Edgar Filing: PUTNAM MANAGED HIGH YIELD TRUST

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934

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

PUTNAM MANAGED HIGH YIELD TRUST
PUTNAM MASTER INCOME 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)

Payment of Filing Fee (Check the appropriate box):
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/ X / No fee required
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/ / 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:
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/ / Fee paid previously with preliminary materials.
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/ / 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:

Important information
For shareholders of:

PUTNAM MANAGED HIGH YIELD TRUST

PUTNAM MASTER INCOME TRUST AND

PUTNAM TAX-FREE HEALTH CARE FUND

This document contains your proxy statement and proxy card. Your proxy
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 carefully review the proxy statement, and either record
your voting instructions via the Internet or fill out your proxy card
and mail it back in the envelope provided. 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.

PUTNAM INVESTMENTS

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Table of contents

A Message from the Chairman 1

Notice of Shareholder Meeting 2

Trustees' Recommendations 3

PROXY CARD ENCLOSED

If you have any questions, please contact us at (1-800-225-1581) or call
your financial advisor.

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A Message from the Chairman

Dear Shareholder:

I am writing to you to ask for your vote on an important question that
affects 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. We
are asking for your vote on the following proposal: Fixing the number of
Trustees and electing your fund's Trustees.

We realize that most shareholders will not be able to attend the fund's
meeting. However, we do need every shareholder's 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 proposals, contact your financial advisor or call a
Putnam customer service representative at 1-800-225-1581.

Sincerely yours,

/S/ John A. Hill
John A. Hill, Chairman

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

Notice of the 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 Managed High Yield Trust, Putnam Master
Income Trust and Putnam Tax-Free Health Care Fund:

The Annual Meeting of Shareholders of your fund will be held on October
3, 2002 at 11:00 a.m., Boston time, on the eighth floor of One Post
Office Square, Boston, Massachusetts, to consider the following:

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.

July 31, 2002

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 Master Income
Trust, Putnam Managed High Yield Trust and Putnam Tax-Free Health Care
Fund for use at the Annual Meeting of Shareholders of each fund to be
held on October 3, 2002, and, if your fund's meeting is adjourned, at
any later meetings, for the purposes stated in the Notice of Meeting
(see previous page). The Notice of Annual Meeting, the proxy and the
Proxy Statement are being mailed on or about August 2, 2002.

* How do your fund's Trustees recommend that shareholders vote on the
proposal?

The Trustees recommend that you vote FOR:

Fixing the number of Trustees and electing Trustees.

* Who is eligible to vote?

Shareholders of record at the close of business on July 5, 2002 are
entitled to be present and to vote at the meeting or any adjourned
meeting.

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

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

The Proposal

ELECTION OF TRUSTEES

* Who are the nominees for Trustees?

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

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

The nominees for Trustees and their backgrounds are shown in the table
below. The table discloses each nominee's name, date of birth, principal
occupation(s) during the past 5 years, and other information about the
nominee's professional background, including other directorships the
nominee holds. Each nominee currently serves as a Trustee. Each Trustee
oversees all of the Putnam funds and serves for an indefinite term until
his or her resignation, death or removal. The address of all of the
Trustees is One Post Office Square, Boston, Massachusetts 02109. At June
30, 2002, there were 111 Putnam funds.

Jameson A. Baxter (9/6/43)
Trustee since 1994

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

Ms. Baxter also serves as a Director of ASHTA Chemicals, Inc., Banta
Corporation (a printing and digital imaging firm), Intermatic
Corporation (manufacturer of energy control products) and Ryerson Tull,
Inc. (a steel service corporation), Advocate Health Care and the
National Center for Nonprofit Boards. She is Chairman Emeritus of the
Board of Trustees, Mount Holyoke College, having served as Chairman for
five years and as a board member for thirteen years. Ms. Baxter has also
held various positions in investment banking and corporate finance,
including Vice President and Principal of the Regency Group, Inc. and
Consultant to First Boston Corporation. She is a graduate of Mount
Holyoke College.

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

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

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

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

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

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

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

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Mr. Jackson is a private investor.

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

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

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

Dr. Joskow serves as a Director of National Grid Group, a UK based
holding company with interests in electric power and telecommunications
networks and the Whitehead Institute for Biomedical Research, a
non-profit research institution. He has been President of the Yale
University Council since 1993. Prior to February 2002, March 2000 and
September 1998, Dr. Joskow was a Director of State Farm Indemnity
Company, an automobile insurance company, a Director of New England
Electric System, a public utility holding company, and a consultant to
National Economic Research Associates, respectively. He has published
five books and numerous articles on topics in industrial organization,
government regulation of industry and competition policy and is active
on industry restructuring, environmental, energy, competition, and
privatization policies, serving as an advisor to governments and
corporations worldwide. Dr. Joskow is a graduate of Cornell University
and Yale University, and is a Fellow of the Econometric Society and the
American Academy of Arts and Sciences.
Elizabeth T. Kennan (2/25/38)
Trustee since 1992

