SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. )
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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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/ / Preliminary Additional Materials
- ----
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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(e) or
- ---- Sec. 240.14a-12

PUTNAM MANAGED HIGH YIELD TRUST
PUTNAM TAX-FREE HEALTH CARE FUND
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)

PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
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/ x / $125 per Exchange Act Rules 0-11(c)(1)(ii),
- ---- 14a-6(i)(1), or 14a-6(i)(2).
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/ / $500 per each party to the controversy pursuant
- ---- to Exchange Act Rule 14a-6(i)(3).
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/ / Fee computed on table below per Exchange Act Rules
- ---- 14a-6(i)(4) 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:

(4) Proposed maximum aggregate value of transaction:

----
/ / 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 IN
PUTNAM MANAGED HIGH YIELD TRUST
PUTNAM TAX-FREE HEALTH CARE FUND

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

WHILE INVESTORS SOMETIMES FIND A PROXY STATEMENT INTIMIDATING, WE
ARE, IN FACT, ASKING FOR YOUR VOTE ON JUST A FEW MATTERS. SO WE
URGE YOU TO SPEND A COUPLE OF MINUTES WITH THE PROXY STATEMENT,
FILL OUT YOUR PROXY CARD, AND RETURN IT TO US. 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 LOGO APPEARS HERE)
BOSTON * LONDON * TOKYO

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 the special toll-
free number we have set up for you (1-800-225-1581) or call your
financial adviser.

A MESSAGE FROM THE CHAIRMAN

(Photograph of George Putnam appears here)

Dear Shareholder:

I am writing to you to ask for your vote on important questions
that affect your investment in your fund. While you are, of
course, welcome to join us at your fund's meeting, most
shareholders cast their vote by filling out and signing the
enclosed proxy. We are asking for your vote on these matters:

1. ELECTING TRUSTEES TO OVERSEE YOUR FUND; AND

2. RATIFYING THE SELECTION BY THE TRUSTEES OF THE INDEPENDENT
AUDITORS OF YOUR FUND FOR ITS CURRENT FISCAL YEAR.

Although we would like very much to have each shareholder attend
their fund's meeting, we realize this is not possible. Whether
or not you plan to be present, we need your vote. We urge you to
complete, sign, and return the enclosed proxy card promptly. A
postage-paid envelope is enclosed.

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 don't 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, call 1-800-225-1581.

Sincerely yours,

(signature of George Putnam)
George Putnam, Chairman

PUTNAM MANAGED HIGH YIELD TRUST
PUTNAM TAX-FREE HEALTH CARE FUND
NOTICE OF A 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 and Putnam
Tax-Free Health Care Fund:

A Meeting of Shareholders of your fund will be held on March 7,
1996 at 2:00 p.m., Boston time, on the eighth floor of One Post
Office Square, Boston, Massachusetts, to consider the following:

1. FIXING THE NUMBER OF TRUSTEES AND ELECTING TRUSTEES. SEE
PAGE 4.

2. RATIFYING THE SELECTION OF AUDITORS FOR YOUR FUND FOR THE
CURRENT FISCAL YEAR. SEE PAGE 20.

3. TRANSACTING OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING.

By the Trustees

George Putnam, Chairman
William F. Pounds, Vice Chairman

Jameson A. Baxter Donald S. Perkins
Hans H. Estin George Putnam, III
John A. Hill Eli Shapiro
Elizabeth T. Kennan A.J.C. Smith
Lawrence J. Lasser W. Nicholas Thorndike
Robert E. Patterson

WE URGE YOU TO MARK, SIGN, DATE, AND MAIL THE ENCLOSED PROXY IN
THE POSTAGE-PAID ENVELOPE PROVIDED SO YOU WILL BE REPRESENTED AT
THE MEETING.

December 15, 1995

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
ADVISER.

WHO IS ASKING FOR MY VOTE?

THE ENCLOSED PROXY IS SOLICITED BY THE TRUSTEES OF PUTNAM MANAGED
HIGH YIELD TRUST AND PUTNAM TAX-FREE HEALTH CARE FUND for use at
the Meeting of Shareholders of each fund to be held on March 7,
1996, and, if your fund's meeting is adjourned, at any later
meetings, for the purposes stated in the Notice of Meeting (see
previous page).

HOW DO YOUR FUND'S TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE ON
THESE PROPOSALS?

The Trustees recommend that you vote

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

2. FOR SELECTING PRICE WATERHOUSE LLP AS THE INDEPENDENT
AUDITORS FOR YOUR FUND.

WHO IS ELIGIBLE TO VOTE?

Shareholders of record at the close of business on December 8,
1995, are entitled to be present and to vote at the meeting or
any adjourned meeting. The Notice of Meeting, the proxy, and the
Proxy Statement have been mailed to shareholders of record on or
about December 18, 1995.

Each share is entitled to one vote. Shares represented by duly
executed proxies will be voted in accordance with shareholders'
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 the
meeting, your shares will be voted at the Trustees' discretion.

THE PROPOSALS

I. ELECTION OF TRUSTEES

WHO ARE THE NOMINEES FOR TRUSTEES?

