<SUBMISSION>

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HhoW/fGb0qA5uqGUnC4Sm6Dij8PlMY6HIx6DUOVJcx8Yzj+/8BjitwHPLNuywA1u 2JBZplwR9hG+stUcAFZO8Q== 0000928816-05-001325.txt : 20051005 0000928816-05-001325.hdr.sgml : 20051005 20051005171151 ACCESSION NUMBER: 0000928816-05-001325 CONFORMED SUBMISSION TYPE: 497 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20051005 DATE AS OF CHANGE: 20051005 EFFECTIVENESS DATE: 20051005 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM ARIZONA TAX EXEMPT INCOME FUND CENTRAL INDEX KEY: 0000869392 IRS NUMBER: 046665534 STATE OF INCORPORATION: MA FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 033-37992 FILM NUMBER: 051125609 BUSINESS ADDRESS: STREET 1: PUTNAM INVESTMENTS INC STREET 2: ONE POST OFFICE SQUARE MAIL STOP A 14 CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 8002251585 MAIL ADDRESS: STREET 1: 2 LIBERTY SQUARE STREET 2: MAIL STOP L6 CITY: BOSTON STATE: MA ZIP: 02109 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM PENNSYLVANIA TAX EXEMPT INCOME FUND CENTRAL INDEX KEY: 0000794615 IRS NUMBER: 043057637 STATE OF INCORPORATION: MA FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 033-28321 FILM NUMBER: 051125610 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQ CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6172921000 MAIL ADDRESS: STREET 1: ONE POST OFFICE SQU CITY: BOSTON STATE: MA ZIP: 02109 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM OHIO TAX EXEMPT INCOME FUND II CENTRAL INDEX KEY: 0000794616 IRS NUMBER: 046626129 STATE OF INCORPORATION: MA FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 033-08924 FILM NUMBER: 051125611 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQ CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 617-292-14 FORMER COMPANY: FORMER CONFORMED NAME: PUTNAM OHIO TAX EXEMPT INCOME FUND DATE OF NAME CHANGE: 19920609 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM MICHIGAN TAX EXEMPT INCOME FUND / CENTRAL INDEX KEY: 0000794611 IRS NUMBER: 046626130 STATE OF INCORPORATION: MA FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 033-08923 FILM NUMBER: 051125613 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQ CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 617-292-14 FORMER COMPANY: FORMER CONFORMED NAME: PUTNAM MICHIGAN TAX EXEMPT INCOME FUND DATE OF NAME CHANGE: 19920609 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM NEW JERSEY TAX EXEMPT INCOME FUND CENTRAL INDEX KEY: 0000857463 IRS NUMBER: 043073948 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 033-32550 FILM NUMBER: 051125614 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQUARE CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6172921000 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM MASSACHUSETTS TAX EXEMPT INCOME FUND II CENTRAL INDEX KEY: 0000792288 IRS NUMBER: 046626127 STATE OF INCORPORATION: MA FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 033-05416 FILM NUMBER: 051125615 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQ CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 617-292-14 FORMER COMPANY: FORMER CONFORMED NAME: PUTNAM MASSACHUSETTS TAX EXEMPT INCOME FUND /MA/ DATE OF NAME CHANGE: 19920609 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM FLORIDA TAX EXEMPT INCOME FUND CENTRAL INDEX KEY: 0000864488 IRS NUMBER: 043091965 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 033-35677 FILM NUMBER: 051125616 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQUARE STREET 2: MAILSTOP A 14 CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 8002551581 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM MINNESOTA TAX EXEMPT INCOME FUND II CENTRAL INDEX KEY: 0000794612 IRS NUMBER: 046626128 STATE OF INCORPORATION: MA FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 033-08916 FILM NUMBER: 051125612 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQ CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6172921000 FORMER COMPANY: FORMER CONFORMED NAME: PUTNAM MINNESOTA TAX EXEMPT INCOME FUND DATE OF NAME CHANGE: 19920609 497 1 a3749710505.htm PUTNAM PROSPECTUS MULTIFUND SUPPLEMENT <SUBMISSION>

Prospectus Supplement

228306 9/05

dated September 30, 2005 to the retail prospectuses of all Putnam retail funds other than

money market funds

CDSC on Class A Shares. Beginning October 3, 2005, class A shares purchased without an initial sales charge (other than shares purchased by qualified retirement plans) may be subject to a deferred sales charge of 1.00% if redeemed within eighteen months of purchase. Accordingly, in the section “How do I buy fund shares?” the following sentence is added after the second sentence immediately following the table in the subsection on deferred sales charges:

Unless otherwise agreed with Putnam Retail Management, class A shares purchased on or after October 3, 2005 that are part of a purchase of $1 million or more (other than by a qualified retirement plan) will be subject to a 1.00% deferred sales charge if redeemed within eighteen months of purchase.

For information on the different CDSC that may apply to class A shares purchased prior to October 3, 2005, please see the prospectus.