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

* Interested Trustees

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

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

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

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

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

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

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

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

Mr. Smith is a Director of Trident Corp., a limited partnership with
over thirty institutional investors, and a Trustee of the Carnegie Hall
Society, the Educational Broadcasting Corporation and the National
Museums of Scotland. He is Chairman of the Central Park Conservancy and
a Member of the Board of Overseers of the Joan and Sanford I. Weill
Graduate School of Medical Sciences of Cornell University. He was
educated in Scotland. Mr. Smith is a Fellow of the Faculty of Actuaries
in Edinburgh, the Canadian Institute of Actuaries and the Conference of
Actuaries, an Associate of the Society of Actuaries, and a Member of the
American Academy of Actuaries, the International Actuarial Association
and the International Association of Consulting Actuaries.
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* Nominees who are or may be deemed to be "interested persons" (as
defined in the Investment Company Act of 1940) of the fund, Putnam
Management, Putnam Retail Management, or Marsh & McLennan Companies,
Inc., the parent company of Putnam, LLC and its affiliated companies.
Messrs. Putnam, Lasser and Smith are deemed "interested persons" by
virtue of their positions as officers or shareholders of the fund or
Putnam Management, Putnam Retail Management, or Marsh & McLennan
Companies, Inc. George Putnam, III is the President of your Fund and
each of the other Putnam funds. Lawrence J. Lasser is the President and
Chief Executive Officer of Putnam Investments, LLC and Putnam
Management. Mr. Lasser and Mr. Smith also serve as Directors of Marsh &
McLennan Companies, Inc. The balance of the nominees are not "interested
persons."

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

* What are the Trustees' responsibilities?

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

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

Audit and Pricing Committee. The Audit and Pricing Committee provides
oversight on matters relating to the preparation of the funds' financial
statements, compliance matters and Code of Ethics issues. This oversight
is discharged by regularly meeting with management and the funds'
independent auditors and keeping current on industry developments.
Duties of this Committee also include the review and evaluation of all
matters and relationships pertaining to the funds' independent auditors,
including their independence. The members of the Audit and Pricing
Committee of your fund include only Trustees who are not "interested
persons" of the fund or Putnam Management. Each member of the Audit and
Pricing Committee is "independent" as defined in Sections
303.01(B)(2)(a) and (3) of the listing standards of the New York Stock
Exchange. The Committee also reviews the funds' policies and procedures
for achieving accurate and timely pricing of the funds' shares,
including oversight of fair value determinations of individual
securities made by Putnam Management or other designated agents of the
funds. The Committee oversees compliance by money market funds with Rule
2a-7, interfund transactions pursuant to Rule 17a-7, and the correction
of occasional pricing errors. The Committee also receives reports
regarding the liquidity of portfolio securities. The Trustees have
adopted a written charter for the Audit and Pricing Committee. The
Committee currently consists of Messrs. Stephens (Chairperson) and
Thorndike, and Drs. Kennan and Joskow.

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

Brokerage and Custody Committee. The Brokerage and Custody Committee
reviews the policies and procedures of the funds regarding the execution
of portfolio transactions for the funds, including policies regarding
the allocation of brokerage commissions and soft dollar credits. The
Committee reviews periodic reports regarding the funds' activities
involving derivative securities, and reviews and evaluates matters
relating to the funds' custody arrangements. The Committee currently
consists of Messrs. Jackson (Chairperson), Curtis, Mullin, Thorndike,
Ms. Baxter and Dr. Kennan.

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

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

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

Executive Committee. The functions of the Executive Committee are
twofold. The first is to ensure that the funds' business may be
conducted at times when it is not feasible to convene a meeting of the
Trustees or for the Trustees to act by written consent. The Committee
may exercise any or all of the power and authority of the Trustees when
the Trustees are not in session. The second is to establish annual and
ongoing goals, objectives and priorities for the Board of Trustees and
to insure coordination of all efforts between the Trustees and Putnam
Investments on behalf of the shareholders of the Putnam funds. The
Committee currently consists of Ms. Baxter and Messrs. Hill (Chairman),
Jackson, Putnam, Stephens and Thorndike.

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

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

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

The Trustees believe each Trustee should have a significant investment
in the Putnam funds. The Trustees allocate their investments among the
approximately 123 Putnam funds based on their own investment needs. The
table below shows the number of shares beneficially owned by each
Trustee and the value of each Trustee's holdings in the fund and in all
of the Putnam funds as of April 30, 2002.

Putnam Managed High Yield Trust

Aggregate Dollar
Range of Shares
Held in all of the
Dollar Amount Putnam Funds
Number of Range of Overseen by
Name of Trustee shares owned Shares Owned Trustee (123)
---------------------------------------------------------------------------------

Jameson A. Baxter 652 $1-$10,000 over $100,000
---------------------------------------------------------------------------------
Charles B. Curtis 105 $1-$10,000 over $100,000
---------------------------------------------------------------------------------
John A. Hill 100 $1-$10,000 over $100,000
---------------------------------------------------------------------------------
Ronald J. Jackson 200 $1-$10,000 over $100,000
---------------------------------------------------------------------------------
Paul L. Joskow 100 $1-$10,000 over $100,000
---------------------------------------------------------------------------------
Elizabeth T. Kennan 240 $1-$10,00 0over $100,000
---------------------------------------------------------------------------------
John H. Mullin, III 100 $1-$10,000 over $100,000
---------------------------------------------------------------------------------
Robert E. Patterson 200 $1-$10,000 over $100,000
---------------------------------------------------------------------------------
W. Thomas Stephens 100 $1-$10,000 over $100,000
---------------------------------------------------------------------------------
W. Nicholas Thorndike 237 $1-$10,000 over $100,000
---------------------------------------------------------------------------------
Lawrence J. Lasser 100 $1-$10,000 over $100,000
---------------------------------------------------------------------------------
George Putnam, III 500 $1-$10,000 over $100,000
---------------------------------------------------------------------------------
A.J.C. Smith 200 $1-$10,000 over $100,000
---------------------------------------------------------------------------------

