53627 7/99
PROSPECTUS SUPPLEMENT
dated July 19, 1999 to:
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PUTNAM ARIZONA TAX EXEMPT INCOME FUND (THE "ARIZONA FUND")
Prospectus dated September 30, 1998
Effective July 16, 1999, Putnam Investment Management's
agreement to waive a portion of its management fee for the
Arizona fund terminated and a new management contract took
effect. The fees under the new management contract will be
higher than those currently paid (because of the termination
of the waiver), but will be lower than the former
contractual rate.
As a result of these changes, the portions of the section of
the prospectus "Expenses summary Annual fund operating
expenses" and "Examples" relating to the Arizona fund are
replaced with the following:
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
FUND MANAGEMENT
OPERATING 12B-1 OTHER TOTAL
FEES FEES EXPENSES EXPENSES
---------- ----- -------- ---------
Class A 0.50% 0.20% 0.19% 0.89%
Class B 0.50% 0.85% 0.19% 1.54%
Class M 0.50% 0.50% 0.19% 1.19%
The table is provided to help you understand the expenses of
investing and your share of fund operating expenses. The
expenses shown in the table do not reflect the application
of credits that reduce fund expenses. The expenses shown
under "Management fees" and "Total fund operating expenses"
reflect the fees which would have been paid under the new
management contract for the last fiscal year, without regard
to the management fee waiver then in effect.
EXAMPLES
Your investment of $1,000 would incur the following
expenses, assuming 5% annual return and, except as
indicated, redemption at the end of each period:
1 3 5 10
year years years years
CLASS A $56 $75 $94 $152
CLASS B $66 $79 $104 $166*
CLASS B (NO REDEMPTION) $16 $49 $84 $166*
CLASS M $44 $69 $96 $172
The examples do not represent past or future expense levels.
Actual expenses may be greater or less than those shown.
Federal regulations require the examples to assume a 5%
annual return, but actual annual return varies.
* Reflects conversion of class B shares to class A shares
(which pay lower ongoing expenses) approximately eight
years after purchase. See "Alternative sales
arrangements."