The Nominating Committee of the Trustees 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 Nominating Committee of the Trustees 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, Inc., your fund's investment manager
("Putnam Management").

JAMESON ADKINS BAXTER
[INSERT PICTURE]

Ms. Baxter, age 52, is the President of Baxter Associates, Inc.,
a management and financial consulting firm which she founded in
1986. During that time, she was also a Vice President and
Principal of the Regency Group, Inc., and a Consultant to First
Boston Corporation, both of which are investment banking firms.
From 1965 to 1986, Ms. Baxter held various positions in
investment banking and corporate finance at First Boston.

Ms. Baxter currently also serves as a Director of Banta
Corporation, a Fortune 500 printing company, Avondale Federal
Savings Bank, a savings and loan company, and ASHTA Chemicals,
Inc., a basic chemicals producer. She is also the Chairman
Emeritus of the Board of Trustees of Mount Holyoke College,
having previously served as Chairman for five years and as a
Board member for thirteen years; an Honorary Trustee and past
President of the Board of Trustees of the Emma Willard School;
and a Member of the Board of Governors of Good Shepherd Hospital.
She is also active in various professional and civic
organizations, including the Financial Women's Association of New
York. Ms. Baxter is a graduate of Mount Holyoke College.

HANS H. ESTIN
[INSERT PICTURE]

Mr. Estin, age 67, is a Chartered Financial Analyst and the Vice
Chairman of North American Management Corp., a registered
investment adviser serving individual clients and their families.
Mr. Estin currently also serves as a Director of The Boston
Company, Inc., a registered investment adviser which provides
administrative and investment management services to mutual funds
and other institutional investors, and Boston Safe Deposit and
Trust Company; a Corporation Member of Massachusetts General
Hospital; and a Trustee of New England Aquarium. He previously
served as the Chairman of the Board of Trustees of Boston
University and is currently active in various other civic
associations, including the Boys & Girls Clubs of Boston, Inc.
Mr. Estin is a graduate of Harvard College and holds honorary
doctorates from Merrimack College and Boston University.

JOHN A. HILL
[INSERT PICTURE]

Mr. Hill, age 53, is the Chairman and Managing Director of First
Reserve Corporation, a registered investment adviser investing in
companies in the world-wide energy industry on behalf of
institutional investors.

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

Mr. Hill currently also serves as a Director of Snyder Oil
Corporation, an exploration and production company which he
founded, Maverick Tube Corporation, a manufacturer of structural
steel, pipe and well casings, PetroCorp Incorporated, an
exploration and production company, Enterra Corporation, an oil
field service company, various private companies controlled by
First Reserve Corporation, and various First Reserve Funds. He
is currently 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.

ELIZABETH T. KENNAN
[INSERT PICTURE]

Ms. Kennan, age 57, is President Emeritus and Professor of Mount
Holyoke College. From 1978 through June 1995, she was President
of Mount Holyoke College. From 1966 to 1978, she was on the
faculty of Catholic University, where she taught history and
published numerous articles.

Ms. Kennan currently also serves as a Director of NYNEX
Corporation, a telecommunications company, Northeast Utilities,
the Kentucky Home Life Insurance Companies, and Talbots, a
women's clothing retailer. She also serves as a Member of The
Folger Shakespeare Library Committee. She is currently active in
various educational and civic associations, including the
Committee on Economic Development and the Council on Foreign
Relations. Ms. Kennan is a graduate of Mount Holyoke College,
the University of Washington and St. Hilda College at Oxford
University and holds several honorary doctorates.

LAWRENCE J. LASSER*
[INSERT PICTURE]

Mr. Lasser, age 53, is the Vice President of your fund and the
other Putnam funds. He has been the President, Chief Executive
Officer and a Director of Putnam Investments, Inc. and Putnam
Management since 1985, having begun his career there in 1969.

Mr. Lasser currently also serves as a Director of Marsh &
McLennan Companies, Inc., the parent company of Putnam
Management, and INROADS/Central New England, Inc., a job market
internship program for minority high school and college students.
He is a Member of the Board of Overseers of the Museum of
Science, the Museum of Fine Arts and the Isabella Stewart Gardner
Museum in Boston. He is also a Trustee of the Beth Israel
Hospital and Buckingham, Browne and Nichols School. Mr. Lasser
is a graduate of Antioch College and Harvard Business School.

ROBERT E. PATTERSON
[INSERT PICTURE]

Mr. Patterson, age 50, is the Executive Vice President and
Director of Acquisitions of Cabot Partners Limited Partnership, a
registered investment adviser which manages real estate
investments for institutional investors. Prior to 1990, he was
the Executive Vice President of Cabot, Cabot & Forbes Realty
Advisors, Inc., the predecessor company of Cabot Partners. Prior
to that, he was a Senior Vice President of the Beal Companies, a
real estate management, investment and development company. He
has also worked as an attorney and held various positions in
state government, including the founding Executive Director of
the Massachusetts Industrial Finance Agency.

