PUTNAM HIGH YIELD TRUST, N-30D, 1994-04-28

PUTNAM HIGH YIELD TRUST
N-30D, 1994-04-28

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(logo)

Putnam
High Yield
Trust

Semiannual
Report
February 28, 1994

(artwork)

For investors seeking high
current income through
a diversified portfolio of
high-yielding, lower-rated
corporate bonds, with a
secondary objective of
capital growth when
consistent with high
current income

Contents
2 How your fund performed
3 From the Chairman
4 Report from Putnam Management
Semiannual Report
7 Report of Independent Accountants
8 Portfolio of investments owned
18 Financial statements
30 Fund performance supplement
31 Your Trustees

A member
of the Putnam
Family of Funds
<PAGE>
<TABLE>
<CAPTION>

How your
fund performed

For periods ended February 28, 1994

Total return performance* Fund First Boston
Class A Class B High Yield Lehman Brothers
NAV POP NAV CDSC Index Corp. Bond Index
<S> <C> <C> <C> <C> <C> <C>
6 months 8.43% 3.27% 8.00% 3.00% 7.04% 0.38%
1 year 16.31 10.78 15.35 10.35 15.61 6.67
5 years 80.50 71.93 -- -- 86.28 73.89
annualized 12.54 11.45 -- -- 13.25 11.70
10 years 215.38 200.40 -- -- -- 226.21
annualized 12.17 11.63 -- -- -- 12.55
Life-of-class**
(class B shares) -- -- 15.35 10.35 15.61 6.67

Share data Class A Class B
NAV POP NAV
August 31, 1993 $13.01 $13.66 $12.99
February 28, 1994 $13.42 $14.09 $13.39

Distributions
6 months ended Investment
February 28, 1994 Number income Total
Class A 6 $0.660 $0.660
Class B 6 $0.615 $0.615

Current returns Class A Class B
at the end of the period NAV POP NAV
Current dividend rate 9.39% 8.94% 8.69%
Current 30-day yield 8.78 8.36 8.03

<PAGE>
Total return at end of most recent calendar quarter
Periods ended March 31, 1994
Class A Class B
NAV POP NAV CDSC
1 year 10.49% 5.27% 9.66% 4.69%
5 years 74.42 66.15 -- --
annualized 11.77 10.69 -- --
10 years 210.06 195.32 -- --
annualized 11.98 11.44 -- --
Life-of-class** 11.34 7.34
(class B shares
annualized) -- -- 10.45 6.78

*Performance data represent past results. Investment return and principal value will
fluctuate so an investor's shares, when redeemed, may be worth more or less than their
original cost.

**Effective March 1, 1993, the fund began offering class B shares. Performance of each
share class will differ.

/TABLE
<PAGE>
Terms you need to know

Total return is the change in value of an investment from the
beginning to the end of a period, assuming the reinvestment of
all distributions. It may be shown at net asset value or at
public offering price.

Net asset value (NAV) is the value of all your fund's assets,
minus any liabilities, divided by the number of outstanding
shares, not reflecting any sales charge.

Public offering price (POP) is the price of a mutual fund share
plus the maximum sales charge levied at the time of purchase.

Contingent deferred sales charge (CDSC) is a charge applied at
the time of the redemption of shares rather than the time of
purchase. It generally declines and eventually disappears over a
stated period.

Class A shares are the shares of your fund offered subject to an
initial sales charge. Your fund's POP includes the maximum 4.75%
sales charge.

Class B shares are the shares of your fund offered with no
initial sales charge. Within the first six years of purchase,
they are subject to a CDSC declining from 5% to 1%. After the
sixth year, the CDSC no longer applies.

Current dividend rate is calculated by annualizing the net
investment income paid to shareholders in the fund's most recent
distribution, then dividing by the NAV or POP on the last day of
the period.

Current 30-day yield, based only on the fund's net investment
income earnings, is calculated in accordance with Securities and
Exchange Commission guidelines.

Please see the fund performance supplement on page 30 for
additional information about performance comparisons and the
special risks associated with high-yield securities.
<PAGE>
From the
Chairman

(photograph of George Putnam)

George Putnam
Chairman
of the Trustees

Dear Shareholder:

Putnam High Yield Trust continues to demonstrate the
effectiveness of its investment strategy. Despite substantial
market volatility at the close of the semiannual period, your
fund turned in attractive total returns for the six months ended
February 28, 1994 -- 8.43% for class A shares and 8.00% for class
B shares, both at net asset value. These numbers are especially
gratifying given the negative return of the Lehman Brothers
Corporate Bond Index, an unmanaged list of investment-grade
bonds, during the same period.

The strength and depth of Putnam's high-yield bond department
allowed your fund to benefit substantially from the favorable
investment environment that persisted through much of the period.
The team's research talent and strong presence in the market
proved even more valuable, however, as the Federal Reserve
Board's decision to raise interest rates unleashed concerns about
inflation that touched every sector of the market.

According to Portfolio Manager Ed D'Alelio, Putnam Management
expects the unrest that has resulted from these perception-based
concerns to lead to substantial buying opportunities. Attractive
pricing, combined with still-favorable fundamentals, bodes well
for both the high-yield market and your fund in the second half
of fiscal 1994.

Respectfully yours,

(signature of George Putnam)
George Putnam
April 20, 1994
<PAGE>
Report from
Putnam Management

The first half of Putnam High Yield Trust's current fiscal year
closed on February 28, 1994, with the fund posting strong
performance for the period. As shown by the table on page two,
the fund had a $0.41 per share rise in the net asset value of
class A shares, and $0.40 for class B shares. This, combined with
reinvested income distributions totaling over $0.60 per share,
resulted in attractive total returns for shareholders in both
classes.

The fund's performance also stacks up favorably against commonly
used corporate bond indexes. Class A share total returns at net
asset value for both this period and the 12 months ended February
28, 1994, outperformed the Lehman Brothers Corp. Bond Index, an
unmanaged list of investment-grade bonds, and the First Boston
High Yield Index, an unmanaged list of lower-rated bonds.

Additionally, the independent rating agency Morningstar, Inc.,
continues to recognize Putnam High Yield Trust's above-average
performance among funds with similar objectives. Morningstar has
awarded the fund four or five stars -- the highest ratings
available -- for every two-week period since October 7, 1991. The
fund retained a four-star rating through March 25, 1994, based on
risk-adjusted 3-, 5-, and 10-year total returns, adjusted for
sales charges, as of February 28, 1994.

The pros and cons of rising prices As fiscal 1994 began, investor
demand for the income streams offered by higher-yielding,
lower-rated corporate bonds continued to outpace the supply of
these securities. This demand pushed high-yield bond prices
higher during the initial months of the period, as the market was
bolstered by slow but steady economic growth, stable to declining
interest rates, and low inflation.

Although price appreciation in the bond market translated into a
higher net asset value for your fund's shares during the period,
it also led to aggressive pricing moves by new issuers.
Throughout the opening months of the period, increased
participation in the high-yield market allowed issuers of new
debt to set prices that produced yields in the 8.75% to 9.75%
range, narrowing the spread between lower-rated and
investment-grade bonds. We found previously issued bonds trading
in the secondary market to be similarly overpriced.

Fed move spurs repricing The Federal Reserve Board intended its
February decision to raise short-term interest rates simply as a
preemptive measure against any overheating of the economy that
could lead to increased inflation. However, investors generally
chose to interpret the Fed's move as a reactive strike against
inflationary pressures, quickly sending shockwaves through both
the equity and bond markets. Many investors sold out of their
positions, lock-ing in some of the profits they had built up in
stocks and corporate bonds over the past few years. Even for
investors who did not overreact to the rising rates, the credit
risk inherent in high-yield bonds began to seem too great a
price, given the newly increased yields of short-term Treasury
notes.

We believe the current wave of concern over inflation is
unfounded. Looking past investor sentiment to economic
fundamentals, it is clear that capacity utilization within many
industries remains low, corporate price increases have generally
been slight, and productivity gains have kept unit labor costs
down -- all factors that indicate continued low inflation.

Given these positive fundamentals, the recent bond market
sell-off has created favorable prospects for your fund,
effectively repricing the high-yield market. Prices on new issues
are once again more attractive, typically producing yields from
9.50% up to 11%. We are also finding more compelling values in
the secondary market.

Industry focus As always, the research capabilities of our
high-yield analysts have helped pinpoint the industries and
specific issues that we believe best enhance the overall
portfolio composition. Many of the industries we favored in
fiscal 1993 continue to be well-represented in the portfolio. Our
analysts have been following some particularly interesting
developments in the recreation and cable television industries,
two of the fund's largest industry allocations.

