SCHEDULE 14A INFORMATION
         
                     PROXY STATEMENT PURSUANT TO SECTION 14(a)
                       OF THE SECURITIES EXCHANGE ACT OF 1934     
          
                                  (Amendment No. )
                                                                  
    ----
                              Filed by the Registrant           
/ X /
                                                                  
   ---- 
                                                                  
    ----
                     Filed by a Party other than the Registrant   
  /   /
                                                                  
  ---- 
         Check the appropriate box:
          ----                                                    
             
         / X /     Preliminary Proxy Statement                    
            
         ----
          ----                                                    
             
         /   /     Preliminary Additional Materials         
         ----                                                     
            
          ----
         /   /     Definitive Proxy Statement                     
          
         ----                                                     
            
          ----                                                    
             
         /   /     Definitive Additional Materials                
           
         ----
          ----
         /   /     Soliciting Material Pursuant to Sec.
240.14a-11(e) or
         ----      Sec. 240.14a-12
         
                          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):
          ----
         / x /     $125 per Exchange Act Rules 0-11(c)(1)(ii),
         ----       14a-6(i)(1), or 14a-6(i)(2).                  
           
          ----
         /   /     $500 per each party to the controversy
pursuant
         ----      to Exchange Act Rule 14a-6(i)(3).
          ----
         /   /     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 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 pages [  ] and [  ].
         
         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                           [4]
         
         
         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 the
following 
         matters:
         
         1.   Fixing the number of Trustees and electing Trustees
to 
              oversee your fund;
         
         2.   Ratifying the selection by the Trustees of the
independent 
              auditors of your fund for its current fiscal year; 
         
         3.   Approving amendments to certain of your fund's
fundamental 
              investment restrictions; and 
         
         4.   Approving the elimination of certain of your fund's 
              fundamental investment restrictions.
         
         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 do not return their proxies, their
fund may 
         have to incur the expense of follow-up solicitations. 
All 
         shareholders benefit from the speedy return of proxies.
         
         Your vote is important to us.  We appreciate the time
and 
         consideration that I am sure you will give this
important matter. 
         If you have questions about the proposals, contact your
financial 
         adviser or call a Putnam customer service representative
at 
         1-800-225-1581.
         
                                       Sincerely yours,
         
                                       (signature of George
Putnam)
                                       George Putnam, Chairman
         


         





         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 Tax-Free Health Care Fund:
         
         A Meeting of Shareholders of your fund will be held on
December 
         5, 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 [  ].
         
         2.   Ratifying the selection by the Trustees of the
independent 
              auditors of your fund for its current fiscal year. 
See 
              page [  ].
         
         3.A. Approving an amendment to the fund's fundamental
investment 
              restriction with respect to diversification.  See
page [  ].
         
         3.B. Approving an amendment to the fund's fundamental
investment 
              restriction with respect to investments in the
voting 
              securities of a single issuer.  See page [  ].  
         
         3.C. Approving an amendment to the fund's fundamental
investment 
              restriction with respect to making loans.  See page
[  ]. 
         
         3.D. Approving an amendment to the fund's fundamental
investment 
              restriction with respect to concentration of its
assets. 
              See page [  ].  
         
         3.E. Approving an amendment to the fund's fundamental
investment 
              restriction with respect to investments in
commodities.  See 
              page [  ]. 
         
         4.A. Approving the elimination of the fund's fundamental 
              investment restriction with respect to investments
in 
              securities of issuers in which management of the
fund or 
              Putnam Investment Management owns securities.  See 
              page [  ].
         
         4.B. Approving the elimination of the fund's fundamental 
              investment restriction with respect to margin
transactions. 
              See page [  ].
         


         





         4.C. Approving the elimination of the fund's fundamental 
              investment restriction with respect to short sales. 
See 
              page [  ].  
         
         4.D. Approving the elimination of the fund's fundamental 
              investment restriction with respect to pledging
assets.  See 
              page [  ]. 
         
         
         4.E. Approving the elimination of the fund's fundamental 
              investment restriction with respect to investments
in 
              certain oil, gas and mineral interests.  See page [ 
 ].  
         
         4.F. Approving the elimination of the fund's fundamental 
              investment restriction with respect to investing to
gain 
              control of a company's management.   See page [  
].
         
         4.G. Approving the elimination of the fund's fundamental 
              investment restriction with respect to investments
in other 
              investment companies.   See page [   ].
         
         5.   Transacting other business as may properly come
before the 
              meeting.
         
         By the Trustees
         
         George Putnam, Chairman 
         William F. Pounds, Vice Chairman 
         
         Jameson A. Baxter                   Robert E. Patterson
         Hans H. Estin                       Donald S. Perkins
         John A. Hill                        George Putnam, III
         Ronald J. Jackson                   Eli Shapiro
         Elizabeth T. Kennan                 A.J.C. Smith
         Lawrence J. Lasser                  W. Nicholas
Thorndike
         
         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.
         
         October 7, 1996
         

         





         Proxy Statement
         
         This document will give you the information you need to
vote on 
         the matters listed on the previous pages.  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 Tax-
         Free Health Care Fund for use at the Meeting of
Shareholders of 
         the fund to be held on December 5, 1996, and, if your
fund's 
         meeting is adjourned, at any later meetings, for the
purposes 
         stated in the Notice of Meeting (see previous pages).
         
