SCHEDULE 14A INFORMATION

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

Filed by the Registrant / X /

Filed by a party other than the Registrant / /

Check the appropriate box:

/ / Preliminary Proxy Statement

/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e) (2))

/ X / Definitive Proxy Statement

/ / Definitive Additional Materials

/ / Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12

Putnam 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):

/ X / No fee required

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

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

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

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

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

/ / Fee paid previously with preliminary materials.

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

(1) Amount Previously Paid:

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(4) Date Filed:

Important information for shareholders of

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

The document you hold in your hands 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 provide your
voting instructions by using any of the methods shown on your proxy
card. When shareholders don't return their proxies in sufficient
numbers, we have to make 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 minutes 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.

[GRAPHIC OMITTED: PHOTO OF JOHN A. HILL]

A Message from the Chairman

Dear Fellow Shareholder:

I am writing to you to ask for your vote on important matters 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
either filling out and signing the enclosed proxy card or by voting via
the Internet. We are asking for your vote on the following matter:
fixing the number of Trustees at thirteen and electing your fund's
Trustees.

Although we would like very much to have each shareholder attend this
meeting, we realize that it may not be possible. Whether or not you plan
to be present, we need your vote. We urge you to record your voting
instructions via the Internet or by completing, signing, and returning
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 vote 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 I
am sure you will give this important matter. If you have questions about
the proposal, please call a Putnam customer service representative at
1-800-225-1581 or contact your financial advisor.

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 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, in the event you 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
7, 2003 at 11:00 a.m., Boston time, at the principal offices of the fund
on the eighth floor of One Post Office Square, Boston, Massachusetts, to
consider the following:

1. Fixing the number of Trustees and electing Trustees.

By the Trustees

John A. Hill, Chairman
George Putnam, III, President

Jameson A. Baxter
Charles B. Curtis
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John H. Mullin, III
Robert E. Patterson
A.J.C. Smith
W. Thomas Stephens
W. Nicholas Thorndike

We urge you to mark, sign, date, and mail the enclosed proxy in the
postage-paid envelope provided or record your voting instructions via
the Internet so you will be represented at the meeting.

August 4, 2003

Proxy statement

This document will give you the information you need to vote on the
proposal. Much of the information 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
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 Managed High
Yield Trust, Putnam Master Income Trust and Putnam Tax-Free Health Care
Fund for use at the Annual Meeting of Shareholders of each fund to be
held on October 7, 2003, and, if your fund's meeting is adjourned, at
any later meetings, for the purposes stated in the Notice of Annual
Meeting (see previous page). The Notice of Annual Meeting, the proxy and
the Proxy Statement are being mailed on or about August 8, 2003.

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

The Trustees recommend that you vote

1. For fixing the number of Trustees at thirteen as proposed and the
election of all nominees.

* Who is eligible to vote?

Shareholders of record at the close of business on July 11, 2003 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 your duly
executed proxy will be voted in accordance with your instructions. If
you sign the proxy, but don't fill in a vote, your shares will be voted
in accordance with the Trustees' recommendations. If any other business
is brought before your fund's meeting, your shares will be voted at the
Trustees' discretion.

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

The Proposals

I. Election of Trustees

* Who are the nominees for Trustees?

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

The Board Policy and Nominating Committee of the Trustees of each fund
recommends that the number of Trustees be fixed at thirteen and that you
vote for the election of the nominees described below. Each nominee is
currently a Trustee of your fund and of the other Putnam funds. The 13
nominees for election as Trustees 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
December 31, 2002, there were 101 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 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), 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. Until 2002, Ms. Baxter was a Director
of Intermatic Corporation (a manufacturer of energy control products).

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 dealing with national security issues).
Mr. Curtis also serves as Senior Advisor to the United Nations
Foundation.