In the gaming industry, state and local governments across the
country continue to join the trend toward creating new gambling
jurisdictions as alternate sources of revenue. Because successful
precedents are easing the way for other governments to win
approval, Putnam's emphasis on research should help us sort
through the pack and pinpoint those opportunities that we believe
are most likely to prove rewarding.

Despite the increasing regulatory pressure on the cable
television industry, we still view cable companies as valuable
holdings. While government regulation may ultimately reduce the
cash flows earned from home television subscriptions, we are
looking ahead to alternative cable uses now in development.
Industry research has led us to discover many forward-thinking
companies that are exploring cable technology for use in on-line
communications, fiber-optic telephone networking, and even as a
means of measuring household utility usage.

Technological developments among the industries and companies we
follow, and market developments overall, keep the high-yield
sector interesting and challenging. As the fund enters the second
half of fiscal 1994, we look forward to continuing to participate
in the best opportunities this sector has to offer.
<PAGE>
Top 10 holdings (2/28/94)

Flagstar Corp. 11 1/4s, 2004
Gaylord Container Corp.
zero%, 2005
Adelphia Communications
Corp. 12 1/2s, 2002
Grand Union Co. 12 1/4s,
2002
Trump Taj Mahel 11.35s,
1999
Kaiser Aluminum Chemical
Corp. 12 3/4s, 2003
Del Monte Corp. 12 1/4s, 2002
Revlon Consumer Products
Corp. 9 3/8s, 2001
Playtex Family Products
Corp. 14 3/4s, 1997
Jordan Industries Inc. 10 3/8,
2003

*Represents 21.0% of the port-
folio. Future holdings will vary.

(barchart)
Top industry sectors (based on percentage of net assets as of
2/28/94)
Recreation ...........................8.8%
Cable television ......................7.8%
Consumer services ..................6.9%
Forest products .............5.7%
Broadcasting ...........5.6%
<PAGE>
Putnam
High Yield
Trust

Semiannual
Report

For the six months ended February 28, 1994

Report of Independent Accountants

To the Trustees and Shareholders of
Putnam High Yield Trust

We have audited the accompanying statement of assets and
liabilities of Putnam High Yield Trust, including the portfolio
of investments owned, as of February 28, 1994, and the related
statement of operations for the six months then ended, the
statement of changes in net assets for the six months ended
February 28, 1994 and for the year ended August 31, 1993, and the
"Financial highlights" for the six months ended February 28, 1994
and for each of the ten years in the period ended August 31, 1993
for Class A shares, and for the six months ended February 28,
1994 and for the period March 1, 1993 (commencement of
operations) to August 31, 1993 for Class B shares. These
financial statements and "Financial highlights" are the
responsibility of the Trust's management. Our responsibility is
to express an opinion on these financial statements and
"Financial highlights" based on our audits.

We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements and "Financial highlights" are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned as of February 28, 1994 by correspondence with
the custodian and brokers. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.

In our opinion, the financial statements and "Financial
highlights" referred to above present fairly, in all material
respects, the financial position of Putnam High Yield Trust as of
February 28, 1994, the results of its operations for the six
months then ended, the changes in its net assets for the six
months ended February 28, 1994 and for the year ended August 31,
1993, and the "Financial highlights" for the six months ended
February 28, 1994 and for each of the ten years in the period
ended August 31, 1993 for Class A shares and for the six months
ended February 28, 1994 and for the period March 1, 1993
(commencement of operations) to August 31, 1993 for Class B
shares in conformity with generally accepted accounting
principles.

Coopers & Lybrand
Boston, Massachusetts
April 15, 1994
<PAGE>
Portfolio of
investments owned
February 28, 1994

Corporate Bonds and Notes (97.3%)(a)
Principal Amount Value

Recreation (8.8%)
$ 21,000,000 AMC Entertainment, Inc. sr.
sub. notes 12 5/8s, 2002 $ 24,150,000
7,500,000 AMC Entertainment, Inc. sr.
sub. deb. 11 7/8s, 2000 8,550,000
2,250,000 Bally's Casino Inc. sr. disc.
notes zero %, 1998(b) 1,485,000
18,000,000 Bally's Park Place Funding
Inc. gtd. 1st mtge. notes
11 7/8s, 1999 19,395,000
5,837,000 Bell Casinos Inc. 1st mrge.
deb. 12s, 2000(b) 5,837,000
6,000,000 Capital Gaming sr. sub. deb.
11 1/2s, 2001(b) 7,380,000
12,910,000 Casino America Inc. 1st mtge.
deb. 11 1/2s, 2001 13,297,300
8,880,000 Casino Magic Finance Corp.
1st Mtge. deb. 11 1/2s,
2001(b) 9,146,400
10,850,000 Cinemark Mexico notes 12s,
2003(b) 10,768,625
8,900,000 Cinemark USA sr. notes 12s,
2002 9,968,000
33,500,000 Golden Nugget Finance Corp.
1st mtge. deb. Ser. B,
10 5/8s, 2003 31,573,750
7,670,000 Grand Casino Resorts, Inc.
notes 12 1/2s, 2000 8,513,700
9,000,000 Lady Luck Gaming sr sub.
deb. 10 1/2s, 2001 9,112,500
5,580,000 Louisiana Casino Cruise
Corp. sr. sub. deb. 11 1/2s,
1998(b) 5,970,600
19,150,000 Pioneer Finance Corp. gtd.
list mtge. 13 1/2s, 1998 20,155,375
5,000,000 President Riverboat Casinos
sr. sub. notes 11 3/4s, 2001(b) 5,150,000
$ 22,600,000 Showboat, Inc. 1st Mtge. deb.
9 1/4s, 2008 $ 23,052,000
7,475,000 Treasure Bay Gaming 1st.
mtge. units 12 1/4s, 2000(b) 7,699,250
14,931,000 Trump Castle Funding Corp.
deb. 11 1/2s, 2000(b) 14,931,000
26,350,000 Trump Plaza Funding, Inc.
1st mtge. notes 10 7/8s, 2001 25,888,875
<PAGE>
68,232,000 Trump Taj Mahal deb. Ser. A,
11.35s, 1999(c) 70,278,960