         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;
         
         2.   For selecting Price Waterhouse LLP as the
independent 
              auditors of your fund; 
         
         3.A. For amending the fund's fundamental investment
restriction 
              with respect to diversification;
         
         3.B. For amending the fund's fundamental investment
restriction 
              with respect to investments in the voting
securities of a 
              single issuer;
         
         3.C. For amending the fund's fundamental investment
restriction 
              with respect to making loans;
         
         3.D. For amending the fund's fundamental investment
restriction 
              with respect to concentration of its assets;
         
         3.E. For amending the fund's fundamental investment
restriction 
              with respect to investments in commodities;
         
         4.A. For eliminating the fund's fundamental investment 
              restriction with respect to investments in
securities of 
              issuers in which management of the fund or Putnam
Investment 
              Management owns securities;
         
         4.B. For eliminating the fund's fundamental investment 
              restriction with respect to margin transactions;


         





         
         4.C. For eliminating the fund's fundamental investment 
              restriction with respect to short sales; 
         
         4.D. For eliminating the fund's fundamental investment 
              restriction with respect to pledging assets; 
         
         4.E. For eliminating the fund's fundamental investment 
              restriction with respect to investments in certain
oil, gas 
              and mineral interests;  
         
         4.F. For eliminating the fund's fundamental investment 
              restriction with respect to investing to gain
control of a 
              company's management; and
         
         4.G. For eliminating the fund's fundamental investment 
              restriction with respect to investments in other
investment 
              companies.   
         
         Who is eligible to vote?
         
         Shareholders of record at the close of business on
September 6, 
         1996, 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 October 7, 1996.  
         
         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 fourteen 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 53, 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, Avondale Federal Savings Bank, and ASHTA
Chemicals, 
         Inc.  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 Chair of the Board of
Governors of 
         Good Shepherd Hospital.  Ms. Baxter is a graduate of
Mount 
         Holyoke College. 
         
         
         Hans H. Estin
         [Insert Picture]
         
         Mr. Estin, age 68, 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 54, 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, Weatherford Enterra,
Inc., an 
         oil field service company, various private companies
controlled 
         by First Reserve Corporation, and various First Reserve
Funds. 
         He is also a Member of the Board of Advisors of Fund
Directions. 
         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. 
         
         
         Ronald J. Jackson
         [Insert Picture]
         
         Mr. Jackson, age 52, was Chairman of the Board,
President and 
         Chief Executive Officer of Fisher-Price, Inc., a major
toy 
         manufacturer, from 1990 to 1993.  He previously served
as 
         President and Chief Executive Officer of Stride-Rite,
Inc., a 
         manufacturer and distributor of footwear, from 1989 to
1990, and 
         as President and Chief Executive Officer of Kenner
Parker Toys, 
         Inc., a major toy and game manufacturer, from 1985 to
1987. 
         Prior to that, he held various financial and marketing
positions 
         at General Mills, Inc. from 1966 to 1985, including Vice 
         President, Controller and Vice President of Marketing
for Parker 
         Brothers, a toy and game company, and President of
Talbots, a 
         retailer and direct marketer of women's apparel.
         
         Mr. Jackson currently serves as a Director of Safety
1st, Inc., a 
         company which markets a wide range of child care and
safety 
         products.  He also serves as a Trustee of Salem Hospital
and an 
         Overseer of the Peabody Essex Museum.  He previously
served as a 
         Director of a number of public companies including
Fisher-Price, 
         Inc., Kenner Parker Toys, Inc., Stride-Rite, Inc., and
Mattel, 
         Inc., a major toy manufacturer.  Mr. Jackson is a
graduate of 
         Michigan State University Business School. 
         
         
         Elizabeth T. Kennan
         [Insert Picture]
         
         Ms. Kennan, age 58, 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. 
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 51, 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 69, 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 AON Corp., an insurance company, Cummins
Engine 
         Company, Inc., an engine and power generator equipment 
         manufacturer and assembler, Current Assets L.L.C., a
corporation 
         providing financial staffing services, Illinova and
Illinois 
         Power Co., Inland Steel Industries, Inc., LaSalle Street
Fund, 
         Inc., a real estate investment trust, Lucent
Technologies Inc., 
         Springs Industries, Inc., a textile manufacturer, and
Time 
         Warner, Inc., one of the nation's largest media
conglomerates.  
         He previously served as a Director of several other
major public 
         corporations, including Corning Glass Works, Eastman
Kodak 
         Company, Firestone Tire & Rubber Company and Kmart
Corporation.
         
         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 68, 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., 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. and General Mills, Inc.  Dr.
Pounds is a 
         graduate of Carnegie-Mellon University.
         
         


         





         George Putnam*
         [Insert Picture]
         
         Mr. Putnam, age 70, 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., Freeport Copper and Gold, Inc., McMoRan
Oil and 
         Gas, Inc., mining and natural resources companies,
General Mills, 
         Inc., 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 and the Museum of Science in Boston;
the New 
         England Aquarium; 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 45, 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 & Rhoads.  
         
         Mr. Putnam currently also serves as a Director of 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 80, 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
Officer of 
         the National Bureau of Economic Research and also
provided 
         economic and financial consulting services to various
clients.  
         
         Dr. Shapiro is a past Director of many companies,
including 
         Nomura Dividend Income Fund, Inc., a privately held
registered 
         investment company managed by Putnam Management, 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 62, 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 63, 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 owner of television
stations, 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 
         president, 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 
         manages 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 a certain publicly
held company 
              that includes registered broker-dealer firms among
its 
              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 Mr.
Jackson, 
         all the nominees were elected by the shareholders in
March 1996.  
         Mr. Jackson was elected by the other Trustees in May
1996.  As 
         indicated above, Dr. Shapiro also previously served as a
Trustee 
         of the Putnam funds from 1984 to 1989.  The 14 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 14 for your fund.  
          
         What are the Trustees' responsibilities?
         
         Your fund's Trustees are responsible for the general
oversight of 
         your fund's business and for assuring that your fund is
managed 
         in the best interests of its shareholders.  The Trustees 
         periodically 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 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 
         your fund's operating expenses.  In carrying out these 
         responsibilities, the Trustees are assisted by an
independent 
         administrative staff and by your 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 99 Putnam
funds 
         based on their own investment needs.  The Trustees'
aggregate 
         investments in the Putnam funds total over $47 million. 
The 
         table below lists each Trustee's current investments in
the fund 
         and in the Putnam funds as a group.
         