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

DONALD S. PERKINS*
[INSERT PICTURE]

Mr. Perkins, age 68, is the retired Chairman of the Board of
Jewel Companies, Inc., a diversified retailer, where among other
roles he served as President, Chief Executive Officer and
Chairman of the Board from 1965 to 1980. He currently also
serves as a Director of various other public corporations,
including American Telephone & Telegraph Company, AON Corp., an
insurance company, Cummins Engine Company, Inc., an engine and
power generator equipment manufacturer and assembler, Illinova
and Illinois Power Co., Inland Steel Industries, Inc., Kmart
Corporation, a major department store company, LaSalle Street
Fund, Inc., a real estate investment trust, and Time Warner,
Inc., the nation's largest media conglomerate. He previously
served as a director of several other major public corporations,
including Corning Glass Works, Eastman Kodak Company and
Firestone Tire & Rubber Company.

Mr. Perkins currently also serves as a Trustee and Vice Chairman
of Northwestern University and as a Trustee of the Hospital
Research and Education Trust. He is currently active in various
civic and business associations, including the Business Council
and the Civic Committee of the Commercial Club of Chicago, of
which he is the founding Chairman. Mr. Perkins is a graduate of
Yale University and Harvard Business School and holds an honorary
Doctorate from Loyola University of Chicago.

WILLIAM F. POUNDS
[INSERT PICTURE]

Dr. Pounds, age 67, is the Vice Chairman of your fund and of the
other Putnam funds. He has been a Professor of Management at the
Alfred P. Sloan School of Management at the Massachusetts
Institute of Technology since 1961 and served as Dean of that
School from 1966 to 1980. He previously served as Senior Advisor
to the Rockefeller Family and Associates and was a past Chairman
of Rockefeller & Co., Inc., a registered investment adviser which
manages Rockefeller family assets, and Rockefeller Trust Company.

Dr. Pounds currently also serves as a Director of IDEXX
Laboratories, Inc., M/A-COM, Inc., EG&G, Inc., Perseptive
Biosystems, Inc., Management Sciences For Health, Inc. and Sun
Company, Inc. He is also a Trustee of the Museum of Fine Arts in
Boston; an Overseer of WGBH Educational Foundation, and a Fellow
of The American Academy of Arts and Sciences. He previously
served as a director of Fisher-Price, Inc., a major toy
manufacturer and General Mills, Inc., a major manufacturer and
distributor of food products. Dr. Pounds is a graduate of
Carnegie Mellon University.

GEORGE PUTNAM*
[INSERT PICTURE]

Mr. Putnam, age 69, is the Chairman and President of your fund
and of the other Putnam funds. He is the Chairman and a Director
of Putnam Management and Putnam Mutual Funds Corp. and a director
of Marsh & McLennan, their parent company. Mr. Putnam is the son
of the founder of the Putnam funds and Putnam Management and has
been employed in various capacities by Putnam Management since
1951, including Chief Executive Officer from 1961 to 1973. He is
a former Overseer and Treasurer of Harvard University; a past
Chairman of the Harvard Management Company; and a Trustee
Emeritus of Wellesley College and Bradford College.

Mr. Putnam currently also serves as a Director of The Boston
Company, Inc., Boston Safe Deposit and Trust Company, Freeport-
McMoRan, Inc., a mining and natural resources company, General
Mills, Inc., a major manufacturer of food products, Houghton
Mifflin Company, a major publishing company, and Rockefeller
Group, Inc., a real estate manager. He is also a Trustee of
Massachusetts General Hospital, McLean Hospital, Vincent Memorial
Hospital, WGBH Educational Foundation and the Museum of Fine Arts
in Boston; an Overseer of Northeastern University; and a Fellow
of The American Academy of Arts and Sciences. Mr. Putnam is a
graduate of Harvard College and Harvard Business School and holds
honorary doctorates from Bates College and Harvard University.

GEORGE PUTNAM, III*
[INSERT PICTURE]

Mr. Putnam, age 44, is the President of New Generation Research,
Inc., a publisher of financial advisory and other research
services relating to bankrupt and distressed companies, and New
Generation Advisers, Inc., a registered investment adviser which
provides advice to private funds specializing in investments in
such companies. Prior to founding New Generation in 1985, Mr.
Putnam was an attorney with the Philadelphia law firm Dechert
Price & Rhodes.

Mr. Putnam currently also serves as a Director of The World
Environment Center and the Massachusetts Audubon Society. He is
also a Trustee of the Sea Education Association and St. Mark's
School and an Overseer of the New England Medical Center. Mr.
Putnam is a graduate of Harvard College, Harvard Business School
and Harvard Law School.

ELI SHAPIRO
[INSERT PICTURE]

Dr. Shapiro, age 79, is the Alfred P. Sloan Professor of
Management, Emeritus at the Alfred P. Sloan School of Management
at the Massachusetts Institute of Technology, having served on
the faculty of the Sloan School for eighteen years. He
previously was also on the faculty of Harvard Business School,
The University of Chicago School of Business and Brooklyn
College. During his academic career, Dr. Shapiro authored
numerous publications concerning finance and related topics. He
previously served as the President and Chief Executive of the
National Bureau of Economic Research and also provided economic
and financial consulting services to various clients.

