800-225-1581.

Sincerely yours,

/s/ John A. Hill
John A. Hill, Chairman

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PUTNAM CONVERTIBLE OPPORTUNITIES AND
INCOME TRUST
PUTNAM MANAGED HIGH YIELD TRUST
PUTNAM MASTER INCOME TRUST
PUTNAM TAX-FREE HEALTH CARE FUND
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 Convertible Opportunities and Income Trust
Putnam Managed High Yield Trust
Putnam Master Income Trust
Putnam Tax-Free Health Care Fund

The Annual Meeting of Shareholders of your fund will be held on
October 11, 2001 at 11 a.m., Boston time, on the eighth floor of
One Post Office Square, Boston, Massachusetts, to consider the
following:

1. FIXING THE NUMBER OF TRUSTEES AND ELECTING TRUSTEES.

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.

August 13, 2001
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PROXY STATEMENT

- THIS DOCUMENT WILL GIVE YOU THE INFORMATION YOU NEED TO VOTE ON THE MATTERS
LISTED ON THE PREVIOUS PAGE. MUCH OF THE INFORMATION IN THE PROXY STATEMENT
IS REQUIRED UNDER RULES OF THE SECURITIES AND EXCHANGE COMMISSION ("SEC");
SOME OF IT IS TECHNICAL. IF THERE IS ANYTHING YOU DON'T UNDERSTAND, PLEASE
CONTACT US AT OUR SPECIAL TOLL-FREE NUMBER, 1-800-225-1581 OR CALL YOUR
FINANCIAL ADVISOR.

- WHO IS ASKING FOR YOUR VOTE?

THE ENCLOSED PROXY IS SOLICITED BY THE TRUSTEES OF PUTNAM
CONVERTIBLE OPPORTUNITIES AND INCOME TRUST, PUTNAM MANAGED HIGH
YIELD TRUST, PUTNAM MASTER INCOME TRUST AND PUTNAM TAX-FREE HEALTH
CARE FUND for use at the Annual Meeting of Shareholders of each
fund to be held on October 11, 2001, and, if your fund's meeting
is adjourned, at any later meetings, for the purposes stated in
the Notice of Annual Meeting (see previous page). The Notice of
Meeting, the proxy and the Proxy Statement are being mailed on or
about August 15, 2001.

- HOW DO YOUR FUND'S TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE ON THIS
PROPOSAL?

The Trustees recommend that you vote

1a. Putnam Convertible Opportunities and Income Trust only: FOR
FIXING THE NUMBER OF TRUSTEES AS PROPOSED AND THE ELECTION OF
CLASS C NOMINEES.

1b. Putnam Managed High Yield Trust, Putnam Master Income Trust,
Putnam Tax-Free Health Care Fund only: FOR FIXING THE NUMBER OF
TRUSTEES AS PROPOSED AND THE ELECTION OF ALL NOMINEES.

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- WHO IS ELIGIBLE TO VOTE?

Shareholders of record at the close of business on July 20, 2001
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.

Shareholders of each fund vote separately with respect to each
proposal. The outcome of a vote affecting one fund does not affect
any other fund.

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THE PROPOSALS

I. ELECTION OF TRUSTEES

- WHO ARE THE NOMINEES FOR TRUSTEES?

The Board Policy and Nominating Committee of the Trustees of each
fund makes recommendations concerning the 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").

- PUTNAM MANAGED HIGH YIELD TRUST, PUTNAM MASTER INCOME TRUST, PUTNAM
TAX-FREE HEALTH CARE FUND

The Board Policy and Nominating Committee of the Trustees of each
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.

- PUTNAM CONVERTIBLE OPPORTUNITIES AND INCOME TRUST

The Trustees of Putnam Convertible Opportunities and Income Trust
are classified into three classes of Trustees: Class A, Class B
and Class C. Only the Class C Trustees of the fund, whose current
terms expire at the time of the shareholder meeting, are being
nominated for election, as described below. The nominees for
Class C Trustees are John H. Mullin, III, A.J.C. Smith, W. Thomas
Stephens and W. Nicholas Thorndike, and each nominee's background
is described below. Each Class C Trustee is also a Trustee of each
of the other Putnam funds.

The Board Policy and Nominating Committee of the Trustees
recommends that the number of Trustees be fixed at thirteen and
that you vote for the election of each of the Class C nominees.

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- JAMESON ADKINS BAXTER
CLASS A TRUSTEE FOR PUTNAM CONVERTIBLE
OPPORTUNITIES AND INCOME TRUST

[photo of Jameson Adkins Baxter]
Ms. Baxter, born September 6, 1943, is the President
of Baxter Associates, Inc., a management consulting
and private investment firm that she founded in
1986. During that
time, she was also a Vice President and Principal of the Regency
Group, Inc. and a Consultant to First Boston Corporation, both of
which are investment banking firms. From 1965 to 1986, Ms. Baxter
held various positions in investment banking and corporate finance
at First Boston.

Ms. Baxter currently also serves as a Director of Banta
Corporation, Ryerson Tull and ASHTA Chemicals, Inc. She is also
the Chairman Emeritus of the Board of Trustees of Mount Holyoke
College, having previously served as Chairman for five years and
as a Board member for thirteen years; an Honorary Trustee and past
President of the Board of Trustees of the Emma Willard School;
Member of the Board of Governors of Good Shepherd Hospital; and
Chair of the National Center for Non-profit Boards. Ms. Baxter is
a graduate of Mount Holyoke College.

- CHARLES B. CURTIS

CLASS A TRUSTEE FOR PUTNAM

CONVERTIBLE OPPORTUNITIES AND

INCOME TRUST

[photo of Charles B. Curtis]

Mr. Curtis, born April 27, 1940, is the President of NTI, a
private foundation dedicated to reducing the threat from weapons
of mass destruction. Mr. Curtis also serves as Senior

Advisor to the United Nations Foundation.

6
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Energy Regulatory Commission, which he chaired from 1977 to 1981.
He is a current member of the Department of Defense's Policy
Board, the Council on Foreign Relations, the Electric Power
Research Institute Advisory Council, the Gas Technology Institute
Board of Directors, the University of Chicago Board of Governors
for Argonne National Laboratory, the EG&G Technology Services,
Inc. Board of Directors, and the Environment and Natural Resources
Program Steering Committee, John F. Kennedy School of Government,
Harvard University.

Mr. Curtis has B.S. and B.A. degrees from the University of
Massachusetts - Amherst and a J.D. from the Boston University Law
School.

- JOHN A. HILL
CLASS B TRUSTEE FOR PUTNAM CONVERTIBLE
OPPORTUNITIES AND INCOME TRUST

[photo of John A. Hill]

Mr. Hill, born January 31, 1942, is Chairman of the
Trustees. He is the Vice-Chairman and Managing
Director of First Reserve Corporation, an investment
advisor investing in com

panies in the world-wide energy industry on behalf of
institutional investors.

Prior to acquiring First Reserve in 1983, Mr. Hill held executive
positions with several investment advisory firms and various
positions with the federal government, including Associate
Director of the Office of Management and Budget and Deputy
Administrator of the Federal Energy Administration.

Mr. Hill currently also serves as a Director of Devon Energy
Corporation, an exploration and production company;
TransMontaingne Oil Company, a refined oil product pipeline and
distribution company; St. Lukes-Roosevelt Hospital of New York;
Sarah Lawrence College; and various private companies controlled
by First Reserve Corporation. He is currently active in various
business associations, including the Economic Club of New York,
and lectures on energy issues in the United

7
<Page>

States and Europe. Mr. Hill is a graduate of Southern Methodist
University.

- RONALD J. JACKSON
CLASS B TRUSTEE FOR PUTNAM
CONVERTIBLE OPPORTUNITIES AND
INCOME TRUST

[photo of Ronald J. Jackson]
Mr. Jackson, born December 17, 1943, retired as Chairman of the
Board, President and Chief Executive Officer of Fisher-
Price, Inc., a major toy manufacturer, in 1993, a position
which he held since 1990. He previously served as President and
Chief Executive Officer of Stride-Rite, Inc., a manufacturer and
distributor of footwear, from 1989 to 1990, and as President and
Chief Executive Officer of Kenner Parker Toys, Inc., a major toy
and game manufacturer, from 1985 to 1987. Prior to that, he held
various financial and marketing positions at General Mills, Inc.
from 1966 to 1985, including Vice President, Controller and Vice
President of Marketing for Parker Brothers, a toy and game
company, and President of Talbots, a retailer and direct marketer
of women's apparel. Mr. Jackson is a graduate of Michigan State
University Business School.

- PAUL L. JOSKOW
CLASS A TRUSTEE FOR PUTNAM CONVERTIBLE

OPPORTUNITIES AND INCOME TRUST

[photo of Paul L. Joskow]
Dr. Joskow, born June 30, 1947, is Elizabeth and
James Killian Professor of Economics and Director of
the Center for Energy and Environmental Policy
Research at the Massa
chusetts Institute of Technology. He has published five books and
numerous articles on topics in industrial organization, government
regulation of industry, and competition policy. Dr. Joskow
currently serves as a Director of the National Grid Group, a UK
based holding company with interests in electric power and
telecommunications networks, State Farm Indemnity Company, an
automobile insurance company, and the Whitehead Institute for
Biomedical

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Research, a non-profit research institution. He has been President
of the Yale University Council since 1993.

Dr. Joskow is active on industry restructuring, environmental,
energy, competition, and privatization policies and has served as
an advisor to governments and corporations around the world.

Dr. Joskow is a graduate of Cornell University and Yale
University. He is a Fellow of the Econometric Society and the
American Academy of Arts and Sciences.

- ELIZABETH T. KENNAN
CLASS B TRUSTEE FOR PUTNAM
CONVERTIBLE OPPORTUNITIES AND
INCOME TRUST

[photo of Elizabeth T. Kennan]
Dr. Kennan, born February 25, 1938, is President Emeritus of Mount
Holyoke College. From 1978 through June 1995, she was President of
Mount Holyoke College. From 1966 to 1978,
she was on the faculty of Catholic University, where she taught
history, published numerous articles, and directed the
post-doctoral programs in Patristic and Medieval Studies.

Dr. Kennan currently also serves as a director of Northeast
Utilities, Talbots and Cambus-Kenneth Bloodstock, a corporation
involved in thoroughbred horse breeding and farming. She is a
member of The Folger Shakespeare Library Committee and a trustee
of Franklin Pierce College.

Dr. Kennan previously served as a director of Bell Atlantic
Corporation, Chastain Real Estate and Kentucky Home Life
Insurance. Active in various educational and civic associations,
Dr. Kennan is a graduate of Mount Holyoke College, the University
of Washington, and St. Hilda's College, Oxford University. She
holds several honorary doctorates.

9
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- LAWRENCE J. LASSER*
CLASS A TRUSTEE FOR PUTNAM CONVERTIBLE
OPPORTUNITIES AND INCOME TRUST

[photo of Lawrence J. Lassser]
Mr. Lasser, born November 1, 1942, is a Vice
President of your fund and each of the other Putnam
funds. He has been the President, Chief Executive
Officer and a Director of
Putnam Investments, LLC and Putnam Management since 1985, having
begun his career there in 1969.

Mr. Lasser currently also serves as a Director of Marsh & McLennan
Companies, Inc., the parent company of Putnam Management. He is a
Member of the Board of Directors of the United Way of
Massachusetts Bay, a Member of the Board of Governors of the
Investment Company Institute, a Trustee of the Museum of Fine
Arts, Boston, a Trustee and Member of the Finance and Executive
Committees of the Beth Israel Deaconess Medical Center, Boston and
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.

- JOHN H. MULLIN, III
CLASS C TRUSTEE FOR PUTNAM
CONVERTIBLE OPPORTUNITIES AND
INCOME TRUST

[photo of John H. Mullin, III]
Mr. Mullin, born June 15, 1941, is Chairman and CEO of Ridgeway
Farm, a limited liability company engaged in timber activities and
farming. Prior to establishing Ridgeway Farm in
1989, Mr. Mullin was a Managing Director of Dillon, Read & Co.
Inc., an investment banking firm.

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served as a Director of Dillon, Read & Co. Inc., Adolph Coors
Company, Crystal Brands, Inc., Fisher-Price, Inc., Mattel, Inc.
and The Ryland Group, Inc. Mr. Mullin is a Trustee Emeritus of
Washington & Lee University where he served as Chairman of the
Investment Committee. Mr. Mullin is a graduate of Washington & Lee
University and The Wharton Graduate School at the University of
Pennsylvania.

- ROBERT E. PATTERSON
CLASS B TRUSTEE FOR PUTNAM CONVERTIBLE
OPPORTUNITIES AND INCOME TRUST

[photo of Robert E. Patterson]
Mr. Patterson, born March 15, 1945, is the President
and a Trustee of Cabot Industrial Trust, a publicly
traded real estate investment trust. Prior to
February, 1998 he was Execu
tive Vice President and Director of Acquisitions of Cabot Partners
Limited Partnership, a registered investment advisor which managed
real estate investments for institutional investors. Prior to
1990, he was the Executive Vice President of Cabot, Cabot & Forbes
Realty Advisors, Inc., the predecessor company of Cabot Partners.
Prior to that, he was a Senior Vice President of the Beal
Companies, a real estate management, investment and development
company. He has also worked as an attorney and held various
positions in state government, including the founding Executive
Director of the Massachusetts Industrial Finance Agency.

Mr. Patterson currently also serves as Chairman of the Joslin
Diabetes Center, a Trustee of SEA Education Association and a
Director of Brandywine Trust Company. Mr. Patterson is a graduate
of Harvard College and Harvard Law School.