Mr. Curtis is a Member of the Council on Foreign Relations, and the
Trustee Advisory Council of the Applied Physics Laboratory, Johns
Hopkins University. Until 2003, Mr. Curtis was a Member of the Electric
Power Research Institute Advisory Council, and the University of Chicago
Board of Governors for Argonne National Laboratory. Prior to 2002, Mr.
Curtis was a Member of the Board of Directors of the Gas Technology
Institute and the Board of Directors of the Environment and Natural
Resources Program Steering Committee, John F. Kennedy School of
Government, Harvard University. Until 2001, Mr. Curtis was a Member of
the Department of Defense Policy Board and Director of EG&G Technical
Services, Inc. (a fossil energy research and development support).

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

[GRAPHIC OMITTED: PHOTO OF JOHN A. HILL]
- ---------------------------------------

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 (closed-end investment company).

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

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Mr. Jackson is a private investor.

Mr. Jackson is President of the Kathleen and Ronald J. Jackson
Foundation (a charitable trust). He is also a Member of the Board of
Overseers of WGBH (public television and radio), as well as a Member of
the Board of Overseers of the Peabody Essex Museum.

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 also serves as a Director of National Grid Transco (UK based
holding company with interests in electric and gas transmission and
distribution and telecommunications infrastructure); 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.

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

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

Dr. Kennan is Chairman, Cambus-Kenneth Bloodstock (a limited liability
company involved in thoroughbred horse breeding and farming) and
President Emeritus of Mount Holyoke College.

Dr. Kennan also serves as a Trustee of Northeast Utilities and Centre
College. She is also a Director of Talbots (a distributor of women's
apparel). Prior to 2001, Dr. Kennan 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.

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

[GRAPHIC OMITTED: PHOTO OF JOHN H. MULLIN, III
- ----------------------------------------------

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

Mr. Mullin is also 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. (a packaging company). Mr. Mullin is a
Trustee Emeritus of Washington & Lee University where he served as
Chairman of the Investment Committee. Prior to May 2001, he was a
Director of Graphic Packaging International Corp.

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

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Mr. Patterson is Senior Partner of Cabot Properties, L.P. and Chairman
of Cabot Properties, Inc.

Mr. Patterson is also Chairman of the Joslin Diabetes Center, a Trustee
of SEA Education Association and a Director of Brandywine Trust Company.
Prior to December 2001, he served as President and Trustee of Cabot
Industrial Trust (a publicly traded real estate investment trust).

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

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Mr. Stephens is a Corporate Director.

Mr. Stephens is a Director of Qwest Communications, Xcel Energy
Incorporated (a public utility company), TransCanada Pipelines, and
Norske Canada, Inc. (a paper manufacturer). Until 2003, Mr. Stephens was
a Director of Mail-Well (a printing and envelope company). Prior to July
2001 and October 1999, Mr. Stephens was Chairman of Mail-Well and CEO of
MacMillan-Bloedel (a forest products company).

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 manufacturer and
publisher), and The Providence Journal Co. (a newspaper publisher).

Mr. Thorndike is also 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.

* 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 and Putnam Management. He has been President and Chief
Executive Officer since 1985, having begun his career there in 1969.

Mr. Lasser is also 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.

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 also a Director of The Boston Family Office, L.L.C. (a
registered investment advisor), and a Trustee of St. Mark's School and
Shore Country Day School. Until 2002, Mr. Putnam was a Trustee of the
SEA Education Association.

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

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Mr. Smith is a Director of Marsh & McLennan Companies, Inc.

Mr. Smith is also 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. Prior to May
2000 and November 1999, Mr. Smith was Chairman and CEO, respectively, of
Marsh & McLennan.
- --------------------------------------------------------------------------

* 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 and Putnam Management.
Each of Mr. Lasser and Mr. Smith serves as Director of Marsh & McLennan
Companies, Inc. The balance of the nominees are not "interested
persons."

All the nominees were elected by the shareholders of each fund on
October 3, 2002. The 13 nominees for election as Trustees 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 ensuring 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 Dr. Joskow (Chairperson), Messrs.
Patterson, Thorndike and Stephens.

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 paragraph entitled "Date for Receipt of Shareholders'
Proposals for the Next Annual Meeting," 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 as 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 consists only of Trustees who are not "interested persons" of
your fund or Putnam Management. The Committee currently consists of Ms.
Baxter (Chairperson) and Messrs. Curtis, Jackson, Mullin and Dr. Kennan.