         





                          Share Ownership by Trustees
         
                          Year first                        
Number of
                           elected as     Number of          
shares of
                           Trustee of     shares of the       all
Putnam
                           the Putnam     fund owned         
funds owned
Trustees                 funds          as of 6/28/96*      as of
6/28/96**     
- - - -----------------------------------------------------------------
- - - --------- 
               
         Jameson A. Baxter        1994               300          
  24,102
         Hans H. Estin            1972               115          
  26,270
     John A. Hill             1985               100           
123,624         
         Ronald J. Jackson        1996               200          
  12,209
         Elizabeth T. Kennan      1992               223          
  27,475
         Lawrence J. Lasser       1992               100          
 451,608
         Robert E. Patterson      1984               100          
  60,322
         Donald S. Perkins        1982               838          
 160,110
         William F. Pounds        1971               335          
 348,913
         George Putnam            1957               848         
1,516,577
         George Putnam, III       1984               500          
 287,830
         Eli Shapiro              1995***            ---          
  80,677
         A.J.C. Smith             1986               200(1)       
  35,339
         W. Nicholas Thorndike    1992               122          
  79,113
- - - -----------------------------------------------------------------
- - - ---------
         
*    Except as noted below, each Trustee has sole investment
power and sole 
     voting power 
     with respect to his or her shares of the fund.  
         
**   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.
        
(1)  Mr. Smith has shared investment power and shared voting
power with 
    respect to his shares of the fund.  
         
  As of June 28, 1996, the Trustees and officers of the fund
owned a total of 
  3,981 shares 
  of the fund, comprising less than 1% of its outstanding shares
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 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 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.  These include:  the Contract Committee, which
reviews 
         all contractual arrangements with Putnam Management and
its 
         affiliates; the Communication and Service Committee,
which 
         reviews the quality of services provided by your fund's
investor 
         servicing agent and custodian; 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 the 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 
         1995, 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?
         
         Your fund pays each Trustee a fee for his or her
services.  Each 
         Trustee also receives fees for serving as Trustee of the
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+ 
         
                                                                  
Total
                                           Aggregate       
compensation
                                        compensation           
from all
         Trustees                     from the fund*      Putnam
funds**
        
- - - --------------------------------------------------------------
         Jameson A. Baxter                    $874           
$150,854
         Hans H. Estin                         870            
150,854
         John A. Hill                          863            
149,854
         Elizabeth T. Kennan                   870            
148,854
         Lawrence J. Lasser                    865            
150,854
         Robert E. Patterson                   901            
152,854
         Donald S. Perkins                     866            
150,854
         William F. Pounds                     866            
149,854
         George Putnam                         870            
150,854
         George Putnam, III                    870            
150,854
         Eli Shapiro***                        905             
95,372
         A.J.C. Smith                          863            
149,854
         W. Nicholas Thorndike                 901            
152,854
         
         +    Ronald J. Jackson became a Trustee of the fund
effective May 3, 
              1996 and received no compensation from the fund or
the other 
              Putnam funds in 1995.
         
         *    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.  As of December 31,
1995, there were 
              99 funds in the Putnam family.
         
         ***  Elected as a Trustee in April 1995.
         
         Your 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 each 
         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 will receive
similar benefits 
         upon their retirement.  A Trustee who retired in
calendar 1995 and 
         was eligible to receive benefits under these Guidelines
would have 
         received an annual benefit of $66,749, based upon the
aggregate 
         retainer fees paid by the Putnam funds for such year. 
The Trustees


         





         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 Your Fund," on page [  ]. 
         
         Putnam Investments
         
         Putnam Investment Management, Inc. and its affiliate,
Putnam 
         Fiduciary Trust Company, your 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 the 
         auditor of your fund for the current fiscal year.  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.
         
         PROPOSALS 3 AND 4 
         
         As described in the following proposals, the Trustees
are 
         recommending that shareholders approve a number of
changes to your 
         fund's fundamental investment restrictions, including
the 
         elimination of certain of these restrictions.  The
purpose of these 
         changes is to standardize the investment restrictions of
the Putnam 
         funds, including your fund where appropriate, and in
certain cases 
         to increase the fund's investment flexibility.  By
having standard 
         investment restrictions for all Putnam funds, Putnam
Management will 
         be able to more easily monitor each fund's compliance
with its 
         investment policies.  Most of these changes will have
little 
         practical effect on the way the fund is managed given
the fund's 
         current investment objective and policies.
         


         





         Several of these changes expand the fund's opportunities
to invest 
         in securities that generate taxable income.  In any
case, the fund 
         will continue to meet the asset composition requirements
under the 
         Internal Revenue Code of 1986, as amended, for passing
through tax-
         exempt income as exempt-interest dividends to its
shareholders.
         
         The adoption of any of these proposals is not contingent
on the 
         adoption of any other proposal.
         
         3.A. AMENDING THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION WITH 
              RESPECT TO DIVERSIFICATION
         
         The Trustees are recommending that the fund's
fundamental investment 
         restriction with respect to the diversification of its
investments 
         be revised to reflect the standard restriction expected
to be used 
         by other Putnam funds and to clarify that the
diversification 
         restriction does not apply to securities guaranteed by
the U.S. 
         government or its agencies or instrumentalities.  
         
         The fund's current restriction states that the fund may
not:  
         
              "With respect to 75% of its total assets, invest in
securities 
              of any issuer if, immediately after such
investment, more than 
              5% of the total assets of the fund (taken at
current value) 
              would be invested in the securities of such issuer;
provided 
              that this limitation does not apply to securities
of the U.S. 
              government or its agencies or instrumentalities."  
         