11
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- GEORGE PUTNAM, III*
CLASS B TRUSTEE FOR PUTNAM
CONVERTIBLE OPPORTUNITIES AND
INCOME TRUST

[photo of George Putnam, III]
Mr. Putnam, born August 10, 1951, is the President of your Fund
and each of the other Putnam Funds. He is also President of New
Generation Research, Inc., a publisher of finan
cial advisory and other research services relating to bankrupt and
distressed companies, and New Generation Advisers, Inc., a
registered investment advisor which provides advice to private
funds specializing in investments in such companies. Prior to
founding New Generation in 1985, Mr. Putnam was an attorney with
the Philadelphia law firm Dechert Price & Rhoads.

Mr. Putnam currently also serves as a Director of The Boston
Family Office, L.L.C., a registered investment advisor that
provides financial advice to individuals and families. He is also
a Trustee of the SEA Education Association and St. Mark's School.
Mr. Putnam is a graduate of Harvard College, Harvard Business
School and Harvard Law School.

- A.J.C. SMITH*
CLASS C TRUSTEE FOR PUTNAM CONVERTIBLE
OPPORTUNITIES AND INCOME TRUST

[photo of A.J.C. Smith]
Mr. Smith, born April 13, 1934, is a Director of
Marsh & McLennan Companies, Inc. From May 1992 to
November 1999, he served as the company's Chairman
and Chief Executive
Officer and from November 1999 to May 2000, he served as Chairman.
He has been employed by Marsh & McLennan and related companies in
various capacities since 1961. Mr. Smith is a Director of the
Trident Corp.; a Trustee of the Carnegie Hall Society, the Central
Park Conservancy, the Educational Broadcasting Corporation, the
Economic Club of New York, and the U.S. Chamber of Commerce; a
Member of the Board of Overseers of the Joan and Sanford I. Weill
Graduate School of Medical Sciences of Cornell University; and a
Founder of the Museum of Scotland

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Society. He was educated in Scotland and is a Fellow of the
Faculty of Actuaries in Edinburgh, a Fellow of the Canadian
Institute of Actuaries, a Fellow of the Conference of Actuaries,
an Associate of the Society of Actuaries, a Member of the American
Academy of Actuaries, the International Actuarial Association and
the International Association of Consulting Actuaries.

- W. THOMAS STEPHENS
CLASS C TRUSTEE FOR PUTNAM
CONVERTIBLE OPPORTUNITIES AND
INCOME TRUST

[photo of W. Thomas Stephens]
Mr. Stephens, born September 2, 1942, was, until 1999, the
President and Chief Executive Officer of MacMillan Bloedel
Limited, a forest products and building materials company. In
1996, Mr. Stephens retired as Chairman of the Board of Directors,
President and Chief Executive Officer of Johns Manville
Corporation.

Mr. Stephens serves as a Director for Mail-Well, a printing and
envelope company, Qwest Communications, a communications company,
Xcel Energy Incorporated, a public utility company, TransCanada
Pipelines, and Norske Skog Canada, Inc., a paper manufacturer.
Mr. Stephens has B.S. and M.S. degrees from the University of
Arkansas.

- W. NICHOLAS THORNDIKE
CLASS C TRUSTEE FOR PUTNAM CONVERTIBLE
OPPORTUNITIES AND INCOME TRUST

[photo of W. Nicholas Thorndike]
Mr. Thorndike, born March 28, 1933, serves as a
Director of various corporations and charitable
organizations, including, Providence Journal Co., a
newspaper publisher,
and Courier Corporation, a book binding and printing company. He
is also a Trustee of Cabot Industrial Trust and Northeastern
University, a member of the Advisory Board of National Grid USA,
an electric company, and an Honorary Trustee of Massachusetts
General Hospital, where he previously served as chairman and
president. Prior to

13
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December 1988, Mr. Thorndike was the 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. He also previously served
as a Trustee of the Wellington Group of Funds (now The Vanguard
Group) and was the Chairman and a Director of Ivest Fund, Inc.
Mr. Thorndike is a graduate of Harvard College.
----------------------------

*Nominees who are or may be deemed to be "interested persons" (as
defined in the Investment Company Act of 1940) of your fund,
Putnam Management, and Putnam Retail Management, Limited
Partnership ("Putnam Retail Management"), the principal
underwriter for all the open-end Putnam funds and an affiliate of
Putnam Management. Messrs. Lasser, Putnam III and Smith are deemed
"interested persons" by virtue of their positions as officers or
affiliates of your fund, or directors of Putnam Management, Putnam
Retail Management, or Marsh & McLennan Companies, Inc., the parent
company of Putnam Management and Putnam Retail Management.

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

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Except as indicated above, the principal occupations and business
experience of the nominees for the last five years have been with
the employers indicated, although in some cases they have held
different positions with those employers.

The 13 nominees for election as Trustees for each of Putnam
Managed High Yield Trust, Putnam Master Income Trust, and Putnam
Tax-Free Health Care Fund at the shareholder meeting of your fund
who receive the greatest number of votes will be elected as
Trustees of your fund. All the nominees were elected by the
shareholders of each fund in October 2000, other than Mr. Curtis
who was elected by the Board of Trustees effective July 1, 2001.
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.

As mentioned above, only the Class C Trustees of Putnam
Convertible Opportunities and Income Trust are being nominated for
election. The other Trustees of the fund will continue to serve
under their current terms. The terms for the Class A Trustees will
expire at the fund's 2002 annual meeting of shareholders, and the
terms of the Class B Trustees will expire at the fund's 2003
annual meeting. Each of the fund's Class A Trustees was elected by
shareholders in October 1999, other than Mr. Curtis who was
elected by the Board of Trustees effective July 1, 2001. Each of
the fund's Class B Trustees was elected by shareholders in October
2000. Each of the fund's Class C Trustees was elected by
shareholders in December 1998.

The four nominees for Trustees of Putnam Convertible Opportunities
and Income Trust who receive the greatest number of votes will be
elected Class C Trustees of the fund. Each Class C Trustee will be
elected to a three-year term expiring at the fund's 2004 annual
meeting of shareholders. Each

15
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Trustee of Putnam Convertible Opportunities and Income Trust
serves until the expiration of his or her term and until his or
her successor is elected and qualified.

The address for each of the current Trustees and each of the
nominees is One Post Office Square, Boston, Massachusetts 02109.

- 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 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.

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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. This table shows the value of
their holdings in the Putnam funds.

<Table>

Each Trustee over $100,000
Trustees as a group over $31,000,000
</Table>

The Trustees allocate their investments among the approximately
124 Putnam funds based on their own investment needs. The table
below shows each Trustee's current investment in each fund.

17
<Page>

<Table>
<Caption>
Year first Putnam Putnam Putnam
elected as Con. Opp. Managed Master
Trustee of And Income High Yield Income
the Putnam Trust Trust Trust
Trustees funds (# of shares)(1) (# of shares)(1) (# of shares)(1)

- -----------------------------------------------------------------------------------------------------------------------------
Jameson A. Baxter 1994 320 418 135
Charles B. Curtis 2001 100 100 100
John A. Hill 1985 1,600 100 1,500
Ronald J. Jackson 1996 200(2) 200(2) 200(2)
Paul L. Joskow 1997 100 100 100
Elizabeth T. Kennan 1992 173 220 185
Lawrence J. Lasser 1992 100 100 100
John H. Mullin, III 1997 100 100 100
Robert E. Patterson 1984 200 200 300
George Putnam, III 1984 20,500 500 500
A.J.C. Smith 1986 100(2) 200(2) 200(2)
W. Thomas Stephens 1997 100 100 100
W. Nicholas Thorndike 1992 173 217 240

<Caption>
Putnam
Tax-Free
Health Care
Fund
Trustees (# of shares)(1)

Jameson A. Baxter 383
Charles B. Curtis 100
John A. Hill 100
Ronald J. Jackson 200(2)
Paul L. Joskow 100
Elizabeth T. Kennan 172
Lawrence J. Lasser 100
John H. Mullin, III 100
Robert E. Patterson 100
George Putnam, III 500
A.J.C. Smith 200(2)
W. Thomas Stephens 100
W. Nicholas Thorndike 170
</Table>

- ---------------------------------------------------------------------
(1) Except as otherwise noted, each trustee has sole voting power and sole
investment power with respect to his or her shares of your fund.

(2) Includes shares over which the Trustee has shared investment and shared
voting power.

The Trustees' ownership is based on beneficial ownership as of July 23,
2001. The value of shares owned by the Trustees has been determined as of
June 30, 2001.

As of July 23, 2001, the Trustees and officers of Putnam Convertible
Opportunities and Income Trust, Putnam Managed High Yield Trust, Putnam
Master Income Trust and Putnam Tax-Free Health Care Fund owned a total of
23,766, 2,555, 3,760 and 2,325 shares respectively, comprising 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;

18
<Page>
- 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.
These currently include: the Contract Committee, which reviews all
the contractual arrangements with Putnam Management and its
affiliates; the Communication, Service and Marketing Committee,
which reviews the quality of services provided by your fund's
investor servicing agent and custodian; the Brokerage and Custody
Committee, which reviews matters relating to custody of
securities, best execution, brokerage costs and allocations and
new investment techniques; the Audit Committee, which reviews
procedures for the valuation of securities, the fund's accounting
policies and the adequacy of internal controls and supervises the
engagement of the fund's auditors; the Executive Committee, which
establishes annual and ongoing goals, objectives and

19
<Page>

priorities for the Trustees and reviews the compensation of the
Trustees and their administrative staff; the Board Policy and
Nominating committee, which reviews the conduct of the fund's
legal affairs, evaluates and recommends candidates for election as
Trustees and recommends the appointment of members and chairs each
board committee; the Distributions and Closed-End Funds Committee,
which is responsible for reviewing special issues applicable to
closed-end funds; and the Pricing Committee, which reviews
procedures for the valuation of securities.

Each Trustee generally attends at least two formal committee
meetings during each regular meeting of the Trustees. During 2000,
the average Trustee participated in approximately 40 committee and
board meetings. In addition, the Trustees meet in small groups
with Chief Investment Officers and Portfolio Managers to review
recent performance and the current investment climate for selected
funds. These meetings ensure that each fund's performance is
reviewed in detail at least twice a year. The Contract Committee
typically meets on several additional occasions during the year to
carry out its responsibilities. Other committees, including an
Executive Committee, may also meet on special occasions as the
need arises.

- WHAT ARE THE TRUSTEES PAID FOR THEIR SERVICES?

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. 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 2000:

20
<Page>

PUTNAM CONVERTIBLE OPPORTUNITIES AND
INCOME TRUST
COMPENSATION TABLE

<Table>
<Caption>
Estimated
Pension or annual
retirement benefits
benefits from all
Aggregate accrued as Putnam
compensation part of funds
from the fund upon
Trustees/Year fund(1) expenses retirement(2)

-----------------------------------------------------------------------------------------
Jameson A. Baxter/1994 $545 $129 $100,000
Charles B. Curtis(9) -- -- 100,000
Hans H. Estin/1972(10) 546 280 100,000
John A. Hill/1985(5)(8) 562 159 200,000
Ronald J. Jackson/1996 545 175 100,000
Paul L. Joskow/1997 545 83 100,000
Elizabeth T. Kennan/1992 544 190 100,000
Lawrence J. Lasser/1992(7) 295 134 92,500
John H. Mullin, III/1997 542 124 100,000
Robert E. Patterson/1984 545 97 100,000
William F. Pounds/1971(5)(6) 301 275 111,000
George Putnam/1957(6) 295 228 92,834
George Putnam, III/1984(8) 552 71 150,000
A.J.C. Smith/1986(7) 293 204 91,833
W. Thomas Stephens/1997 541 116 100,000
W. Nicholas Thorndike/1992 537 266 100,000

Total
compensation
from all
Trustees/Year Putnam funds(3)

-------------------------------------------------------------
Jameson A. Baxter/1994 $200,000(4)
Charles B. Curtis(9) --
Hans H. Estin/1972(10) 200,500
John A. Hill/1985(5)(8) 269,000(4)
Ronald J. Jackson/1996 200,000(4)
Paul L. Joskow/1997 200,000(4)
Elizabeth T. Kennan/1992 199,500
Lawrence J. Lasser/1992(7) 107,000
John H. Mullin, III/1997 199,000(4)
Robert E. Patterson/1984 200,000
William F. Pounds/1971(5)(6) 127,000
George Putnam/1957(6) 107,000
George Putnam, III/1984(8) 225,000
A.J.C. Smith/1986(7) 106,000
W. Thomas Stephens/1997 198,500(4)
W. Nicholas Thorndike/1992 197,000
</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 2000.

(3) As of December 31, 2000, there were 124 funds in the Putnam
family.

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

(5) Includes additional compensation for services through
June 30, 2000.

(6) Reflects retirement from the Board of Trustees of the Putnam
funds on June 30, 2000.

21
<Page>
(7) 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.

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

(9) Mr. Curtis was elected by the Board of Trustees of the Putnam
funds as Trustee effective July 1, 2001.

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

22
<Page>

PUTNAM MANAGED HIGH YIELD TRUST
COMPENSATION TABLE

-----------------------------------------------------------------------------------------
Jameson A. Baxter/1994 $545 $131 $100,000
Charles B. Curtis(9) -- -- 100,000
Hans H. Estin/1972(10) 546 279 100,000
John A. Hill/1985(5)(8) 562 184 200,000
Ronald J. Jackson/1996 545 161 100,000
Paul L. Joskow/1997 545 92 100,000
Elizabeth T. Kennan/1992 544 193 100,000
Lawrence J. Lasser/1992(7) 295 119 92,500
John H. Mullin, III/1997 542 138 100,000
Robert E. Patterson/1984 545 97 100,000
William F. Pounds/1971(5)(6) 301 192 111,000
George Putnam/1957(6) 295 159 92,834
George Putnam, III/1984(8) 552 80 150,000
A.J.C. Smith/1986(7) 293 200 91,833
W. Thomas Stephens/1997 541 129 100,000
W. Nicholas Thorndike/1992 537 270 100,000

Total
compensation
from all
Trustees/Year Putnam funds(3)

---------------------------------------------------------------------------------------
Jameson A. Baxter/1994 $200,000(4)
Charles B. Curtis(9) --
Hans H. Estin/1972(10) 200,500
John A. Hill/1985(5)(8) 269,000(4)
Ronald J. Jackson/1996 200,000(4)
Paul L. Joskow/1997 200,000(4)
Elizabeth T. Kennan/1992 199,500
Lawrence J. Lasser/1992(7) 107,000
John H. Mullin, III/1997 199,000(4)
Robert E. Patterson/1984 200,000
William F. Pounds/1971(5)(6) 127,000
George Putnam/1957(6) 107,000
George Putnam, III/1984(8) 225,000
A.J.C. Smith/1986(7) 106,000
W. Thomas Stephens/1997 198,500(4)
W. Nicholas Thorndike/1992 197,000
</Table>

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

(1) Includes an annual retainer and an attendance fee for each
meeting attended.