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 ensure coordination of all efforts between the Trustees and Putnam
Investments on behalf of the shareholders of the Putnam funds. The
Committee currently consists of Messrs. Hill (Chairman), Jackson, Dr.
Joskow, Putnam, Thorndike and Ms. Baxter.

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
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 each fund and in all of the Putnam funds as
of April 30, 2003.

Putnam Managed High Yield Trust

Number of Dollar Range of Aggregate Dollar
Putnam Managed Putnam Managed Range of Shares
High Yield High Yield Held in all of the
Trust Shares Trust Shares Putnam Funds
Name of Trustee Owned Owned Overseen by Trustee (101)
- -----------------------------------------------------------------------------------------

Jameson A. Baxter 418 $1-$10,000 over $100,000
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Charles B. Curtis 115 $1-$10,000 over $100,000
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John A. Hill 100 $1-$10,000 over $100,000
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Ronald J. Jackson 200 $1-$10,000 over $100,000
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Paul L. Joskow 100 $1-$10,000 over $100,000
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Elizabeth T. Kennan 263 $1-$10,000 over $100,000
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John H. Mullin, III 100 $1-$10,000 over $100,000
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Robert E. Patterson 200 $1-$10,000 over $100,000
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W. Thomas Stephens 100 $1-$10,000 over $100,000
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W. Nicholas Thorndike 259 $1-$10,000 over $100,000
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Lawrence J. Lasser 100 $1-$10,000 over $100,000
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George Putnam, III 500 $1-$10,000 over $100,000
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A.J.C. Smith 200 $1-$10,000 over $100,000
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Putnam Master Income Trust

Aggregate Dollar
Number of Dollar Range of Range of Shares
Putnam Master Putnam Master Held in all of the
Income Trust Income Trust Putnam Funds
Name of Trustee Shares Owned Shares Owned Overseen by Trustee (101)
- -----------------------------------------------------------------------------------------

Jameson A. Baxter 135 $1-$10,000 over $100,000
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Charles B. Curtis 110 $1-$10,000 over $100,000
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John A. Hill 1,500 $1-$10,000 over $100,000
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Ronald J. Jackson 200 $1-$10,000 over $100,000
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Paul L. Joskow 100 $1-$10,000 over $100,000
- -----------------------------------------------------------------------------------------
Elizabeth T. Kennan 217 $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 280 $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

Aggregate Dollar
Number of Dollar Range of Range of Shares
Putnam Tax-Free Putnam Tax-Free Held in all of the
Health Care Fund Health Care Fund Putnam Funds
Name of Trustee Shares Owned Shares Owned Overseen by Trustee (101)
- -----------------------------------------------------------------------------------------

Jameson A. Baxter 383 $1-$10,000 over $100,000
- -----------------------------------------------------------------------------------------
Charles B. Curtis 109 $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 192 $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 190 $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, 2003, the Trustees and officers of Putnam Managed High
Yield Trust, Putnam Master Income Trust and Putnam Tax-Free Health Care
Fund as a group 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 the last full calendar year, 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 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 table below:

Putnam Managed High Yield Trust

Fiscal year ended May 31, 2003
- ---------------------------------------------------------
Audit and Pricing Committee 11
- ---------------------------------------------------------
Board Policy and Nominating Committee 9
- ---------------------------------------------------------
Brokerage and Custody Committee 5
- ---------------------------------------------------------
Communication, Service and Marketing Committee 6
- ---------------------------------------------------------
Contract Committee 12
- ---------------------------------------------------------
Distributions Committee 7
- ---------------------------------------------------------
Executive Committee 1
- ---------------------------------------------------------
Investment Oversight Committee 10
- ---------------------------------------------------------

Putnam Master Income Trust

Fiscal year ended October 31, 2002
- ---------------------------------------------------------
Audit and Pricing Committee* 11
- ---------------------------------------------------------
Board Policy and Nominating Committee** 5
- ---------------------------------------------------------
Brokerage and Custody Committee 4
- ---------------------------------------------------------
Communication, Service and Marketing Committee 6
- ---------------------------------------------------------
Contract Committee 12
- ---------------------------------------------------------
Distributions Committee 3
- ---------------------------------------------------------
Executive Committee 1
- ---------------------------------------------------------
Investment Oversight Committee 10
- ---------------------------------------------------------

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 by the Audit Committee during
each fund's last fiscal year. For Putnam Master Income Trust only, the
Pricing Committee met 1 time prior to the combination.