Putnam

Tax Exempt

Income Funds

9|30|05

Prospectus

Putnam Arizona Tax Exempt Income Fund, Putnam Florida Tax Exempt Income

Fund, Putnam Michigan Tax Exempt Income Fund, Putnam Minnesota Tax Exempt

Income Fund, Putnam New Jersey Tax Exempt Income Fund, Putnam Ohio Tax

Exempt Income Fund, Putnam Pennsylvania Tax Exempt Income Fund: Class A, B

and M shares, Putnam Massachusetts Tax Exempt Income Fund: Class A, B, C

and M shares

Investment Category: Tax-Exempt

CONTENTS

Fund summaries 2

Goals 2

Main investment strategies 2

Main risks 2

Performance information 3

Fees and expenses 9

What are each fund's main investment

strategies and related risks? 13

Who manages the funds? 20

How does a fund price its shares? 26

How do I buy fund shares? 26

How do I sell fund shares? 33

How do I exchange fund shares? 35

Policy on excessive short-term trading 36

Fund distributions and taxes 39

Financial highlights 41

This prospectus explains what you should know about these mutual

funds before you invest. Please read it carefully.

Putnam Investment Management, LLC (Putnam Management), which has

managed mutual funds since 1937, manages the funds.

These securities have not been approved or disapproved by the Securities

and Exchange Commission nor has the Commission passed upon the accuracy

or adequacy of this prospectus. Any statement to the contrary is

a crime.

You may qualify for sales charge discounts on class A or class M shares.

Please notify your financial advisor of other accounts that may help you

obtain a sales charge discount. See "How do I buy fund shares?" for details.

Fund summaries

GOALS

Each fund seeks as high a level of current income exempt from federal

income tax and personal income tax (if any) of its respective state as we

believe is consistent with preservation of capital.

MAIN INVESTMENT STRATEGIES -- TAX EXEMPT INVESTMENTS

We invest mainly in bonds that:

* pay interest that is exempt from federal income tax and personal income tax

(if any) of its respective state,

* are investment-grade in quality, and

* have intermediate- to long-term maturities (three years or longer).

Under normal circumstances, we invest at least 80% of a fund's net assets

in tax exempt securities. This investment policy cannot be changed without

the approval of the fund's shareholders. Certain states may impose

additional requirements on the composition of a fund's portfolio in order

for distributions from that fund to be exempt from state taxes. Under

normal circumstances, the Florida fund will invest so that its shares are

exempt from the Florida intangibles tax.

MAIN RISKS

The main risks that could adversely affect the value of a fund's shares and

the total return on your investment include:

* The risk that movements in financial markets will adversely affect the value

of each fund's investments. This risk includes interest rate risk, which

means that the prices of each fund's investments are likely to fall if

interest rates rise. Interest rate risk is generally higher for

investments with longer maturities.

* The risk that the issuers of a fund's investments will not make timely

payments of interest and principal. This credit risk is generally higher

for debt that is below investment-grade in quality.

* The risk that interest each fund receives might be taxable.

* The risk of investing mostly in a single state. Investments in a single

state, even though representing a number of different issuers, may be

affected by common economic forces and other factors. This vulnerability

to factors affecting the state's tax-exempt investments will be

significantly greater than that of a more geographically diversified

fund, which may result in greater losses and volatility.

The Arizona fund, Florida fund and New Jersey fund are "non-diversified,"

which means that these funds may invest more of their assets in the

securities of fewer issuers than a "diversified" fund. This increases the

fund's vulnerability to factors affecting a single investment and can

result in greater fund losses and volatility than a fund that invests more

broadly.

You can lose money by investing in a fund. A fund may not achieve its goal,

and is not intended as a complete investment program. An investment in a

fund is not a deposit in a bank and is not insured or guaranteed by the

Federal Deposit Insurance Corporation or any other government agency.

PERFORMANCE INFORMATION

The following information provides some indication of each fund's risks.

Each chart shows year-to-year changes in the performance of one of the

fund's classes of shares, class A shares. Performance figures do not

reflect the impact of sales charges. If they did, performance would be less

than that shown. The tables following the charts compare each fund's

performance to that of a broad measure of market performance. Of course, a

fund's past performance is not an indication of future performance.

THE ARIZONA FUND

[GRAPHIC OMITTED: vertical bar chart CALENDAR YEAR TOTAL RETURNS FOR THE

ARIZONA FUND'S CLASS A SHARES]

CALENDAR YEAR TOTAL RETURNS FOR THE ARIZONA FUND'S CLASS A SHARES

1995 17.08%

1996 3.00%

1997 7.88%

1998 4.86%

1999 -3.11%

2000 10.22%

2001 4.76%

2002 8.07%

2003 5.23%

2004 3.50%

Year-to-date performance through 6/30/05 was 2.72%. During the periods

shown in the bar chart, the highest return for a quarter was 7.13% (quarter

ending 3/31/95) and the lowest return for a quarter was -2.48% (quarter

ending 6/30/04).

THE FLORIDA FUND

[GRAPHIC OMITTED: vertical bar chart CALENDAR YEAR TOTAL RETURNS FOR THE

FLORIDA FUND'S CLASS A SHARES]

CALENDAR YEAR TOTAL RETURNS FOR THE FLORIDA FUND'S CLASS A SHARES

1995 17.35%

1996 2.91%

1997 8.95%

1998 5.05%

1999 -3.51%

2000 11.27%

2001 4.77%

2002 8.71%

2003 3.54%

2004 4.23%

Year-to-date performance through 6/30/05 was 2.59%. During the periods

shown in the bar chart, the highest return for a quarter was 6.92% (quarter

ending 3/31/95) and the lowest return for a quarter was -2.37% (quarter

ending 3/31/96).