332,303,335
Cable Television (7.8%)
13,500,000 Adelphia Communications
Corp. notes Ser. B, 9 7/8s,
2005 14,175,000
2,000,000 Adelphia Communications
Corp. sr. deb. 11 7/8s, 2004 2,220,000
89,320,000 Adelphia Communications
Corp. sr. notes 12 1/2s, 2002 99,145,200
7,500,000 Cablevision Systems Corp. sr.
sub. deb. 9 7/8s, 2023 8,325,000
2,000,000 Cablevision System Corp. sr.
sub. reset deb. 14s, 2003 2,080,000
9,000,000 Century Communications
Corp. sr. disc. notes zero %,
2003 3,960,000
5,000,000 Century Communications
Corp. sr. sub. deb. 11 7/8s,
2003 5,700,000
3,000,000 Continental Cable sr. deb.
8 7/8s, 09/15/2005 3,120,000
33,500,000 Continental Cablevision, Inc.
sr. deb. 9 1/2s, 2013 35,175,000
7,600,000 Continental Cablevision, Inc.
sr. deb. 9s, 2008 8,056,000
$ 16,250,000 Continental Cablevision, Inc.
sr. sub. deb. 12 7/8s, 2004 $ 18,118,750
17,862,000 Falcon Holdings Group, Inc.
sr. sub. notes 11s, 2003(c) 18,576,480
11,300,000 Insight Communications Co.
sr. sub. notes stepped-
coupon 8 1/4s (11 1/4s,
3/1/96), 2000(d) 11,497,750
24,925,000 Jones Intercable, Inc. sub.
deb. 11 1/2s, 2004 27,666,750
15,100,000 Marcus Cable Co. (L.P.) sr.
deb. 11 7/8s, 2005 15,930,500
18,000,000 Royal Crown Corp sr. secd.
notes 9 3/4s, 2000 18,270,000
292,016,430
Consumer Services (6.9%)
9,470,000 Arizona Charlies Corp. sub.
deb. 12s, 2000(b) 9,422,650
13,320,000 Brylane L.P. sr. sub. notes
Ser. B, 10s, 2003 13,986,000
4,240,000 Capitol Queen Corp. sr. sub.
deb. 12s, 2000(b) 3,731,200
6,650,000 Finlay Enterprises Inc. sr.
disc. deb. stepped-coupon
zero % (12s, 5/1/98),
2005(d) 4,389,000
12,500,000 Finlay Enterprises, Inc. sr.
notes 10 5/8s, 2003 13,146,125
111,193,000 Flagstar Corp. sr. sub. deb.
11 1/4s, 2004 113,972,825
7,500,000 Hillhaven Corp. sr. sub. notes
10 1/8s, 2001 7,987,500
7,000,000 Marvel Parent Holdings, Inc.
sr. secd. zero %, 1998 4,725,000
18,500,000 Marvel Parent Holdings III,
Inc. sr. notes 9 1/8s, 1998(b) 18,315,000
$ 56,000,000 Marvel Parent Holdings, Inc.
sr. secd. disc. notes
zero %, 1998 $ 36,680,000
1,500,000 Solon Automated Services,
Inc. notes 12 3/4s, 2001 1,657,500
15,600,000 Solon Automated Services,
Inc. sr. sub. deb. 13 3/4s, 2002 17,511,000
13,000,000 Triangle Pacific Corp. sr.
notes 10 1/2s, 2003 13,780,000
259,303,800
Forest Products (5.7%)
19,500,000 Container Corp. of America
jr. sub. deb. 15 1/2s, 2004(c) 37,732,500
121,500,000 Gaylord Container Corp. sr.
sub. disc. deb. stepped-
coupon zero % (12 3/4s,
5/15/96), 2005(d) 105,705,000
23,500,000 Riverwood International Corp.
sr. sub notes 11 1/4s, 2002 25,732,500
31,300,000 Stone Container Corp. sr. sub.
notes 9 7/8s, 2001 30,674,000
10,350,000 Stone Savannah River Pulp &
Paper Corp. sr. sub. notes
14 1/8s, 2000 10,569,938
3,500,000 Williamhouse Regency
Delaware, Inc. sr. sub. deb.
11 1/2s, 2005 3,780,000
214,193,938
Broadcasting (5.6%)
8,000,000 Act III Broadcasting Inc. sr.
sub. notes 9 5/8s, 2003 8,280,000
875,000 Act III Theatres sr. sub. notes
11 7/8s, 2003 986,563
$ 8,000,000 Argyle TV Operations sr. sub.
notes 9 7/8s, 2003 $ 8,160,000
7,000,000 General Media sr. secd. notes
10 5/8s, 2000(b) 7,105,000
11,500,000 Granite Broadcasting Corp.
sr. sub. deb. 12 3/4s, 2002 12,305,000
74,500,000 NEXTEL Communications
Inc. sr. disc. notes stepped-
coupon zero % (11 1/2s,
9/1/98), 2003(d) 52,243,125
<PAGE>
48,500,000 NEXTEL Communications Inc.
sr. notes stepped-coupon
zero % (9 3/4s, 2/15/99)
2004(d) 31,888,750
8,875,000 New City Broadcasting Corp.
sr. sub. notes 11 3/8s, 2003 9,407,500
8,075,000 Outlet Broadcasting, Inc, sr.
sub, notes 10 7/8s, 2003 8,357,625
59,500,000 Panamsat L.P. sr. sub. notes
stepped-coupon zero %
(11 3/8s, 8/1/98), 2003(d) 40,906,250
10,000,000 SFX Broadcasting sr. sub.
notes 11 3/8s, 2000 10,650,000
17,500,000 Summit Communications
Group, Inc. sr. sub. deb.
10 1/2s, 2005 18,987,500
209,277,313
Health Care (5.1%)
17,200,000 Abbey Healthcare Group, Inc.
sr. sub. notes 9 1/2s, 2002 17,286,000
6,300,000 American Healthcare
management Inc. sr. sub.
notes 10s, 2003 6,741,000
6,000,000 American Medical
International Inc. jr. sub.
deb. 15s, 2005 9,990,000
$ 12,000,000 Community Health Systems
sr. sub. notes 10 7/8s, 2003 $ 12,840,000
21,306,400 EPIC Healthcare Group, Inc.
jr. sub. bonds 11s, 2003(c) 12,943,638
39,250,000 EPIC Holdings Inc. sr. notes
stepped-coupon zero %
(12s, 3/15/97), 2002(d) 30,811,250
18,000,000 EPIC Holdings, Inc. sr. sub.
notes 10 7/8s, 2003 20,835,000
10,000,000 General Medical sr. sub.
notes 10 7/8s, 2003(b) 10,500,000
15,000,000 Mediplex Group, Inc. sr. sub.
notes 11 3/4s, 2002 16,425,000
7,500,000 Multicare Cos., Inc. sr. sub.
notes 12 1/2s, 2002 8,700,000
32,150,000 Ornda Healthcorp sr. sub.
notes 12 1/4s, 2002 36,008,000
6,600,000 Quorum Health Group, Inc.
sr. sub. notes 11 7/8s, 2002 7,491,000
3,000,000 Wright Medical Terminology
Inc. sr. secd. notes Ser. B,
10 3/4s, 2000(b) 3,090,000
193,660,888
Chemicals (5.0%)
6,450,000 Arcadian Partners L.P. sr.
notes Ser. B, 10 3/4s, 2005 6,756,375
46,000,000 G-I Holdings Inc. sr. notes
zero %, 1998(b) 30,820,000
31,225,000 Harris Chemical Corp. sr. sub.
notes 10 3/4s, 2003 33,644,938
6,925,000 PMI Acquisitions Corp. sr. sub.
notes 10 1/4s, 2003 7,409,750
32,846,000 PMI Holdings Corp. sub.
sics. deb. stepped-coupon
zero % (11 1/2s, 9/1/00),
2005(b)(d) 17,490,495
$ 42,600,000 Quantum Chemical Corp. sr.
sub. deb. 13s, 2004 $ 45,635,250
15,500,000 Quantum Chemical Corp. sr.
sub. notes 12 1/2s, 1999 16,255,625
18,960,000 UCC Investors Holding, Inc.
sub. notes stepped-coupon
zero % (10 1/2s, 5/1/98),
2005(d) 12,513,600
17,000,000 UCC Investor Holding, Inc.
sr. sub. notes 11s, 2003 18,445,000
188,971,033
Insurance (4.6%)
12,750,000 American Reinsurance Corp.
sr. sub. deb. 10 7/8s, 2004 14,829,844
25,250,000 Bankers Life Holding Corp. sr.
sub. notes Ser. A 13s, 2002 31,057,500
5,500,000 National RE Holdings Corp. sr.
sub. notes 14 1/2s, 1999 6,359,375
47,278,000 Premium Standard Farms deb.
zero %, 2003 35,399,403
22,461,000 Premium Standard Farms deb.
zero %, 2003 16,789,598
6,650,000 Premium Standard Farms
exch. pfd. units 12 1/2s,
2000(b) 7,248,500
29,600,000 Premium Standard Farms sr.
secd. notes 12s, 2000(b) 32,264,000
19,500,000 Reliance Group Holdings sr.
notes 9s, 2000 19,890,000
9,050,000 Reliance Group Holdings sr.
sub. notes 9 3/4s, 2003 9,231,000
173,069,220
Conglomerates (4.4%)
$ 55,166,000 Collins & Aikman Group, Inc.
deb. 15s, 1995 $ 56,407,235
1,250,000 Collins & Aikman Group, Inc.
deb. stepped-coupon 7 1/2s,
(10s, 1/31/94), 2005(d) 1,243,750
18,350,000 Collins & Aikman Group, Inc.
sr. sub. deb. 11 7/8s, 2001 18,808,750
60,700,000 Jordan Industries, Inc. sr.
notes 10 3/8s, 2003 62,521,000
8,800,000 McAndrews & Forbes
Holdings, Inc. sub. deb.
13s, 1999 8,844,000
<PAGE>
17,783,000 PA Holdings Corp. sr. sub.
notes 13 3/4s, 1999 19,116,725
166,941,460
Food (4.3%)
10,000,000 Chiquita Brands sr. notes
9 1/8s, 2004 9,937,500
63,675,000 Del Monte Corp. sub. deb.
12 1/4s, 2002 ($60,000,000
par acquired 3/12/93, cost
$61,830,000; $3,675,000
par acquired 10/18/93, cost
