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                         PUTNAM FUNDS TRUST
                 PUTNAM HIGH QUALITY BOND FUND
        (Name of Registrant as Specified In Its Charter)

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

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                Fund Mergers Q&A, March 1999
                              
THIS Q&A IS DESIGNED TO HELP YOU RESPOND TO QUESTIONS ABOUT
FORTHCOMING CHANGES INVOLVING SEVERAL PUTNAM FIXED-INCOME
FUNDS. PROPOSALS HAVE BEEN MADE TO MERGE TWO SMALLER FUNDS
INTO LARGER FUNDS. EACH ISSUE IS ADDRESSED IN A SEPARATE
SECTION BELOW.

1.   Putnam High Quality Bond Fund merger


WHY IS PUTNAM HIGH QUALITY BOND FUND CLOSING?

  The Trustees have approved Putnam Management's proposal
  to merge this fund into Putnam American Government Income
  Fund, and shareholders will vote on the proposal July 1,
  1999.  Consequently, the fund closed to new investors on
  February 26.  Existing shareholders can continue to add
  to their accounts through reinvestment or purchase of
  additional shares.

WHY DID PUTNAM MANAGEMENT RECOMMEND THIS MERGER?

  Larger mutual funds typically have lower expense ratios
  than smaller funds.  Therefore, Putnam Management and the
  Trustees believe merging the relatively small Putnam High
  Quality Bond Fund into a larger fund with a similar
  strategy and objective will be more cost-efficient and in
  the best interests of shareholders.

HOW WILL SHAREHOLDERS BE AFFECTED?

  Assuming the merger is approved by shareholders on July
  1, 1999, it will be effective later in July.  Shares of
  Putnam High Quality Bond Fund will be exchanged for
  shares of Putnam American Government Income Fund to
  create new accounts of equal net asset value. Both funds
  pay distributions monthly. The merger is not intended to
  be a taxable event for shareholders.
  

HOW DO THE TWO FUNDS COMPARE IN TERMS OF STRATEGY AND
OBJECTIVE?

  While both funds seek current income and invest primarily
  in U.S. government and agency fixed-income securities,
  their strategies are slightly different. Putnam American
  Government Fund invests substantially all of its assets
  in U.S. government and agency securities, Putnam High
  Quality Bond Fund may also invest significantly in
  investment-grade corporate and foreign bonds.
  


 HOW DO THE TWO FUNDS COMPARE IN TERMS OF ASSETS?

  As of  March  31, 1999 Putnam American Government Income
  Fund had $1,524,841,774 in assets, compared with
  $372,697,199 for Putnam High Quality Bond Fund.


HOW HAS THE FUND PERFORMED? HOW HAS PUTNAM AMERICAN
GOVERNMENT FUND PERFORMED?

  The fund's mix of U.S. government and high-quality
  corporate securities has delivered respectable longer-
  term performance (class A shares ranked 155 out of 184,
  111 out of 147 and 41 out of 97 for U.S. government funds
  tracked by Lipper* for the  1, 3 and 5 years ended
  December 31, 1998). However, over the short term it has
  lagged behind the rest of its category (class A shares
  ranked 155 out of 184 funds for the 12 months ended
  December 31).
  
  Putnam American Government Income Fund, which invests
  only in U.S. government and agency securities, has had
  much stronger results in recent years. Its class A shares
  ranked in the top quartile for the three- and five-year
  periods ended December 31, 1998, finishing 32 out of 147
  U.S. government funds tracked by Lipper* and 15 out of
  97, respectively, although for the 10-year period it
  finished 38 out of 50 funds.  For the 12 months ended
  December 31, it finished 47 out of 184.
  
  Returns for the Putnam American Government Income Fund
  for the 1, 5 and 10 years are as follows:
  
              Class A      Class B      Class M
              (NAV)        (NAV)        (NAV)

1 year        8.55%        7.68%        8.36%

5 years       6.87%        6.01%        6.63%

10 years      7.64%        6.77%        7.35%
  
  
  *Lipper rankings are based on total return performance,
  vary over time, and do not include the effects of sales
  charges.  Performance of other share classes will vary.
  Past performance is not indicative of future results.
  

HAVE THERE BEEN RECENT MANAGEMENT CHANGES?

  James Prusko and Jennifer Leichter were appointed
  managers of the fund in the spring of 1998. This past
  fall, Jennifer moved on to other responsibilities and was
  replaced by two new members of Putnam's Core Fixed-Income
  Group. Kevin Cronin, Chief Investment Officer of the
  group's mortgage and asset-backed team, came to Putnam
  from MFS Investment Management.  Krishna K. Memani, who
  leads the group's high-grade corporate bond team, came to
  Putnam from Morgan Stanley.
  