** 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 by the Board Policy and Nominating
Committee during each fund's last fiscal year. For Putnam Master Income
Trust only, the Proxy Committee met 2 times prior to the combination.

* 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 2002:

Putnam Managed High Yield Trust
Compensation Table

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

Jameson A. Baxter/1994(4) $593 $165 $100,000 $216,750
- -------------------------------------------------------------------------------------------
Charles B. Curtis/2001 564 119 100,000 206,250
- -------------------------------------------------------------------------------------------
John A. Hill/1985(4)(6) 992 200 200,000 388,250
- -------------------------------------------------------------------------------------------
Ronald J. Jackson/1996(4) 566 154 100,000 207,250
- -------------------------------------------------------------------------------------------
Paul L. Joskow/1997(4) 558 143 100,000 203,750
- -------------------------------------------------------------------------------------------
Elizabeth T. Kennan/1992 560 205 100,000 204,250
- -------------------------------------------------------------------------------------------
Lawrence J. Lasser/1992(5) -- 93 92,500 --
- -------------------------------------------------------------------------------------------
John H. Mullin, III/1997(4) 575 217 100,000 210,000
- -------------------------------------------------------------------------------------------
Robert E. Patterson/1984 578 111 100,000 211,000
- -------------------------------------------------------------------------------------------
George Putnam, III/1984(6) 693 92 125,000 253,000
- -------------------------------------------------------------------------------------------
A.J.C. Smith/1986(5) -- 211 91,833 --
- -------------------------------------------------------------------------------------------
W. Thomas Stephens/1997(4) 556 201 100,000 203,250
- -------------------------------------------------------------------------------------------
W. Nicholas Thorndike/1992 560 266 100,000 204,500
- -------------------------------------------------------------------------------------------

(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 2002.

(3) As of December 31, 2002, there were 101 funds in the Putnam family.
For Mr. Hill, amounts shown also include compensation for service as a
trustee of TH Lee, Putnam Emerging Opportunities Portfolio, a closed-end
fund advised by an affiliate of Putnam Management.

(4) Includes compensation deferred pursuant to a Trustee Compensation
Deferral Plan. The total amounts of deferred compensation payable by the
fund to Ms. Baxter, Mr. Hill, Mr. Jackson, Mr. Joskow, Mr. Mullin and
Mr. Stephens as of May 31, 2003 were $346, $916, $462, $352, $396, $155,
respectively, including income earned on such amounts.

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

(6) Includes additional compensation to Messrs. Hill and Putnam for
service as Chairman and President of the Funds, respectively.

Putnam Master Income Trust
Compensation Table

Jameson A. Baxter/1994(4) $873 $247 $100,000 $216,750
- -------------------------------------------------------------------------------------------
Charles B. Curtis/2001 831 207 100,000 206,250
- -------------------------------------------------------------------------------------------
John A. Hill/1985(4)(6) 1,462 289 200,000 388,250
- -------------------------------------------------------------------------------------------
Ronald J. Jackson/1996(4) 834 228 100,000 207,250
- -------------------------------------------------------------------------------------------
Paul L. Joskow/1997(4) 821 177 100,000 203,750
- -------------------------------------------------------------------------------------------
Elizabeth T. Kennan/1992 824 298 100,000 204,250
- -------------------------------------------------------------------------------------------
Lawrence J. Lasser/1992(5) -- 125 92,500 --
- -------------------------------------------------------------------------------------------
John H. Mullin, III/1997(4) 846 272 100,000 210,000
- -------------------------------------------------------------------------------------------
Robert E. Patterson/1984 850 162 100,000 211,000
- -------------------------------------------------------------------------------------------
George Putnam, III/1984(6) 1,020 133 125,000 253,000
- -------------------------------------------------------------------------------------------
A.J.C. Smith/1986(5) -- 284 91,833 --
- -------------------------------------------------------------------------------------------
W. Thomas Stephens/1997(4) 819 248 100,000 203,250
- -------------------------------------------------------------------------------------------
W. Nicholas Thorndike/1992 825 385 100,000 204,500
- -------------------------------------------------------------------------------------------