$3,675,000)(c)(e) 65,545,453
25,600,000 Fresh Del Monte Produce
Corp. sr. notes 10s, 2003(b) 25,344,000
10,000,000 Mafco, Inc. sr. sub. notes
11 7/8s, 2002 10,550,000
4,650,000 RJR Nabisco Inc. notes
9 1/4s, 2013 4,533,750
1,100,000 Rykoff Sexton sr. sub. notes
8 7/8s, 11/01/2003 1,122,000
$ 26,000,000 Specialty Foods units stepped-
coupon zero % (13s,
8/15/99), 2005(d) $ 13,780,000
30,450,000 Specialty Foods Corp. sr. sub.
notes Ser. B, 11 1/4s, 2003 32,277,000
163,089,703
Specialty Consumer Products (3.7%)
10,000,000 Equitable Bag Co. sr. notes
12 3/8s, 2002 7,500,000
53,925,000 Playtex Family Products Corp.
sr. sub. disc. notes 14 3/4s,
1997 57,295,313
32,740,000 Playtex Family Products Corp.
sr. sub. notes 9s, 2003 32,167,050
22,499,000 Playtex Family Group, Inc.
sub. notes ser. B, 15s, 2000 22,527,124
20,000,000 Playtex Family Group, Inc.
sub. notes 15s, 2000
(acquired 2/8/93 cost
$20,075,000)(e) 20,025,000
139,514,487
Retail (3.4%)
20,000,000 County Seat Stores sr. sub.
notes 12s, 2001 20,050,000
7,000,000 Duane Reade Corp. sr. notes
12s, 2002 7,630,000
46,610,000 Duane Reade Holding Corp.
sub. notes stepped-coupon
zero % (15s, 9/15/99),
2004(d) 25,169,400
61,500,000 Revlon Consumer Products
Corp. sr. notes Ser. B,
9 3/8s, 2001 59,040,000
<PAGE>
$ 16,700,000 Specialty Retailers, Inc. sr.
sub. notes 11s, 2003 $ 17,535,000
129,424,400
Food Chains (2.9%)
86,550,000 Grand Union Co. sr. sub.
notes 12 1/4s, 2002 91,310,250
16,170,000 Megafoods Stores Inc. sr.
notes 10 1/4s, 2000 16,210,425
107,520,675
Finance (2.7%)
11,000,000 American Annuity Group, Inc.
sr. notes 9 1/2s, 2001 11,302,500
6,200,000 Chevy Chase Savings Bank
Inc. sub. deb. 9 1/4s, 2005 6,448,000
15,000,000 Comdata Network, Inc. sr.
notes 12 1/2s, 1999 16,575,000
50,000,000 Ford Motor Credit med. term
notes 18s, 1994 51,250,000
6,500,000 PRT Funding Corp. sr. notes
11 5/8s, 2004 6,370,000
7,980,000 U.S. Banknote Corp. sr. notes
10 3/8s, 2002 8,578,500
100,524,000
Cellular Communications (2.4%)
24,000,000 Cellular, Inc. sr. sub. disc.
notes stepped-coupon
zero % (11 3/4s, 9/1/98),
2003(d) 16,560,000
37,530,000 Cencall Communications
Corp. sr. disc. notes
stepped-coupon zero %
(10 1/8s, 1/15/99), 2004(d) 24,019,200
$ 35,000,000 Centennial Cellular Corp. sr.
notes 8 7/8s, 2001 $ 34,737,500
19,700,000 MFS Communications Inc. sr.
disc. notes stepped-coupon
zero % (9 3/4s, 1/15/99), 2004(d) 12,460,250
3,420,000 USA Mobile Commerce Corp.
sr. note 9 1/2s, 2004 3,351,600
91,128,550
Containers (2.2%)
24,000,000 Anchor Glass Container Corp.
sr. sub. deb. 9 7/8s, 2008 25,200,000
9,100,000 Container Corp. of America
sub. deb. 14s, 2001 10,192,000
27,800,000 Ivex Packaging Corp. sr. sub.
notes 12 1/2s, 2002 30,927,500
13,770,000 United States Can Co. sr. sub.
notes 13 1/2s, 2002 15,973,200
82,292,700
Basic Industrial Products (2.1%)
6,500,000 Canandiague Wine sr. sub.
notes 8 3/4s, 2003 6,451,250
<PAGE>
3,500,000 Congoleum Corp. sr. notes 9s,
2001 3,482,500
8,915,000 Corporate Express, Inc.sr.
sub. notes 9 5/8s, 3/15/2004 8,825,850
20,500,000 Jack Eckered Corp. sr. sub.
notes 9 1/4s, 2004 20,705,000
10,000,000 Joy Technologies sr. notes
10 1/4s, 2003 10,500,000
4,225,000 Koppers Industries sr. note
8 1/2s, 2/01/2004 4,235,563
17,550,000 Specialty Equipment Co. sr.
sub. notes 11 3/8s, 2003 18,515,250
$ 7,700,000 Universal Outdoor sr. note 11s,
2003(b) $ 7,854,000
80,569,413
Electrical Equipment (2.1%)
3,500,000 Ampex Group, Inc. sr. notes
13 1/4s, 1996 665,000
34,450,000 Amphenol Corp. sr. sub. notes
12 3/4s, 2002 39,616,200
72,250,000 International Semi-Tech Corp.
sr. secd. disc. notes stepped-
coupon zero % (11 1/2s,
8/15/00), 2003(d) 38,292,500
78,573,700
Automotive Parts (1.9%)
34,770,000 Auburn Hills Trust gtd. exch.
certif. 12 3/8s, 2020 51,829,031
10,000,000 Exide Corp. sr. sub. deb.
stepped-coupon zero %
(12 1/4s, 12/15/97), 2004(d) 7,250,000
10,000,000 Key Plastics Corp. sr. notes
14s, 1999 12,100,000
71,179,031
Aluminum (1.8%)
61,750,000 Kaiser Aluminum & Chemical
Corp. sr. sub. notes 12 3/4s,
2003 66,072,500
Metals and Mining (1.7%)
4,500,000 Bayou Steel Corp. 1st mtge.
10 1/4s, 2001 4,516,875
8,750,000 Haynes International, Inc.
Ser. B, sr. notes 11 1/4s, 1998 9,012,500
$ 13,750,000 Haynes International, Inc. sr.
sub. notes 13 1/2s, 1999 $ 14,300,000
2,082,000 Horsehead Industries, Inc.
sr. sub. ext. reset notes
13 1/2s, 1994 2,082,000
19,450,000 Horsehead Industries, Inc.
sub. notes 14s, 1999 19,255,500
5,500,000 Geneva Steel Corp. sr. notes
9 1/2s, 2004 5,555,000
10,000,000 WCI Steel Inc. sr. notes
10 1/2s, 2002(b) 10,725,000
65,446,875
Electric Utilities (1.7%)
8,000,000 Midland Funding Corp. II deb.
Ser. B, 13 1/4s, 2006 9,280,000
22,000,000 Texas New Mexico Power
Corp. secd. deb. 12 1/2s, 1999 24,310,000
31,750,000 Maxus Energy Corp. global
notes 9 3/8s, 2003 31,591,250
65,181,250
Gas (1.5%)
50,800,000 TransTexas Gas Corp. sr.
secd. notes 10 1/2s, 2000 54,864,000
Lodging (1.1%)
12,000,000 Red Roof Inns sr. notes
9 5/8s, 2003(b) 12,300,000
8,610,000 Santa Fe Hotel, Inc. units
11s, 2000 9,040,500
$ 21,700,000 John Q Hammons Hotel
1st notes 8 7/8s, 2004 $ 21,374,000
42,714,500
Building Products (1.0%)
9,347,000 American Standard, Inc. sub.
disc. deb. 14 1/4s, 2003 9,884,453
500,000 Nortek Inc. sr. sub. deb.
13 1/2s, 1997 510,000
25,000,000 Southdown, Inc. sr. sub. notes
Ser. B, 14s, 2001 29,250,000
39,644,453
Apparel (.9%)
32,500,000 Guess Jeans, Inc. 9 1/2
8/15/2003(b) 33,800,000
Consumer Non-Durables (0.8%)
31,000,000 Westpoint Stevens, Inc. sr.
sub. deb. 9 3/8s, 2005 31,310,000
Textiles (.8%)
5,500,000 Foamex (L.P.) Capital Corp.
sr. notes 11 1/4s, 2002 6,050,000
22,000,000 Foamex (L.P.) Capital Corp.
sr. sub. deb. 11 7/8s, 2004 24,420,000
30,470,000
Environmental Control (.7%)
25,000,000 ICF Kaiser International Inc.
sr. sub. notes 12s, 2003 26,062,500
Advertising (.6%)
$ 9,150,000 Lamar Advertising Co. sr.
secd. notes 11s, 2003 $ 9,723,669
12,000,000 Outdoor Systems, Inc. sr.
notes 10 3/4s, 2003 12,600,000
22,323,669
Business Services (0.6%)
13,000,000 Bell & Howell Group, Inc. deb.
stepped-coupon zero %
(11 1/2s, 3/1/00), 2005(d) 7,150,000
<PAGE>
35,645,850 DR Holdings Inc. sr. sub. deb.
15 1/2s, 2002(c)(f) 5,079,534
1,570,000 Page Mart Inc. units stepped-
coupon zero % (12 1/4s,
11/1/98), 2003(b)(d) 9,773,250
22,002,784
Pharmaceuticals (.5%)
15,000,000 Smithkline Beecham Corp.
med. term notes 17 3/4s, 1996 18,590,625
Real Estate (.5%)
17,750,000 Scotsman Group Inc. sr. secd.
notes 9 1/2s, 2000 18,149,375
Tobacco (.5%)
17,000,000 Consolidated Cigar Corp. sr.
sub. notes 10 1/2s, 2003 17,000,000
Busses (0.4%)
12,500,000 Blue Bird Acquisition Corp. sr.
sub. deb. Ser. B, 11 3/4s, 2002 13,625,000
Shipping (0.2%)
$ 8,000,000 Viking Star Shipping 1st pfd.
mtge. notes 9 5/8s, 2003 $ 8,680,000
Home Furnishings (.2%)
7,497,600 Simmons Mattress Corp. deb.
8s, 2003(b)(c) 7,291,416
Soft Drinks (.2%)
5,000,000 Dr. Pepper Bottling Co. (Texas)
sr. disc. notes stepped-
coupon zero % (11 5/8s,
2/15/98), 2003(d) 3,500,000
Total Corporate Bonds
and Notes
(cost $3,474,489,258) $3,660,283,023