Putnam Master Income Trust

Jameson A. Baxter 202 $1-$10,000 over $100,000
---------------------------------------------------------------------------------
Charles B. Curtis 101 $1-$10,000 over $100,000
---------------------------------------------------------------------------------
John A. Hill 1,500 $10,001-$50,000 over $100,000
---------------------------------------------------------------------------------
Ronald J. Jackson 200 $1-$10,000 over $100,000
---------------------------------------------------------------------------------
Paul L. Joskow 100 $1-$10,000 over $100,000
---------------------------------------------------------------------------------
Elizabeth T. Kennan 199 $1-$10,000 over $100,000
---------------------------------------------------------------------------------
John H. Mullin, III 100 $1-$10,000 over $100,000
---------------------------------------------------------------------------------
Robert E. Patterson 300 $1-$10,000 over $100,000
---------------------------------------------------------------------------------
W. Thomas Stephens 100 $1-$10,000 over $100,000
---------------------------------------------------------------------------------
W. Nicholas Thorndike 257 $1-$10,000 over $100,000
---------------------------------------------------------------------------------
Lawrence J. Lasser 100 $1-$10,000 over $100,000
---------------------------------------------------------------------------------
George Putnam, III 500 $1-$10,000 over $100,000
---------------------------------------------------------------------------------
A.J.C. Smith 200 $1-$10,000 over $100,000
---------------------------------------------------------------------------------

Putnam Tax-Free Health Care Fund

Jameson A. Baxter 504 $1-$10,000 over $100,000
---------------------------------------------------------------------------------
Charles B. Curtis 103 $1-$10,000 over $100,000
---------------------------------------------------------------------------------
John A. Hill 100 $1-$10,000 over $100,000
---------------------------------------------------------------------------------
Ronald J. Jackson 200 $1-$10,000 over $100,000
---------------------------------------------------------------------------------
Paul L. Joskow 100 $1-$10,000 over $100,000
---------------------------------------------------------------------------------
Elizabeth T. Kennan 181 $1-$10,000 over $100,000
---------------------------------------------------------------------------------
John H. Mullin, III 100 $1-$10,000 over $100,000
---------------------------------------------------------------------------------
Robert E. Patterson 100 $1-$10,000 over $100,000
---------------------------------------------------------------------------------
W. Thomas Stephens 100 $1-$10,000 over $100,000
---------------------------------------------------------------------------------
W. Nicholas Thorndike 179 $1-$10,000 over $100,000
---------------------------------------------------------------------------------
Lawrence J. Lasser 100 $1-$10,000 over $100,000
---------------------------------------------------------------------------------
George Putnam, III 500 $1-$10,000 over $100,000
---------------------------------------------------------------------------------
A.J.C. Smith 200 $1-$10,000 over $100,000
---------------------------------------------------------------------------------

At April 30, 2002, the Trustees and officers of your fund owned less
than 1% of the outstanding shares of each fund on that date.

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

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

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

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

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

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

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

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

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

* How often do the Trustees meet?

The Trustees meet each month (except August) over a two-day period to
review the operations of your fund and of the other Putnam funds. A
portion of these meetings is devoted to meetings of various committees
of the board which focus on particular matters. Each Trustee generally
attends at least two formal committee meetings during each regular
meeting of the Trustees. During a typical year, the average Trustee
participates in approximately 45 committee and board meetings. In
addition, the Trustees meet in small groups with Chief Investment
Officers and Portfolio Managers to review recent performance and the
current investment climate for selected funds. These meetings ensure
that each fund's performance is reviewed in detail at least twice a
year. The Contract Committee typically meets on several additional
occasions during the year to carry out its responsibilities. Other
committees, including the Executive Committee, may also meet on special
occasions as the need arises. The number of times each committee met
during your fund's last fiscal year is shown in the tables below:

Putnam Managed High Yield Trust

Fiscal year ended May 31, 2002
--------------------------------------------------------------
Audit and Pricing Committee* 11
--------------------------------------------------------------
Board Policy and Nominating Committee** 5
--------------------------------------------------------------
Brokerage and Custody Committee 2
--------------------------------------------------------------
Communication, Service and Marketing Committee 7
--------------------------------------------------------------
Contract Committee 11
--------------------------------------------------------------
Distributions Committee 0
--------------------------------------------------------------
Executive Committee 3
--------------------------------------------------------------
Investment Oversight Committee 10
--------------------------------------------------------------