THE MASSACHUSETTS FUND

[GRAPHIC OMITTED: vertical bar chart CALENDAR YEAR TOTAL RETURNS FOR THE

MASSACHUSETTS FUND'S CLASS A SHARES]

CALENDAR YEAR TOTAL RETURNS FOR THE MASSACHUSETTS FUND'S CLASS A SHARES

1995 18.11%

1996 3.91%

1997 8.89%

1998 5.33%

1999 -3.55%

2000 11.35%

2001 4.44%

2002 8.53%

2003 4.92%

2004 4.26%

Year-to-date performance through 6/30/05 was 2.77%. During the periods

shown in the bar chart, the highest return for a quarter was 7.11% (quarter

ending 3/31/95) and the lowest return for a quarter was -2.20% (quarter

ending 6/30/04).

THE MICHIGAN FUND

[GRAPHIC OMITTED: vertical bar chart CALENDAR YEAR TOTAL RETURNS FOR THE

MICHIGAN FUND'S CLASS A SHARES]

CALENDAR YEAR TOTAL RETURNS FOR THE MICHIGAN FUND'S CLASS A SHARES

1995 16.33%

1996 4.16%

1997 8.41%

1998 4.57%

1999 -4.45%

2000 10.07%

2001 5.11%

2002 7.72%

2003 4.31%

2004 3.45%

Year-to-date performance through 6/30/05 was 2.50%. During the periods

shown in the bar chart, the highest return for a quarter was 6.17% (quarter

ending 3/31/95) and the lowest return for a quarter was -2.04% (quarter

ending 3/31/96).

THE MINNESOTA FUND

[GRAPHIC OMITTED: vertical bar chart CALENDAR YEAR TOTAL RETURNS FOR THE

MINNESOTA FUND'S CLASS A SHARES]

CALENDAR YEAR TOTAL RETURNS FOR THE MINNESOTA FUND'S CLASS A SHARES

1995 16.41%

1996 3.30%

1997 7.59%

1998 5.07%

1999 -4.02%

2000 9.93%

2001 4.60%

2002 7.98%

2003 5.50%

2004 3.78%

Year-to-date performance through 6/30/05 was 2.20%. During the periods

shown in the bar chart, the highest return for a quarter was 6.78% (quarter

ending 3/31/95) and the lowest return for a quarter was -2.15% (quarter

ending 3/31/96).

THE NEW JERSEY FUND

[GRAPHIC OMITTED: vertical bar chart CALENDAR YEAR TOTAL RETURNS FOR THE

NEW JERSEY FUND'S CLASS A SHARES]

CALENDAR YEAR TOTAL RETURNS FOR THE NEW JERSEY FUND'S CLASS A SHARES

1995 16.28%

1996 3.63%

1997 8.78%

1998 4.90%

1999 -3.51%

2000 10.30%

2001 4.41%

2002 8.06%

2003 4.76%

2004 3.40%

Year-to-date performance through 6/30/05 was 2.92%. During the periods

shown in the bar chart, the highest return for a quarter was 6.53% (quarter

ending 3/31/95) and the lowest return for a quarter was -2.35% (quarter

ending 6/30/04).

THE OHIO FUND

[GRAPHIC OMITTED: vertical bar chart CALENDAR YEAR TOTAL RETURNS FOR THE

OHIO FUND'S CLASS A SHARES]

CALENDAR YEAR TOTAL RETURNS FOR THE OHIO FUND'S CLASS A SHARES

1995 15.66%

1996 3.66%

1997 8.48%

1998 4.46%

1999 -3.69%

2000 10.24%

2001 4.83%

2002 8.41%

2003 5.27%

2004 3.62%

Year-to-date performance through 6/30/05 was 2.47%. During the periods

shown in the bar chart, the highest return for a quarter was 6.17% (quarter

ending 3/31/95) and the lowest return for a quarter was -2.33% (quarter

ending 6/30/04).

THE PENNSYLVANIA FUND

[GRAPHIC OMITTED: vertical bar chart CALENDAR YEAR TOTAL RETURNS FOR THE

PENNSYLVANIA FUND'S CLASS A SHARES]

CALENDAR YEAR TOTAL RETURNS FOR THE PENNSYLVANIA FUND'S CLASS A SHARES

1995 16.82%

1996 3.70%

1997 8.72%

1998 3.76%

1999 -4.23%

2000 9.82%

2001 5.66%

2002 8.53%

2003 5.04%

2004 4.36%

Year-to-date performance through 6/30/05 was 2.72%. During the periods

shown in the bar chart, the highest return for a quarter was 6.67% (quarter

ending 3/31/95) and the lowest return for a quarter was -2.29% (quarter

ending 6/30/04).