Convertible Preferred Stocks (0.5%)(a)(cost $6,537,141)
Number of Shares Value
130,000 Chrysler Corp. Ser. A, $4.625
dep. shs. cv. pfd. $ 20,670,000

Common Stocks (0.4%)(a)
Number of Shares Value
2,426 CDK Holding Corp. rights
(acquired 10/31/18 cost
$135,898)(e)(f) $ 77,632
55,025 Dr. Pepper/Seven-Up Cos.,
Inc.(f) 1,348,113
66,667 Duane Reade Corp. (acquired
9/24/92 cost $133,333)(e) 133,333
13,300 Finlay Enterprises Inc. Class A 199,500
70,086 Grand Casinos, Inc.(f) 2,041,255
95,331 Kendall International, Inc. $ 4,242,230
11,048 PMI Holdings Corp. 773,360
5,502 Premium Holdings (L.P.)Corp. 550,200
79 RJR Nabisco Holdings Corp.(f) 543
196,147 SPI Holdings Inc. Class B 1,250,437
1,688,900 Solon Automated Services,
Inc .($1,515,680 par
acquired 6/18/92 cost
$905,100; $173,220 par
acquired 8/14/92, cost
$96,529)(e) 1,055,563
390,000 Specialty Foods Corp. 780,000
81,372 Taj Mahal Holding Corp.
Class A 1,790,184
96,264 Computervision Corp.
(acquired 8/21/92 cost
$866,376)(e) 294,808
120,329 Wang Laboratories, Inc. 2,135,840
Total Common Stocks
(cost $13,217,441) $ 16,672,998

Preferred Stocks (0.4%)(a)
Number of Shares Value
7,407 Duane Reade Corp. zero %
pfd. (acquired 9/24/92,
cost $1,199,999)(e) $ 1,199,999
2,307,505 Playtex Family Products Corp.
$0.14 jr. pfd. (acquired
6/3/92, cost $3,692,008)(e) 4,615,010
560,000 Playtex Family Products Corp.
$0.14 jr. pfd. (acquired
2/6/92 cost $859,544)(e) 1,120,000
4,000,000 Playtex Family Products Corp.
Ser. B, $3.50, pfd. (acquired
2/6/92 cost $6,136,400)(e) 8,000,000
Total Preferred Stocks
(cost $11,887,951) $ 14,935,009

Warrants (0.4%)(a)(f)
Number of Warrants Expiration Date Value
265,000 Becker Gaming
Corp.(b) 11/15/00 $ 662,500
5,837 Belle Casinos Inc. 10/15/03 233,480
4,015 CDK Holding Corp.
Class A (acquired
10/31/88, cost
$224,921)(e) 7/7/99 128,480
4,294 CDK Holding Corp.
Class B (acquired
10/31/88 cost
$120,273)(e) 7/7/99 128,820
9,000 Capital Gaming Inc. 2/1/99 22,500
42,125 Casino America Inc. 11/15/96 389,659
53,280 Casino Magic
Finance Corp. 10/14/96 106,560
120,548 Cinemark Mexico 8/1/03 1,115,069
<PAGE>
1,688,688 Gaylord Container Corp.
(1,367,998 units
acquired 12/2/93
cost $4,671,713;
320,690 units acquired
1/20/94 cost
$1,614,674)(e) 7/31/95 7,388,010
7,000 General Media 126,000
1,870 Lear Holdings Corp. 841,500
30,000 President Riverboat
Casinos 9/15/96 112,500
220,000 Southdown, Inc.
(acquired 10/31/91
cost $660,000)(e) 11/1/96 2,915,000
8,936 Southland Corp. 41,329
402 Wright Medical
Technology,
Inc. 6/30/03 44,220
Total Warrants
(cost $10,069,845) $ 14,255,627

Yankee Bonds and Notes (0.3%)(a)
Principal Amount Value
$ 5,395,000 Banco de Galicia Inc. global
notes 9s, 2003 $ 5,246,638
7,230,000 Eletson Holdings, Inc. 1st pfd.
mtge. notes 9 1/4s, 2003 7,519,200
Total Yankee Bonds
and Notes
(cost $12,600,291) $ 12,765,838

Short-Term Investments (0.7%)(a)
Principal Amount Value
$ 5,573,000 Interest in $547,577,000
repurchase agreement
dated February 28, 1994
with Goldman Sachs & Co.,
Inc. due March 1, 1994 with
respect to various U.S.
Treasury obligations--
maturity value of $5,573,531
for an effective yield of 3.43% $ 5,573,531
20,000,000 IBM Credit Corp. 3.42,
March 9, 1994 19,982,900

Total Short-Term Investments
(cost $25,556,431) $ 25,556,431

Total Investments
(cost $3,554,358,358)(g) $3,765,138,926

(a) Percentages indicated are based on net assets of
$3,762,516,562, which correspond to a net asset value per share
for class A and class B share of $13.42 and $13.39 respectively.

(b) Security exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in
transactions exempt from registration, normally to qualified
institutional buyers. For the period ended February 28, 1994,
these securities amounted to $316,104,886 or 8.4% of net assets.

(d) The interest rate and date shown paranthetically represent
the next interest rate to be paid and the date the Fund will
begin accruing this rate.

(e) Restricted as to public resale. At the date of aquisition,
these securities were valued at cost. There were no outstanding
unrestricted of the same class as those held. Total market value
of restricted securities owned at February 28, 1994 was
$112,627,108 or 3.0% of net assets.

(f) Non-income producing security.

(g) The aggregate identified cost on a tax basis is
$3,554,360,427, resulting in gross unrealized appreciation and
depreciation of $253,825,164 and $43,046,665, respectively, or
net unrealized appreciation of $210,778,499.
<PAGE>
<TABLE>
<CAPTION>

Statement of
assets and liabilities
February 28, 1994

<S> <C> <C> <C>
Assets
Investments in securities, at value
(identified cost $3,554,358,358) (Note 1) $3,765,138,926
Interest and other receivables 86,264,467
Receivable for shares of the Fund sold 17,238,154
Receivable for securities sold 5,767,396

Total assets 3,874,408,943

Liabilities
Payable to the subcustodian (Note 2) $ 521
Payable for securities purchased 77,199,588
Payable for shares of the Fund repurchased 26,660,130
Payable for compensation of Manager (Note 2) 5,052,523
Payable for administrative services (Note 2) 29,376
Payable for compensation of Trustees (Note 2) 7,609
Payable for investor servicing and custodian fees (Note 2) 954,885
Payable for distribution fees (Note 2) 1,713,845
Other accrued expenses 239,212
Payable for closed forward currency contracts 34,692

Total liabilities 111,892,381

Net assets $3,762,516,562

Represented by
Paid-in capital (Notes 1, 4 and 5) $4,022,366,078
Distributions in excess of net investment income (2,212,781)
Accumulated net realized loss on investment transactions (Note 1) (468,417,303)
Net unrealized appreciation of investments 210,780,568

Total -- Representing net assets applicable to capital shares
outstanding $3,762,516,562

Computation of net asset value and offering price
Net asset value and redemption price of Class A shares ($3,276,332,422
divided by 244,057,691 shares) $13.42

Offering price per share (100/95.25 of $13.42)* $14.09
Net asset value and offering price of Class B shares ($486,184,140 divided
by 36,303,586 shares)** $13.39

*On single retail sales of less than $50,000. On sales of $50,000 or more and on group
sales the offering price is reduced.