(3) As of December 31, 2000, there were 124 funds in the Putnam
family.

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

(5) Includes additional compensation for services through
June 30, 2000.

(6) Reflects retirement from the Board of Trustees of the Putnam
funds on June 30, 2000.

23
<Page>

(7) 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.

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

(9) Mr. Curtis was elected by the Board of Trustees of the Putnam
funds as Trustee effective July 1, 2001.

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

24
<Page>

PUTNAM MASTER INCOME TRUST
COMPENSATION TABLE

-----------------------------------------------------------------------------------------
Jameson A. Baxter/1994 $774 $180 $100,000
Charles B. Curtis(9) -- -- 100,000
Hans H. Estin/1972(10) 776 404 100,000
John A. Hill/1985(5)(8) 862 205 200,000
Ronald J. Jackson/1996 774 251 100,000
Paul L. Joskow/1997 774 102 100,000
Elizabeth T. Kennan/1992 772 267 100,000
Lawrence J. Lasser/1992(7) 424 203 92,500
John H. Mullin, III/1997 770 153 100,000
Robert E. Patterson/1984 774 138 100,000
William F. Pounds/1971(5)(6) 451 467 111,000
George Putnam/1957(6) 424 394 92,834
George Putnam, III/1984(8) 808 94 150,000
A.J.C. Smith/1986(7) 420 295 91,833
W. Thomas Stephens/1997 768 143 100,000
W. Nicholas Thorndike/1992 762 374 100,000

Total
compensation
from all
Trustees/Year Putnam funds(3)

-----------------------------------------------------------------------------------------
Jameson A. Baxter/1994 $200,000(4)
Charles B. Curtis(9) --
Hans H. Estin/1972(10) 200,500
John A. Hill/1985(5)(8) 269,000(4)
Ronald J. Jackson/1996 200,000(4)
Paul L. Joskow/1997 200,000(4)
Elizabeth T. Kennan/1992 199,500
Lawrence J. Lasser/1992(7) 107,000
John H. Mullin, III/1997 199,000(4)
Robert E. Patterson/1984 200,000
William F. Pounds/1971(5)(6) 127,000
George Putnam/1957(6) 107,000
George Putnam, III/1984(8) 225,000
A.J.C. Smith/1986(7) 106,000
W. Thomas Stephens/1997 198,500(4)
W. Nicholas Thorndike/1992 197,000
</Table>

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

(1) Includes an annual retainer and an attendance fee for each
meeting attended.

(3) As of December 31, 2000, there were 124 funds in the Putnam
family.

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

(5) Includes additional compensation for services through
June 30, 2000.

(6) Reflects retirement from the Board of Trustees of the Putnam
funds on June 30, 2000.

25
<Page>

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

(9) Mr. Curtis was elected by the Board of Trustees of the Putnam
funds as Trustee effective July 1, 2001.

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

26
<Page>

PUTNAM TAX-FREE HEALTH CARE FUND
COMPENSATION TABLE

-----------------------------------------------------------------------------------------
Jameson A. Baxter/1994 $ 662 $ 162 $100,000
Charles B. Curtis(9) -- -- 100,000
Hans H. Estin/1972(10) 664 344 100,000
John A. Hill/1985(5)(8) 702 228 200,000
Ronald J. Jackson/1996 662 198 100,000
Paul L. Joskow/1997 662 114 100,000
Elizabeth T. Kennan/1992 661 238 100,000
Lawrence J. Lasser/1992(7) 363 146 92,500
John H. Mullin, III/1997 659 171 100,000
Robert E. Patterson/1984 662 120 100,000
William F. Pounds/1971(5)(6) 375 236 111,000
George Putnam/1957(6) 363 196 92,834
George Putnam, III/1984(8) 678 99 150,000
A.J.C. Smith/1986(7) 360 246 91,833
W. Thomas Stephens/1997 658 160 100,000
W. Nicholas Thorndike/1992 653 334 100,000

Total
compensation
from all
Trustees/Year Putnam funds(3)

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

(1) Includes an annual retainer and an attendance fee for each
meeting attended.

(3) As of December 31, 2000, there were 124 funds in the Putnam
family.

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

(5) Includes additional compensation for services through
June 30, 2000.

(6) Reflects retirement from the Board of Trustees of the Putnam
funds on June 30, 2000.

27
<Page>

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

(9) Mr. Curtis was elected by the Board of Trustees of the Putnam
funds as Trustee effective July 1, 2001.

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

28
<Page>
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 by the funds 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 compensated by the funds. A death benefit is also
available under the Plan which 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.

For additional information about your fund, including further
information about its Trustees and officers, please see "Fund
Information," on page 35.

FURTHER INFORMATION ABOUT VOTING AND THE MEETING

QUORUM AND METHODS OF TABULATION. The shareholders of each fund
vote separately with respect to each proposal. In the case of each
fund, 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

29
<Page>

(ii) the broker or nominee does not have the discretionary voting
power on a particular matter) will be counted as shares that are
present and entitled to vote on the matter for purposes of
determining the presence of a quorum. Votes cast by proxy or in
person at the meeting will be counted by persons appointed by your
fund as tellers for the meeting.

The tellers will count the total number of votes cast "for"
approval of a proposal for purposes of determining whether
sufficient affirmative votes have been cast. With respect to the
election of Trustees and, when applicable, the selection of
auditors, neither abstentions nor broker non-votes have any effect
on the outcome of the proposal. With respect to any other
proposals, abstentions and broker non-votes have the effect of a
negative vote on the proposal.

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

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

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

SOLICITATION OF PROXIES. In addition to soliciting proxies by
mail, Trustees of your fund and employees of Putnam Management,
Putnam Fiduciary Trust Company, and Putnam 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
30
<Page>
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 use
the Internet, please access the Internet address found on your
proxy card on the World Wide Web. 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 Internet access, such as usage
charges from Internet access providers and telephone companies,
that must be borne by the shareholders.

Your fund's Trustees have adopted a general policy of maintaining
confidentiality in the voting of proxies. Consistent with this
policy, your fund may solicit proxies from shareholders

31
<Page>
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 expense DF King,
77 Water Street, New York, NY 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 proxy
statements and related materials, including printing and delivery
costs, are borne by each fund.

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

32
<Page>

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 October 2002
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 July 13, 2002 and no later than
August 12, 2002.

DATE FOR RECEIPT OF SHAREHOLDERS' PROPOSALS FOR THE UPCOMING
ANNUAL MEETING ON OCTOBER 11, 2001. 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 upcoming
October 11, 2001 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 later than September 5,
2001.

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.

33
<Page>
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, and its affiliates, and its affiliate, Putnam
Fiduciary Trust Company, the fund's investor servicing agent and
custodian (collectively, the "Putnam companies"), are owned by
Putnam Investments, LLC. Putnam Investments, 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. The address of
Putnam Investments Trust, Putnam Investments, LLC and each of the
Putnam companies 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 each fund provides that the fund will indemnify its
Trustees and officers against liabilities and expenses incurred in
connection with litigation in which they may be involved because
of their offices with the fund, except if it is determined in the
manner specified in the Agreement and Declaration of Trust that
they have not acted in good faith in the reasonable belief that
their actions were in the best interests of the fund or that such
indemnification would relieve any officer or Trustee of any
liability to the fund or its shareholders arising by reason of
willful misfeasance, bad faith, gross negligence or reckless
disregard of his or her

34
<Page>
duties. Your fund, at its expense, provides liability insurance
for the benefit of its Trustees and officers.

INDEPENDENT AUDITORS. KPMG LLP, 99 High 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 Committee of the Board of Trustees
unanimously approved the selection of KPMG LLP in July 2000, and
the Trustees unanimously approved such selection in July 2000.
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.

PricewaterhouseCoopers LLP, independent accountants, has
previously served as the independent auditors of your fund. The
change in audit firms reflects the Trustees' decision to continue
their policy of having two audit firms serve the Putnam funds. In
the past, the two firms were Price Waterhouse LLP and Coopers &
Lybrand LLP. These firms merged in July, 1998.
PricewaterhouseCoopers LLP resigned as independent auditors in
July 2000. It has issued no report on the financial statements for
either of the past two fiscal years containing an adverse opinion
or a disclaimer of opinion, or that was qualified as to
uncertainty, audit scope or accounting procedure. There were no
disagreements between PricewaterhouseCoopers LLP and your fund on
any matter of accounting principles and practices, financial
statement disclosure, or auditing scope or procedure.

35
<Page>
--------------------------

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

<Table>
<Caption>
Audit Fees Financial Information
for all Systems Design and
Audit Fees Putnam Funds Implementation Fees All Other Fees

-----------------------------------------------------------------------------------------------
Conv. Opp. and Income Trust $31,000 $789,000 $ 0 $1,338,000
Managed High Yield Trust $29,000 $964,000 $ 0 $1,116,000
Master Income Trust $27,000 $626,000 $ 0 $1,339,000
Tax-Free Health Care Fund $21,000 $964,000 $ 0 $1,117,000
</Table>

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

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.

36
<Page>

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 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.

AUDIT COMMITTEE. The members of the Audit Committee of your fund
include only Trustees who are not "interested persons" of the fund
or Putnam Management. Each member of the Audit 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 Trustees
have adopted a written charter for the Audit Committee, a copy of
which is attached to this Proxy Statement as APPENDIX A. The Audit
Committee currently consists of Dr. Kennan and Messrs. Curtis and
Stephens (Chairman). As of the end of each fund's last fiscal
year, the Audit Committee consisted of Dr. Kennan, Messrs. Mullin
and Stephens and Hans H. Estin. Mr. Estin retired from the Board
of Trustees on June 30, 2001. During your fund's last fiscal year,
the Audit Committee of the Putnam Funds met 7 times.

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

37
<Page>

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 Committee has received the written disclosures and the
letter from your fund's independent accountants required by
Independence Standards Board Standard No. 1 (requiring auditors to
make written disclosures to and discuss with the Audit 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 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.

Elizabeth T. Kennan
John H. Mullin, III
W. Thomas Stephens (Chairman)

BOARD POLICY AND NOMINATING COMMITTEE. The Board Policy and
Nominating Committee consists only of Trustees who are not
"interested persons" of your fund or Putnam Management. The Board
Policy and Nominating Committee currently consists of Dr. Kennan
(Chairperson), Messrs. Hill, Patterson and Thorndike. During your
fund's last fiscal year, the Board Policy and Nominating Committee
of the Putnam Funds met 6 times.

EXECUTIVE COMMITTEE. The Executive Committee currently consists of
Ms. Baxter and Messrs. Hill (Chairman), Putnam, III, Stephens and
Thorndike. During your fund's last fiscal year, the Executive
Committee of the Putnam Funds met 3 times, except for Putnam
Master Income Trust and Putnam Investment Grade Municipal Trust,
during the last fiscal year

38
<Page>

of which the Executive Committee of the Putnam Funds met 2 times.

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, III, 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 III and Lawrence J. Lasser, the
officers of each fund are as follows:

39
<Page>
PUTNAM CONVERTIBLE OPPORTUNITIES AND INCOME TRUST

<Table>
<Caption>
Name (age) Year first Five Year
Office with elected to Business
the fund office History

-----------------------------------------------------------------------
Charles E. Porter (62) 1989 Managing Director, Putnam
EXECUTIVE VICE PRESIDENT, Investments and Putnam
TREASURER & PRINCIPAL Management
FINANCIAL OFFICER
Patricia C. Flaherty (53) 1993 Senior Vice President,
SENIOR VICE PRESIDENT Putnam Investments and
Putnam Management
Michael T. Healy (43) 2000 Managing Director, Putnam
SENIOR VICE PRESIDENT, Investor Services and
ASSISTANT TREASURER Putnam Investments
PRINCIPAL ACCOUNTING
OFFICER
Gordon H. Silver (53) 1990 Senior Managing Director,
VICE PRESIDENT Putnam Investments and
Putnam Management
Ian Ferguson (43) 1997 Senior Managing Director,
VICE PRESIDENT Putnam Investments and
Putnam Management
James A. Polk* (38) 2001 Senior Vice President,
VICE PRESIDENT Putnam Investments
Dolores S. Bamford* (36) 2000 Senior Vice President,
VICE PRESIDENT Putnam Investments
Rosemary Thomsen* (40) 2000 Senior Vice President,
VICE PRESIDENT Putnam Investments
Richard A. Monaghan** (46) 1998 Managing Director, Putnam
VICE PRESIDENT Investments, Putnam
Management and Putnam
Retail Management
John R. Verani (61) 1988 Senior Vice President,
VICE PRESIDENT Putnam Investments and
Putnam Management
Edward T. Shadek (40) 1997 Managing Director, Putnam
VICE PRESIDENT Investments and Putnam
Management
Stephen Oristaglio (45) 1998 Senior Managing Director,
VICE PRESIDENT Putnam Investments and
Putnam Management
</Table>

-----------------------------------------------------------------------------
*The fund's portfolio manager
**President of Putnam Retail Management