         The proposed amended fundamental investment restriction
is set forth 
         below.  
         
              "The fund may not ...
         
              With respect to 75% of its total assets, invest in
the 
              securities of any issuer if, immediately after such
investment, 
              more than 5% of the total assets of the fund (taken
at current 
              value) would be invested in the securities of such
issuer; 
              provided that this limitation does not apply to
obligations 
              issued or guaranteed as to interest or principal by
the U.S. 
              government or its agencies or instrumentalities."  
         
         The amended restriction clarifies, consistent with the
Investment 
         Company Act of 1940, as amended (the "1940 Act"), that
U.S. 
         government securities include obligations issued or
guaranteed as to 
         interest or principal by the U.S. government or its
agencies or 
         instrumentalities.  
         
         Required vote.  Approval of this proposal requires the
affirmative 
         vote of the lesser of (1) more than 50% of the
outstanding shares of 
         the fund, or (2) 67% or more of the shares of the fund
present at 
         the meeting if more than 50% of the outstanding shares
of the fund 
         are present at the meeting in person or by proxy.  


         





         
         
         3.B. AMENDING THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION WITH 
              RESPECT TO INVESTMENTS IN THE VOTING SECURITIES OF
A SINGLE 
              ISSUER

         The Trustees are recommending that the fund's
fundamental investment restriction with respect to investments in
the voting securities of a single issuer be revised to reflect
the standard restriction expected to be used by other Putnam
funds and to grant the fund the 
         maximum flexibility permitted under the Investment
Company Act of 
         1940 (the "1940 Act").  The 1940 Act prohibits a
diversified fund 
         such as the fund from investing, with respect to 75% of
its total 
         assets, in the voting securities of an issuer if as a
result it 
         would own more than 10% of the outstanding voting
securities of that 
         issuer.  The fund's current investment restriction,
which is more 
         restrictive than the 1940 Act, states that the fund may
not:
         
              "Acquire more than 10% of the voting securities of
any issuer."
         
         The proposed amended fundamental investment restriction
is set forth 
         below.  
         
              "The fund may not ...
         
              With respect to 75% of its total assets, acquire
more than 
              10% of the outstanding voting securities of any
issuer."
         
         
         The amendment enables the fund to purchase more than 10%
of the 
         voting securities of an issuer with respect to 25% of
the fund's 
         total assets.  Since the fund invests primarily in
fixed-income 
         securities, which are not typically voting securities,
this proposal 
         will have little practical effect on the fund. 
Nevertheless, Putnam 
         Management believes it would be in the best interest of
the fund to 
         conform the policy to provide the fund with maximum
flexibility 
         should circumstances change.
         
         To the extent the fund individually or with other funds
and accounts 
         managed by Putnam Management or its affiliates were to
own all or a 
         major portion of the outstanding voting securities of a
particular 
         issuer, under adverse market or economic conditions or
in the event 
         of adverse changes in the financial condition of the
issuer the fund 
         could find it more difficult to sell these voting
securities when 
         Putnam Management believes it advisable to do so, or may
be able to 
         sell the securities only at prices significantly lower
than if they 
         were more widely held.  
         
         Required vote.  Approval of this proposal requires the
affirmative 
         vote of the lesser of (1) more than 50% of the
outstanding shares of 
         the fund, or (2) 67% or more of the shares of the fund
present at
         the meeting if more than 50% of the outstanding shares
of the fund 
         are present at the meeting in person or by proxy.
         
         
         3.C. AMENDING THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION WITH 
              RESPECT TO MAKING LOANS
         The Trustees are recommending that the fund's
fundamental investment 
         restriction with respect to making loans be revised to
reflect the 
         standard restriction expected to be used by other Putnam
funds and 
         to remove any asset limitations on the fund's ability to
enter into 
         repurchase agreements and securities loans.  The current
restriction 
         states that the fund may not:
         
              "Make loans, except by purchase of debt obligations
in which 
              the fund may invest consistent with its investment
policies, by 
              entering into repurchase agreements with respect to
not more 
              than 25% of its total assets (taken at current
value), or 
              through the lending of its portfolio securities
with respect to 
              not more than 25% of its total assets."
         
         The proposed amended fundamental investment restriction
is set forth 
         below.  
         
              "The fund may not ...
         
              Make loans, except by purchase of debt obligations
in 
              which the fund may invest consistent with its
investment 
              policies, by entering into repurchase agreements,
or by 
              lending its portfolio securities."
         
         Following the amendment, the fund may, consistent with
its 
         investment objective and policies and applicable law,
enter into 
         repurchase agreements and securities loans without
limit.
         
         Given the fund's investment policies and the fact that
securities 
         loans and repurchase agreements give rise to taxable
income, Putnam 
         Management does not presently intend to engage in
securities loans 
         or repurchase agreements on behalf of the fund. 
Nevertheless, 
         Putnam Management believes it is in the best interest of
the fund to 
         conform the policy and to provide the fund with maximum
flexibility 
         should circumstances change.  
         
         When the fund enters into a repurchase agreement, it
typically 
         purchases a security for a relatively short period
(usually not more 
         than one week), which the seller agrees to repurchase at
a fixed 
         time and price, representing the fund's cost plus
interest.  When 
         the fund enters into a securities loan, it lends certain
of its 
         portfolio securities to broker-dealers or other parties
and 
         typically receives an interest payment in return.  These 
         transactions must be fully collateralized at all times,
but involve 
         some risk to the fund if the other party should default
on its


         





         obligation.  If the other party in these transactions
should become 
         involved in bankruptcy or insolvency proceedings, it is
possible 
         that the fund may be treated as an unsecured creditor
and be 
         required to return the underlying collateral to the
other party's 
         estate.
         
