PUTNAM TAX EXEMPT INCOME FUND
Prospectus Supplement dated May 6, 1996
to Prospectus dated February 1, 1996
The third paragraph under the heading "How the fund pursues its
objective - Basic investment stragegy" on page 8 of the
prospectus is replaced with the following:
The fund's investments in tax-exempt securities and taxable
obligations will be limited to securities rated at the time of
purchase not lower than the five highest grades assigned by
either Moody's Investors Service, Inc. ("Moody's") (Aaa, Aa, A,
Baa or Ba) or Standard & Poor's ("S&P") (AAA, AA, A, BBB or BB),
or unrated securities that Putnam Management determines are of
comparable quality.