40
<Page>
PUTNAM MANAGED HIGH YIELD TRUST

<Table>
<Caption>
Name (age) Year first Five Year
Office with elected to Business
the fund office History

-----------------------------------------------------------------------
Charles E. Porter (62) 1989 Managing Director, Putnam
EXECUTIVE VICE PRESIDENT, Investments and Putnam
TREASURER & PRINCIPAL Management
FINANCIAL OFFICER
Patricia C. Flaherty (53) 1993 Senior Vice President,
SENIOR VICE PRESIDENT Putnam Investments and
Putnam Management
Michael T. Healy (43) 2000 Managing Director, Putnam
SENIOR VICE PRESIDENT, Investor Services and
ASSISTANT TREASURER Putnam Investments
PRINCIPAL ACCOUNTING
OFFICER
Gordon H. Silver (53) 1990 Senior Managing Director,
VICE PRESIDENT Putnam Investments and
Putnam Management
Ian Ferguson (43) 1997 Senior Managing Director,
VICE PRESIDENT Putnam Investments and
Putnam Management
Rosemary Thomsen* (40) 2000 Senior Vice President,
VICE PRESIDENT Putnam Investments
Richard A. Monaghan** (46) 1998 Managing Director, Putnam
VICE PRESIDENT Investments, Putnam
Management and Putnam
Retail Management
John R. Verani (61) 1988 Senior Vice President,
VICE PRESIDENT Putnam Investments and
Putnam Management
Stephen Oristaglio (45) 1998 Senior Managing Director,
VICE PRESIDENT Putnam Investments and
Putnam Management
Kevin Cronin (39) 2001 Managing Director, Putnam
VICE PRESIDENT Investments and Putnam
Management
Stephen Preacher (36) 2000 Managing Director, Putnam
VICE PRESIDENT Investments and Putnam
Management
</Table>

-----------------------------------------------------------------------------
*The fund's portfolio manager

**President of Putnam Retail Management

<Page>

PUTNAM MASTER INCOME TRUST

<Table>
<Caption>
Name (age) Year first Five Year
Office with elected to Business
the fund office History

-----------------------------------------------------------------------
Charles E. Porter (62) 1989 Managing Director, Putnam
EXECUTIVE VICE PRESIDENT, Investments and Putnam
TREASURER & PRINCIPAL Management
FINANCIAL OFFICER
Patricia C. Flaherty (53) 1993 Senior Vice President,
SENIOR VICE PRESIDENT Putnam Investments and
Putnam Management
Michael T. Healy (43) 2000 Managing Director, Putnam
SENIOR VICE PRESIDENT, Investor Services and
ASSISTANT TREASURER Putnam Investments
PRINCIPAL ACCOUNTING
OFFICER
Gordon H. Silver (53) 1990 Senior Managing Director,
VICE PRESIDENT Putnam Investments and
Putnam Management
Ian Ferguson (43) 1997 Senior Managing Director,
VICE PRESIDENT Putnam Investments and
Putnam Management
David Waldman* (34) 1998 Managing Director, Putnam
VICE PRESIDENT Management.
Prior to June 1997,
Mr. Waldman was a
Portfolio Manager at
Lazard Freres.
Richard A. Monaghan** (46) 1998 Managing Director, Putnam
VICE PRESIDENT Investments, Putnam
Management and Putnam
Retail Management
John R. Verani (61) 1988 Senior Vice President,
VICE PRESIDENT Putnam Investments and
Putnam Management
Stephen Oristaglio (45) 1998 Senior Managing Director,
VICE PRESIDENT Putnam Investments and
Putnam Management
Kevin Cronin (39) 2000 Managing Director, Putnam
VICE PRESIDENT Investments and Putnam
Management
</Table>

-----------------------------------------------------------------------------
*The fund's portfolio manager
**President of Putnam Retail Management

42
<Page>

PUTNAM TAX-FREE HEALTH CARE FUND

<Table>
<Caption>
Name (age) Year first Five Year
Office with elected to Business
the fund office History

-----------------------------------------------------------------------
Charles E. Porter (62) 1989 Managing Director, Putnam
EXECUTIVE VICE PRESIDENT, Investments and Putnam
TREASURER & PRINCIPAL Management
FINANCIAL OFFICER
Patricia C. Flaherty (53) 1993 Senior Vice President,
SENIOR VICE PRESIDENT Putnam Investments and
Putnam Management
Michael T. Healy (43) 2000 Managing Director, Putnam
SENIOR VICE PRESIDENT, Investor Services and
ASSISTANT TREASURER Putnam Investments
PRINCIPAL ACCOUNTING
OFFICER
Gordon H. Silver (53) 1990 Senior Managing Director,
VICE PRESIDENT Putnam Investments and
Putnam Management
Ian Ferguson (43) 1997 Senior Managing Director,
VICE PRESIDENT Putnam Investments and
Putnam Management
Blake Anderson* (44) 1998 Managing Director, Putnam
VICE PRESIDENT Investments
Richard A. Monaghan** (46) 1998 Managing Director, Putnam
VICE PRESIDENT Investments, Putnam
Management and Putnam
Retail Management
John R. Verani (61) 1988 Senior Vice President,
VICE PRESIDENT Putnam Investments and
Putnam Management
Stephen Oristaglio (45) 1998 Senior Managing Director,
VICE PRESIDENT Putnam Investments and
Putnam Management
Jerome Jacobs (42) 1996 Managing Director, Putnam
VICE PRESIDENT Investments and Putnam
Management
</Table>

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

*The fund's portfolio manager

**President of Putnam Retail Management

43
<Page>

ASSETS AND SHARES OUTSTANDING OF YOUR FUND AS OF JULY 2, 2001

<Table>

NET ASSETS:

Putnam Convertible Opportunities and
Income Trust $70,353,476.56

Putnam Managed High Yield Trust $69,472,531.92

Putnam Master Income Trust $367,623,639.27

Putnam Tax-Free Health Care Fund $186,629,595.19

SHARES OUTSTANDING AND AUTHORIZED TO
VOTE:
Putnam Convertible Opportunities and
Income Trust 3,712,567 shares

Putnam Managed High Yield Trust 7,507,107 shares

Putnam Master Income Trust 53,095,749 shares

Putnam Tax-Free Health Care Fund 13,807,168 shares

5% beneficial ownership
Putnam Convertible Opportunities and
Income Trust None

Putnam Managed High Yield Trust None

Putnam Master Income Trust None

Putnam Tax-Free Health Care Fund None
</Table>

44
<Page>
APPENDIX A

THE PUTNAM FUNDS
AUDIT COMMITTEE CHARTER

MISSION. The primary mission of the Audit Committee is to oversee
matters relating to the preparation of the Funds' financial
statements. The Committee will discharge this responsibility
through oversight of management, the Funds' independent auditors
and industry developments. The Committee and the Trustees shall
have ultimate authority and responsibility, subject to the rights
of shareholders where applicable, to select, evaluate and replace
the Funds' independent auditors.

COMPOSITION: The Committee will be comprised exclusively of
Independent Trustees. The Committee shall have at least three
members, who shall collectively satisfy the independence and
expertise requirements of each exchange on which shares of one or
more Putnam Funds are traded.

ASSISTANCE. The Committee may seek the assistance of Fund
Administration staff, the Funds' independent auditors and counsel,
management and other parties as it may deem appropriate.

ROLE OF INDEPENDENT AUDITORS. The Funds' independent auditors are
ultimately accountable to the Trustees and the Committee.

SPECIFIC DUTIES OF COMMITTEE. The duties of the Committee include:

INDEPENDENT AUDITOR MATTERS

- Recommending the selection of independent auditors and
evaluating their performance

- Recommending fees for independent auditors

- Reviewing regular reports of independent auditors

- Reviewing auditor independence

- Reviewing and approving the scope of any special projects to be
undertaken by independent auditors

A-1
<Page>
- Reviewing relationship of independent auditors with Funds and
management, including activities outside Fund audits

- Considering any weaknesses or deficiencies noted by independent
auditors

- Overseeing internal control reviews performed by independent
auditors

In performing their duties, the Committee shall be responsible for
ensuring that the independent auditors submit on a periodic basis
to the Committee a formal written statement delineating all
relationships between the independent auditors and the Funds and
that the Committee is responsible for actively engaging in a
dialogue with the independent auditors with respect to any
disclosed relationships or services that may impact the
objectivity and independence of the independent auditors and for
recommending that the Trustees take appropriate action in response
to the independent auditors' report to satisfy themselves of the
independent auditors' independence.

GENERAL MATTERS

- Reviewing scope and adequacy of audits

- Reviewing significant changes in tax and accounting policies

- Reviewing nature of accounting and tax policies

- Reviewing special matters impacting accounting issues

OTHER MATTERS

- Reviewing quality of internal accounting function

- Reviewing regular reports of internal auditors and management

- Reviewing matters relating to the Funds' Code of Ethics and
Putnam Investments' Code of Ethics

- Reassessing annually the adequacy of this Charter and recommend
any proposed changes to the full Board of Trustees

- Reviewing compliance matters

A-2
<Page>

(This page intentionally left blank)

<Page>
PUTNAMINVESTMENTS
THE PUTNAM FUNDS
ONE POST OFFICE SQUARE
BOSTON, MASSACHUSETTS 02109
TOLL-FREE 1-800-225-1581

72582 7/01

<Page>

IMPORTANT INFORMATION
FOR SHAREHOLDERS IN:
PUTNAM CALIFORNIA INVESTMENT GRADE MUNICIPAL TRUST
PUTNAM HIGH YIELD MUNICIPAL TRUST
PUTNAM INVESTMENT GRADE MUNICIPAL TRUST
PUTNAM MANAGED MUNICIPAL INCOME TRUST
PUTNAM MUNICIPAL BOND FUND
PUTNAM MUNICIPAL OPPORTUNITIES TRUST
PUTNAM NEW YORK INVESTMENT GRADE MUNICIPAL TRUST

WE WANT TO KNOW HOW YOU WOULD LIKE TO VOTE AND WELCOME YOUR COMMENTS.
PLEASE TAKE A FEW MOMENTS WITH THESE MATERIALS AND RETURN YOUR PROXY TO
US.

[LOGO]
<Page>
TABLE OF CONTENTS

<Table>

A Message from the Chairman 1
Notice of Shareholder Meeting 2
Trustees' Recommendations 4
</Table>

PROXY CARD ENCLOSED

If you have any questions, please contact us at (1-800-225-1581) or call
your financial advisor.
- ----------------------------------------------
<Page>
A MESSAGE FROM THE CHAIRMAN

[photo of John A. Hill]

Dear Shareholder:

Sincerely yours,

/s/ John A. Hill
----------------------
John A. Hill, Chairman

1
<Page>

PUTNAM CALIFORNIA INVESTMENT GRADE
MUNICIPAL TRUST
PUTNAM HIGH YIELD MUNICIPAL TRUST
PUTNAM INVESTMENT GRADE MUNICIPAL TRUST
PUTNAM MANAGED MUNICIPAL INCOME TRUST
PUTNAM MUNICIPAL BOND FUND
PUTNAM MUNICIPAL OPPORTUNITIES TRUST
PUTNAM NEW YORK INVESTMENT GRADE
MUNICIPAL TRUST
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 California Investment Grade Municipal Trust
Putnam High Yield Municipal Trust
Putnam Investment Grade Municipal Trust
Putnam Managed Municipal Income Trust
Putnam Municipal Bond Fund
Putnam Municipal Opportunities Trust
Putnam New York Investment Grade Municipal Trust

The Annual Meeting of Shareholders of your fund will be held on
October 11, 2001 at 11:00 a.m., Boston time, on the eighth floor
of One Post Office Square, Boston, Massachusetts, to consider the
following:

1. FIXING THE NUMBER OF TRUSTEES AND ELECTING TRUSTEES.

By the Trustees
John A. Hill, Chairman
George Putnam, III, President

2
<Page>
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.
August 13, 2001

3
<Page>
PROXY STATEMENT

- WHO IS ASKING FOR YOUR VOTE?

THE ENCLOSED PROXY IS SOLICITED BY THE TRUSTEES OF PUTNAM
CALIFORNIA INVESTMENT GRADE MUNICIPAL TRUST, PUTNAM HIGH YIELD
MUNICIPAL TRUST, PUTNAM INVESTMENT GRADE MUNICIPAL TRUST, PUTNAM
MANAGED MUNICIPAL INCOME TRUST, PUTNAM MUNICIPAL BOND FUND, PUTNAM
MUNICIPAL OPPORTUNITIES TRUST, AND PUTNAM NEW YORK INVESTMENT
GRADE MUNICIPAL TRUST, for use at the Annual Meeting of
Shareholders of each fund to be held on October 11, 2001, and, if
your fund's meeting is adjourned, at any later meetings, for the
purposes stated in the Notice of Annual Meeting (see previous
page). The Notice of Meeting, the proxy and the Proxy Statement
are being mailed on or about August 15, 2001.

- HOW DO YOUR FUND'S TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE ON THIS
PROPOSAL?

The Trustees recommend that you vote

1. FOR FIXING THE NUMBER OF TRUSTEES AS PROPOSED AND THE ELECTION OF
ALL NOMINEES.

4
<Page>
- WHO IS ELIGIBLE TO VOTE?

Shareholders of record at the close of business on July 20, 2001
are entitled to be present and to vote at the meeting or any
adjourned meeting.

Each share is entitled to one vote. Unless otherwise noted, the
holders of your fund's preferred shares and holders of your fund's
common shares will vote together as a single class. 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.

Shareholders of each fund vote separately with respect to each
proposal. The outcome of a vote affecting one fund does not affect
any other fund.

5
<Page>
THE PROPOSALS

I. ELECTION OF TRUSTEES

- WHO ARE THE NOMINEES FOR TRUSTEES?