Putnam Master Income Trust

Fiscal year ended October 31, 2001
--------------------------------------------------------------
Audit and Pricing Committee* 8
--------------------------------------------------------------
Board Policy and Nominating Committee** 6
--------------------------------------------------------------
Brokerage and Custody Committee 5
--------------------------------------------------------------
Communication, Service and Marketing Committee 6
--------------------------------------------------------------
Contract Committee 11
--------------------------------------------------------------
Distributions Committee 2
--------------------------------------------------------------
Executive Committee 4
--------------------------------------------------------------
Investment Oversight Committee 9
--------------------------------------------------------------

Putnam Tax-Free Health Care Fund

* Effective February 2002, the Pricing Committee's functions were merged
into the Audit and Pricing Committee. The number of meetings shown
represents the number of meetings held during your fund's last fiscal
year by the Audit Committee prior to the combination and the combined
committee after the combination. The Pricing Committee met 3 times prior
to the combination for Putnam Managed High Yield Trust and Putnam
Tax-Free Health Care Fund. The Pricing Committee met 5 times prior to
the combination for Putnam Master Income Trust.

** Effective March 2002, the Proxy Committee's functions were merged
into the Board Policy and Nominating Committee. The number of meetings
shown represents the number of meetings held during your fund's last
fiscal year by the Board Policy and Nominating Committee prior to
combination and the combined committee after the combination. The Proxy
Committee met 3 times prior to the combination for Putnam Managed High
Yield Trust and Putnam Tax-Free Health Care Fund. The Proxy Committee
met 4 times prior to the combination for Putnam Master Income Trust.

* What are the Trustees paid for their services?

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

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

Putnam Master Income Trust Compensation Table

Estimated
Retirement annual Total
Aggregate benefits benefits from compensation
compensation accrued all Putnam from all
from the as part of funds upon Putnam
Trustees/Year fund (1) fund expenses retirement (2) funds (3)
----------------------------------------------------------------------------------------

Jameson A. Baxter/
1994 (4) $961 $193 $100,000 $205,750
----------------------------------------------------------------------------------------
Charles B. Curtis/
2001 (8) 353 -- 100,000 92,000
----------------------------------------------------------------------------------------
Hans H. Estin/
1972 (5) 590 395 97,904 109,000
----------------------------------------------------------------------------------------
John A. Hill/
1985 (4)(7) 1,369 323 200,000 403,500
----------------------------------------------------------------------------------------
Ronald J. Jackson/
1996 (4) 961 198 100,000 205,750
----------------------------------------------------------------------------------------
Paul L. Joskow/
1997 (4) 944 154 100,000 201,250
----------------------------------------------------------------------------------------
Elizabeth T. Kennan/
1992 953 283 100,000 203,500
----------------------------------------------------------------------------------------
Lawrence J. Lasser/
1992 (6) -- 135 92,500 --
----------------------------------------------------------------------------------------
John H. Mullin, III/
1997 (4) 960 232 100,000 205,500
----------------------------------------------------------------------------------------
Robert E. Patterson/
1984 957 140 100,000 204,750
----------------------------------------------------------------------------------------
George Putnam, III/
1984 (7) 1,148 135 125,000 249,750
----------------------------------------------------------------------------------------
A.J.C. Smith/
1986 (6) -- 277 91,833 --
----------------------------------------------------------------------------------------
W. Thomas Stephens/
1997 (4) 943 217 100,000 201,000
----------------------------------------------------------------------------------------
W. Nicholas Thorndike/
1992 947 397 100,000 202,000
----------------------------------------------------------------------------------------

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

(2) Assumes that each Trustee retires at the normal retirement date. For
Trustees who are not within three years of retirement, estimated
benefits for each Trustee are based on Trustee fee rates in effect
during calendar 2001.

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

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

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

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

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

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

Putnam Managed High Yield Trust Compensation Table

Jameson A. Baxter/
1994 (4) $572 $140 $100,000 $205,750
----------------------------------------------------------------------------------------
Charles B. Curtis/
2001 (8) 405 34 100,000 92,000
----------------------------------------------------------------------------------------
Hans H. Estin/
1972 (5) 134 161 97,904 109,000
----------------------------------------------------------------------------------------
John A. Hill/
1985 (4)(7) 1,031 218 200,000 403,500
----------------------------------------------------------------------------------------
Ronald J. Jackson/
1996 (4) 560 133 100,000 205,750
----------------------------------------------------------------------------------------
Paul L. Joskow/
1997 (4) 537 131 100,000 201,250
----------------------------------------------------------------------------------------
Elizabeth T. Kennan/
1992 534 195 100,000 203,500
----------------------------------------------------------------------------------------
Lawrence J. Lasser/
1992 (6) -- 84 92,500 --
----------------------------------------------------------------------------------------
John H. Mullin, III/
1997 (4) 554 197 100,000 205,500
----------------------------------------------------------------------------------------
Robert E. Patterson/
1984 557 99 100,000 204,750
----------------------------------------------------------------------------------------
George Putnam, III/
1984 (7) 665 94 125,000 249,750
----------------------------------------------------------------------------------------
A.J.C. Smith/
1986 (6) -- 191 91,833 --
----------------------------------------------------------------------------------------
W. Thomas Stephens/
1997 (4) 531 184 100,000 201,000
----------------------------------------------------------------------------------------
W. Nicholas Thorndike/
1992 536 265 100,000 202,000
----------------------------------------------------------------------------------------