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

(4) Includes compensation deferred pursuant to a Trustee Compensation
Deferral Plan. The total amounts of deferred compensation payable by the
fund to Ms. Baxter, Mr. Hill, Mr. Jackson, Mr. Joskow, Mr. Mullin and
Mr. Stephens as of October 31, 2002 were $320, $784, $530, $306, $418,
$101, respectively, including income earned on such amounts.

(6) Includes additional compensation to Messrs. Hill and Putnam for
service as Chairman and President of the Funds, respectively.

Putnam Tax-Free Health Care Fund
Compensation Table

Jameson A. Baxter/1994(4) $758 $211 $100,000 $216,750
- -------------------------------------------------------------------------------------------
Charles B. Curtis/2001 721 152 100,000 206,250
- -------------------------------------------------------------------------------------------
John A. Hill/1985(4)(6) 1,270 256 200,000 388,250
- -------------------------------------------------------------------------------------------
Ronald J. Jackson/1996(4) 724 198 100,000 207,250
- -------------------------------------------------------------------------------------------
Paul L. Joskow/1997(4) 713 184 100,000 203,750
- -------------------------------------------------------------------------------------------
Elizabeth T. Kennan/1992 716 263 100,000 204,250
- -------------------------------------------------------------------------------------------
Lawrence J. Lasser/1992(5) -- 120 92,500 --
- -------------------------------------------------------------------------------------------
John H. Mullin, III/1997(4) 735 279 100,000 210,000
- -------------------------------------------------------------------------------------------
Robert E. Patterson/1984 738 142 100,000 211,000
- -------------------------------------------------------------------------------------------
George Putnam, III/1984(6) 886 118 125,000 253,000
- -------------------------------------------------------------------------------------------
A.J.C. Smith/1986(5) -- 272 91,833 --
- -------------------------------------------------------------------------------------------
W. Thomas Stephens/1997(4) 711 258 100,000 203,250
- -------------------------------------------------------------------------------------------
W. Nicholas Thorndike/1992 716 341 100,000 204,500
- -------------------------------------------------------------------------------------------

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

(4) Includes compensation deferred pursuant to a Trustee Compensation
Deferral Plan. The total amounts of deferred compensation payable by the
fund to Ms. Baxter, Mr. Hill, Mr. Jackson, Mr. Joskow, Mr. Mullin and
Mr. Stephens as of May 31, 2003 were $444, $1,176, $594, $452, $509,
$199, respectively, including income earned on such amounts.

(6) Includes additional compensation to Messrs. Hill and Putnam for
service as Chairman and President of the Funds, respectively.

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 any proposal, other than the election of
Trustees, in which case shareholders of each series of a trust vote
together as a single class. In the case of each fund, other than Putnam
Master Income Trust, a majority of the shares entitled to vote
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. 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. 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. With respect to the election of Trustees, neither
abstentions nor broker non-votes have an 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 a proposal.

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

Other Business. The Trustees know of no matters other than those set
forth herein to be brought before the meeting. If, however, any other
matters properly come before the Meeting, it is the Trustees' intention
that proxies will be voted on such matters in accordance with the
judgment of the persons named 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 arrange to have a proxy
solicitation firm call you to record your voting instructions by
telephone. The procedures for voting proxies by telephone are 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 Management 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 the 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 have the opportunity to submit their voting instructions
via the Internet by utilizing a program provided by a third party vendor
hired by Putnam Management. The giving of such a proxy will not affect
your right to vote in person should you decide to attend the Meeting. To
vote via the Internet, you will need the "control" number that appears
on your proxy card. To use the Internet, please access the Internet
address listed 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 general policy of maintaining
confidentiality in the voting of proxies. Consistent with this policy,
your fund may solicit proxies from shareholders who have not voted their
shares or who have abstained from voting.