Pursuant to the bylaws of your fund and the Investment Company Act
of 1940, holders of the preferred shares of your fund, voting as a
class, are entitled to elect two nominees for Trustees. The
holders of the preferred shares and the common shares of your
fund, voting together as a single class, are entitled to vote for
the remaining 11 of the 13 nominees. Therefore, Messrs. Hill and
Patterson have been nominated as Trustees to be elected by the
holders of the preferred shares, while the other eleven Trustees
have been nominated to be elected by the holders of the preferred
shares and common shares voting together as a single class.

- JAMESON ADKINS BAXTER

[photo of Jameson Adkins Baxter]
Ms. Baxter, born September 6, 1943, is the President of Baxter
Associates, Inc., a management consulting and private investment
firm that she founded in 1986. During that time,
she was also a Vice President and Principal of the Regency
Group, Inc. and a Consultant to First Boston Corporation, both of
which are investment banking firms. From 1965 to 1986, Ms. Baxter
held various positions in investment banking and corporate finance
at First Boston.

6
<Page>
Ms. Baxter currently also serves as a Director of Banta
Corporation, Ryerson Tull and ASHTA Chemicals, Inc. She is also
the Chairman Emeritus of the Board of Trustees of Mount Holyoke
College, having previously served as Chairman for five years and
as a Board member for thirteen years; an Honorary Trustee and past
President of the Board of Trustees of the Emma Willard School;
Member of the Board of Governors of Good Shepherd Hospital; and
Chair of the National Center for Non-profit Boards. Ms. Baxter is
a graduate of Mount Holyoke College.

- CHARLES B. CURTIS

[photo of Charles B. Curtis]

Mr. Curtis, born April 27, 1940, is the President of NTI, a
private foundation dedicated to reducing the threat from weapons
of mass destruction. Mr. Curtis also serves as Senior

Advisor to the United Nations Foundation.

Mr. Curtis has over 15 years of law practice experience and
18 years in government service. He served as Under Secretary, and
later, Deputy Secretary of Energy from February 1994 to May 1997.
Mr. Curtis has held positions on the staff of the U.S. Treasury,
the Securities and Exchange Commission, the U.S. House of
Representatives, and the Federal Energy Regulatory Commission,
which he chaired from 1977 to 1981. He is a current member of the
Department of Defense's Policy Board, the Council on Foreign
Relations, the Electric Power Research Institute Advisory Council,
the Gas Technology Institute Board of Directors, the University of
Chicago Board of Governors for Argonne National Laboratory, the
EG&G Technology Services, Inc. Board of Directors, and the
Environment and Natural Resources Program Steering Committee, John
F. Kennedy School of Government, Harvard University.

7
<Page>

Mr. Curtis has B.S. and B.A. degrees from the University of
Massachusetts - Amherst and a J.D. from the Boston University Law
School.

- JOHN A. HILL

[photo of John A. Hill]

Mr. Hill, born January 31, 1942, is Chairman of the Trustees. He
is the Vice-Chairman and Managing Director of First Reserve
Corporation, an investment advisor investing in com

panies in the world-wide energy industry on behalf of
institutional investors.

- RONALD J. JACKSON

[photo of Ronald J. Jackson]

Mr. Jackson, born December 17, 1943, retired as Chairman of the
Board, President and Chief Executive Officer of Fisher-
Price, Inc., a major toy manufacturer, in 1993, a position

which he held since 1990. He previously served as President and
Chief Executive Officer of Stride-Rite, Inc., a manufacturer and
distributor of footwear, from 1989 to 1990, and as President and
Chief Executive Officer of Kenner Parker Toys, Inc., a major toy
and game manufacturer, from 1985 to 1987. Prior to that, he held
various financial and marketing positions at General Mills, Inc.
from 1966 to 1985, including Vice President, Controller and Vice
President of Marketing for

8
<Page>
Parker Brothers, a toy and game company, and President of Talbots,
a retailer and direct marketer of women's apparel. Mr. Jackson is
a graduate of Michigan State University Business School.

- PAUL L. JOSKOW

[photo of Paul L. Joskow]

Dr. Joskow, born June 30, 1947, is Elizabeth and James Killian
Professor of Economics and Director of the Center for Energy and
Environmental Policy Research at the Massachu

setts Institute of Technology. He has published five books and
numerous articles on topics in industrial organization, government
regulation of industry, and competition policy. Dr. Joskow
currently serves as a Director of the National Grid Group, a UK
based holding company with interests in electric power and
telecommunications networks, State Farm Indemnity Company, an
automobile insurance company, and the Whitehead Institute for
Biomedical Research, a non-profit research institution. He has
been President of the Yale University Council since 1993.

9
<Page>
Dr. Joskow is active on industry restructuring, environmental,
energy, competition, and privatization policies and has served as
an advisor to governments and corporations around the world.

Dr. Joskow is a graduate of Cornell University and Yale
University. He is a Fellow of the Econometric Society and the
American Academy of Arts and Sciences.

- ELIZABETH T. KENNAN

[photo of Elizabeth T. Kennan]

Dr. Kennan, born February 25, 1938, is President Emeritus of Mount
Holyoke College. From 1978 through June 1995, she was President of
Mount Holyoke College. From 1966 to 1978,

she was on the faculty of Catholic University, where she taught
history, published numerous articles, and directed the
post-doctoral programs in Patristic and Medieval Studies.

- LAWRENCE J. LASSER*

Mr. Lasser, born November 1, 1942, is a Vice President of your
fund and each of the other Putnam funds. He has been the
President, Chief Executive Officer and a Director of Putnam
Investments, LLC and Putnam Management since 1985, having begun
his career there in 1969.

10
<Page>
Mr. Lasser currently also serves as a Director of Marsh & McLennan
Companies, Inc., the parent company of Putnam Management. He is a
Member of the Board of Directors of the United Way of
Massachusetts Bay, a Member of the Board of Governors of the
Investment Company Institute, a Trustee of the Museum of Fine
Arts, Boston, a Trustee and Member of the Finance and Executive
Committees of the Beth Israel Deaconess Medical Center, Boston and
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.

[photo of Lawrence J. Lassser]

[photo of John H. Mullin, III]
- JOHN H. MULLIN, III

Mr. Mullin, born June 15, 1941, is Chairman and CEO of Ridgeway
Farm, a limited liability company engaged in timber

activities and farming. Prior to establishing Ridgeway Farm in
1989, Mr. Mullin was a Managing Director of Dillon, Read & Co.
Inc., an investment banking firm.

Mr. Mullin currently serves as a Director of Graphic Packaging
International Corp., a company engaged in the manufacture of
packaging products, Alex. Brown Realty, Inc., a real estate
investment company, Progress Energy, Inc., a public utility
company, and The Liberty Corporation, a company engaged in the
broadcasting industry. Mr. Mullin previously served as a Director
of Dillon, Read & Co. Inc., Adolph Coors Company, Crystal
Brands, Inc., Fisher-Price, Inc., Mattel, Inc. and The Ryland
Group, Inc. Mr. Mullin is a Trustee Emeritus of Washington & Lee
University where he served as Chairman of the Investment
Committee. Mr. Mullin is a graduate of Washington & Lee University
and The Wharton Graduate School at the University of Pennsylvania.

11
<Page>
- ROBERT E. PATTERSON

[photo of Robert E. Patterson]

Mr. Patterson, born March 15, 1945, is the President and a Trustee
of Cabot Industrial Trust, a publicly traded real estate
investment trust. Prior to February, 1998 he was Executive

Vice President and Director of Acquisitions of Cabot Partners
Limited Partnership, a registered investment advisor which managed
real estate investments for institutional investors. Prior to
1990, he was the Executive Vice President of Cabot, Cabot & Forbes
Realty Advisors, Inc., the predecessor company of Cabot Partners.
Prior to that, he was a Senior Vice President of the Beal
Companies, a real estate management, investment and development
company. He has also worked as an attorney and held various
positions in state government, including the founding Executive
Director of the Massachusetts Industrial Finance Agency.

- GEORGE PUTNAM, III*

[photo of George Putnam, III]

Mr. Putnam, born August 10, 1951, is the President of your Fund
and each of the other Putnam Funds. He is also President of New
Generation Research, Inc., a publisher of finan

cial advisory and other research services relating to bankrupt and
distressed companies, and New Generation Advisers, Inc., a
registered investment advisor which provides advice to private
funds specializing in investments in such companies. Prior to
founding New Generation in 1985, Mr. Putnam was an attorney with
the Philadelphia law firm Dechert Price & Rhoads.

Mr. Putnam currently also serves as a Director of The Boston
Family Office, L.L.C., a registered investment advisor that
provides financial advice to individuals and families. He is

12
<Page>
also a Trustee of the SEA Education Association and St. Mark's
School. Mr. Putnam is a graduate of Harvard College, Harvard
Business School and Harvard Law School.

- A.J.C. SMITH*

[photo of A.J.C. Smith]

Mr. Smith, born April 13, 1934, is a Director of Marsh & McLennan
Companies, Inc. From May 1992 to November 1999, he served as the
company's Chairman and Chief

Executive Officer and from November 1999 to May 2000, he served as
Chairman. He has been employed by Marsh & McLennan and related
companies in various capacities since 1961. Mr. Smith is a
Director of the Trident Corp.; a Trustee of the Carnegie Hall
Society, the Central Park Conservancy, the Educational
Broadcasting Corporation, the Economic Club of New York, and the
U.S. Chamber of Commerce; a Member of the Board of Overseers of
the Joan and Sanford I. Weill Graduate School of Medical Sciences
of Cornell University; and a Founder of the Museum of Scotland
Society. He was educated in Scotland and is a Fellow of the
Faculty of Actuaries in Edinburgh, a Fellow of the Canadian
Institute of Actuaries, a Fellow of the Conference of Actuaries,
an Associate of the Society of Actuaries, a Member of the American
Academy of Actuaries, the International Actuarial Association and
the International Association of Consulting Actuaries.

- W. THOMAS STEPHENS

[photo of W. Thomas Stephens]

Mr. Stephens, born September 2, 1942, was, until 1999, the
President and Chief Executive Officer of MacMillan Bloedel
Limited, a forest products and building materials company. In

1996, Mr. Stephens retired as Chairman of the Board of Directors,
President and Chief Executive Officer of Johns Manville
Corporation.

Mr. Stephens serves as a Director for Mail-Well, a printing and
envelope company, Qwest Communications, a

13
<Page>
communications company, Xcel Energy Incorporated, a public utility
company, TransCanada Pipelines, and Norske Skog Canada, Inc., a
paper manufacturer. Mr. Stephens has B.S. and M.S. degrees from
the University of Arkansas.

- W. NICHOLAS THORNDIKE

[photo of W. Nicholas Thorndike]

Mr. Thorndike, born March 28, 1933, serves as a Director of
various corporations and charitable organizations, including,
Providence Journal Co., a newspaper publisher, and Courier

Corporation, a book binding and printing company. He is also a
Trustee of Cabot Industrial Trust and Northeastern University, a
member of the Advisory Board of National Grid USA, an electric
company, and an Honorary Trustee of Massachusetts General
Hospital, where he previously served as chairman and president.
Prior to December 1988, Mr. Thorndike was the 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. He
also previously served as a Trustee of the Wellington Group of
Funds (now The Vanguard Group) and was the Chairman and a Director
of Ivest Fund, Inc. Mr. Thorndike is a graduate of Harvard
College.

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

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

All the nominees were elected by the shareholders in October 2000,
other than Mr. Curtis, who was elected by the Board of Trustees
effective July 1, 2001. The 11 nominees for election as Trustees
by the holders of common and preferred shares, voting as a single
class, at the shareholder meeting of your fund who receive the
greatest number of votes from the preferred and common
shareholders will be elected as Trustees of your fund. In
addition, the 2 nominees for election as Trustees by the preferred
shareholders, voting as a single class, at the shareholder meeting
of your fund who receive the greatest number of votes from the
preferred shareholders 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.

The address for each of the current Trustees and each of the
nominees is One Post Office Square, Boston, Massachusetts 02109.

- WHAT ARE THE TRUSTEES' RESPONSIBILITIES?

15
<Page>

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.

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.

16
<Page>
- 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. This table shows the value of
their holdings in the Putnam funds.

<Table>

Each Trustee over $100,000
Trustees as a group over $31,000,000
</Table>

The Trustees allocate their investments among the approximately
124 Putnam funds based on their own investment needs. The table
below shows each Trustee's current investment in each fund.

17
<Page>

<Table>
<Caption>
Putnam Putnam
Putnam California Putnam New York
High Investment Putnam Municipal Investment
Year first Yield Grade Municipal Opportu- Grade
elected as Municipal Municipal Bond nities Municipal
Trustee of Trust Trust Fund Trust Trust
the Putnam (# of (# of (# of (# of (# of
Trustees funds shares)(1) shares)(1) shares)(1) shares)(1) shares)(1)

- -------------------------------------------------------------------------------------------------------------------------
Jameson A. Baxter 1994 129 126 2,878 128 125
Charles B. Curtis 2001 100 100 100 100 100
John A. Hill 1985 100 100 200 100 100
Ronald J. Jackson 1996 200 200 400 200 200
Paul L. Joskow 1997 100 100 200 100 100
Elizabeth T. Kennan 1992 162 165 311 172 157
Lawrence J. Lasser 1992 100 100 200 100 100
John H. Mullin, III 1997 100 100 200 100 100
Robert E. Patterson 1984 6,800 100 300 100 100
George Putnam, III 1984 300 500 1,000 500 500
A.J.C. Smith 1986 200 200 400 200 200
W. Thomas Stephens 1997 100 100 200 100 100
W. Nicholas Thorndike 1992 198 163 316 171 162

Putnam Putnam
Managed Investment
Municipal Grade
Income Municipal
Trust Trust
(# of (# of
Trustees shares)(1) shares)(1)

Jameson A. Baxter 129 129
Charles B. Curtis 100 100
John A. Hill 100 100
Ronald J. Jackson 200 200
Paul L. Joskow 100 100
Elizabeth T. Kennan 165 164
Lawrence J. Lasser 100 100
John H. Mullin, III 100 100
Robert E. Patterson 300 300
George Putnam, III 300 300
A.J.C. Smith 200 200
W. Thomas Stephens 100 100
W. Nicholas Thorndike 203 201
</Table>

- --------------------------------------------------------------------------------
(1) Except as otherwise noted, each trustee has sole voting power and sole
investment power with respect to his or her shares of your fund.