Average Annual Total Returns (for periods ending 12/31/04)

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

Past Past Past

The Arizona Fund 1 year 5 years 10 years

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

Class A before taxes -0.41% 5.51% 5.63%

Class A after taxes on distributions -0.41% 5.51% 5.63%

Class A after taxes on distributions

and sale of fund shares 1.12% 5.39% 5.54%

Class B before taxes -2.14% 5.32% 5.37%

Class M before taxes -0.21% 5.31% 5.38%

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

The Florida Fund

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

Class A before taxes 0.32% 5.65% 5.79%

Class A after taxes on distributions -0.02% 5.57% 5.75%

Class A after taxes on distributions

and sale of fund shares 1.98% 5.50% 5.69%

Class B before taxes -1.35% 5.46% 5.52%

Class M before taxes 0.62% 5.48% 5.53%

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

The Massachusetts Fund

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

Class A before taxes 0.43% 5.86% 6.08%

Class A after taxes on distributions 0.34% 5.83% 6.07%

Class A after taxes on distributions

and sale of fund shares 1.77% 5.70% 5.99%

Class B before taxes -1.40% 5.66% 5.80%

Class C before taxes 2.47% 5.81% 5.64%

Class M before taxes 0.53% 5.61% 5.78%

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

The Michigan Fund

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

Class A before taxes -0.34% 5.30% 5.44%

Class A after taxes on distributions -0.34% 5.30% 5.41%

Class A after taxes on distributions

and sale of fund shares 1.13% 5.21% 5.38%

Class B before taxes -2.20% 5.10% 5.16%

Class M before taxes -0.24% 5.10% 5.17%

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

The Minnesota Fund

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

Class A before taxes -0.12% 5.53% 5.50%

Class A after taxes on distributions -0.12% 5.52% 5.50%

Class A after taxes on distributions

and sale of fund shares 1.31% 5.41% 5.44%

Class B before taxes -1.99% 5.31% 5.21%

Class M before taxes 0.00% 5.31% 5.21%

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

The New Jersey Fund

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

Class A before taxes -0.47% 5.35% 5.58%

Class A after taxes on distributions -0.47% 5.35% 5.57%

Class A after taxes on distributions

and sale of fund shares 0.91% 5.23% 5.50%

Class B before taxes -2.25% 5.12% 5.30%

Class M before taxes -0.27% 5.11% 5.31%

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

The Ohio Fund

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

Class A before taxes -0.34% 5.62% 5.57%

Class A after taxes on distributions -0.35% 5.61% 5.54%

Class A after taxes on distributions

and sale of fund shares 1.04% 5.46% 5.48%

Class B before taxes -2.05% 5.42% 5.30%

Class M before taxes -0.03% 5.44% 5.32%

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

The Pennsylvania Fund

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

Class A before taxes 0.43% 5.85% 5.69%

Class A after taxes on distributions 0.43% 5.84% 5.62%

Class A after taxes on distributions

and sale of fund shares 1.63% 5.71% 5.58%

Class B before taxes -1.33% 5.65% 5.41%

Class M before taxes 0.54% 5.65% 5.42%

Lehman Municipal Bond Index

(no deduction for fees, expenses or

taxes) 4.48% 7.20% 7.06%

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

Unlike the bar chart, this performance information reflects the impact of

sales charges. Class A and class M share performance reflects the current

maximum initial sales charges (which for class A shares reflects a

reduction that took effect after 12/31/04); class B and class C share

performance reflects the maximum applicable deferred sales charge if shares

had been redeemed on 12/31/04 and, for class B shares, does not assume

conversion to class A shares after eight years. For periods before the

inception of class C shares (8/19/03 for the Massachusetts fund) and class

M shares (4/3/95 for the Minnesota and Ohio funds; 4/17/95 for the Michigan

fund; 5/1/95 for the Florida and New Jersey funds; 5/12/95 for the

Massachusetts fund; and 7/3/95 for the Arizona and Pennsylvania funds),

performance shown for these classes in the table is based on the

performance of the fund's class A shares, adjusted to reflect the

appropriate sales charge and the higher 12b-1 fees paid by the class B,

class C and class M shares. For portions of the period, the performance of

each fund except the Massachusetts fund benefited from Putnam Management's

agreement to limit the fund's expenses.

Each fund's performance is compared to the Lehman Municipal Bond Index, an

unmanaged index of long-term fixed-rate investment-grade tax-exempt bonds.

After-tax returns reflect the highest individual federal income tax rates

and do not reflect state and local taxes. Actual after-tax returns depend

on an investor's tax situation and may differ from those shown. After-tax

returns are shown for class A shares only and will vary for other classes.

After-tax returns are not relevant to those investing through 401(k) plans,

IRAs or other tax-deferred arrangements.

FEES AND EXPENSES

This table summarizes the fees and expenses you may pay if you invest in a

fund. Except as noted, expenses are based on each fund's last fiscal year.