         Required vote.  Approval of this proposal requires the
affirmative 
         vote of the lesser of (1) more than 50% of the
outstanding shares of 
         the fund, or (2) 67% or more of the shares of the fund
present at 
         the meeting if more than 50% of the outstanding shares
of the fund 
         are present at the meeting in person or by proxy.
         
         
         3.D. AMENDING THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION WITH 
              RESPECT TO CONCENTRATION OF ITS ASSETS
         
         The Trustees are recommending that the fund's
fundamental investment 
         restriction regarding concentration be revised to
reflect the 
         standard restriction expected to be used by other Putnam
funds.  The 
         current restriction states that the fund may not:
         
              "Invest more than 25% of the value of its total
assets in 
              securities of issuers in any one industry, other
than health 
              care tax-exempt securities.  (Securities of the
U.S. 
              government, its agencies, or instrumentalities, and
securities 
              backed by the credit of a governmental entity are
not 
              considered to represent industries.)"  
         
         The proposed amended fundamental restriction is set
forth below.
         
              "The fund may not...
         
              Purchase securities (other than securities of the
U.S. 
              government, its agencies or instrumentalities or
tax-exempt 
              securities, except tax-exempt securities backed
only by the 
              assets and revenues of non-governmental issuers)
if, as a 
              result of such purchase, more than 25% of the
fund's total 
              assets would be invested in any one industry, other
than health 
              care tax-exempt securities."  
         
         The proposed amendment merely conforms the fund's
restriction and 
         would have no effect on the fund's investments.  
         
         Required vote.  Approval of this proposal requires the
affirmative 
         vote of the lesser of (1) more than 50% of the
outstanding shares of 
         the fund, or (2) 67% or more of the shares of the fund
present at 
         the meeting if more than 50% of the outstanding shares
of the fund 
         are present at the meeting in person or by proxy.  
         3.E. AMENDING THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION WITH 
              RESPECT TO INVESTMENTS IN COMMODITIES
  The Trustees are recommending that the fund's fundamental
investment 
         restriction with respect to investments in commodities
be revised to 
         reflect the standard restriction expected to be used by
other Putnam 
         funds.  The current restriction states that the fund may
not:  
         
              "Purchase or sell commodities or commodity
contracts, except 
              that it may purchase or sell financial future
contracts or 
              options."
         
         The proposed amended fundamental restriction is set
forth below.
         
              "The fund may not ...
         
              Purchase or sell commodities or commodity
contracts, 
              except that the fund may purchase and sell
financial 
              futures contracts and options and may enter into
foreign 
              exchange contracts and other financial transactions
not 
              involving physical commodities."
         
         Under the revised restriction, the fund will continue to
be able to 
         engage in a variety of transactions involving the use of
financial 
         futures and options, as well as various other financial
transactions 
         to the extent consistent with its investment objective
and policies. 
         Although the fund may already engage in many of these
activities, 
         Putnam Management believes that the revised language
more clearly 
         sets forth the fund's policy.  The addition of financial 
         transactions not involving the direct purchase or sale
of physical 
         commodities is intended to give the fund maximum
flexibility to 
         invest in a variety of financial instruments that could
technically 
         be considered commodities, but which do not involve the
direct 
         purchase or sale of physical commodities, which is the
intended 
         focus of the restriction.
         
         Foreign exchange transactions are subject to many of the
risks 
         associated with futures and options.  However, given the
fund's 
         investment policies and the fact that foreign currency
exchange 
         transactions give rise to taxable income, the fund
currently has no 
         intention of engaging in such investments.
         
         Required vote.  Approval of this proposal requires the
affirmative 
         vote of the lesser of (1) more than 50% of the
outstanding shares of 
         the fund, or (2) 67% or more of the shares of the fund
present at 
         the meeting if more than 50% of the outstanding shares
of the fund 
         are present at the meeting in person or by proxy.   
         
         


         





         4.A. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION WITH 
              RESPECT TO INVESTMENTS IN SECURITIES OF ISSUERS IN
WHICH 
              MANAGEMENT OF THE FUND OR PUTNAM INVESTMENT
MANAGEMENT OWNS 
              SECURITIES
         
         The Trustees are recommending eliminating the fund's
fundamental 
         investment restriction which prevents the fund from
investing in the 
         securities of issuers in which management of the fund or
Putnam 
         Management owns a certain percentage of securities
because it is 
         unnecessary in light of current regulatory requirements. 
The 
         current restriction states that the fund may not:
         
              "Invest in securities of any issuer, if, to the
knowledge of 
              the fund, officers and Trustees of the Fund and
officers and 
              directors of Putnam who beneficially own more than
0.5% of the 
              securities of that issuer together own more than 5%
of such 
              securities."
         
         By eliminating the restriction, the fund would be able
to invest in 
         the securities of any issuer without regard to ownership
in such 
         issuer by management of the fund or Putnam Management,
except to the 
         extent prohibited by the fund's investment policies or
the 1940 Act.
         
         Required vote.  Approval of this proposal requires the
affirmative 
         vote of the lesser of (1) more than 50% of the
outstanding shares of 
         the fund, or (2) 67% or more of the shares of the fund
present at 
         the meeting if more than 50% of the outstanding shares
of the fund 
         are present at the meeting in person or by proxy.
         
         
         4.B. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION WITH 
              RESPECT TO MARGIN TRANSACTIONS
         
         The Trustees are recommending that the fund's
fundamental investment 
         restriction with respect to margin transactions be
eliminated. 
         "Margin transactions" involve the purchase of securities
with money 
         borrowed from a broker, with cash or eligible securities
being used 
         as collateral against the loan.  The current restriction
states that 
         the fund may not:
         
              "Purchase securities on margin, except such
short-term credits 
              as may be necessary for the clearance of purchases
and sales of 
              securities, and except that it may make margin
payments in 
              connection with transactions in futures contracts,
options, and 
              other financial instruments."
         