(2) Includes shares over which the Trustee has shared investment and shared
voting power.

The Trustees ownership is based on beneficial ownership as of July 23, 2001.
The value of shares owned by the Trustees has been determined as of
June 30, 2001. None of the Trustees owns any of your fund's preferred
shares.

As of July 23, 2001, the Trustees and officers of Putnam California
Investment Grade Municipal Trust, Putnam High Yield Municipal Trust, Putnam
Investment Grade Municipal Trust, Putnam Managed Municipal Income Trust,
Putnam Municipal Bond Fund, Putnam Municipal Opportunities Trust and Putnam
New York Investment Grade Municipal Trust owned a total of 2,054, 8,589,
2,094, 2,097, 6,705, 2,071 and 2,044 shares respectively, comprising less
than 1% of the outstanding shares of such fund on that date.

18
<Page>
- WHAT ARE SOME OF THE WAYS IN WHICH THE TRUSTEES REPRESENT SHAREHOLDER
INTERESTS?

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

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

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

- by reviewing 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

19
<Page>

meetings of various committees of the board which focus on
particular matters. These currently include: the Contract
Committee, which reviews all the contractual arrangements with
Putnam Management and its affiliates; the Communication, Service
and Marketing Committee, which reviews the quality of services
provided by your fund's investor servicing agent and custodian;
the Brokerage and Custody Committee, which reviews matters
relating to custody of securities, best execution, brokerage costs
and allocations and new investment techniques; the Audit
Committee, which reviews procedures for the valuation of
securities, the fund's accounting policies and the adequacy of
internal controls and supervises the engagement of the fund's
auditors; the Executive Committee, which establishes annual and
ongoing goals, objectives and priorities for the Trustees and
reviews the compensation of the Trustees and their administrative
staff; the Board Policy and Nominating Committee, which reviews
the conduct of the fund's legal affairs, evaluates and recommends
candidates for election as Trustees and recommends the appointment
of members and chairs each board committee; the Distributions and
Closed-End Funds Committee, which is responsible for reviewing
special issues applicable to closed-end funds; and the Pricing
Committee, which reviews procedures for the valuation of
securities.

20
<Page>
- WHAT ARE THE TRUSTEES PAID FOR THEIR SERVICES?

21
<Page>

PUTNAM CALIFORNIA INVESTMENT GRADE MUNICIPAL TRUST
COMPENSATION TABLE

-----------------------------------------------------------------------------------------
Jameson A. Baxter/1994 $475 $114 $100,000
Charles B. Curtis(9) -- -- 100,000
Hans H. Estin/1972(10) 476 244 100,000
John A. Hill/1985(5)(8) 487 154 200,000
Ronald J. Jackson/1996 475 145 100,000
Paul L. Joskow/1997 475 78 100,000
Elizabeth T. Kennan/1992 473 168 100,000
Lawrence J. Lasser/1992(7) 258 108 92,500
John H. Mullin, III/1997 472 117 100,000
Robert E. Patterson/1984 475 85 100,000
William F. Pounds/1971(5)(6) 262 192 111,000
George Putnam/1957(6) 258 159 92,834
George Putnam, III/1984(8) 480 67 150,000
A.J.C. Smith/1986(7) 255 176 91,833
W. Thomas Stephens/1997 471 109 100,000
W. Nicholas Thorndike/1992 467 235 100,000

Total
compensation
from all
Trustees/Year Putnam funds(3)

-----------------------------------------------------
Jameson A. Baxter/1994 $200,000(4)
Charles B. Curtis(9) --
Hans H. Estin/1972(10) 200,500
John A. Hill/1985(5)(8) 269,000(4)
Ronald J. Jackson/1996 200,000(4)
Paul L. Joskow/1997 200,000(4)
Elizabeth T. Kennan/1992 199,500
Lawrence J. Lasser/1992(7) 107,000
John H. Mullin, III/1997 199,000(4)
Robert E. Patterson/1984 200,000
William F. Pounds/1971(5)(6) 127,000
George Putnam/1957(6) 107,000
George Putnam, III/1984(8) 225,000
A.J.C. Smith/1986(7) 106,000
W. Thomas Stephens/1997 198,500(4)
W. Nicholas Thorndike/1992 197,000
</Table>

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

(1) Includes an annual retainer and an attendance fee for each
meeting attended.

(3) As of December 31, 2000, there were 124 funds in the Putnam
family.

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

(5) Includes additional compensation for services through
June 30, 2000.

(6) Reflects retirement from the Board of Trustees of the Putnam
funds on June 30, 2000.

22
<Page>

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

(9) Mr. Curtis was elected by the Board of Trustees of the Putnam
funds as Trustee effective July 1, 2001.

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

23
<Page>

PUTNAM HIGH YIELD MUNICIPAL TRUST
COMPENSATION TABLE

-----------------------------------------------------------------------------------------
Jameson A. Baxter/1994 $662 $160 $100,000
Charles B. Curtis(9) -- -- 100,000
Hans H. Estin/1972(10) 664 345 100,000
John A. Hill/1985(5)(8) 701 207 200,000
Ronald J. Jackson/1996 662 209 100,000
Paul L. Joskow/1997 662 106 100,000
Elizabeth T. Kennan/1992 661 235 100,000
Lawrence J. Lasser/1992(7) 363 158 92,500
John H. Mullin, III/1997 659 159 100,000
Robert E. Patterson/1984 662 120 100,000
William F. Pounds/1971(5)(6) 375 304 111,000
George Putnam/1957(6) 363 252 92,834
George Putnam, III/1984(8) 678 92 150,000
A.J.C. Smith/1986(7) 360 250 91,833
W. Thomas Stephens/1997 658 149 100,000
W. Nicholas Thorndike/1992 653 330 100,000

Total
compensation
from all
Trustees/Year Putnam funds(3)

-----------------------------------------------------------------------------------
Jameson A. Baxter/1994 $200,000(4)
Charles B. Curtis(9) --
Hans H. Estin/1972(10) 200,500
John A. Hill/1985(5)(8) 269,000(4)
Ronald J. Jackson/1996 200,000(4)
Paul L. Joskow/1997 200,000(4)
Elizabeth T. Kennan/1992 199,500
Lawrence J. Lasser/1992(7) 107,000
John H. Mullin, III/1997 199,000(4)
Robert E. Patterson/1984 200,000
William F. Pounds/1971(5)(6) 127,000
George Putnam/1957(6) 107,000
George Putnam, III/1984(8) 225,000
A.J.C. Smith/1986(7) 106,000
W. Thomas Stephens/1997 198,500(4)
W. Nicholas Thorndike/1992 197,000
</Table>

-----------------------------------------------------------------------------
(1) Includes an annual retainer and an attendance fee for each
meeting attended.

(3) As of December 31, 2000, there were 124 funds in the Putnam
family.

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

(5) Includes additional compensation for services through
June 30, 2000.

(6) Reflects retirement from the Board of Trustees of the Putnam
funds on June 30, 2000.

24
<Page>
(7) 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.

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

(9) Mr. Curtis was elected by the Board of Trustees of the Putnam
funds as Trustee effective July 1, 2001.

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

25
<Page>

PUTNAM INVESTMENT GRADE MUNICIPAL TRUST
COMPENSATION TABLE

-----------------------------------------------------------------------------------------
Jameson A. Baxter/1994 $666 $154 $100,000
Charles B. Curtis(9) -- -- 100,000
Hans H. Estin/1972(10) 668 343 100,000
John A. Hill/1985(5)(8) 715 174 200,000
Ronald J. Jackson/1996 666 219 100,000
Paul L. Joskow/1997 666 90 100,000
Elizabeth T. Kennan/1992 665 228 100,000
Lawrence J. Lasser/1992(7) 363 174 92,500
John H. Mullin, III/1997 663 135 100,000
Robert E. Patterson/1984 666 118 100,000
William F. Pounds/1971(5)(6) 378 399 111,000
George Putnam/1957(6) 363 333 92,834
George Putnam, III/1984(8) 685 80 150,000
A.J.C. Smith/1986(7) 360 252 91,833
W. Thomas Stephens/1997 661 127 100,000
W. Nicholas Thorndike/1992 656 320 100,000

Total
compensation
from all
Trustees/Year Putnam funds(3)

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

(1) Includes an annual retainer and an attendance fee for each
meeting attended.

(3) As of December 31, 2000, there were 124 funds in the Putnam
family.

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

(5) Includes additional compensation for services through
June 30, 2000.

(6) Reflects retirement from the Board of Trustees of the Putnam
funds on June 30, 2000.

26
<Page>

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

(9) Mr. Curtis was elected by the Board of Trustees of the Putnam
funds as Trustee effective July 1, 2001.

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

27
<Page>

PUTNAM MANAGED MUNICIPAL INCOME TRUST
COMPENSATION TABLE

-----------------------------------------------------------------------------------------
Jameson A. Baxter/1994 $703 $164 $100,000
Charles B. Curtis(9) -- -- 100,000
Hans H. Estin/1972(10) 704 368 100,000
John A. Hill/1985(5)(8) 791 187 200,000
Ronald J. Jackson/1996 703 229 100,000
Paul L. Joskow/1997 703 93 100,000
Elizabeth T. Kennan/1992 701 243 100,000
Lawrence J. Lasser/1992(7) 386 186 92,500
John H. Mullin, III/1997 699 139 100,000
Robert E. Patterson/1984 703 126 100,000
William F. Pounds/1971(5)(6) 413 426 111,000
George Putnam/1957(6) 386 359 92,834
George Putnam, III/1984(8) 736 86 150,000
A.J.C. Smith/1986(7) 383 269 91,833
W. Thomas Stephens/1997 697 130 100,000
W. Nicholas Thorndike/1992 692 341 100,000

Total
compensation
from all
Trustees/Year Putnam funds(3)

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

(1) Includes an annual retainer and an attendance fee for each
meeting attended.

(3) As of December 31, 2000, there were 124 funds in the Putnam
family.

(4) Includes compensation deferred pursuant to a Trustee
Compensation Deferral Plan. The total amounts of deferred
compensation payable by the fund to Mr. Hill, Mr. Jackson,
Mr. Joskow, Mr. Mullin, and Mr. Stephens as of April 30, 2001
were $9,533, $5,244, $814, $2,542 and $1,910, respectively,
including income earned on such amounts.

(5) Includes additional compensation for services through
June 30, 2000.

28
<Page>

(6) Reflects retirement from the Board of Trustees of the Putnam
funds on June 30, 2000.

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

(9) Mr. Curtis was elected by the Board of Trustees of the Putnam
funds as Trustee effective July 1, 2001.

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

29
<Page>

PUTNAM MUNICIPAL BOND FUND
COMPENSATION TABLE

-------------------------------------------------------------------------------------------------
Jameson A. Baxter/1994 $1,137 $310 $100,000
Charles B. Curtis(9) -- -- 100,000
Hans H. Estin/1972(10) 1,139 648 100,000
John A. Hill/1985(5)(8) 1,181 471 200,000
Ronald J. Jackson/1996 1,137 353 100,000
Paul L. Joskow/1997 1,137 231 100,000
Elizabeth T. Kennan/1992 1,133 455 100,000
Lawrence J. Lasser/1992(7) 624 171 92,500
John H. Mullin, III/1997(5) 1,130 347 100,000
Robert E. Patterson/1984 1,137 228 100,000
William F. Pounds/1971(5)(6) 638 313 111,000
George Putnam/1957(6) 624 260 92,834
George Putnam, III/1984(8) 1,155 201 150,000
A.J.C. Smith/1986(7) 617 274 91,833
W. Thomas Stephens/1997 1,126 324 100,000
W. Nicholas Thorndike/1992 1,118 639 100,000

Total
compensation
from all
Trustees/Year Putnam funds(3)

-------------------------------------------------------------------------------------------------
Jameson A. Baxter/1994 $200,000(4)
Charles B. Curtis(9) --
Hans H. Estin/1972(10) 200,500
John A. Hill/1985(5)(8) 269,000(4)
Ronald J. Jackson/1996 200,000(4)
Paul L. Joskow/1997 200,000(4)
Elizabeth T. Kennan/1992 199,500
Lawrence J. Lasser/1992(7) 107,000
John H. Mullin, III/1997(5) 199,000(4)
Robert E. Patterson/1984 200,000
William F. Pounds/1971(5)(6) 127,000
George Putnam/1957(6) 107,000
George Putnam, III/1984(8) 225,000
A.J.C. Smith/1986(7) 106,000
W. Thomas Stephens/1997 198,500(4)
W. Nicholas Thorndike/1992 197,000
</Table>

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

(1) Includes an annual retainer and an attendance fee for each
meeting attended.

(3) As of December 31, 2000, there were 124 funds in the Putnam
family.

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

(5) Includes additional compensation for services through
June 30, 2000.

(6) Reflects retirement from the Board of Trustees of the Putnam
funds on June 30, 2000.

30
<Page>

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

(9) Mr. Curtis was elected by the Board of Trustees of the Putnam
funds as Trustee effective July 1, 2001.

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

(11) Represents amounts paid or accrued by Putnam Investment Grade
Municipal Trust II during its fiscal year ended April 30,
2001, plus amounts paid or accrued by Putnam Investment Grade
Municipal Trust III during the same period. Effective
July 23, 2001, those two funds were combined, with the
surviving fund being renamed Putnam Municipal Bond Fund.