Persons holding shares as nominees will, upon request, be reimbursed for
their reasonable expenses in soliciting instructions from their
principals. Your fund has retained at its own expense D.F. King & Co.,
Inc., 48 Wall Street, New York, New York 10005, to aid in the
solicitation of instructions for registered and nominee accounts, for a
fee not to exceed $1,500 plus reasonable out-of-pocket expenses for
mailing and phone costs. The expenses of the preparation of proxy
statements and related materials, including printing and delivery costs,
are borne by each fund.

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

Date for Receipt of Shareholders' Proposals for the Next Annual Meeting.
The Board Policy and Nominating Committee will consider nominees
recommended by shareholders of each fund to serve as Trustees, provided
that shareholders submit their recommendations by the date set forth
below. 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 2004 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 11, 2004 and no later than
August 10, 2004. It is currently anticipated that each fund's next
annual meeting of shareholders will be held in October 2004. Shareholder
proposals to be included in the proxy statement for that meeting must be
received by your fund before April 6, 2004. Shareholders who wish to
make a proposal at the October 2004 annual meeting--other than one that
will be included in the fund's proxy materials--should notify the fund no
later than June 24, 2004.

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. 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 the
proposals. They will vote against any such adjournment those proxies
required to be voted against the 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 Investments. Putnam Investments 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 of Putnam Investments. The
address of Putnam Investments Trust, Putnam Investments, 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 each fund provides that the fund will indemnify its Trustees and
officers against liabilities and expenses incurred in connection with
litigation in which they may be involved because of their offices with
the fund, except if it is determined in the manner specified in the
Agreement and Declaration of Trust that they have not acted in good
faith in the reasonable belief that their actions were in the best
interests of the fund or that such indemnification would relieve any
officer or Trustee of any liability to the fund or its shareholders
arising by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of his or her 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, and the Trustees unanimously approved such
selection in July 1999 for Putnam Master Income Trust and July 2000 for
Putnam Managed High Yield Trust and Putnam Tax-Free Health Care Fund.
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.

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

Audit Fees Financial Information All
for All System Design and Other
Audit Fees Putnam Funds Implementation Fees Fees
- -----------------------------------------------------------------------------
Master Income Trust $28,800 $1,016,100 $0 $6,800
- -----------------------------------------------------------------------------
Managed High
Yield Trust $30,100 $946,500 $0 $6,200
- -----------------------------------------------------------------------------
Tax-Free Health
Care Fund $21,200 $946,500 $0 $6,800
- -----------------------------------------------------------------------------

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 entirely related to providing
tax compliance assistance and rating agency reviews 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 (Chairperson)
Robert E. Patterson
W. Nicholas Thorndike
W. Thomas Stephens

Officers and Other Information. All of the officers of your fund, with
the exception of George Putnam, III, 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 LLC, 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 III, the other officers of each fund are as
follows:

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
- -------------------------------------------------------------------------------------
Karnig H. Durgarian (1/13/56) 2002 Senior Managing Director,
Vice President and Principal Putnam Investments
Executive Officer
- -------------------------------------------------------------------------------------
Steven D. Krichmar (6/27/58) 2002 Managing Director,
Vice President and Principal Putnam Investments. Prior
Financial Officer to July 2001, Partner,
PricewaterhouseCoopers, LLP
- -------------------------------------------------------------------------------------
Michael T. Healy (1/24/58) 2000 Managing Director,
Assistant Treasurer and Putnam Investments
Principal Accounting Officer
- -------------------------------------------------------------------------------------
Beth S. Mazor (4/6/58) 2002 Senior Vice President,
Vice President Putnam Investments
- -------------------------------------------------------------------------------------
Gordon H. Silver (7/3/47) 1990 Senior Managing Director,
Vice President Putnam Investments, Putnam
Management and Putnam
Retail Management
- -------------------------------------------------------------------------------------
Mark C. Trenchard (6/5/62) 2002 Senior Vice President,
Vice President and BSA Putnam Investments
Compliance Officer
- -------------------------------------------------------------------------------------
William H. Woolverton (1/17/51) 2003 Managing Director, Putnam
Vice President and Chief Legal Officer Investments, Putnam
Management and Putnam
Retail Management
- -------------------------------------------------------------------------------------
Judith Cohen (6/7/45) 1993 Clerk and Assistant
Clerk and Assistant Treasurer Treasurer, The Putnam
Funds
- -------------------------------------------------------------------------------------