**Redemption price per share is equal to net asset value less any applicable contingent
deferred sales charge.

/TABLE
<PAGE>
<TABLE>
<CAPTION>

Statement of
operations
Six months ended February 28, 1994

<S> <C> <C>
Investment income:
Interest $194,138,943
Dividends 300,625

Total investment income 194,439,568

Expenses:
Compensation of Manager (Note 2) $9,855,215
Investor servicing and custodian fees (Note 2) 1,763,118
Compensation of Trustees (Note 2) 48,879
Auditing 91,174
Report to shareholders 123,761
Legal 22,873
Postage 168,992
Administrative services (Note 2) 15,788
Distribution fees -- Class A (Note 2) 4,009,537
Distribution fees -- Class B (Note 2) 1,797,628

Total expenses 17,896,965

Net investment income 176,542,603

Net realized gain on investments (Notes 1 and 3) 73,699,100
Net unrealized appreciation of investments during the period 41,965,380

Net gain on investment transactions 115,664,480

Net increase in net assets resulting from operations $292,207,083

/TABLE
<PAGE>
<TABLE>
<CAPTION>

Statement of
changes in net assets

For the six
months ended Year ended
February 28 August 31
1994 1993
<S> <C> <C>
Increase in net assets
Operations:
Net investment income $ 176,542,603 $ 325,034,555
Net realized gain on investments 73,699,100 68,362,748
Net realized loss on forward currency contracts -- (40,307)
Net realized loss on foreign currency -- (108,122)
Net unrealized appreciation of investments, options and
forward currency contracts 41,965,380 3,469,456

Net increase in net assets resulting from operations 292,207,083 396,718,330

Undistributed net investment income included in price of
shares sold and repurchased, net -- 1,485,874
Distributions to shareholders from:
Net investment income
Class A (162,489,035) (320,268,578)
Class B (16,821,386) (5,027,877)
In excess of net investment income (Note 1)
Class A -- (7,618,377)
Class B -- --
Increase from capital share transactions (Note 4)221,024,899 914,023,769

Total increase in net assets 333,921,561 979,313,141
<PAGE>
Net assets
Beginning of period 3,428,595,001 2,449,281,860
End of period (including distributions in excess of
net investment income of $(2,212,781) and
$(4,761,597), respectively) $3,762,516,562 $3,428,595,001

/TABLE
<PAGE>
<TABLE>
<CAPTION>

Financial highlights*
(For a share outstanding throughout the period)

March 1, 1993
Six months (commencement Six months
ended of operations) to ended
February 28 August 31 February 28 Year ended August 31
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Class B Class A
Net Asset Value,
Beginning of Period $12.99 $12.84 $13.01 $12.76

Investment Activities
Net Investment Income .61 .62 .65 1.46
Net Realized and
Unrealized Gain (Loss)
on Investments .41 .23 .42 .28

Total from
Investment
Operations 1.02 .85 1.07 1.74

Less Distributions from :
Net Investment
Income (.62) (.70) (.66) (1.45)
In excess of net
investment income -- -- -- (.04)
Net Realized Gain
on Investments -- -- -- --
Paid-in Capital -- -- -- --

Total Distributions (.62) (.70) (.66) (1.49)

Net Asset Value,
End of Period $13.39 $12.99 $13.42 $13.01<PAGE>
Total Investment
Return at Net
Asset Value (%)(a) 16.00(b) 13.60(b) 16.86(b) 14.50

Net Assets,
End of Period
(in thousands) $486,184 $238,647 $3,276,332 $3,189,948

Ratio of Expenses to
Average Net Assets (%) 1.66(b) 1.69(b) .91(b) .92
Ratio of Net Investment
Income to Average
Net Assets (%) 9.11(b) 9.76(b) 9.81(b) 11.27
Portfolio Turnover (%)** 25.65(c) 50.90 25.65(c) 50.90

See page 22 for notes to Financial highlights.

/TABLE
<PAGE>
<TABLE>
<CAPTION>

Financial highlights*(continued)
(For a share outstanding throughout the period)

Year ended August 31
1992 1991 1990 1989 1988 1987 1986 1985 1984
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A
Net Asset Value,
Beginning of Period $11.55 $10.99 $13.84 $14.57 $15.28 $15.52 $15.42 $14.82 $17.24

Investment Activities
Net Investment Income 1.57 1.52 1.64 1.89 1.82 1.91 1.96 2.11 2.18
Net Realized and
Unrealized Gain (Loss)
on Investments 1.22 .66 (2.69) (.71) (.67) (.22) .34 .71 (1.65)

Total from
Investment
Operations 2.79 2.18 (1.05) 1.18 1.15 1.69 2.30 2.82 .53

Less Distributions from :
Net Investment
Income (1.56) (1.52) (1.67) (1.86) (1.86) (1.93) (2.20) (2.22) (2.22)
In excess of net
investment income -- -- -- -- -- -- -- -- --
Net Realized Gain
on Investments (.02) -- (.02) (.05) -- -- -- -- (.73)
Paid-in Capital -- (.10) (.11) -- -- -- -- -- --

Total Distributions (1.58) (1.62) (1.80) (1.91) (1.86) (1.93) (2.20) (2.22) (2.95)

Net Asset Value,
End of Period $12.76 $11.55 $10.99 $13.84 $14.57 $15.28 $15.52 $15.42 $14.82
<PAGE>
Total Investment
Return at Net
Asset Value (%)(a) 25.50 22.47 (7.58) 8.47 8.25 11.34 15.76 20.32 3.19

Net Assets,
End of Period
(in thousands) $2,449,282 $1,832,181 $1,651,544 $2,415,203 $2,390,123 $2,287,344 $2,361,819 $1,308,290 $646,269

Ratio of Expenses to
Average Net Assets (%) .97 1.09 .95 .72 .61 .61 .57 .60 .64
Ratio of Net Investment
Income to Average
Net Assets (%) 12.63 14.18 13.76 13.15 12.38 12.15 12.34 13.64 13.75
Portfolio Turnover (%)* 47.05 72.53 47.64 51.03 75.38 92.81 77.21 160.84 238.88

*Financial highlights for periods ended through August 31, 1992 have been reclassified and data has been presented to
conform with the requirements issued by the SEC in April 1993. As of September 1, 1993, the Fund discontinued the use of
equalization accounting (see Note 1 of Notes to Financial Statements).
**Portfolio turnover calculations for fiscal 1985 and thereafter include transactions in U.S. government securities with
maturities greater than one year.
Prior period portfolio turnover calculations exclude all transactions in U.S. government securities.
(a)Total Investment Return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b)Annualized
(c)Not annualized

/TABLE
<PAGE>
Notes to
financial statements
February 28, 1994

Note 1 Significant accounting policies

The Fund is registered under the Investment Company Act of 1940,
as amended, as a diversified, open-end management investment
company. The Fund seeks high current income by investing
primarily in high-yielding, lower-rated fixed-income securities
constituting a portfolio that Putnam Management believes does not
involve undue risk to income or principal.

The Fund offers both Class A and Class B shares. The Fund
commenced its public offering of Class B shares on March 1, 1993.
Class A shares are sold with a maximum front-end sales charge of
4.75%. Class B shares do not pay a front-end sales charge, but
pay a higher ongoing distribution fee than Class A shares, and
may be subject to a contingent deferred sales charge, if those
shares are redeemed within six years of purchase. Expenses of the
Fund are borne pro-rata by the holders of both classes of shares,
except that each class bears expenses unique to that class
(including the distribution fees applicable to such class), and
votes as a class only with respect to its own distribution plan
or other matters on which a class) vote is required by law or
determined by the Trustees. Shares of each class would receive
their pro-rata share of the net assets of the Fund, if the Fund
were liquidated. In addition, the Trustees declare separate
dividends on each class of shares.

The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of its
financial statements. The policies are in conformity with
generally accepted accounting principles.

A) Security valuation Investments for which market quotations are
readily available are stated at market value, which is determined
using the last reported sale price, or, if no sales are reported-
- -as in the case of some securities traded over-the-counter--the
last reported bid price, except that certain U.S. government
obligations are stated at the mean between the last reported bid
and asked prices. Securities quoted in foreign currencies are
translated into U.S. dollars at the current exchange rate.
Short-term investments having remaining maturities of 60 days or
less are stated at amortized cost which approximates market, and
other investments, including restricted securities, are stated at
fair value following procedures approved by the Trustees. Market
quotations are not considered to be readily available for
long-term corporate bonds and notes; such investments are stated
at fair value on the basis of valuations furnished by a pricing
service, approved by the Trustees, which determines valuations
for normal, institutional-size trading units of such securities
using methods based on market transactions for comparable
securities and various relationships between securities that are
generally recognized by institutional traders. (See Section E of
Note 1 with respect to valuation of options and forward currency
contracts.)

B) Joint trading account Pursuant to an exemptive order issued by
the Securities and Exchange Commission, the Fund may transfer
uninvested cash balances into a joint trading account, along with
the cash of other registered investment companies managed by
Putnam Investment Management, Inc. (Putnam Management) the Fund's
Manager, a wholly-owned subsidiary of Putnam Investments, Inc.,
and certain other accounts. These balances may be invested in one
or more repurchase agreements and/or short-term money market
instruments.