         Putnam Management recommended that this restriction be
eliminated 
         because it is unnecessary in light of current regulatory 
         requirements; the 1940 Act does not require the fund to
have such a 
         restriction.  If the restriction were removed, this fund
would be 
         able to engage in margin transactions to the extent
consistent with 
         its investment policies.


         





         
         The fund's potential use of margin transactions beyond
transactions 
         in financial futures and options and for the clearance
of purchases 
         and sales of securities, including the use of margin in
ordinary 
         securities transactions, is currently limited by the
position taken 
         by the Staff of the SEC which prohibit margin
transactions because 
         they create senior securities.  The fund's ability to
engage in 
         margin transactions is also limited by its investment
policies, 
         which generally permit the fund to borrow money only in
limited 
         circumstances.
         
         Required vote.  Approval of this proposal requires the
affirmative 
         vote of the lesser of (1) more than 50% of the
outstanding shares of 
         the fund, or (2) 67% or more of the shares of the fund
present at 
         the meeting if more than 50% of the outstanding shares
of the fund 
         are present at the meeting in person or by proxy.
         
         
         4.C. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION WITH 
              RESPECT TO SHORT SALES
         
         
         The Trustees are recommending that the fund's
fundamental investment 
         restriction with respect to short sales be eliminated. 
The current 
         restriction states that the fund may not:
         
              "Make short sales of securities or maintain a short
position 
              for the account of the fund unless at all times
when a short 
              position is open it owns an equal amount of such
securities or 
              owns securities which, without payment of any
further 
              consideration, are convertible into or exchangeable
for 
              securities of the same issue as, and in equal
amount to, the 
              securities sold short."
         
         Putnam Management recommended that this restriction be
eliminated 
         because it is unnecessary in light of current regulatory 
         requirements; the 1940 Act does not require the fund to
have such a 
         restriction.
         
         Given the fund's investment policies and the fact that
short sales 
         give rise to taxable income, Putnam Management does not
currently 
         intend to engage in short sales on behalf of the fund. 
         Nevertheless, Putnam Management believes it is in the
best interest 
         of the fund to eliminate the policy to provide the fund
with maximum 
         flexibility should circumstances change.
         
         Required vote.  Approval of this proposal requires the
affirmative 
         vote of the lesser of (1) more than 50% of the
outstanding shares of 
         the fund, or (2) 67% or more of the shares of the fund
present at 
         the meeting if more than 50% of the outstanding shares
of the fund 
         are present at the meeting in person or by proxy.
         4.D. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION WITH 
              RESPECT TO PLEDGING ASSETS
          The Trustees are recommending that the fund's
fundamental investment 
         restriction which limits the fund's ability to pledge
its assets be 
         eliminated.  The current restriction states that the
fund may not:
         
              "Pledge, hypothecate, mortgage, or otherwise
encumber its 
              assets in excess of 15% of its total assets (taken
at the lower 
              of cost and current value) in connection with
borrowings 
              permitted by restriction 1 in the Prospectus." 
[Restriction 1 
              referred to in this restriction allows the fund to
borrow money 
              in an amount equal to 10% of its total assets for
limited 
              purposes.]
         
         This proposal would remove all restrictions on the
fund's ability to 
         pledge its assets.  Putnam Management believes that this
enhanced 
         flexibility could assist the fund in achieving its
investment 
         objective. Further, Putnam Management believes that the
fund's 
         current limits on pledging may conflict with the fund's
ability to 
         borrow money for extraordinary or emergency purposes. 
This conflict 
         arises because banks may require borrowers such as the
fund to 
         pledge assets in order to collateralize the amount
borrowed.  These 
         collateral requirements are typically for amounts at
least equal to, 
         and often larger than, the principal amount of the loan. 
If the 
         fund needed to borrow the maximum amount permitted by
its policies 
         (currently 10% of its total assets), it might be
possible that a 
         bank would require collateral in excess of 15% of the
fund's total 
         assets.  Thus, the current restriction could have the
effect of 
         reducing the amount that the fund may borrow in these
situations.
         
         Pledging assets does entail certain risks.  To the
extent that the 
         fund pledges its assets, the fund may have less
flexibility in 
         liquidating its assets.  If a large portion of the
fund's assets 
         were involved, the fund's ability to meet its
obligations could be 
         delayed.
         
         Required vote.  Approval of this proposal requires the
affirmative 
         vote of the lesser of (1) more than 50% of the
outstanding shares of 
         the fund, or (2) 67% or more of the shares of the fund
present at 
         the meeting if more than 50% of the outstanding shares
of the fund 
         are present at the meeting in person or by proxy.
         
         
         4.E. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION WITH 
              RESPECT TO INVESTMENTS IN CERTAIN OIL, GAS AND
MINERAL 
              INTERESTS
         The Trustees are recommending that the fund's
fundamental investment 
         restriction with respect to investments in oil, gas and
mineral 
         leases, rights or royalty contracts be eliminated.  The
current 
         restriction states that the fund may not:


         





         
              "Buy or sell oil, gas, or other mineral leases,
rights, or 
              royalty contracts, although it may purchase
securities of 
              issuers which deal in, represent interests in, or
are secured 
              by interests in such leases, rights, or contracts,
and it may 
              acquire or dispose of such leases, rights, or
contracts 
              acquired through the exercise of its rights as a
holder of debt 
              obligations secured thereby."
         
         Putnam Management recommended that this restriction be
eliminated 
         because it is unnecessary in light of current regulatory 
         requirements; the 1940 Act does not require that the
fund have such 
         a restriction.  However, given the fund's investment
policies, 
         Putnam Management has no current intention of causing
the fund to 
         invest in such securities.
         
         Required vote.  Approval of this proposal requires the
affirmative 
         vote of the lesser of (1) more than 50% of the
outstanding shares of 
         the fund, or (2) 67% or more of the shares of the fund
present at 
         the meeting if more than 50% of the outstanding shares
of the fund 
         are present at the meeting in person or by proxy.
         
