PUTNAM TAX EXEMPT INCOME FUND
Prospectus Supplement dated July 11, 1996
to Prospectus dated February 1, 1996
The third paragraph under the heading "How the fund pursues its
objective - Basic investment strategy" on page 8 of the
prospectus is replaced with the following:
Investments by the fund in tax-exempt securities and taxable
obligations will be limited to securities rated at the time of
purchase at least Ba by Moody's Investors Service, Inc.
("Moody's") or at least BB by Standard & Poor's ("S&P") or
unrated securities that Putnam Management determines are of
comparable quality at the time of purchase.