Shareholder Fees (fees paid directly from your investment)*

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

Class A Class B Class C Class M

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

Maximum Sales Charge (Load)

Imposed on Purchases (as a

percentage of the offering price) 3.75% NONE NONE 3.25%

Maximum Deferred Sales

Charge (Load) (as a percentage

of the original purchase price or

redemption proceeds, whichever

is lower) NONE** 5.00% 1.00% NONE

Maximum Redemption Fee***

(as a percentage of total

redemption proceeds) 2.00% 2.00% 2.00% 2.00%

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

Annual Fund Operating Expenses+<>

(expenses that are deducted from fund assets)

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

Total Annual Expense

Management Distribution Other Fund Operating Reimburse- Net

Fees (12b-1) Fees Expenses Expenses ment Expenses

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

The Arizona Fund

Class A 0.50% 0.20%++ 0.24% 0.94% (0.11%) 0.83%

Class B 0.50% 0.85% 0.24% 1.59% (0.11%) 1.48%

Class M 0.50% 0.50% 0.24% 1.24% (0.11%) 1.13%

The Florida Fund

Class A 0.50% 0.20%++ 0.19% 0.89% (0.02%) 0.87%

Class B 0.50% 0.85% 0.19% 1.54% (0.02%) 1.52%

Class M 0.50% 0.50% 0.19% 1.19% (0.02%) 1.17%

The Massachusetts Fund

Class A 0.50% 0.20%++ 0.16% 0.86% N/A 0.86%

Class B 0.50% 0.85% 0.16% 1.51% N/A 1.51%

Class C 0.50% 1.00% 0.16% 1.66% N/A 1.66%

Class M 0.50% 0.50% 0.16% 1.16% N/A 1.16%

The Michigan Fund

Class A 0.50% 0.20%++ 0.22% 0.92% (0.01%) 0.91%

Class B 0.50% 0.85% 0.22% 1.57% (0.01%) 1.56%

Class M 0.50% 0.50% 0.22% 1.22% (0.01%) 1.21%

The Minnesota Fund

Class A 0.50% 0.20%++ 0.24% 0.94% (0.04%) 0.90%

Class B 0.50% 0.85% 0.24% 1.59% (0.04%) 1.55%

Class M 0.50% 0.50% 0.24% 1.24% (0.04%) 1.20%

The New Jersey Fund

Class A 0.50% 0.20%++ 0.19% 0.89% (0.01%) 0.88%

Class B 0.50% 0.85% 0.19% 1.54% (0.01%) 1.53%

Class M 0.50% 0.50% 0.19% 1.19% (0.01%) 1.18%

The Ohio Fund

Class A 0.50% 0.20%++ 0.20% 0.90% (0.01%) 0.89%

Class B 0.50% 0.85% 0.20% 1.55% (0.01%) 1.54%

Class M 0.50% 0.50% 0.20% 1.20% (0.01%) 1.19%

The Pennsylvania Fund

Class A 0.50% 0.20%++ 0.21% 0.91% (0.01%) 0.90%

Class B 0.50% 0.85% 0.21% 1.56% (0.01%) 1.55%

Class M 0.50% 0.50% 0.21% 1.21% (0.01%) 1.20%

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

* Certain investments in class A and class M shares may qualify for

discounts on applicable sales charges. See "How do I buy fund shares?" for

details.

** A deferred sales charge of up to 1.00% on class A shares may be imposed on certain

redemptions of shares bought without an initial sales charge.

*** A 2.00% redemption fee (also referred to as a "short-term trading fee") may apply to

any shares that are redeemed (either by selling or exchanging into another fund)

within 5 days of purchase.

+ See the section "Who manages the fund?" for a discussion of regulatory matters and litigation.

++ Represents a blended rate. 12b-1 fees for Class A shares are paid at a rate equal to the

weighted average of (i) 0.20% on the net assets of the fund attributable to Class A shares

purchased and paid for prior to April 1, 2005 and (ii) 0.25% on all other net assets of the

fund attributable to Class A shares.

<> Reflects Putnam Management's agreement, effective January 28, 2004, to waive fees and reimburse

expenses of a fund through May 31, 2006 to the extent necessary to ensure that the fund's

expenses do not exceed the simple average of the expenses of all front-end load funds viewed

by Lipper Inc. as having the same investment classification or objective as the fund. The

expense reimbursement is based on a comparison of a fund's expenses with the average annualized

operating expenses of the funds in its Lipper peer group, as calculated in accordance with

Lipper's standard method for comparing fund expenses, for each calendar quarter during the

fund's last fiscal year, excluding 12b-1 fees and without giving effect to any expense offset

and brokerage service arrangements that may reduce fund expenses.

EXAMPLE

The example translates the expenses shown in the preceding table into

dollar amounts. By doing this, you can more easily compare the cost of

investing in the funds to the cost of investing in other mutual funds. The

example makes certain assumptions. It assumes that you invest $10,000 in

each fund for the time periods shown and then, except as shown for class B

and class C shares, redeem all your shares at the end of those periods. It

also assumes a 5.00% return on your investment each year and that a fund's

operating expenses remain the same. The example is hypothetical; your

actual costs and returns may be higher or lower.