  Michael Martino has been lead manager of Putnam American
  Government Income Fund since February of 1994. Kevin
  Cronin (see above) joined the team this past fall.
  

HOW AND WHEN WILL SHAREHOLDERS BE NOTIFIED?

  Shareholders will be sent proxies with complete
  information about the proposals in mid April and asked to
  return their votes by July 1.

2.   Putnam High Yield Total Return Fund merger

WHY IS PUTNAM HIGH YIELD TOTAL RETURN FUND CLOSING?

  The Trustees have approved Putnam Management's proposal
  to merge this fund into Putnam High Yield Trust II, and
  shareholders will vote on the proposal July 1, 1999.
  Consequently, the fund closed to new investors on
  February 26.  Existing shareholders can continue to add
  to their accounts through reinvestment or purchase of
  additional shares.

WHY DID PUTNAM MANAGEMENT RECOMMEND THIS MERGER?

  Larger mutual funds typically have lower expense ratios
  than smaller funds. Therefore, Putnam Management and the
  Trustees believe merging the relatively small Putnam High
  Yield Total Return Fund into a larger high yield fund
  will be more cost-efficient and in the best interests of
  shareholders.
  
  In addition, Putnam Management believes that investors
  currently favor more income-oriented high yield funds
  such as High Yield Trust II as compared to funds such as
  the Total Return Fund with its total return orientation.

HOW WILL SHAREHOLDERS BE AFFECTED?

  Assuming the merger is approved by shareholders on July
  1, 1999, it will be effective later in July. Shares of
  Putnam High Yield Total Return Fund will be exchanged for
  shares of Putnam High Yield Trust II to create new
  accounts of equal net asset value. The merger is not
  intended to be a taxable event for shareholders.
  
  Both funds pay monthly distributions. The March 31, 1999
  NAV yields for the the funds are as follows:
  
  Putnam Total Return Fund
  
  Class A:       9.27%
  Class B:       8.71%
  Class M:       9.18%
  
  Putnam High Yield Trust II
  
  Class A:       9.89%
  Class B:       9.18%
  Class M:       9.64%
  
  However, the funds differ in the manner in which
  distributions are accrued. Putnam High Yield Trust II
  accrues a portion of each monthly distribution daily, so
  shareholders who redeem before the ex-dividend date will
  receive a portion of that month's distribution. Putnam
  High Yield Total Return Fund's distribution is payable in
  full to shareholders who held fund shares as of the
  record date. Those who redeem before the date do not
  receive the distribution, but its value is still
  reflected in their share price and would be part of any
  capital gain or loss on the sale of the shares. Shares
  redeemed after the record date receive the full amount of
  the distribution, which would then be taxable as ordinary
  income.

HOW DO THE TWO FUNDS COMPARE IN TERMS OF ASSETS?

  As of March 31, 1999, Putnam High Yield Trust II had
  $1,250,489,636 in assets, compared with $111,884,858 for
  Putnam High Yield Total Return.

HOW DO THE TWO FUNDS COMPARE IN TERMS OF OBJECTIVE AND
STRATEGY?

     The objectives of the two funds differ to some extent.
     Putnam High Yield Total Return seeks total return with
     equal emphasis on capital gains and income.  Putnam
     High Yield Trust II seeks high current income with
     growth of capital a secondary objective.  Thus, Putnam
     High Yield Trust II is more income oriented.  The
     investment policies of the two funds are similar.  Each
     invests at least 80% of its assets in lower rated fixed
     income securities.
     
HOW HAS THE FUND PERFORMED?  HOW HAS PUTNAM HIGH YIELD TRUST
II PERFORMED?

  Returns for Putnam High Yield Trust II are as follows:
  
              Class A     Class B     Class M
              (NAV)       (NAV)       (NAV)

1 year        0.20%      -0.30%        0.12%
Life          0.20%      -0.30%        0.12%


HAVE THERE BEEN RECENT MANAGEMENT CHANGES?

  Jennifer Leichter has been lead manager of both funds
  since their inception. Robert Paine is co-lead manager of
  Putnam High Yield Total Return Fund and was recently
  added to the Putnam High Yield Trust II team. Jeffrey
  Kaufman, a member of the Putnam High Yield Total Return
  team, also recently joined the Putnam High Yield Trust II
  team. Rosemary Thomsen is co-lead manager of Putnam High
  Yield Trust II.

HOW AND WHEN WILL SHAREHOLDERS BE NOTIFIED?

  Shareholders will be sent proxies with complete
  information about the proposals in mid April and asked to
  return their votes by July 1.