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

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

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

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

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

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

Putnam Tax-Free Health Care Fund Compensation Table

Jameson A. Baxter/
1994 (4) $729 $176 $100,000 $205,750
----------------------------------------------------------------------------------------
Charles B. Curtis/
2001 (8) 518 44 100,000 92,000
----------------------------------------------------------------------------------------
Hans H. Estin/
1972 (5) 170 199 97,904 109,000
----------------------------------------------------------------------------------------
John A. Hill/
1985 (4)(7) 1,317 274 200,000 403,500
----------------------------------------------------------------------------------------
Ronald J. Jackson/
1996 (4) 714 168 100,000 205,750
----------------------------------------------------------------------------------------
Paul L. Joskow/
1997 (4) 684 166 100,000 201,250
----------------------------------------------------------------------------------------
Elizabeth T. Kennan/
1992 682 245 100,000 203,500
----------------------------------------------------------------------------------------
Lawrence J. Lasser/
1992 (6) -- 107 92,500 --
----------------------------------------------------------------------------------------
John H. Mullin, III/
1997 (4) 706 249 100,000 205,500
----------------------------------------------------------------------------------------
Robert E. Patterson/
1984 710 125 100,000 204,750
----------------------------------------------------------------------------------------
George Putnam, III/
1984 (7) 849 118 125,000 249,750
----------------------------------------------------------------------------------------
A.J.C. Smith/
1986 (6) -- 242 91,833 --
----------------------------------------------------------------------------------------
W. Thomas Stephens/
1997 (4) 677 233 100,000 201,000
----------------------------------------------------------------------------------------
W. Nicholas Thorndike/
1992 683 334 100,000 202,000
----------------------------------------------------------------------------------------

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

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

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

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

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

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

Under a Retirement Plan for Trustees of the Putnam funds (the "Plan"),
each Trustee who retires with at least five years of service as a
Trustee of the funds is entitled to receive an annual retirement benefit
equal to one-half of the average annual compensation paid to such
Trustee for the last three years of service prior to retirement. This
retirement benefit is payable during a Trustee's lifetime, beginning the
year following retirement, for a number of years equal to such Trustee's
years of service. A death benefit, also available under the Plan,
assures that the Trustee and his or her beneficiaries will receive
benefit payments for the lesser of an aggregate period of (i) ten years
or (ii) such Trustee's total years of service.

The Plan Administrator (a committee comprised of Trustees that are not
"interested persons" of the fund, as defined in the Investment Company
Act of 1940) may terminate or amend the Plan at any time, but no
termination or amendment will result in a reduction in the amount of
benefits (i) currently being paid to a Trustee at the time of such
termination or amendment, or (ii) to which a current Trustee would have
been entitled had he or she retired immediately prior to such
termination or amendment.

Further Information About Voting and the Meeting

Quorum and Methods of Tabulation. The shareholders of each fund vote
separately with respect to each proposal. A majority of the shares
entitled to vote, those that are 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). However, for Putnam Master Income Trust, thirty-percent of
the shares entitled to vote constitutes a quorum. 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.

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, neither
abstentions nor broker non-votes have any effect on the outcome of the
proposal. With respect to any other proposal, 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 designed to authenticate shareholders' identities, to allow
them to authorize the voting of their shares in accordance with their
instructions and to confirm that their instructions have been properly
recorded. Your fund has been advised by counsel that these procedures
are consistent with the requirements of applicable law. If these
procedures were subject to a successful legal challenge, such votes
would not be counted at the meeting. Your fund is unaware of any such
challenge at this time. Shareholders would be called at the phone number
Putnam Investments has in its records for their accounts, and would be
asked for their Social Security number or other identifying information.
The shareholders would then be given an opportunity to authorize proxies
to vote their shares at the meeting in accordance with their
instructions. To ensure that the shareholders' instructions have been
recorded correctly, they will also receive a confirmation of their
instructions in the mail. A special toll-free number will be available
in case the information contained in the confirmation is incorrect.

Shareholders may have the opportunity to submit their voting
instructions via the Internet by utilizing a program provided by a third
party vendor hired by Putnam Management. The giving of such a proxy will
not affect your right to vote in person should you decide to attend the
meeting. To vote via the Internet, you will need the control number that
appears on your proxy card. To vote, please access the Internet address
found on your proxy card. The Internet voting procedures are designed to
authenticate shareholder identities, to allow shareholders to give their
voting instructions, and to confirm that shareholders' instructions have
been recorded properly. Shareholders voting via the Internet should
understand that there may be costs associated with electronic access,
such as usage charges from Internet access providers and telephone
companies, that must be borne by the shareholders.

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

Persons holding shares as nominees will upon request be reimbursed for
their reasonable expenses in soliciting instructions from their
principals. Your fund has retained at its expense D. F. King & Co.,
Inc., 77 Water Street, New York, New York 10005, to aid in the
solicitation of instructions for registered and nominee accounts, for a
fee not to exceed $3,000.00 plus reasonable out-of-pocket expenses for
mailing and phone costs. The expenses of the preparation of the proxy
statements and related materials, including printing and delivery costs,
are borne by the fund.