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

1 year 3 years 5 years 10 years

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

The Arizona Fund

Class A $457 $653 $865 $1,477

Class B $651 $791 $1,055 $1,706*

Class B (no redemption) $151 $491 $855 $1,706*

Class M $436 $695 $974 $1,767

The Florida Fund

Class A $460 $646 $ 848 $1,428

Class B $655 $784 $1,038 $1,658*

Class B (no redemption) $155 $484 $838 $1,658*

Class M $440 $689 $956 $1,720

The Massachusetts Fund

Class A $459 $639 $834 $1,396

Class B $654 $777 $1,024 $1,626*

Class B (no redemption) $154 $477 $824 $1,626*

Class C $269 $523 $902 $1,965

Class C (no redemption) $169 $523 $902 $1,965

Class M $439 $682 $943 $1,688

The Michigan Fund

Class A $464 $656 $ 864 $1,463

Class B $659 $795 $1,054 $1,692*

Class B (no redemption) $159 $495 $854 $1,692*

Class M $444 $699 $973 $1,753

The Minnesota Fund

Class A $463 $659 $ 872 $1,483

Class B $658 $798 $1,062 $1,712*

Class B (no redemption) $158 $498 $ 862 $1,712*

Class M $443 $702 $ 980 $1,773

The New Jersey Fund

Class A $461 $647 $ 849 $1,429

Class B $656 $785 $1,038 $1,659*

Class B (no redemption) $156 $485 $838 $1,659*

Class M $441 $690 $957 $1,720

The Ohio Fund

Class A $462 $650 $ 854 $1,440

Class B $657 $789 $1,044 $1,670*

Class B (no redemption) $157 $489 $ 844 $1,670*

Class M $442 $693 $ 962 $1,731

The Pennsylvania Fund

Class A $463 $653 $ 859 $1,452

Class B $658 $792 $1,049 $1,681*

Class B (no redemption) $158 $492 $ 849 $1,681*

Class M $443 $696 $ 967 $1,742

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

* Reflects conversion of class B shares to class A shares, which pay lower

12b-1 fees. Conversion occurs eight years after purchase.

What are each fund's main investment strategies and related risks?

Any investment carries with it some level of risk that generally reflects

its potential for reward. We pursue each fund's goal by investing mainly in

tax-exempt investments. We will consider, among other things, credit,

interest rate and prepayment risks as well as general market conditions

when deciding whether to buy or sell investments. A description of the

risks associated with each fund's main investment strategies follows.

* Tax-exempt investments. These investments are issued by public authorities

to raise money for public purposes, such as loans for the construction

of housing, schools or hospitals, or to provide temporary financing in

anticipation of the receipt of taxes and other revenue. They also

include private activity obligations of public authorities to finance

privately owned or operated facilities. Changes in law or adverse

determinations by the Internal Revenue Service or a state tax authority

could make the income from some of these obligations taxable.

Investments in securities of issuers located outside the applicable

state may be applied toward meeting a requirement to invest in a

tax-exempt investment if the security pays interest that is exempt from

federal income tax and the applicable state's income tax.

Interest income from private activity bonds may be subject to federal AMT

for individuals. As a policy that cannot be changed without the approval

of fund shareholders, we cannot include these investments for the purpose

of complying with the 80% investment policies described in the "Main

Investment Strategies" section. Corporate shareholders will be required to

include all exempt-interest dividends in determining their federal AMT.

For more information, including possible state, local and other taxes,

contact your tax advisor.

* General obligations. These are backed by the issuer's authority to levy

taxes and are considered an obligation of the issuer. They are payable

from the issuer's general unrestricted revenues, although payment may

depend upon government appropriation or aid from other governments.

These investments may be vulnerable to legal limits on a government's

power to raise revenue or increase taxes, as well as economic or other

developments that can reduce revenues.

* Special revenue obligations. These are payable from revenue earned by a

particular project or other revenue source. They include private

activity bonds such as industrial development bonds, which are paid only

from the revenues of the private owners or operators of the facilities.

Investors can look only to the revenue generated by the project or the

private company operating the project rather than the credit of the

state or local government authority issuing the bonds. Special revenue

obligations are typically subject to greater credit risk than general

obligations because of the relatively limited source of revenue.

* Interest rate risk. The values of bonds and other debt instruments usually

rise and fall in response to changes in interest rates. Declining

interest rates generally increase the value of existing debt

instruments, and rising interest rates generally decrease the value of

existing debt instruments. Changes in a debt instrument's value usually

will not affect the amount of interest income paid to the fund, but will

affect the value of the fund's shares. Interest rate risk is generally

greater for investments with longer maturities.

Some investments give the issuer the option to call or redeem an investment

before its maturity date. If an issuer calls or redeems an investment

during a time of declining interest rates, we might have to reinvest the

proceeds in an investment offering a lower yield, and therefore might not

benefit from any increase in value as a result of declining interest rates.

"Premium" investments offer coupon rates higher than prevailing market

rates. However, they involve a greater risk of loss, because their values

tend to decline over time.

* Credit risk. Investors normally expect to be compensated in proportion to

the risk they are assuming. Thus, debt of issuers with poor credit

prospects usually offers higher yields than debt of issuers with more

secure credit. Higher-rated investments generally have lower credit

risk.

We invest mostly in investment-grade debt investments. These are rated at

least BBB or its equivalent at the time of purchase by a nationally

recognized securities rating agency, or are unrated investments we believe

are of comparable quality. We may invest up to 25% of the fund's total

assets in non-investment-grade investments. However, we will not invest in

investments that are rated lower than BB or its equivalent by each agency

rating the investment, or are unrated securities that we believe are of

comparable quality. We will not necessarily sell an investment if its

rating is reduced after we buy it.