         
         4.F. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION WITH 
              RESPECT TO INVESTING TO GAIN CONTROL OF A COMPANY'S
MANAGEMENT
          The Trustees are recommending that the fund's
fundamental investment 
         restriction which states that the fund may not "make
investments for 
         the purpose of gaining control of a company's
management" be 
         eliminated.  Eliminating the restriction would make it
clear that 
         the fund can freely exercise its rights as a shareholder
of the 
         various companies in which it may invest, which may at
times fall 
         under the technical definition of control.  These rights
may include 
         the right to actively oppose or support the management
of such 
         companies.  Since the fund invests primarily in
fixed-income 
         securities, this proposal will not impact the majority
of the fund's 
         investments.  Nevertheless, Putnam Management believes
it would be 
         in the best interest of the fund to eliminate the
restriction to 
         provide the fund with maximum flexibility should
circumstances 
         change.
         
         Required vote.  Approval of this proposal requires the
affirmative 
         vote of the lesser of (1) more than 50% of the
outstanding shares of 
         the fund, or (2) 67% or more of the shares of the fund
present at 
         the meeting if more than 50% of the outstanding shares
of the fund 
         are present at the meeting in person or by proxy.
         
         
         4.G. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION WITH 
              RESPECT TO INVESTMENTS IN OTHER INVESTMENT
COMPANIES
         
         The Trustees are recommending that the fund's
fundamental investment 
         restriction with respect to investments in other
investment


         





         companies be eliminated.  The current restriction states
that the 
         fund may not:
         
              "Invest in the securities of registered open-end
investment 
              companies, except as they may be acquired as part
of a merger 
              or consolidation or acquisition of assets."
         
         By eliminating the restriction, the fund would have the
ability to 
         invest in investment vehicles, such as open-end
investment companies 
         and unit investment trusts, which may be registered
investment 
         companies under the 1940 Act, to the extent consistent
with 
         applicable law and the fund's investment policies.  Such
pass-
         through entities may involve duplication of some fees
and expenses, 
         but may also provide attractive investment
opportunities.  In 
         addition, the fund could pursue a combination with
another open-end 
         investment company through a merger, consolidation or
acquisition of 
         assets, and invest in other open-end companies in
open-market 
         investments.  Of course, any such combination or
investment by the 
         fund would be subject to the restrictions imposed under
the 1940 Act 
         in effect from time to time.  Putnam Management believes
that this 
         enhanced flexibility could assist the fund in meeting
its objective. 
         
         
         Required vote.  Approval of this proposal requires the
affirmative 
         vote of the lesser of (1) more than 50% of the
outstanding shares of 
         the fund, or (2) 67% or more of the shares of the fund
present at 
         the meeting if more than 50% of the outstanding shares
of the fund 
         are present at the meeting in person or by proxy.
         
         
         Further Information About Voting and the Shareholder
Meeting
         
         Quorum and Methods of Tabulation.  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 (unless otherwise noted in the
proxy 
         statement).  Shares represented by proxies that reflect
abstentions 
         and "broker non-votes" (i.e., shares held by brokers or
nominees as 
         to which (i) instructions have not been received from
the beneficial 
         owners or the persons entitled to vote and (ii) the
broker or 
         nominee does not have the discretionary voting power on
a particular 
         matter) will be counted as shares that are present and
entitled to 
         vote on the matter for purposes of determining the
presence of a 
         quorum.  Votes cast by proxy or in person at the meeting
will be 
         counted by persons appointed by your fund as tellers for
the 
         meeting.  
         
         The tellers will count the total number of votes cast
"for" approval 
         of 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 your fund and employees of Putnam
Management, Putnam 
         Fiduciary Trust Company and Putnam Mutual Funds may
solicit proxies 
         in person or by telephone.  Your 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.  Your fund has been advised by
counsel that these 
         procedures are consistent with the requirements of
applicable law. 
         If these procedures were subject to a successful legal
challenge, 
         such votes would not be counted at the meeting.  Your
fund is 
         unaware of any such challenge at this time. 
Shareholders would be 
         called at the phone number Putnam Investments has in its
records for 
         their accounts, and would be asked for their Social
Security number 
         or other identifying information.  The shareholders
would then be 
         given an opportunity to authorize proxies to vote their
shares at 
         the meeting in accordance with their instructions.  To
ensure that 
         the shareholders' instructions have been recorded
correctly, they 
         will also receive a confirmation of their instructions
in the mail. 
         A special toll-free number will be available in case the
information 
         contained in the confirmation is incorrect.  
         
         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 expense D.F.
King & Co., 
         Inc., 77 Water Street, New York, New York 10005, to aid
in the 
         solicitation instructions for nominee and registered
accounts, for a


         





         fee not to exceed $2,500 plus reasonable out-of-pocket
expenses for 
         mailing and phone costs.  
         
         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 your fund,
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 your fund's next annual
meeting of 
         shareholders will be held in December, 1997. 
Shareholder proposals 
         to be included in your fund's proxy statement for the
next annual 
         meeting must be received by your fund before June 20,
1997.  
         
         Adjournment.  If sufficient votes in favor of any of the
proposals 
         set forth in the Notice of the Meeting are not received
by the time 
         scheduled for the meeting, the persons named as proxies
may propose 
         adjournments of the meeting for a period or periods of
not more than 
         60 days in the aggregate to permit further solicitation
of proxies 
         with respect to 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 such adjournment
those proxies 
         required to be voted against such proposals.  Your fund
pays the 
         costs of any additional solicitation and of any
adjourned session. 
         Any proposals for which sufficient favorable votes have
been 
         received by the time of the meeting may be acted upon
and considered 
         final regardless of whether the meeting is adjourned to
permit 
         additional solicitation with respect to any other
proposal.  
         