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

Date for receipt of shareholders' proposals for the next annual meeting.
It is currently anticipated that your fund's next annual meeting of
shareholders will be held in October 2003. Shareholder proposals to be
included in the proxy statement for that meeting must be received by
your fund before April 17, 2003. Shareholders who wish to make a
proposal at the October 2003 annual meeting--other than one that will be
included in the fund's proxy materials--should notify the fund no later
than July 1, 2003. The Board Policy and Nominating Committee will also
consider nominees recommended by shareholders of the fund to serve as
Trustees, provided that shareholders submit their recommendations by the
above date. If a shareholder who wishes to present a proposal fails to
notify the fund by this date, the proxies solicited for the meeting will
have discretionary authority to vote on the shareholder's proposal if it
is properly brought before the meeting. If a shareholder makes a timely
notification, the proxies may still exercise discretionary voting
authority under circumstances consistent with the SEC's proxy rules.
Shareholders who wish to propose one or more nominees for election as
Trustees, or to make a proposal fixing the number of Trustees, at the
October 2003 annual meeting must provide written notice to the fund
(including all required information) so that such notice is received in
good order by the fund no earlier than July 13, 2003 and no later than
August 12, 2003.

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

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

Fund Information

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

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

Independent Auditors. 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
and Pricing Committee of the Board of Trustees unanimously approved the
selection of KPMG LLP in July 2001, and the Trustees unanimously
approved such selection in July 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.

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.

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

Audit Fees Financial Information All
for All Systems Design and Other
Audit Fees Putnam Funds Implementation Fees Fees
-------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------
Master Income Trust $26,800 $1,092,200 $0 $6,600
-------------------------------------------------------------------------------------------
Managed High Yield Trust $29,000 $1,092,200 $0 $6,200
-------------------------------------------------------------------------------------------
Tax-Free Health Care Fund $20,300 $1,092,200 $0 $6,900
-------------------------------------------------------------------------------------------

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

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

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

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

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

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

Putnam Master Income Trust

Year first
Name (date of birth) elected Business experience
Office with the fund to office during past 5 years
--------------------------------------------------------------------------------

Charles E. Porter (7/26/38) 1989 Managing Director,
Executive Vice President, Putnam Investments
Treasurer & Principal Financial Officer and Putnam Management
--------------------------------------------------------------------------------
Patricia C. Flaherty (12/1/46) 1993 Senior Vice President,
Senior Vice President Putnam Investments
and Putnam Management
--------------------------------------------------------------------------------
Michael T. Healy (1/24/58) 2000 Managing Director,
Assistant Treasurer & Putnam Investor Services
Principal Accounting Officer and Putnam Investments
--------------------------------------------------------------------------------
Gordon H. Silver (7/3/47) 1990 Senior Managing Director,
Vice President Putnam Investments
and Putnam Management
--------------------------------------------------------------------------------
Ian Ferguson (7/3/57) 1997 Senior Managing Director,
Vice President Putnam Investments
and Putnam Management
--------------------------------------------------------------------------------
Stephen Oristaglio (8/21/55) 1998 Senior Managing Director,
Vice President Putnam Investments and
Putnam Management
--------------------------------------------------------------------------------
Kevin Cronin (6/13/61) 2001 Managing Director,
Vice President Putnam Investments and
Putnam Management
--------------------------------------------------------------------------------
Richard G. Leibovitch (10/31/63) 2000 Managing Director of
Vice President Putnam Investments and
Putnam Management. Prior
to February 1999,
Managing Director at J.P.
Morgan
--------------------------------------------------------------------------------
Brett C. Browchuk (2/27/63) 1994 Managing Director of
Vice President Putnam Investments and
Putnam Management
--------------------------------------------------------------------------------
Richard A. Monaghan* (8/25/54) 1998 Managing Director,
Vice President Putnam Investments,
Putnam Management and
Putnam Retail Management
--------------------------------------------------------------------------------
John R. Verani (6/11/39) 1988 Senior Vice President,
Vice President Putnam Investments and
Putnam Management
--------------------------------------------------------------------------------

* President of Putnam Retail Management

Putnam Managed High Yield Trust

Year first
Name (date of birth) elected Business experience
Office with the fund to office during past 5 years
--------------------------------------------------------------------------------