Shares Outstanding of your Fund
as of April 30, 2003
- ------------------------------------------------------------------
Putnam Master Income Trust 53,329,917 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 204778 7/03

PO Box 18011
Hauppauge, NY 11788-8811

Your vote is important. For your convenience, you may record your
voting instructions via the Internet or by returning this proxy card by
mail.

1 INTERNET

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

* Enter the 14-digit control number printed on your proxy card.

* Follow the instructions on the site.

* There is no need for you to return your proxy card.

2 MAIL

Mail in the proxy card attached below.

* Please sign and date your proxy card.

* Detach the card from this proxy form.

* Return the card in the postage-paid envelope provided.

CONTROL NUMBER: 999 9999 9999 999

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 enclosed envelope
provided. Your vote is important.

Proxy for a meeting of shareholders to be held on October 7, 2003, 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 on the reverse
side, at the meeting of shareholders of Putnam Managed High Yield Trust
on October 7, 2003, 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/Co-owner sign(s) here Date

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.

MHY_13440

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 card 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. A postage-paid
envelope is enclosed for your convenience.

Thank you!

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, the Proxies will vote in the same manner as the
Trustees recommend.

Please vote by filling in the appropriate boxes below.

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

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)

[ ] [ ]

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:
- ----------------------------------------------------------------------------

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

PO Box 18011
Hauppauge, NY 11788-0811

Your vote is important. For your convenience, you may record your
voting instructions via the Internet or by returning this proxy card by
mail.

1 INTERNET

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

* Enter the 14-digit control number printed on your proxy card.

* Follow the instructions on the site.

* There is no need for you to return your proxy card.

2 MAIL

Mail in the proxy card attached below.

* Please sign and date your proxy card.

* Detach the card from this proxy form.

* Return the card in the postage-paid envelope provided.

CONTROL NUMBER: 999 9999 9999 999

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 enclosed envelope
provided. Your vote is important.

Proxy for a meeting of shareholders to be held on October 7, 2003, 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 on the reverse
side, at the meeting of shareholders of Putnam Master Income Trust on
October 7, 2003, 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/Co-owner sign(s) here Date

MIT_13440

Has your address changed?

Do you have any comments?

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

PLEASE DETACH AT PERFORATION BEFORE MAILING

DEAR SHAREHOLDER:

Thank you!

Please vote by filling in the appropriate boxes below.

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

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)

[ ] [ ]

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:
- ----------------------------------------------------------------------------

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

PO Box 18011
Hauppauge, NY 11788-0811

Your vote is important. For your convenience, you may record your
voting instructions via the Internet or by returning this proxy card by
mail.

1 INTERNET

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

* Enter the 14-digit control number printed on your proxy card.

* Follow the instructions on the site.

* There is no need for you to return your proxy card.

2 MAIL

Mail in the proxy card attached below.

* Please sign and date your proxy card.

* Detach the card from this proxy form.

* Return the card in the postage-paid envelope provided.

CONTROL NUMBER: 999 9999 9999 999

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 enclosed envelope
provided. Your vote is important.

Proxy for a meeting of shareholders to be held on October 7, 2003, 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 on the reverse
side, at the meeting of shareholders of Putnam Tax-Free Health Care Fund
on October 7, 2003, 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/Co-owner sign(s) here Date

TFH_13440

Has your address changed?

Do you have any comments?

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

PLEASE DETACH AT PERFORATION BEFORE MAILING

DEAR SHAREHOLDER:

Thank you!

Please vote by filling in the appropriate boxes below.

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

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)

[ ] [ ]

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:

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