Dr. Shapiro currently serves as a Director of Nomura Dividend
Income Fund, Inc., a privately held registered investment company
managed by Putnam Management. He is also a past Director of many
companies, including Reece Corporation, a sewing machine
manufacturer, Commonwealth Mortgage, Dexter Corporation, a
manufacturer of plastics and related products, Avis Corporation,
a car rental company, Connecticut Bank and Trust Company,
Connecticut National Gas Corporation, the Federal Home Loan Bank
of Boston, where he served as Chairman from 1977 to 1989,
Travelers' Corporation, an insurance company, and Norlin
Corporation, a musical instrument manufacturer; and a past
Trustee of Mount Holyoke College and the Putnam funds (from 1984
to 1989).

Dr. Shapiro is a Fellow of The American Academy of Arts and
Sciences and is active in various professional and civic
associations, including the American Economic Association, the
American Finance Association and the Council on Foreign
Relations. Dr. Shapiro is a graduate of Brooklyn College and
Columbia University.

A.J.C. SMITH*
[INSERT PICTURE]

Mr. Smith, age 61, is the Chairman and Chief Executive Officer of
Marsh & McLennan Companies, Inc. He has been employed by Marsh &
McLennan and related companies in various capacities since 1961.
Mr. Smith is a Director of the Trident Corp., and he also serves
as a Trustee of the Carnegie Hall Society, the Central Park
Conservancy, The American Institute for Chartered Property
Underwriters, and is a Founder of the Museum of Scotland Society.
He was educated in Scotland and is a Fellow of the Faculty of
Actuaries in Edinburgh, a Fellow of the Canadian Institute of
Actuaries, a Fellow of the Conference of Actuaries in Public
Practice, an Associate of the Society of Actuaries, a Member of
the American Academy of Actuaries, the International Actuarial
Association and the International Association of Consulting
Actuaries.

W. NICHOLAS THORNDIKE**
[INSERT PICTURE]

Mr. Thorndike, age 62, serves as a Director of various
corporations and charitable organizations, including Data General
Corporation, a computer and high technology company, Bradley Real
Estate, Inc., a real estate investment firm, Providence Journal
Co., a newspaper publisher, and Courier Corporation, a book
binding and printing company. He is also a Trustee of Eastern
Utilities Associates, Massachusetts General Hospital, where he
previously served as chairman, and Northeastern University.

Prior to December 1988, he was the Chairman of the Board and
Managing Partner of Wellington Management Company/Thorndike,
Doran, Paine & Lewis, a registered investment adviser which
managed mutual funds and institutional assets. He also
previously served as a Trustee of the Wellington Group of Funds
(now The Vanguard Group) and was the Chairman and a Director of
Ivest Fund, Inc. Mr. Thorndike is a graduate of Harvard College.

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

* Nominees who are or may be deemed to be "interested persons"
(as defined in the Investment Company Act of 1940) of your
fund, Putnam Management, and Putnam Mutual Funds Corp.
("Putnam Mutual Funds"), the principal underwriter for all
the open-end Putnam funds and an affiliate of Putnam
Management. Messrs. Putnam, Lasser, and Smith are deemed
"interested persons" by virtue of their positions as
officers or shareholders of your fund, or directors of
Putnam Management, Putnam Mutual Funds, or Marsh & McLennan
Companies, Inc., the parent company of Putnam Management and
Putnam Mutual Funds. Mr. George Putnam, III, Mr. Putnam's
son, is also an "interested person" of your fund, Putnam
Management, and Putnam Mutual Funds. Mr. Perkins may be
deemed to be an "interested person" of your fund because of
his service as a director of certain publicly held companies
that include registered broker-dealer firms among their
subsidiaries. Neither your fund nor any of the other Putnam
funds currently engages in any transactions with such firms
except that certain of such firms act as dealers in the
retail sale of shares of certain Putnam funds in the
ordinary course of their business. The balance of the
nominees are not "interested persons."

** In February 1994 Mr. Thorndike accepted appointment as a
successor trustee of certain private trusts in which he has
no beneficial interest. At that time he also became
Chairman of the Board of two privately owned corporations
controlled by such trusts, serving in that capacity until
October 1994. These corporations filed voluntary petitions
for relief under Chapter 11 of the U.S. Bankruptcy Code in
August 1994.

Except as indicated above, the principal occupations and business
experience of the nominees for the last five years have been with
the employers indicated, although in some cases they have held
different positions with those employers. Except for Dr.
Shapiro, all the nominees were elected by the shareholders in
February, 1995. Dr. Shapiro was elected by the other Trustees in
April, 1995. As indicated above, Dr. Shapiro also previously
served as a Trustee of the Putnam funds from 1984 to 1989. The
13 nominees for election as Trustees at the shareholder meeting
of your fund who receive the greatest number of votes will be
elected 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 recommend that the
shareholders fix the number of Trustees at less than 13 for your
fund.