31
<Page>

PUTNAM MUNICIPAL OPPORTUNITIES TRUST
COMPENSATION TABLE

-----------------------------------------------------------------------------------------
Jameson A. Baxter/1994 $662 $161 $100,000
Charles B. Curtis(9) -- -- 100,000
Hans H. Estin/1972(10) 664 344 100,000
John A. Hill/1985(5)(8) 707 217 200,000
Ronald J. Jackson/1996 662 204 100,000
Paul L. Joskow/1997 662 110 100,000
Elizabeth T. Kennan/1992 661 237 100,000
Lawrence J. Lasser/1992(7) 363 153 92,500
John H. Mullin, III/1997 659 165 100,000
Robert E. Patterson/1984 662 120 100,000
William F. Pounds/1971(5)(6) 377 271 111,000
George Putnam/1957(6) 363 224 92,834
George Putnam, III/1984(8) 680 95 150,000
A.J.C. Smith/1986(7) 360 248 91,833
W. Thomas Stephens/1997 658 154 100,000
W. Nicholas Thorndike/1992 653 332 100,000

Total
compensation
from all
Trustees/Year Putnam funds(3)

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

(1) Includes an annual retainer and an attendance fee for each
meeting attended.

(3) As of December 31, 2000, there were 124 funds in the Putnam
family.

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

(5) Includes additional compensation for services through
June 30, 2000.

(6) Reflects retirement from the Board of Trustees of the Putnam
funds on June 30, 2000.

32
<Page>

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

(9) Mr. Curtis was elected by the Board of Trustees of the Putnam
funds as Trustee effective July 1, 2001.

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

33
<Page>

PUTNAM NEW YORK INVESTMENT GRADE MUNICIPAL TRUST
COMPENSATION TABLE

-----------------------------------------------------------------------------------------
Jameson A. Baxter/1994 $467 $112 $100,000
Charles B. Curtis(9) -- -- 100,000
Hans H. Estin/1972(10) 468 240 100,000
John A. Hill/1985(5)(8) 473 151 200,000
Ronald J. Jackson/1996 467 142 100,000
Paul L. Joskow/1997 467 76 100,000
Elizabeth T. Kennan/1992 465 165 100,000
Lawrence J. Lasser/1992(7) 254 107 92,500
John H. Mullin, III/1997 464 115 100,000
Robert E. Patterson/1984 467 83 100,000
William F. Pounds/1971(5)(6) 256 189 111,000
George Putnam/1957(6) 254 157 92,834
George Putnam, III/1984(8) 470 66 150,000
A.J.C. Smith/1986(7) 251 173 91,833
W. Thomas Stephens/1997 463 107 100,000
W. Nicholas Thorndike/1992 460 231 100,000

Total
compensation
from all
Trustees/Year Putnam funds(3)

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

(1) Includes an annual retainer and an attendance fee for each
meeting attended.

(3) As of December 31, 2000, there were 124 funds in the Putnam
family.

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

(5) Includes additional compensation for services through
June 30, 2000.

(6) Reflects retirement from the Board of Trustees of the Putnam
funds on June 30, 2000.

34
<Page>

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

(9) Mr. Curtis was elected by the Board of Trustees of the Putnam
funds as Trustee effective July 1, 2001.

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

35
<Page>
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 by the funds 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 compensated by the funds. A death benefit is also
available under the Plan which 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.

For additional information about your fund, including further
information about its Trustees and officers, please see "Fund
Information," on page 41.

FURTHER INFORMATION ABOUT VOTING AND THE MEETING

QUORUM AND METHODS OF TABULATION. The shareholders of each fund
vote separately with respect to each proposal. In the case of each
fund, 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), except that where the
preferred shares or common shares shall vote as a separate class,
then a majority of the aggregate number of shares of that class
shall be necessary to constitute a quorum for the transaction of
business by that

36
<Page>

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

SPECIAL RULE FOR PROPORTIONAL VOTING. In accordance with New York
Stock Exchange rules, brokerage firms may vote for or against a
proposal, on behalf of their clients who beneficially own
remarketed preferred shares and from whom they have not received
voting instructions, in the same proportion as votes for and
against such proposal have been received from holders of preferred
shares if (i) the holders of a minimum of 30% of the outstanding
preferred shares have been voted by the holders of preferred
shares, (ii) holders of less than 10% of the outstanding preferred
shares have voted against such proposal and (iii) the holders of
the common shares have approved such proposal.

The tellers will count the total number of votes cast "for"
approval of the proposals for purposes of determining whether
sufficient affirmative votes have been cast. With respect to the
election of Trustees and selection of auditors, neither
abstentions nor broker non-votes have any effect on the outcome of
the proposal. With respect to any other proposals,

37
<Page>

abstentions and broker non-votes have the effect of a negative
vote on the proposal.

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

38
<Page>
an opportunity to authorize proxies to vote their shares at the
meeting in accordance with their instructions. To ensure that the
shareholders' instructions have been recorded correctly, they will
also receive a confirmation of their instructions in the mail. A
special toll-free number will be available in case the information
contained in the confirmation is incorrect.

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

Persons holding shares as nominees will upon request be reimbursed
for their reasonable expenses in soliciting instructions from
their principals. Each fund has retained at its expense DF King,
77 Water Street, New York, NY. 10005, to aid in the solicitation
of instructions for registered and nominee accounts, for a fee not
to exceed $4,000 plus reasonable out-of-pocket expenses for
mailing and phone costs. The expenses of the preparation of proxy
statements and related

39
<Page>

materials, including printing and delivery costs, are borne by
each fund.

DATE FOR RECEIPT OF SHAREHOLDERS' PROPOSALS FOR THE NEXT ANNUAL
MEETING. It is currently anticipated that each fund's next annual
meeting of shareholders will be held in October 2002. Shareholder
proposals to be included in the proxy statement for that meeting
must be received by your fund before April 17, 2002. Shareholders
who wish to make a proposal at the October 2002 annual
meeting--other than one that will be included in the fund's proxy
materials--should notify the fund no later than July 1, 2002. The
Nominating Committee will also consider nominees recommended by
shareholders of each 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 October 2002 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 July 13, 2002 and not later than August 12,
2002.

40
<Page>

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.

41
<Page>
FUND INFORMATION

INDEPENDENT AUDITORS. For Putnam California Investment Grade
Municipal Trust, Putnam Municipal Bond Fund, Putnam Municipal
Opportunities Trust, and Putnam New York Investment Grade
Municipal Trust only:

42
<Page>

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 Committee of the Board of Trustees
and the Trustees unanimously approved the selection of
PricewaterhouseCoopers LLP in May 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.

For Putnam High Yield Municipal Trust, Putnam Investment Grade
Municipal Trust and Putnam Managed Municipal Income Trust only:

KPMG LLP, 99 High 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
Committee of the Board of Trustees and the Trustees unanimously
approved the selection of KPMG for Putnam High Yield Municipal
Trust, Putnam Investment Grade Municipal Trust and Putnam Managed
Municipal Income Trust in July, December, and June of 2000,
respectively. 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 pres-
ent at the meeting to make statements and to respond to
appropriate questions.

PricewaterhouseCoopers LLP, independent accountants, has
previously served as the independent auditors of Putnam High Yield
Municipal Trust, Putnam Investment Grade Municipal Trust and
Putnam Managed Municipal Income Trust. The

43
<Page>

change in audit firms reflects the Trustees' decision to continue
their policy of having two audit firms serve the Putnam funds. In
the past, the two firms were Price Waterhouse LLP and Coopers &
Lybrand LLP. These firms merged in July 1998.
PricewaterhouseCoopers LLP resigned as independent auditors for
Putnam High Yield Municipal Trust, Putnam Investment Grade
Municipal Trust and Putnam Managed Municipal Income Trust in July
2000. It has issued no report on the financial statements for
either of the past two fiscal years containing an adverse opinion
or a disclaimer of opinion, or that was qualified as to
uncertainty, audit scope or accounting procedure. There were no
disagreements between PricewaterhouseCoopers LLP and your fund on
any matter of accounting principles and practice, financial
statement disclosure, or auditing scope or procedure.

44
<Page>
--------------------------

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

<Table>
<Caption>
Audit Fees Financial Information
for All Systems Design and
Audit Fees Putnam Funds Implementation Fees All Other Fees

-----------------------------------------------------------------------------------------------
Putnam California Investment
Grade Municipal Trust $27,000 $3,227,000 $220,000 $ 26,000
Putnam High Yield Municipal
Trust $24,000 $ 872,000 $ 0 $1,339,000
Putnam Investment Grade
Municipal Trust $23,000 $ 696,000 $ 0 $1,339,000
Putnam Managed Municipal
Income Trust $24,000 $ 626,000 $ 0 $1,339,000
Putnam Municipal Bond Fund $25,000 $3,227,000 $220,000 $ 26,000
Putnam Municipal Opportunities
Trust $25,000 $3,227,000 $220,000 $ 26,000
Putnam New York Investment
Grade Municipal Trust $27,000 $3,227,000 $220,000 $ 26,000
</Table>

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

45
<Page>
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 Audit Committee is responsible for making recommendations to
the Trustees as to the selection of your fund's auditors. The
Audit Committee has also 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 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.

AUDIT COMMITTEE. The members of the Audit Committee of your fund
include only Trustees who are not "interested persons" of the fund
or Putnam Management. Each member of the Audit 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 Audit Committee, a copy of which is attached to this Proxy
Statement as APPENDIX A. The Audit Committee currently consists of
Dr. Kennan and Messrs. Curtis and Stephens (Chairman). As of the
end of each fund's last fiscal year, the Audit Committee consisted
of Dr. Kennan, Messrs. Mullin and Stephens and Hans H. Estin. Mr.
Estin retired form the Board of Trustees on June 30, 2001. During
your fund's last fiscal year, the Audit Committee of the Putnam
Funds met 7 times.

46
<Page>
The Audit Committee of your fund has submitted the following
report:

The Audit Committee has reviewed and discussed with management of
your fund the audited financial statements for the last fiscal
year. The Audit 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 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
Committee has received the written disclosures and the letter from
your fund's independent accountants required by Independence
Standards Board Standard No. 1 (requiring auditors to make written
disclosures to and discuss with the Audit 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 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.

Elizabeth T. Kennan
John H. Mullin, III
W. Thomas Stephens (Chairman)

47
<Page>

BOARD POLICY AND NOMINATING COMMITTEE. The Board Policy and
Nominating Committee consists only of Trustees who are not
"interested persons" of your fund or Putnam Management. The Board
Policy and Nominating Committee currently consists of Dr. Kennan
(Chairperson), Messrs. Hill, Patterson and Thorndike. During the
last fiscal year of your funds, the Board Policy and Nominating
Committee of the Putnam Funds met 6 times, except for Putnam
Investment Grade Municipal Trust, during the last fiscal year of
which the Board Policy and Nominating Committee of the Putnam
Funds met 7 times.

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, III, 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 III and Lawrence J. Lasser, the
officers of each fund are as follows:

48
<Page>

PUTNAM CALIFORNIA INVESTMENT GRADE MUNICIPAL TRUST

<Table>
<Caption>
Name (age) Year first Five Year
Office with elected to Business
the fund office History

-----------------------------------------------------------------------
Charles E. Porter (62) 1989 Managing Director, Putnam
EXECUTIVE VICE PRESIDENT, Investments and Putnam
TREASURER & PRINCIPAL Management
FINANCIAL OFFICER
Patricia C. Flaherty (53) 1993 Senior Vice President,
SENIOR VICE PRESIDENT Putnam Investments and
Putnam Management
Michael T. Healy (43) 2000 Managing Director, Putnam
SENIOR VICE PRESIDENT, Investor Services and
ASSISTANT TREASURER Putnam Investments
PRINCIPAL ACCOUNTING
OFFICER
Gordon H. Silver (53) 1990 Senior Managing Director,
VICE PRESIDENT Putnam Investments and
Putnam Management
Ian Ferguson (43) 1997 Senior Managing Director,
VICE PRESIDENT Putnam Investments and
Putnam Management
Richard P. Wyke* (45) 1998 Senior Vice President,
VICE PRESIDENT Putnam Management
Richard A. Monaghan** (46) 1998 Managing Director, Putnam
VICE PRESIDENT Investments, Putnam
Management and Putnam
Retail Management
John R. Verani (61) 1988 Senior Vice President,
VICE PRESIDENT Putnam Investments and
Putnam Management
Stephen Oristaglio (45) 1998 Senior Managing Director,
VICE PRESIDENT Putnam Investments and
Putnam Management
Jerome Jacobs (42) 1996 Managing Director, Putnam
VICE PRESIDENT Investments and Putnam
Management
</Table>

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

*The fund's portfolio manager

**President of Putnam Retail Management

49
<Page>

PUTNAM HIGH YIELD MUNICIPAL TRUST

<Table>
<Caption>
Name (age) Year first Five Year
Office with elected to Business
the fund office History

-----------------------------------------------------------------------
Charles E. Porter (62) 1989 Managing Director, Putnam
EXECUTIVE VICE PRESIDENT, Investments and Putnam
TREASURER & PRINCIPAL Management
FINANCIAL OFFICER
Patricia C. Flaherty (53) 1993 Senior Vice President,
SENIOR VICE PRESIDENT Putnam Investments and
Putnam Management
Michael T. Healy (43) 2000 Managing Director, Putnam
SENIOR VICE PRESIDENT, Investor Services and
ASSISTANT TREASURER Putnam Investments
PRINCIPAL ACCOUNTING
OFFICER
Gordon H. Silver (53) 1990 Senior Managing Director,
VICE PRESIDENT Putnam Investments and
Putnam Management
Ian Ferguson (43) 1997 Senior Managing Director,
VICE PRESIDENT Putnam Investments and
Putnam Management
Blake Anderson* (44) 1998 Managing Director, Putnam
VICE PRESIDENT Investments
Richard A. Monaghan** (46) 1998 Managing Director, Putnam
VICE PRESIDENT Investments, Putnam
Management and Putnam
Retail Management
John R. Verani (61) 1988 Senior Vice President,
VICE PRESIDENT Putnam Investments and
Putnam Management
Stephen Oristaglio (45) 1998 Senior Managing Director,
VICE PRESIDENT Putnam Investments and
Putnam Management
Jerome Jacobs (42) 1996 Managing Director, Putnam
VICE PRESIDENT Investments and Putnam
Management
</Table>