         Financial information.  Your fund will furnish, without
charge, to 
         you 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 Your Fund
         
         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 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 Ms. 
         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 Ms. Kennan 
         (Co-chairpersons), Ms. Baxter, and Messrs. Estin, Hill,
Jackson, 
         Patterson, Shapiro, and Thorndike.
         
         Officers and other information.  In addition to George
Putnam and 
         Lawrence J. Lasser, the officers of your fund are as
follows:
         
                                                              
Year first
                                                              
elected to
         Name (age)                 Office                    
office
        
- - - -----------------------------------------------------------------
         Charles E. Porter (58)     Executive Vice President   19
         Patricia C. Flaherty (49)  Senior Vice President      19
         John D. Hughes (61)        Senior Vice President
                                      & Treasurer              19
         Gordon H. Silver (49)      Vice President             19
         Robert Lucey (  )          Vice President             19
         Gary N. Coburn (50)        Vice President             19
         James E. Erickson (60)     Vice President             19
         Blake E. Anderson (39)     Vice President             19
         Howard K. Manning* (43)    Vice President             19
         William N. Shiebler** (54) Vice President             19
         John R. Verani (57)        Vice President             19
         Paul M. O'Neil (43)        Vice President             19
         Beverly Marcus (52)        Clerk                      19
        
- - - -----------------------------------------------------------------
         *  The fund's portfolio manager
         ** President of Putnam Mutual Funds
         
         All of the officers of your fund are employees of Putnam
Management 
         or its affiliates.  Because of their positions with
Putnam 
         Management or its affiliates or their ownership of stock
of Marsh & 
         McLennan Companies, Inc., the parent corporation of
Putnam 
         Management, Messrs. Putnam, George Putnam, III, Lasser
and Smith 
         (nominees for Trustees of your fund), as well as the
officers of 
         your fund, will benefit from the management fees,
custodian fees, 
         and investor servicing fees paid or allowed by the fund. 
         


         





         Assets and shares outstanding of your fund 
         as of September 6, 1996 
         
         Net assets                               
$196,870,201.95     
         
         Common Shares outstanding 
         and authorized to vote               13,807,168.46
shares     
         
         
         5% beneficial ownership of your fund as of August 30,
1996
         
         Persons beneficially owning more than 5% 
         of the fund's Common Shares                              
   
         
         
         


         





         
         
         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.
         
         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.


         

         
         Proxy for a meeting of shareholders to be held on
December 5, 1996 
         of 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
December 5, 
         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.
         
         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 fixing 
         the number of Trustees and electing Trustees as set
forth in 
         Proposal 1 and FOR Proposals 2, 3.A.-3.E. and 4.A.-4.G. 
In their 
         discretion, the Proxies will also be authorized to vote
upon such 
         other matters that may properly come before the meeting. 
         
         Note:  If you have questions on any of the proposals,
please call
                1-800-225-1581.
         
         PLEASE BE SURE TO SIGN AND DATE THIS PROXY.
         
         Please sign your name exactly as it appears on this
card.  If you 
         are a joint owner, each owner should sign.  When signing
as 
         executor, administrator, attorney, trustee, or guardian,
or as 
         custodian for a minor, please give your full title as
such.  If you 
         are signing for a corporation, please sign the full
corporate name 
         and indicate the signer's office.  If you are a partner,
sign in the 
         partnership name.
         
        
- - - -----------------------------------------------------------------
- - - ---
         Shareholder sign here                                    
Date
         
        
- - - -----------------------------------------------------------------
- - - ---
         Co-owner sign here                                       
Date


         

         
         THE TRUSTEES RECOMMEND A VOTE FOR FIXING THE NUMBER OF
TRUSTEES AND 
         ELECTING ALL OF THE NOMINEES FOR TRUSTEES AND FOR THE
PROPOSALS 
         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, R.J. Jackson, 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 and W.N. Thorndike.
         
         /  /      FOR fixing the number of Trustees and electing
all the 
                   nominees (except as indicated to the contrary
below)
         
         /  /      WITHHOLD authority to vote for all nominees
         
         To withhold authority to vote for one or more of the
nominees, write 
         those nominees' names below:
         
        
- - - -------------------------------------------------------------
         
         PROPOSAL TO:
         
         2.     Ratify the selection       FOR      AGAINST    
ABSTAIN
                of Price Waterhouse LLP    /  /     /  /          
/  /
                as the independent
                auditors of your fund.
         
         3.     Amend the fund's 
                fundamental investment 
                restriction with respect to: 
         
           A.   Diversification.           /  /     /  /          
/  /
         
           B.   Investments in the voting  /  /     /  /          
/  /
                securities of a single 
                issuer.
         
           C.   Making loans.              /  /     /  /          
/  /
                
           D.   Concentration of its
                assets.                    /  /     /  /        / 
/
         
           E.   Investments in             /  /     /  /          
/  /
                commodities.
         
         4.     Eliminate the fund's fundamental 
                investment restriction
                with respect to:
         


         

           A.   Investments in securities  /  /     /  /          
/  /
                of issuers in which
                management of the fund or
                Putnam Investment Management
                owns securities.
         
           B.   Margin transactions.       /  /     /  /          
/  /
         
           C.   Short sales.               /  /     /  /          
/  /
         
           D.   Pledging assets.           /  /     /  /        
/  / /
         
           E.   Investments in certain     /  /     /  /          
/  /
                oil, gas and mineral
                interests.
         
           F.   Investing to gain          /  /     /  /          
/  /
                control of a company's 
                management.
         
           G.   Investments in other       /  /     /  /          
/  /
                investment companies.


         

         
         
         lipsett/106290.111/proxys/health.3.wpf
         /fs66/sec/karvis/.WPF_DOCS/health3.wpf