WHAT ARE THE TRUSTEES' RESPONSIBILITIES?

Each fund's Trustees are responsible for the general oversight of
each fund's business and for assuring that each fund is managed
in the best interests of its shareholders. The Trustees
periodically review each fund's investment performance as well as
the quality of other services provided to each fund and its
shareholders by Putnam Management and its affiliates, including
administration, custody, distribution and investor servicing. At
least annually, the Trustees review the fees paid to Putnam
Management and its affiliates for these services and the overall
level of each fund's operating expenses. In carrying out these
responsibilities, the Trustees are assisted by an independent
administrative staff and by each fund's auditors and legal
counsel, which are selected by the Trustees and are independent
of Putnam Management and its affiliates.

DO THE TRUSTEES HAVE A STAKE IN YOUR FUND?

The Trustees believe it is important that each Trustee have a
significant investment in the Putnam funds. The Trustees
allocate their investments among the more than 80 Putnam funds
based on their own investment needs. The Trustees' aggregate
investments in the Putnam funds total over $36 million. The
table below lists each Trustee's current investments in each fund
and in the Putnam funds as a group.

NUMBER OF SHARES NUMBER OF
OWNED OF PUTNAM SHARES OWNED
YEAR FIRST MANAGED HIGH OF PUTNAM NUMBER OF SHARES
ELECTED AS YIELD TRUST TAX-FREE OWNED OF ALL
TRUSTEE OF THE AS OF HEALTH CARE PUTNAM FUNDS
TRUSTEES PUTNAM FUNDS 11/15/95* FUND AS OF 11/15/95* AS OF 11/15/95**
- ------------------------------------------------------------------------------------------------------------------------

Jameson Adkins Baxter 1994 300 300 13,615
Hans H. Estin 1972 113 110 24,600
John A. Hill 1985 100 110 105,725
Elizabeth T. Kennan 1992 100(1) 100(2) 15,767
Lawrence J. Lasser 1992 100 100 242,755
Robert E. Patterson 1984 200 100 56,874
Donald S. Perkins 1982 420 806 194,892
William F. Pounds 1971 500 335 331,326
George Putnam 1957 886 815 1,346,420
George Putnam, III 1984 500 500 93,709
Eli Shapiro 1995+ --- --- 81,968
A.J.C. Smith 1986 200 200 128,829
W. Nicholas Thorndike 1992 123 117 66,880
- ------------------------------------------------------------------------------------------------------------------------
(1) In addition, Mrs. Kennan is the custodian of a trust for her son which owns 125 shares of the fund.
(2) In addition, Mrs. Kennan is the custodian of a trust for her son which owns 119 shares of the fund.

* As of November 15, 1995, the Trustees and officers of Putnam Managed High Yield Trust and Putnam Tax-Free Health
Care Fund owned a total of 3,542 and 3,583 shares, respectively, of the funds, each comprising less than 1% of the
outstanding shares of such fund on that date. With respect to all of these shares, the Trustees and officers
individually have sole investment power and sole voting power.

** These holdings do not include shares of Putnam money market funds.

+ Dr. Shapiro previously served as a Trustee of the Putnam funds from 1984 to 1989.

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 each fund's investment
performance on an individual basis with each fund's
managers;

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

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

by reviewing the fees paid to 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 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;

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 each fund and of the other
Putnam funds. A portion of these meetings is devoted to meetings
of various Committees of the board which focus on particular
matters. These include: the Contract Committee, which reviews
all contractual arrangements with Putnam Management and its
affiliates; the Communication and Services Committee, which
reviews the quality of services provided by each fund's investor
servicing agent, custodian and distributor; the Pricing,
Brokerage and Special Investments Committee, which reviews
matters relating to valuation of securities, best execution,
brokerage costs and allocations and new investment techniques;
the Audit Committee, which reviews accounting policies and the
adequacy of internal controls and supervises the engagement of
the funds' auditors; the Compensation, Administration and Legal
Affairs Committee, which reviews compensation of the Trustees and
their administrative staff and supervises the engagement of the
funds' independent counsel; and the Nominating Committee, which
is responsible for selecting nominees for election as Trustees.

Each Trustee generally attends at least two formal committee
meetings during such monthly meeting of the Trustees. During
1994, the average Trustee participated in approximately 40
committee and board meetings. In addition, the Trustees meet in
small groups with Chief Investment Officers and Portfolio
Managers to review recent performance and the current investment
climate for selected funds. These meetings ensure that each
fund's performance is reviewed in detail at least twice a year.
The Contract Committee typically meets on several additional
occasions during the year to carry out its responsibilities.
Other Committees, including an Executive Committee, may also meet
on special occasions as the need arises.

WHAT ARE THE TRUSTEES PAID FOR THEIR SERVICES?