Investments rated below BBB or its equivalent are known as "junk bonds."

This rating reflects a greater possibility that the issuers may be unable

to make timely payments of interest and principal and thus default. If this

happens, or is perceived as likely to happen, the values of those

investments will usually be more volatile and are likely to fall. A default

or expected default could also make it difficult for us to sell the

investments at prices approximating the values we had previously placed on

them. Tax-exempt debt, particularly lower-rated tax-exempt debt, usually

has a more limited market than taxable debt, which may at times make it

difficult for us to buy or sell certain debt instruments or to establish

their fair value. Credit risk is generally greater for investments that are

issued at less than their face value and that are required to make

interest payments only at maturity rather than at intervals during the life

of the investment.

We may buy investments that are insured as to the payment of principal and

interest in the event the issuer defaults. Any reduction in the

claims-paying ability of one of the few insurers that provide this

insurance may adversely affect the value of insured investments and,

consequently, the value of the fund's shares.

* Concentration of investments. We may make significant investments in a

segment of the tax-exempt debt market, such as revenue bonds for health

care facilities, housing or airports. These investments may cause the

value of a fund's shares to change more than the values of shares of

funds that invest in a greater variety of investments. Certain events

may adversely affect all investments within a particular market segment.

Examples include legislation or court decisions, concerns about pending

legislation or court decisions, or lower demand for the services or

products provided by a particular market segment.

Investing mostly in tax-exempt investments of a single state makes a fund

more vulnerable to that state's economy and to factors affecting tax exempt

issuers in that state than would be true for a more geographically

diversified fund. These risks include:

* the inability or perceived inability of a government authority to collect

sufficient tax or other revenues to meet its payment obligations,

* the introduction of constitutional or statutory limits on a tax-exempt

issuer's ability to raise revenues or increase taxes, and

* economic or demographic factors that may cause a decrease in tax or other

revenues for a government authority or for private operators of publicly

financed facilities.

In addition, because of the relatively small number of issuers of

tax-exempt securities, we will probably invest a higher percentage of

assets in a single issuer. We may, therefore, be more exposed to the risk

of loss by investing in a few issuers than a fund that invests more

broadly.

At times, the funds and other accounts that we and our affiliates manage

may own all or most of the debt of a particular issuer. This concentration

of ownership may make it more difficult to sell, or to determine the fair

value of, these investments.

* Derivatives. We may engage in a variety of transactions involving

derivatives, such as futures, options, swap contracts and inverse

floaters. Derivatives are financial instruments whose value depends

upon, or is derived from, the value of something else, such as one or

more underlying investments, pools of investments or indexes. We may use

derivatives for both hedging and non-hedging purposes, such as to modify

the behavior of an investment so it responds differently than it would

otherwise to changes in a particular interest rate. For example,

derivatives may increase or decrease an investment's exposure to long-

or short-term interest rates or cause the value of an investment to move

in the opposite direction from prevailing short-term or long-term

interest rates. However, we may also choose not to use derivatives,

based on our evaluation of market conditions or the availability of

suitable derivatives. Investments in derivatives may be applied toward

meeting a requirement to invest in a particular kind of investment if

the derivatives have economic characteristics similar to that

investment.

Derivatives involve special risks and may result in losses. The successful

use of derivatives depends on our ability to manage these sophisticated

instruments. The prices of derivatives may move in unexpected ways due to

the use of leverage or other factors, especially in unusual market

conditions, and may result in increased volatility. The use of derivatives

may also cause the fund to receive taxable income, which could increase the

amount of tax liability for shareholders.

Other risks arise from our potential inability to terminate or sell

derivatives positions. A liquid secondary market may not always exist for

the fund's derivatives positions at any time. In fact, many

over-the-counter instruments (investments not traded on an exchange) will

not be liquid. Over-the-counter instruments also involve the risk that the

other party to the derivative transaction will not meet its obligations.

For further information about the risks of derivatives, see the statement

of additional information (SAI).

* Other investments. In addition to the main investment strategies described

above, we may also make other types of investments, such as investments

in forward commitments, which may produce taxable income and be subject

to other risks, as described in the SAI.

* Alternative strategies. Under normal market conditions, we keep each fund's

portfolio fully invested, with minimal cash holdings. However, at times

we may judge that market conditions make pursuing a fund's usual

investment strategies inconsistent with the best interests of its

shareholders. We then may temporarily use alternative strategies that

are mainly designed to limit losses, including investing in taxable

obligations. However, we may choose not to use these strategies for a

variety of reasons, even in very volatile market conditions. These

strategies may cause a fund to miss out on investment opportunities, and

may prevent a fund from achieving its goal.

* Changes in policies. The Trustees may change a fund's goal, investment

strategies and other policies without shareholder approval, except as

otherwise indicated.

* Portfolio transactions and portfolio turnover rate. Transactions on stock

exchanges, commodities markets and futures markets involve the payment

by each fund of brokerage commissions.

The following table shows the brokerage commissions, if any, that were paid

by each fund during the fiscal year in dollar amounts and as a

percentage of the fund's average net assets.