C) Repurchase agreements The Fund, or any joint trading account,
through its custodian, receives delivery of the underlying
securities, the market value of which at the time of purchase is
required to be in an amount at least equal to the resale price,
including accrued interest. The Fund's Manager is responsible for
determining that the value of these underlying securities is at
all times at least equal to the resale price, including accrued
interest.

D) Security transactions and related investment income Security
transactions are accounted for on the trade date (date the order
to buy or sell is executed). Interest income is recorded on the
accrual basis and dividend income is recorded on the ex-dividend
date.

Discount on zero coupon bonds, original issue discount bonds and
step-up bonds is accreted according to the effective yield
method. Certain securities held by the Fund pay interest in the
form of additional securities; interest on such securities is
recorded on the accrual basis at the lower of coupon rate of
market value of the securities to be received, and is allocated
to the cost of the securities received on the payment date.

Foreign-denominated receivables and payables are
"marked-to-market" using the current exchange rate. The
fluctuation between the original exchange rate and the current
exchange rate is recorded as unrealized gain or loss. Upon
receipt or payment, the Fund realizes a gain or loss on foreign
currency amounting to the difference between the original value
and the ending value of the receivable or payable. Foreign
currency gains and losses related to interest receivable are
reported as part of interest income.

E) Option accounting principles When the Fund writes a call or
put option an amount equal to the premium received by the Fund is
included in the Fund's "Statement of assets and liabilities" as
an asset and an equivalent liability. The amount of the liability
is subsequently "marked-to-market" to reflect the current market
value of the option written. The current market value of an
option is the last sale price or, in the absence of a sale, the
last offering price. If an option expires on its stipulated
expiration date, or if the Fund enters into a closing purchase
transaction, the Fund realizes a gain (or loss if the cost of a
closing purchase transaction exceeds the premium received when
the option was written) without regard to any unrealized gain or
loss on the underlying security, and the liability related to
such option is extinguished. If a written call option is
exercised, the Fund realizes a gain or loss from the sale of the
underlying security and the proceeds of the sale are increased by
the premium originally received. If a written put option is
exercised, the amount of the premium originally received reduces
the cost of the security which the Fund purchases upon exercise
of the option.

The Fund writes covered call options; that is, options for which
it holds the underlying security or its equivalent. Accordingly,
the risk in writing a call option is that the Fund relinquishes
the opportunity to profit if the market price of the underlying
security increases and the option is exercised. In writing a put
option, the Fund assumes the risk of incurring a loss if the
market price of the underlying security decreases and the option
is exercised.

The premium paid by the Fund for the purchase of a call or put
option is included in the Fund's "Statement of assets and
liabilities" as an investment and subsequently "marked-to-market"
to reflect the current market value of the option. If an option
which the Fund has purchased expires on the stipulated expiration
date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the
Fund realizes a gain or loss, depending on whether proceeds from
the closing sale transaction are greater or less than the cost of
the option. If the Fund exercises a call option, the cost of the
securities acquired by exercising the call is increased by the
premium paid to buy the call. If the Fund exercises a put option,
it realizes a gain or loss from the sale of the underlying
security and the proceeds from such sale are decreased by the
premium originally paid.

Options on foreign currencies The Fund writes and purchases put
and call options on foreign currencies. The accounting principles
and risks involved are similar to those described above relating
to options on securities. The amount of potential loss to the
Fund upon exercise of a written call option is the value (in U.S.
dollars) of the currency sold, converted at the spot price, less
the value of U.S. dollars received in exchange. The amount of
potential loss to the Fund upon exercise of a written put option
is the value (in U.S. dollars) of the currency received converted
at the spot price, less the value of the U.S. dollars paid in
exchange.
<PAGE>
Forward currency contracts A forward currency contract is an
agreement between two parties to buy and sell a currency at a set
price on a future date. The market value of the contract will
fluctuate with changes in currency exchange rates. The contract
is "marked-to-market" daily and the change in market value is
recorded by the Fund as an unrealized gain or loss. When the
contract is closed, the Fund records a realized gain or loss
equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed. The
maximum potential loss from forward currency contacts is that the
aggregate face value in U.S. dollars at the time the contact was
opened; however, management believes the likelihood of such a
loss to be remote.

F) Federal taxes It is the policy of the Fund to distribute all
of its income within the prescribed time and otherwise comply
with the provisions of the Internal Revenue Code applicable to
regulated investment companies. It is also the intention of the
Fund to distribute an amount sufficient to avoid imposition of
any excise tax under Section 4982 of the Internal Revenue Code of
1986. Therefore, no provision has been made for federal taxes on
income, capital gains or unrealized appreciation of securities
held and excise tax on income and capital gains.

At August 31, 1993, the Fund had approximately $541,666,411 in
capital loss carryovers available to offset future realized
capital gains, if any. To the extent that the capital loss
carryovers are used to offset realized gains, it is unlikely that
the gains so offset will be distributed to shareholders, since
any such distribution might be taxable as ordinary income.
Loss Carryover Expiration
$ 58,489,469 August 31, 1996
$53,128,974 August 31, 1997
$23,057,542 August 31, 1998
$296,761,877 August 31, 1999
$110,228,549 August 31, 2000

$541,666,411

G) Distributions to shareholders Distributions to shareholders
are recorded by the Fund on the ex-dividend date. At certain
times, the Fund may pay distributions at a level rate even
though, as a result of market conditions or investment decisions,
the Fund may not achieve projected investment results for a given
period.

H) Equalization Prior to September 1, 1993, the Fund used the
accounting practice known as equalization to keep a continuing
shareholder's per share interest in undistributed net investment
income unaffected by sales or repurchases of Fund shares. This
was accomplished by allocating a per share portion of the
proceeds from sales and the costs of repurchases of shares to
undistributed net investment income.

As of September 1, 1993, the Fund discontinued using
equalization. This change has no effect on the Fund's total net
assets, net asset value per share, or its net increase (decrease)
in net assets from operations. Discontinuing the use of
equalization will result in simpler financial statements. The
cumulative effect of the change was to decrease undistributed net
investment income and increase paid-in capital previously
reported through August 31, 1993 by $45,083,291.

Note 2 Management fee, administrative services, and other
transactions

Compensation of Putnam Management, the Fund's Manager, for
management and investment advisory services is paid quarterly
based on the average net assets of the Fund for the quarter. Such
fee is based on the following annual rates: 0.70% of the first
$500 million of average net assets, 0.60% of the next $500
million, 0.55% of the next $500 million, 0.50% of any amount over
$1.5 billion, subject to reduction in any year to the extent that
expenses (exclusive of brokerage, interest and taxes) of the Fund
exceed 2.5% of the first $30 million of average net assets, 2.0%
of the next $70 million and 1.5% of any amount over $100 million,
and by the amount of certain brokerage commissions and fees (less
expenses) received by affiliates of the Manager on the Fund's
portfolio transactions.

The Fund also reimburses the Manager for the compensation and
related expenses of certain officers of the Fund and their staff
who provide administrative services to the Fund. The aggregate
amount of all such reimbursements is determined annually the
Trustees. For the six months ended February 28, 1994, the Fund
paid $15,788 for these services.

Trustees of the Fund receive an annual Trustee's fee of $5,150
and an additional fee for each Trustees' meeting attended.
Trustees who are not interested persons of the Manager and who
serve on committees of the Trustees receive additional fees for
attendance at certain committee meetings.

Custodial functions for the Fund are provided by Putnam Fiduciary
Trust Company (PFTC), a subsidiary of Putnam Investments, Inc.
Investor servicing agent functions are provided by Putnam
Investor Services, a division of PFTC. Fees paid for these
investor servicing and custodial functions for the six months
ended February 28, 1994 amounted to $1,763,118.

Investor servicing and custodian fees reported in the Statement
of operations for the six months ended February 28, 1994 have
been reduced by credits allowed by PFTC.

The Fund has adopted a distribution plan with respect to its
Class A shares (the "Class A Plan") pursuant to Rule 12b-1 under
the Investment Company Act of 1940. The purpose of the Class A
Plan is to compensate Putnam Mutual Funds Corp., a wholly-owned
subsidiary of Putnam Investments Inc., for services provided and
expenses incurred by it in distributing Class A shares. The
Trustees have approved payment by the Fund to Putnam Mutual Funds
Corp. at an annual rate of 0.25% of the Fund's average net assets
attributable to Class A sharess. For the six months ended
February 28, 1994, the Fund paid $4,009,537 in distribution fees
for Class A shares.

During the six months ended February 28, 1994, Putnam Mutual
Funds Corp., acting as an underwriter, received net commissions
of $709,235 from the sale of Class A shares of the Fund.