Each fund pays each Trustee a fee for his or her services. Each
Trustee also receives fees for serving as Trustee of other Putnam
funds. The Trustees periodically review their fees to assure
that such fees continue to be appropriate in light of their
responsibilities as well as in relation to fees paid to trustees
of other mutual fund complexes. The fees paid to each Trustee by
your fund and by all of the Putnam funds are shown below:

COMPENSATION TABLE

AGGREGATE AGGREGATE
COMPENSATION COMPENSATION
FROM PUTNAM FROM PUTNAM TOTAL
MANAGED HIGH TAX-FREE COMPENSATION
YIELD TRUST* HEALTH CARE FROM ALL
TRUSTEES FUND* PUTNAM FUNDS**
- -------- ------------- --------------- --------------------

Ms. Baxter 722 884 $135,850
Mr. Estin 722 884 $141,850
Mr. Hill 718 880 $143,850
Ms. Kennan 712 874 $141,850
Mr. Lasser 722 884 $141,850
Mr. Patterson 732 893 $144,850
Mr. Perkins 718 880 $139,850
Dr. Pounds 725 886 $143,850
Mr. G. Putnam 722 884 $141,850
Mr. G. Putnam, III 722 884 $141,850
Dr. Shapiro++ 59 74 N/A
Mr. Smith 709 871 $137,850
Mr. Thorndike 732 893 $144,850
- ---------------------------------------------------------------------------------------------------------------------------

* Reflects amounts paid by the fund for its last fiscal year. Includes an annual retainer and an attendance fee for
each meeting attended.

** Reflects total payments received from all Putnam funds in the most recent calendar year. At December 31, 1994, there
were 86 funds in the Putnam family.

+ Elected to Board in April, 1995. For the calendar year ended December 31, 1994, Dr. Shapiro received $38,577 in
retirement benefits from the Putnam funds in respect of his prior service as a Trustee. These benefits terminated at
the end of 1994.

Each fund's Trustees have approved Retirement Guidelines for
Trustees of the Putnam funds. These guidelines provide generally
that a Trustee who retires after reaching age 72 and who has at
least 10 years of continuous service will be eligible to receive a
retirement benefit from each Putnam fund for which he or she served
as a Trustee. The amount and form of such benefit is subject to
determination annually by the Trustees and, unless otherwise
determined by the Trustees, will be an annual cash benefit payable
for life equal to one-half of the Trustee retainer fees paid by the
fund at the time of retirement. Several retired Trustees are
currently receiving benefits pursuant to the Guidelines and it is
anticipated that the current Trustees of each fund will receive
similar benefits upon their retirement. A Trustee who retired in
the most recent calendar year and was eligible to receive benefits
under these Guidelines would have received an annual benefit of
$60,425, based upon the aggregate retainer fees paid by the Putnam
funds for such year. The Trustees of each fund reserve the right to
amend or terminate such guidelines and the related payments at any
time, and may modify or waive the foregoing eligibility requirements
when deemed appropriate.

For additional information about your fund, including further
information about its Trustees and officers, please see "Further
information about the funds," on page 23.

PUTNAM INVESTMENTS

Putnam Investment Management, Inc. and its affiliate, Putnam
Fiduciary Trust Company, each fund's investor servicing agent and
custodian, are wholly owned by Putnam Investments, Inc., One Post
Office Square, Boston, Massachusetts 02109, a holding company that
is in turn wholly owned by Marsh & McLennan Companies, Inc., which
has executive offices at 1166 Avenue of the Americas, New York, New
York 10036. Marsh & McLennan Companies, Inc., and its operating
subsidiaries are professional services firms with insurance and
reinsurance brokering, consulting, and investment management
businesses.

2. SELECTION OF INDEPENDENT AUDITORS

Price Waterhouse LLP, 160 Federal Street, Boston, Massachusetts,
independent accountants, has been selected by the Trustees as
auditors of Putnam Managed High Yield Trust and Putnam Tax-Free
Health Care Fund for their current fiscal years. Among the
country's preeminent accounting firms, this firm also serves as the
auditor for approximately half of the 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 the fees charged for these services.

A majority of the votes on the matter is necessary to ratify the
selection of auditors. A representative of the independent auditors
is expected to be present at the meeting to make statements and to
respond to appropriate questions.

FURTHER INFORMATION ABOUT VOTING AND THE SHAREHOLDER MEETING

QUORUM AND METHODS OF TABULATION. The shareholders of each fund
vote separately on the proposals presented for their fund. In the
case of each fund, a majority of the shares entitled to vote --
present in person or represented by proxy -- constitutes a quorum
for the transaction of business with respect to any proposal at the
meeting. 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 each fund as tellers for the
meeting.

The tellers will count the total number of votes cast "for" approval
of the proposals for purposes of determining whether sufficient
affirmative votes have been cast. With respect to the election of
Trustees and selection of auditors, neither abstentions nor broker
non-votes have any effect on the outcome of the proposal. With
respect to any other proposals, 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 each fund and employees of Putnam Management, Putnam
Fiduciary Trust Company, and Putnam Mutual Funds may solicit proxies
in person or by telephone. Each fund may also arrange to have votes
recorded by telephone. The telephone voting procedure is designed
to authenticate shareholders' identities, to allow shareholders to
authorize the voting of their shares in accordance with their
instructions and to confirm that their instructions have been
properly recorded. Each 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. No fund is aware 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.