Charles E. Porter (7/26/38) 1989 Managing Director,
Executive Vice President, Putnam Investments
Treasurer & Principal Financial Officer and Putnam Management
--------------------------------------------------------------------------------
Patricia C. Flaherty (12/1/46) 1993 Senior Vice President,
Senior Vice President Putnam Investments
and Putnam Management
--------------------------------------------------------------------------------
Michael T. Healy (1/24/58) 2000 Managing Director,
Assistant Treasurer & Putnam Investor Services
Principal Accounting Officer and Putnam Investments
--------------------------------------------------------------------------------
Gordon H. Silver (7/3/47) 1990 Senior Managing Director,
Vice President Putnam Investments
and Putnam Management
--------------------------------------------------------------------------------
Ian Ferguson (7/3/57) 1997 Senior Managing Director,
Vice President Putnam Investments
and Putnam Management
--------------------------------------------------------------------------------
Stephen Oristaglio (8/21/55) 1998 Senior Managing Director,
Vice President Putnam Investments and
Putnam Management
--------------------------------------------------------------------------------
Kevin Cronin (6/13/61) 2001 Managing Director,
Vice President Putnam Investments and
Putnam Management
--------------------------------------------------------------------------------
Stephen Preacher (6/15/64) 2000 Managing Director,
Vice President Putnam Investments and
Putnam Management
--------------------------------------------------------------------------------
Richard G. Leibovitch (10/31/63) 2000 Managing Director of
Vice President Putnam Investments and
Putnam Management. Prior
to February 1999,
Managing Director at J.P.
Morgan
--------------------------------------------------------------------------------
Brett C. Browchuk (2/27/63) 1994 Managing Director of
Vice President Putnam Investments and
Putnam Management
--------------------------------------------------------------------------------
Richard A. Monaghan* (8/25/54) 1998 Managing Director,
Vice President Putnam Investments,
Putnam Management and
Putnam Retail Management
--------------------------------------------------------------------------------
John R. Verani (6/11/39) 1988 Senior Vice President,
Vice President Putnam Investments and
Putnam Management
--------------------------------------------------------------------------------

* President of Putnam Retail Management

Putnam Tax-Free Health Care Fund

Year first
Name (date of birth) elected Business experience
Office with the fund to office during past 5 years
--------------------------------------------------------------------------------

Charles E. Porter (7/26/38) 1989 Managing Director,
Executive Vice President, Putnam Investments
Treasurer & Principal Financial Officer and Putnam Management
--------------------------------------------------------------------------------
Patricia C. Flaherty (12/1/46) 1993 Senior Vice President,
Senior Vice President Putnam Investments
and Putnam Management
--------------------------------------------------------------------------------
Michael T. Healy (1/24/58) 2000 Managing Director,
Assistant Treasurer & Putnam Investor
Principal Accounting Officer Services and Putnam
Investments
--------------------------------------------------------------------------------
Gordon H. Silver (7/3/47) 1990 Senior Managing Director,
Vice President Putnam Investments
and Putnam Management
--------------------------------------------------------------------------------
Ian Ferguson (7/3/57) 1997 Senior Managing Director,
Vice President Putnam Investments
and Putnam Management
--------------------------------------------------------------------------------
Stephen Oristaglio (8/21/55) 1998 Senior Managing Director,
Vice President Putnam Investments and
Putnam Management
--------------------------------------------------------------------------------
Jerome Jacobs (8/20/58) 1996 Managing Director,
Vice President Putnam Investments and
Putnam Management
--------------------------------------------------------------------------------
Richard G. Leibovitch (10/31/63) 2000 Managing Director of
Vice President Putnam Investments and
Putnam Management. Prior
to February 1999,
Managing Director at J.P.
Morgan
--------------------------------------------------------------------------------
Brett C. Browchuk (2/27/63) 1994 Managing Director of
Vice President Putnam Investments and
Putnam Management
--------------------------------------------------------------------------------
Richard A. Monaghan* (8/25/54) 1998 Managing Director,
Vice President Putnam Investments,
Putnam Management and
Putnam Retail Management
--------------------------------------------------------------------------------
John R. Verani (6/11/39) 1988 Senior Vice President,
Vice President Putnam Investments and
Putnam Management
--------------------------------------------------------------------------------

* President of Putnam Retail Management

Assets and shares outstanding of your fund
as of April 30, 2002

Net assets:
Putnam Master Income Trust $362,821,409
Putnam Managed High Yield Trust $64,945,704
Putnam Tax-Free Health Care Fund $187,077,744
--------------------------------------------------------------------------------
Common shares:
Putnam Master Income Trust 53,124,777 shares
Putnam Managed High Yield Trust 7,507,107 shares
Putnam Tax-Free Health Care Fund 13,807,168 shares
--------------------------------------------------------------------------------
5% beneficial ownership:
Putnam Master Income Trust None
Putnam Managed High Yield Trust None
Putnam Tax-Free Health Care Fund None
--------------------------------------------------------------------------------

This page intentionally left blank.

PUTNAM INVESTMENTS

The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
Toll-free 1-800-225-1581 84357 7/02

PUTNAM INVESTMENTS

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

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

To record your voting instructions on the Internet

1. Read the proxy statement.

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

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

4. Follow the instructions on the site.

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

PLEASE DETACH AT PERFORATION BEFORE MAILING

This is your PROXY CARD.

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

PLEASE DETACH AT PERFORATION BEFORE MAILING

Proxy for a meeting of shareholders to be held on October 3, 2002, for
Putnam Managed High Yield Trust.

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

The undersigned shareholder hereby appoints John A. Hill, Robert E.
Patterson and W. Nicholas Thorndike, and each of them separately,
Proxies, with power of substitution, and hereby authorizes them to
represent such shareholder and to vote, as designated below, at the
meeting of shareholders of Putnam Managed High Yield Trust on October 3,
2002, at 11:00 a.m., Boston time, and at any adjournments thereof, all
of the shares of the fund that the undersigned shareholder would be
entitled to vote if personally present.

PLEASE BE SURE TO SIGN AND DATE THIS PROXY.