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

*The fund's portfolio manager

**President of Putnam Retail Management

<Page>

PUTNAM INVESTMENT GRADE MUNICIPAL TRUST

<Table>
<Caption>
Name (age) Year first Five Year
Office with elected to Business
the fund office History

-----------------------------------------------------------------------
Charles E. Porter (62) 1989 Managing Director, Putnam
EXECUTIVE VICE PRESIDENT, Investments and Putnam
TREASURER & PRINCIPAL Management
FINANCIAL OFFICER
Patricia C. Flaherty (53) 1993 Senior Vice President,
SENIOR VICE PRESIDENT Putnam Investments and
Putnam Management
Michael T. Healy (43) 2000 Managing Director, Putnam
SENIOR VICE PRESIDENT, Investor Services and
ASSISTANT TREASURER Putnam Investments
PRINCIPAL ACCOUNTING
OFFICER
Gordon H. Silver (53) 1990 Senior Managing Director,
VICE PRESIDENT Putnam Investments and
Putnam Management
Ian Ferguson (43) 1997 Senior Managing Director,
VICE PRESIDENT Putnam Investments and
Putnam Management
Richard P. Wyke* (45) 1998 Senior Vice President,
VICE PRESIDENT Putnam Management
Richard A. Monaghan** (46) 1998 Managing Director, Putnam
VICE PRESIDENT Investments, Putnam
Management and Putnam
Retail Management
John R. Verani (61) 1988 Senior Vice President,
VICE PRESIDENT Putnam Investments and
Putnam Management
Stephen Oristaglio (45) 1998 Senior Managing Director,
VICE PRESIDENT Putnam Investments and
Putnam Management
Jerome Jacobs (42) 1996 Managing Director, Putnam
VICE PRESIDENT Investments and Putnam
Management
</Table>

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

*The fund's portfolio manager

**President of Putnam Retail Management

51
<Page>

PUTNAM MANAGED MUNICIPAL INCOME TRUST

<Table>
<Caption>
Name (age) Year first Five Year
Office with elected to Business
the fund office History

-----------------------------------------------------------------------
Charles E. Porter (62) 1989 Managing Director, Putnam
EXECUTIVE VICE PRESIDENT, Investments and Putnam
TREASURER & PRINCIPAL Management
FINANCIAL OFFICER
Patricia C. Flaherty (53) 1993 Senior Vice President,
SENIOR VICE PRESIDENT Putnam Investments and
Putnam Management
Michael T. Healy (43) 2000 Managing Director, Putnam
SENIOR VICE PRESIDENT, Investor Services and
ASSISTANT TREASURER Putnam Investments
PRINCIPAL ACCOUNTING
OFFICER
Gordon H. Silver (53) 1990 Senior Managing Director,
VICE PRESIDENT Putnam Investments and
Putnam Management
Ian Ferguson (43) 1997 Senior Managing Director,
VICE PRESIDENT Putnam Investments and
Putnam Management
Richard P. Wyke* (45) 1998 Senior Vice President,
VICE PRESIDENT Putnam Management
Richard A. Monaghan** (46) 1998 Managing Director, Putnam
VICE PRESIDENT Investments, Putnam
Management and Putnam
Retail Management
John R. Verani (61) 1988 Senior Vice President,
VICE PRESIDENT Putnam Investments and
Putnam Management
Stephen Oristaglio (45) 1998 Senior Managing Director,
VICE PRESIDENT Putnam Investments and
Putnam Management
Jerome Jacobs (42) 1996 Managing Director, Putnam
VICE PRESIDENT Investments and Putnam
Management
</Table>

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

*The fund's portfolio manager

**President of Putnam Retail Management

52
<Page>

PUTNAM MUNICIPAL BOND FUND

<Table>
<Caption>
Name (age) Year first Five Year
Office with elected to Business
the fund office History

-----------------------------------------------------------------------
Charles E. Porter (62) 1989 Managing Director, Putnam
EXECUTIVE VICE PRESIDENT, Investments and Putnam
TREASURER & PRINCIPAL Management
FINANCIAL OFFICER
Patricia C. Flaherty (53) 1993 Senior Vice President,
SENIOR VICE PRESIDENT Putnam Investments and
Putnam Management
Michael T. Healy (43) 2000 Managing Director, Putnam
SENIOR VICE PRESIDENT, Investor Services and
ASSISTANT TREASURER Putnam Investments
PRINCIPAL ACCOUNTING
OFFICER
Gordon H. Silver (53) 1990 Senior Managing Director,
VICE PRESIDENT Putnam Investments and
Putnam Management
Ian Ferguson (43) 1997 Senior Managing Director,
VICE PRESIDENT Putnam Investments and
Putnam Management
Richard P. Wyke* (45) 1998 Senior Vice President,
VICE PRESIDENT Putnam Management
Richard A. Monaghan** (46) 1998 Managing Director, Putnam
VICE PRESIDENT Investments, Putnam
Management and Putnam
Retail Management
John R. Verani (61) 1988 Senior Vice President,
VICE PRESIDENT Putnam Investments and
Putnam Management
Stephen Oristaglio (45) 1998 Senior Managing Director,
VICE PRESIDENT Putnam Investments and
Putnam Management
Jerome Jacobs (42) 1996 Managing Director, Putnam
VICE PRESIDENT Investments and Putnam
Management
</Table>

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

*The fund's portfolio manager

**President of Putnam Retail Management

53
<Page>

PUTNAM MUNICIPAL OPPORTUNITIES TRUST

<Table>
<Caption>
Name (age) Year first Five Year
Office with elected to Business
the fund office History

-----------------------------------------------------------------------
Charles E. Porter (62) 1989 Managing Director, Putnam
EXECUTIVE VICE PRESIDENT, Investments and Putnam
TREASURER & PRINCIPAL Management
FINANCIAL OFFICER
Patricia C. Flaherty (53) 1993 Senior Vice President,
SENIOR VICE PRESIDENT Putnam Investments and
Putnam Management
Michael T. Healy (43) 2000 Managing Director, Putnam
SENIOR VICE PRESIDENT, Investor Services and
ASSISTANT TREASURER Putnam Investments
PRINCIPAL ACCOUNTING
OFFICER
Gordon H. Silver (53) 1990 Senior Managing Director,
VICE PRESIDENT Putnam Investments and
Putnam Management
Ian Ferguson (43) 1997 Senior Managing Director,
VICE PRESIDENT Putnam Investments and
Putnam Management
Blake Anderson* (44) 1998 Managing Director, Putnam
VICE PRESIDENT Investments
Richard A. Monaghan** (46) 1998 Managing Director, Putnam
VICE PRESIDENT Investments, Putnam
Management and Putnam
Retail Management
John R. Verani (61) 1988 Senior Vice President,
VICE PRESIDENT Putnam Investments and
Putnam Management
Stephen Oristaglio (45) 1998 Senior Managing Director,
VICE PRESIDENT Putnam Investments and
Putnam Management
Jerome Jacobs (42) 1996 Managing Director, Putnam
VICE PRESIDENT Investments and Putnam
Management
</Table>

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

*The fund's portfolio manager

**President of Putnam Retail Management

54
<Page>

PUTNAM NEW YORK INVESTMENT GRADE MUNICIPAL TRUST

<Table>
<Caption>
Name (age) Year first Five Year
Office with elected to Business
the fund office History

-----------------------------------------------------------------------
Charles E. Porter (62) 1989 Managing Director, Putnam
EXECUTIVE VICE PRESIDENT, Investments and Putnam
TREASURER & PRINCIPAL Management
FINANCIAL OFFICER
Patricia C. Flaherty (53) 1993 Senior Vice President,
SENIOR VICE PRESIDENT Putnam Investments and
Putnam Management
Michael T. Healy (43) 2000 Managing Director, Putnam
SENIOR VICE PRESIDENT, Investor Services and
ASSISTANT TREASURER Putnam Investments
PRINCIPAL ACCOUNTING
OFFICER
Gordon H. Silver (53) 1990 Senior Managing Director,
VICE PRESIDENT Putnam Investments and
Putnam Management
Ian Ferguson (43) 1997 Senior Managing Director,
VICE PRESIDENT Putnam Investments and
Putnam Management
Richard P. Wyke* (45) 1998 Senior Vice President,
VICE PRESIDENT Putnam Management
Richard A. Monaghan** (46) 1998 Managing Director, Putnam
VICE PRESIDENT Investments, Putnam
Management and Putnam
Retail Management
John R. Verani (61) 1988 Senior Vice President,
VICE PRESIDENT Putnam Investments and
Putnam Management
Stephen Oristaglio (45) 1998 Senior Managing Director,
VICE PRESIDENT Putnam Investments and
Putnam Management
Jerome Jacobs (42) 1996 Managing Director, Putnam
VICE PRESIDENT Investments and Putnam
Management
</Table>

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

*The fund's portfolio manager

**President of Putnam Retail Management

55
<Page>

ASSETS AND SHARES OUTSTANDING OF YOUR FUND AS OF JULY 2, 2001

<Table>

NET ASSETS:
Putnam California Investment Grade
Municipal Trust $ 68,454,414.61
Putnam High Yield Municipal Trust $181,188,554.14
Putnam Investment Grade Municipal Trust $236,496,463.05
Putnam Managed Municipal Income Trust $403,831,166.13
Putnam Municipal Bond Fund $177,942,661.59
Putnam Municipal Opportunities Trust $213,173,328.20
Putnam New York Investment Grade
Municipal Trust $ 38,648,154.29
</Table>

<Table>

SHARES OUTSTANDING AND AUTHORIZED TO VOTE:
Putnam California Investment Grade
Municipal Trust
Common shares 4,607,092 shares
Preferred shares 320 shares
Putnam High Yield Municipal Trust
Common shares 22,218,223 shares
Preferred shares 900 shares
Putnam Investment Grade Municipal Trust
Common shares 21,145,759 shares
Preferred shares 1,400 shares
Putnam Managed Municipal Income Trust
Common shares 47,107,402 shares
Preferred shares A: 550 shares
B: 550 shares
C: 650 shares
Putnam Municipal Bond Fund
Common shares 13,357,092 shares
Preferred shares A: 630 shares
B: 630 shares
Putnam Municipal Opportunities Trust
Common shares 16,157,092 shares
Preferred shares A: 800 shares
B: 1,620 shares
C: 1,620 shares
Putnam New York Investment Grade
Municipal Trust
Common shares 2,847,092 shares
Preferred shares 200 shares
</Table>

56
<Page>

<Table>

5% beneficial ownership of your fund as of July 2, 2001:
Putnam California Investment Grade
Municipal Trust
Persons beneficially owning more than
5% of the fund's Common shares None
Persons beneficially owning more than
5% of the fund's Preferred shares None
Putnam High Yield Municipal Trust
Persons beneficially owning more than
5% of the fund's Common shares None
Persons beneficially owning more than
5% of the fund's Preferred shares None
Putnam Investment Grade Municipal Trust
Persons beneficially owning more than
5% of the fund's Common shares None
Persons beneficially owning more than
5% of the fund's Preferred shares None
Putnam Managed Municipal Income Trust
Persons beneficially owning more than
5% of the fund's Common shares None
Persons beneficially owning more than
5% of the fund's Preferred shares None
Putnam Municipal Bond Fund
Persons beneficially owning more than
5% of the fund's Common shares None
Persons beneficially owning more than
5% of the fund's Preferred shares None
Putnam Municipal Opportunities Trust
Persons beneficially owning more than
5% of the fund's Common shares None
Persons beneficially owning more than
5% of the fund's Preferred shares None
Putnam New York Investment Grade
Municipal Trust
Persons beneficially owning more than
5% of the fund's Common shares None
Persons beneficially owning more than
5% of the fund's Preferred shares None
</Table>

57
<Page>
APPENDIX A

THE PUTNAM FUNDS
AUDIT COMMITTEE CHARTER

ASSISTANCE. The Committee may seek the assistance of Fund
Administration staff, the Funds' independent auditors and counsel,
management and other parties as it may deem appropriate.

ROLE OF INDEPENDENT AUDITORS. The Funds' independent auditors are
ultimately accountable to the Trustees and the Committee.

SPECIFIC DUTIES OF COMMITTEE. The duties of the Committee include:

INDEPENDENT AUDITOR MATTERS

- Recommending the selection of independent auditors and
evaluating their performance

- Recommending fees for independent auditors

- Reviewing regular reports of independent auditors

- Reviewing auditor independence

- Reviewing and approving the scope of any special projects to be
undertaken by independent auditors

A-1
<Page>
- Reviewing relationship of independent auditors with Funds and
management, including activities outside Fund audits

- Considering any weaknesses or deficiencies noted by independent
auditors

- Overseeing internal control reviews performed by independent
auditors

GENERAL MATTERS

- Reviewing scope and adequacy of audits

- Reviewing significant changes in tax and accounting policies

- Reviewing nature of accounting and tax policies

- Reviewing special matters impacting accounting issues

OTHER MATTERS

- Reviewing quality of internal accounting function

- Reviewing regular reports of internal auditors and management

- Reviewing matters relating to the Funds' Code of Ethics and
Putnam Investments' Code of Ethics

- Reassessing annually the adequacy of this Charter and recommend
any proposed changes to the full Board of Trustees

- Reviewing compliance matters

A-2
<Page>
PUTNAMINVESTMENTS
THE PUTNAM FUNDS
ONE POST OFFICE SQUARE
BOSTON, MASSACHUSETTS 02109
TOLL-FREE 1-800-225-1581

73225 7/01