Each fund's Trustees have adopted a general policy of maintaining
confidentiality in the voting of proxies. Consistent with this
policy, each 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. Putnam Managed High Yield Trust and Putnam Tax-Free
Health Care Fund has retained at its expense D. F. King & Co., Inc.,
77 Water Street, New York, New York 10005, to aid in the
solicitation instructions for nominee accounts, for a fee not to
exceed $3,500 and $4,000, respectively for each fund, plus
reasonable out-of-pocket expenses for each fund.

REVOCATION OF PROXIES. Proxies, including proxies given by
telephone, may be revoked at any time before they are voted by a
written revocation received by the Clerk of the funds, by properly
executing a later-dated proxy or by attending the meeting and voting
in person.

DATE FOR RECEIPT OF SHAREHOLDERS' PROPOSALS FOR THE NEXT ANNUAL
MEETING. It is anticipated that each fund's next annual meeting of
shareholders will be held in March, 1997. Shareholder proposals to
be included in your fund's proxy statement for the next annual
meeting must be received by your fund before August 21, 1996.

ADJOURNMENT. If sufficient votes in favor of any of the proposals
for any fund 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 such fund for a period
or periods of not more than 60 days in the aggregate to permit
further solicitation of proxies with respect to any of such
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 such adjournment those proxies which
they are entitled to vote in favor of such proposals. They will
vote against any such adjournment those proxies required to be voted
against any of such proposals. Such 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. EACH FUND WILL FURNISH, WITHOUT CHARGE, TO
ANY OF ITS SHAREHOLDERS UPON REQUEST 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.

FURTHER INFORMATION ABOUT THE FUNDS

LIMITATION OF TRUSTEE LIABILITY. The Agreement and Declaration of
Trust of your 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.

AUDIT AND NOMINATING COMMITTEES. The voting members of the Audit
Committee of your fund include only Trustees who are not "interested
persons" of the fund or by reason of any affiliation with Putnam
Investments and its affiliates. The Audit Committee currently
consists of Messrs. Estin (Chairman), Perkins (without vote),
Putnam, III (without vote), Shapiro, Smith (without vote), and Mrs.
Kennan. The Nominating Committee consists only of Trustees who are
not "interested persons" of your fund or Putnam Management. The
Nominating Committee currently consists of Dr. Pounds and Mrs.
Kennan (Co-chairpersons), Mrs. Baxter, and Messrs. Estin, Hill,
Patterson, Shapiro, and Thorndike.
OFFICERS AND OTHER INFORMATION. In addition to George Putnam and Lawrence J.
Lasser, the
officers of each fund are as follows:

PUTNAM MANAGED HIGH YIELD TRUST

YEAR FIRST
ELECTED TO
NAME (AGE) OFFICE OFFICE
- ---------- ------ -----------

Charles E. Porter (57) Executive Vice President 1993
Patricia C. Flaherty (49) Senior Vice President 1993
John D. Hughes (60) Senior Vice President & Treasurer 1993
Gordon H. Silver (48) Vice President 1993
Gary N. Coburn (48) Vice President 1993
Jennifer E. Leichter* (35) Vice President 1993
William N. Shiebler** (53) Vice President 1993
John R. Verani (56) Vice President 1993
Paul M. O'Neil (42) Vice President 1993
Beverly Marcus (51) Clerk 1993
- ---------------------------------------------------------------------------------------------
* The fund's portfolio manager
** President of Putnam Mutual Funds

PUTNAM TAX-FREE HEALTH CARE FUND

YEAR FIRST
ELECTED TO
NAME (AGE) OFFICE OFFICE
- ---------- ------ -----------
Charles E. Porter (57) Executive Vice President 1992
Patricia C. Flaherty (49) Senior Vice President 1992
John D. Hughes (60) Senior Vice President & Treasurer 1992
Gordon H. Silver (48) Vice President 1992
Gary N. Coburn (48) Vice President 1992
James E. Erickson (60) Vice President 1992
Blake E. Anderson (39) Vice President 1992
Howard K. Manning* (42) Vice President 1992
Leslie J. Burke* (33) Vice President 1992
William N. Shiebler** (53) Vice President 1992
John R. Verani (56) Vice President 1992
Paul M. O'Neil (42) Vice President 1992
Beverly Marcus (51) Clerk 1992
- ----------------------------------------------------------------------
* One of the fund's portfolio managers
** President of Putnam Mutual Funds

All of the officers of each 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
Management, Messrs. Putnam, George Putnam, III, Lasser and Smith
(nominees for Trustees of each fund), as well as the officers of
each fund, will benefit from the management fees, custodian fees,
and investor servicing fees paid or allowed by each fund.