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

------------------------ -----------------
Shareholder sign here Date

------------------------ -----------------
Co-owner sign here Date

PUTNAM ACCOUNT NUMBER:

HAS YOUR ADDRESS CHANGED?

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

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

DO YOU HAVE ANY COMMENTS?

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

PLEASE DETACH AT PERFORATION BEFORE MAILING

DEAR SHAREHOLDER:

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

THANK YOU!

PLEASE DETACH AT PERFORATION BEFORE MAILING

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

THE TRUSTEES RECOMMEND A VOTE FOR FIXING THE NUMBER OF TRUSTEES AND
ELECTING ALL OF THE NOMINEES:

Please vote by filling in the appropriate boxes below.

1. Proposal to fix the number of Trustees and elect all Nominees.

The nominees for Trustees are: J.A. Baxter, C.B. Curtis, J.A.Hill,
R.J. Jackson, P.L. Joskow, E.T. Kennan, L.J. Lasser, J.H. Mullin, III,
R.E. Patterson, G. Putnam, III, A.J.C. Smith, W.T. Stephens and W.N.
Thorndike.

To withhold authority to vote for one or more of the nominees, write the
name(s) of the nominee(s) below:

FOR WITHHOLD

fixing the number of authority to vote for
Trustees as proposed all nominees
and electing
all the nominees
(except as marked
to the contrary below)

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

PUTNAM INVESTMENTS

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

To record your voting instructions on the Internet

1. Read the proxy statement.

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

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

4. Follow the instructions on the site.

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

PLEASE DETACH AT PERFORATION BEFORE MAILING

This is your PROXY CARD.

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

PLEASE DETACH AT PERFORATION BEFORE MAILING

Proxy for a meeting of shareholders to be held on October 3, 2002, for
Putnam Master Income Trust.

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

The undersigned shareholder hereby appoints John A. Hill, Robert E.
Patterson and W. Nicholas Thorndike, and each of them separately,
Proxies, with power of substitution, and hereby authorizes them to
represent such shareholder and to vote, as designated below, at the
meeting of shareholders of Putnam Master Income Trust on October 3,
2002, at 11:00 a.m., Boston time, and at any adjournments thereof, all
of the shares of the fund that the undersigned shareholder would be
entitled to vote if personally present.

PLEASE BE SURE TO SIGN AND DATE THIS PROXY.

------------------------ -----------------
Shareholder sign here Date

------------------------ -----------------
Co-owner sign here Date

PUTNAM ACCOUNT NUMBER:

HAS YOUR ADDRESS CHANGED?

DO YOU HAVE ANY COMMENTS?

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

PLEASE DETACH AT PERFORATION BEFORE MAILING

DEAR SHAREHOLDER:

THANK YOU!

PLEASE DETACH AT PERFORATION BEFORE MAILING

THE TRUSTEES RECOMMEND A VOTE FOR FIXING THE NUMBER OF TRUSTEES AND
ELECTING ALL OF THE NOMINEES:

Please vote by filling in the appropriate boxes below.

1. Proposal to fix the number of Trustees and elect all Nominees.

To withhold authority to vote for one or more of the nominees, write the
name(s) of the nominee(s) below:

FOR WITHHOLD

fixing the number of authority to vote for
Trustees as proposed all nominees
and electing
all the nominees
(except as marked
to the contrary below)

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

PUTNAM INVESTMENTS

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

To record your voting instructions on the Internet

1. Read the proxy statement.

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

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

4. Follow the instructions on the site.

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

PLEASE DETACH AT PERFORATION BEFORE MAILING

This is your PROXY CARD.

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

PLEASE DETACH AT PERFORATION BEFORE MAILING

Proxy for a meeting of shareholders to be held on October 3, 2002, for
Putnam Tax-Free Health Care Fund.

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

The undersigned shareholder hereby appoints John A. Hill, Robert E.
Patterson and W. Nicholas Thorndike, and each of them separately,
Proxies, with power of substitution, and hereby authorizes them to
represent such shareholder and to vote, as designated below, at the
meeting of shareholders of Putnam Tax-Free Health Care Fund on October
3, 2002, at 11:00 a.m., Boston time, and at any adjournments thereof,
all of the shares of the fund that the undersigned shareholder would be
entitled to vote if personally present.

PLEASE BE SURE TO SIGN AND DATE THIS PROXY.

------------------------ -----------------
Shareholder sign here Date

------------------------ -----------------
Co-owner sign here Date

PUTNAM ACCOUNT NUMBER:

HAS YOUR ADDRESS CHANGED?

DO YOU HAVE ANY COMMENTS?

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

PLEASE DETACH AT PERFORATION BEFORE MAILING

DEAR SHAREHOLDER:

THANK YOU!

PLEASE DETACH AT PERFORATION BEFORE MAILING

THE TRUSTEES RECOMMEND A VOTE FOR FIXING THE NUMBER OF TRUSTEES AND
ELECTING ALL OF THE NOMINEES:

Please vote by filling in the appropriate boxes below.

1. Proposal to fix the number of Trustees and elect all Nominees.

To withhold authority to vote for one or more of the nominees, write the
name(s) of the nominee(s) below:

FOR WITHHOLD

fixing the number of authority to vote for
Trustees as proposed all nominees
and electing
all the nominees
(except as marked
to the contrary below)

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