A deferred sales charge of up to 1% is assessed on certain
redemptions of Class A shares purchased as part of an investment
of $1 million or more. For the six months ended February 28,
1994, Putnam Mutual Funds Corp., acting as underwriter, received
$78,542 on Class A redemptions.

The Fund has adopted a distribution plan with respect to its
Class B shares (the "Class B Plan") pursuant to Rule 12b-1 under
the Investment Company Act of 1940. The purpose of Class B Plan
is to compensate Putnam Mutual Funds Corp.. for services provided
and expenses incurred by it in distributing Class B shares. The
Class B Plan provides for payments by the Fund to Putnam Mutual
Funds Corp. at an annual rate of 1.00% of the Fund's average net
assets attributable to Class B shares. For the six months ended
February 28, 1994, the Fund paid Putnam Mutual Funds Corp.
distribution fees of $1,797,628 for Class B shares.

Putnam Mutual Funds Corp. also receives the proceeds on the
contingent deferred sales charges on its Class B share
redemptions within six years of purchase. The charge is based on
declining rates, which begin at 5% of the net asset value of the
redeemed shares. Putnam Mutual Funds Corp. received contingent
deferred sales charges of $455,458 from redemptions during the
six months ended to February 28, 1994.

As part of the custodian contract between PFTC and the
subcustodian bank, the subcustodian has a lien on the securities
of the Fund to the extent permitted by the Fund's investment
restrictions to cover any advances made by the subcustodian for
the settlement of securities purchased by the Fund.

Note 3 Purchases and sales of securities

During the six months ended February 28, 1994, purchases and
sales of investment securities other than short-term investments
aggregated $1,224,312,727 and $873,474,325, respectively. There
were no purchases and sales of U.S. government obligations. In
determining the net gain or loss on securities sold, the cost of
securities has been determined on the identified cost basis.
<PAGE>
<TABLE>
<CAPTION>

Note 4 Capital shares

At February 28, 1994, there was an unlimited number of shares of beneficial interest
authorized. Transactions in capital shares were as follows:

Six months ended Year ended
February 28 August 31
1994 1993
Class A Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Shares sold 39,995,225 $526,065,850 106,922,442 $1,365,004,561
Shares issued in connection with
reinvestment of distributions 5,996,595 78,988,294 12,527,891 159,850,188
45,991,820 605,054,144 119,450,333 1,524,854,749
Shares repurchased (47,036,100) (620,477,522) (66,328,158) (847,829,579)
Portion represented by
undistributed net
investment income -- -- -- (1,062,770)
Net increase (decrease) (1,044,280) $ (15,423,378) 53,122,175 $ 675,962,400

March 1, 1993
Six months (commencement
ended of operations) to
February 28 August 31
1994 1993
Class B Shares Amount Shares Amount
Shares sold 22,203,382 $292,925,888 19,267,231 $250,134,448
Shares issued in connection with
reinvestment of distributions 628,664 8,286,721 194,584 2,522,150
22,832,046 301,212,609 19,461,815 252,656,598
Shares repurchased (4,901,241) (64,764,332) (1,089,034) (14,172,126)
Portion represented by
undistributed net
investment income -- -- -- (423,103)
Net increase 17,930,805 $236,448,277 18,372,781 $238,061,369
/TABLE
<PAGE>
Note 5 Reclassification of Capital Accounts

Effective September 1, 1993, Putnam High Yield Trust has adopted
the provisions of Statement of Position 93-2 "Determination,
Disclosure and Financial Statement Presentation of Income,
Capital Gain and Return of Capital distributions by Investment
Companies (SOP). The SOP requires the Fund to report the
undistributed net investment income (accumulated loss) and
accumulated net realized gain (loss) accounts in such a manner as
to approximate amounts available for future tax distributions (or
to offset future realized capital gains). In implementing the SOP
the Fund has reclassified $20,782,687 to increase accumulated net
realized loss, $50,399,926 to decrease distributions in excess of
net investment income, with a decrease of $29,617,239 to
additional paid-in capital. These adjustments represent the
cumulative amounts necessary to report these balances on a tax
basis through August 31, 1993. These reclassifications which have
no impact on the total net asset value of the Fund are primarily
attributable to tax equalization which is treated differently in
the computation of distributable income and capital gains under
federal income tax rules and regulations versus generally
accepted accounting principles.
<PAGE>
Fund
performance
supplement

Putnam High Yield Trust is a portfolio managed for high current
income primarily through investments in high-yielding,
lower-rated fixed income securities. The fund invests in
lower-rated, high-yielding securities, which pose a greater risk
to principal than higher-rated securities. High-yield securities
are rated lower than investment-grade securities because there is
a greater possibility that negative changes in the issuer's
business condition, or in general economic conditions, may hinder
the issuer's ability to pay principal and interest on the
securities.

Fund performance figures do not take into account any adjustment
made for distribution plan payments made prior to the plan's
inception in 1990 or any taxes payable on reinvested
distributions.

Lehman Brothers Corporate Bond Index is an unmanaged list of
publicly traded corporate bonds rated Baa or better by Moody's
Investors Service that assumes reinvestment of all distributions
but does not take into account brokerage commissions or other
costs. The fund customarily invests in bonds rated lower than
those in the index, and thus its portfolio contains securities
that do not match those in the index.

The First Boston High Yield Index is an unmanaged list of
publicly traded, lower-rated corporate bonds that assumes
reinvestment of all distributions but does not take into account
brokerage commissions or other costs. Tthe Fund's portfolio
contains securities that do not match those of the index.

The fund performance supplement has been prepared by Putnam
Management to provide additional information about the fund and
the indexes used for performance comparisons. The information is
not part of the portfolio of investments owned or the financial
statements.
<PAGE>
Your
Trustees

George Putnam
Chairman
Chairman and President,
The Putnam Funds

William F. Pounds
Vice Chairman
Professor of Management,
Alfred P. Sloan
School of Management,
Massachusetts Institute of
Technology

Jameson Adkins Baxter
President,
Baxter Associates, Inc.

Hans H. Estin
Vice Chairman,
North American
Management Corporation

John A. Hill
Principal and
Managing Director,
First Reserve Corp.

Elizabeth T. Kennan
President,
Mount Holyoke College

Lawrence J. Lasser
President and
Chief Executive Officer,
Putnam Investments, Inc.

Robert E. Patterson
Executive Vice President,
Cabot Partners
Limited Partnership

Donald S. Perkins
Director of various
corporations

George Putnam, III
President, New Generation
Research, Inc.
<PAGE>
A.J.C. Smith
Chairman of the Board
and Chief Executive Officer
Marsh & McLennan
Companies, Inc.

W. Nicholas Thorndike
Director of various
corporations
<PAGE>
Putnam
High Yield
Trust

Fund information

Investment manager
Putnam Investment
Management, Inc.
One Post Office Square
Boston, MA 02109

Marketing services
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109

Investor servicing agent
Putnam Investor Services
Mailing address:
P.O. Box 41203
Providence, RI 02940-1203
1-800-225-1581

Custodian
Putnam Fiduciary
Trust Company

Legal counsel
Ropes & Gray

Independent accountants
Coopers & Lybrand

(DALBAR logo)

Putnam Investor Services
has received the DALBAR
award each year since the
award's 1990 inception.
In more than 10,000 tests
of 38 shareholder
service components,
Putnam outperformed
the industry standard
in every category.

OD/62-11530
<PAGE>
Officers

George Putnam
President

Charles E. Porter
Executive Vice President

Patricia C. Flaherty
Senior Vice President

Lawrence J. Lasser
Vice President

Gordon H. Silver
Vice President

Gary N. Coburn
Vice President

Edward H. D'Alelio
Vice President
and Fund Manager

Jin W. Ho
Vice President
and Fund Manager

William N. Shiebler
Vice President

John R. Verani
Vice President

Paul O'Neil
Vice President

John D. Hughes
Vice President
and Treasurer

Beverly Marcus
Clerk and
Assistant Treasurer

This report is for the information
of shareholders of Putnam High Yield
Trust. It may also be used as sales
literature when preceded or accom-
panied by the current prospectus,
which gives details of sales charges,
investment objectives, and operating
policies of the fund.
<PAGE>
- ------------------
Bulk Rate
U.S. Postage
Paid
Boston, MA
Permit No. 53749
- ------------------

PUTNAMINVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109<PAGE>
APPENDIX TO FORM N30D FILINGS TO DESCRIBE DIFFERENCES BETWEEN
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(1) Rule lines for tables are omitted.

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(3) Headers (e.g, the name of the fund) and footers (e.g., page
numbers and "The accompanying notes are an integral part of these
financial statements") are omitted.

(4) Because the printed page breaks are not reflected, certain
tabular and columnar headings and symbols are displayed
differently in this filing.

(5) Bullet points and similar graphic signals are omitted.

(6) Page numbering is different.