ASSETS AND SHARES OUTSTANDING OF EACH FUND
AS OF NOVEMBER 30, 1995

Net assets
Putnam Managed High Yield Trust $100,222,439
Putnam Tax-Free Health Care Fund $198,521,324

Common shares outstanding and authorized to vote
Putnam Managed High Yield Trust 7,507,107 shares
Putnam Tax-Free Health Care Fund 13,807,168 shares

Persons beneficially owning more than 5%
of common shares
Putnam Managed High Yield Trust None
Putnam Tax-Free Health Care Fund None

PUTNAMINVESTMENTS
THE PUTNAM FUNDS

One Post Office Square
Boston, Massachusetts 02109
Toll-free 1-800-225-1581

PUTNAMINVESTMENTS

THIS IS YOUR PROXY CARD.

PLEASE VOTE THIS PROXY, SIGN IT BELOW, AND RETURN IT PROMPTLY IN THE
ENVELOPE PROVIDED. YOUR VOTE IS IMPORTANT.

Please fold at perforation before detaching
- --------------------------------------------------------------------

Proxy for a meeting of shareholders, March 7, 1996, for PUTNAM
MANAGED HIGH YIELD TRUST.

THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF THE FUND.

The undersigned shareholder hereby appoints George Putnam, Hans H.
Estin, and Robert E. Patterson, and each of them separately,
proxies, with power of substitution, and hereby authorizes them to
represent and to vote, as designated below, at the meeting of
shareholders of Putnam Managed High Yield Trust on March 7, 1996,
at 2:00 p.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 of you 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

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 ballot and return it with your signed proxy in
the enclosed envelope.

Street
- --------------------------------------------------------------------

City State Zip
- --------------------------------------------------------------------

Telephone
- --------------------------------------------------------------------

DO YOU HAVE ANY COMMENTS?

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

DEAR SHAREHOLDER:

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

THANK YOU!
- --------------------------------------------------------------------
Please fold at perforation before detaching

IF YOU COMPLETE AND SIGN THE PROXY, WE'LL VOTE IT EXACTLY AS YOU
TELL US. IF YOU SIMPLY SIGN THE PROXY, IT WILL BE VOTED FOR
ELECTING TRUSTEES AS SET FORTH IN PROPOSAL 1 AND FOR PROPOSAL 2. IN
THEIR DISCRETION, THE PROXIES WILL ALSO BE AUTHORIZED TO VOTE UPON
SUCH OTHER MATTERS THAT MAY COME BEFORE THE MEETING.

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

Please mark your choices / X / in blue or black ink.

1. Proposal to elect Trustees
The nominees for Trustees are: J.A. Baxter, H.H. Estin, J.A.
Hill, E.T. Kennan, L.J. Lasser, R.E. Patterson, D.S. Perkins,
W.F. Pounds, G. Putnam, G. Putnam, III, E. Shapiro, A.J.C.
Smith, W.N. Thorndike.

/ / FOR fixing the number of Trustees and electing all the
nominees (EXCEPT AS MARKED TO THE CONTRARY BELOW.)

TO WITHHOLD AUTHORITY TO VOTE FOR ONE OR MORE OF THE
NOMINEES, WRITE THOSE NOMINEES' NAMES BELOW:

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

/ / WITHHOLD authority to vote for all nominees

2. PROPOSAL TO RATIFY FOR AGAINST ABSTAIN
THE SELECTION OF / / / / / /
PRICE WATERHOUSE LLP
AS AUDITORS.

NOTE: If you have questions on any of the proposals, please call
1-800-225-1581.

PUTNAMINVESTMENTS

THIS IS YOUR PROXY CARD.

PLEASE VOTE THIS PROXY, SIGN IT BELOW, AND RETURN IT PROMPTLY IN THE
ENVELOPE PROVIDED. YOUR VOTE IS IMPORTANT.

Please fold at perforation before detaching
- --------------------------------------------------------------------

Proxy for a meeting of shareholders, March 7, 1996, for PUTNAM TAX-
FREE HEALTH CARE FUND.

THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF THE FUND.

The undersigned shareholder hereby appoints George Putnam, Hans H.
Estin, and Robert E. Patterson, and each of them separately,
proxies, with power of substitution, and hereby authorizes them to
represent and to vote, as designated below, at the meeting of
shareholders of Putnam Tax-Free Health Care Fund on March 7, 1996,
at 2:00 p.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

Street
- --------------------------------------------------------------------

City State Zip
- --------------------------------------------------------------------

Telephone
- --------------------------------------------------------------------
DO YOU HAVE ANY COMMENTS?

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

DEAR SHAREHOLDER:

THANK YOU!
- --------------------------------------------------------------------
Please fold at perforation before detaching

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

Please mark your choices / X / in blue or black ink.

/ / FOR fixing the number of Trustees and electing all the
nominees (EXCEPT AS MARKED TO THE CONTRARY BELOW.)

TO WITHHOLD AUTHORITY TO VOTE FOR ONE OR MORE OF THE
NOMINEES, WRITE THOSE NOMINEES' NAMES BELOW:

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

/ / WITHHOLD authority to vote for all nominees

2. PROPOSAL TO RATIFY FOR AGAINST ABSTAIN
THE SELECTION OF / / / / / /
PRICE WATERHOUSE LLP
AS AUDITORS.

NOTE: If you have questions on any of the proposals, please call
1-800-225-1581.