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

Brokerage

Brokerage commissions

commissions (% of average

Fund ($) net assets)

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

The Arizona Fund -- --

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

The Florida Fund -- --

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

The Massachusetts Fund -- --

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

The Michigan Fund 125 <0.01%

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

The Minnesota Fund 190 <0.01%

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

The New Jersey Fund -- --

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

The Ohio Fund 209 <0.01%

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

The Pennsylvania Fund 229 <0.01%

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

During the 2005 fiscal year, the funds placed no transactions with brokers

who also provided research services for Putnam Management and its

affiliates. Additional information regarding Putnam's brokerage selection

procedures is included in the SAI.

Although brokerage commissions and other portfolio transaction costs are

not reflected in a fund's Total Annual Fund Operating Expenses or Net

Expenses ratio (as shown in the Annual Fund Operating Expenses table in the

section "Fees and expenses"), they are reflected in each fund's total

return. Combining the brokerage commissions (if any) paid by each fund

during the last fiscal year (as a percentage of the fund's average net

assets) with the fund's Total Annual Fund Operating Expenses ratio or Net

Expenses ratio for class A shares results in a "combined cost ratio." The

following table shows the combined cost ratio (as a percentage of each

fund's average net assets) for class A shares for the last fiscal year.

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

Fund Combined Cost Ratio

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

The Arizona Fund 0.83%

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

The Florida Fund 0.87%

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

The Massachusetts Fund 0.86%

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

The Michigan Fund 0.91%

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

The Minnesota Fund 0.90%

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

The New Jersey Fund 0.88%

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

The Ohio Fund 0.89%

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

The Pennsylvania Fund 0.90%

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

Investors should exercise caution in comparing brokerage commissions and

combined cost ratios for different types of funds. For example, while

brokerage commissions represent one component of a fund's transaction

costs, they do not reflect any undisclosed amount of profit or "mark-up"

included in the price paid by the fund for principal transactions

(transactions made directly with a dealer or other counterparty), including

most fixed income securities and certain derivatives. In addition,

brokerage commissions do not reflect other elements of transaction costs,

including the extent to which a fund's purchase and sale transactions may

change the market price for an investment (the "market impact").

Another factor in transaction costs is a fund's portfolio turnover rate,

which measures how frequently the fund buys and sells investments. During

the past five years, each fund's fiscal year portfolio turnover rate and

the average turnover rate for each fund's Lipper category were as follows:

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

Fund 2005 2004 2003 2002 2001

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

The Arizona Fund 18% 6% 37% 21% 24%

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

Lipper Arizona Municipal

Debt Funds average* 18% 18% 30% 29% 37%

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

The Florida Fund 23% 53% 20% 18% 25%

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

Lipper Florida Municipal

Debt Funds average* 28% 28% 34% 32% 30%

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

The Massachusetts Fund 18% 7% 29% 24% 7%

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

Lipper Massachusetts Municipal

Debt Funds average* 21% 21% 28% 24% 28%

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

The Michigan Fund 18% 10% 24% 21% 14%

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

Lipper Michigan Municipal

Debt Funds average* 18% 18% 30% 20% 29%

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

The Minnesota Fund 11% 6% 27% 12% 26%

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

Lipper Minnesota Municipal

Debt Funds average* 18% 18% 26% 23% 18%

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

The New Jersey Fund 19% 13% 26% 12% 13%

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

Lipper New Jersey Municipal

Debt Funds average* 22% 22% 30% 30% 30%

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

The Ohio Fund 12% 17% 26% 17% 12%

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

Lipper Ohio Municipal

Debt Funds average* 22% 22% 32% 25% 24%

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

The Pennsylvania Fund 16% 17% 22% 13% 13%

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

Lipper Pennsylvania Municipal

Debt Funds average* 19% 19% 20% 26% 29%

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

* Average portfolio turnover rate of funds viewed by Lipper Inc. as having

the same investment classification or objective as the fund. The Lipper

category average portfolio turnover rate is calculated using the portfolio

turnover rate for the fiscal year end of each fund in the Lipper category.

Fiscal years may vary across funds in the Lipper category, which may limit

the comparability of the fund's portfolio turnover rate to the Lipper

average. Comparative data for the last fiscal year is based on information

available as of June 30, 2005.

Both a fund's portfolio turnover rate and the amount of brokerage

commissions it pays will vary over time based on market conditions. High

turnover may lead to increased costs and shareholder taxes and decreased

performance.

Putnam Management is not permitted to consider sales of shares of

the funds (or of the other Putnam funds) as a factor in the selection of

broker-dealers to execute portfolio transactions for the funds.

* Portfolio holdings. The SAI includes a description of each fund's policies

with respect to the disclosure of its portfolio holdings. For information on

a fund's portfolio, you may visit the Putnam Investments Web site,

www.putnam.com/individual, where each fund's top 10 holdings and related

portfolio information may be viewed monthly beginning approximately 15 days

after the end of each month, and full portfolio holdings may be viewed

beginning on the last business day of the month after the end of each

calendar quarter. This information will remain available on the Web site

until a fund files a Form N-CSR or N-Q with the Securities and Exchange

Commission (SEC) for the period that includes the date of the information.

Who manages the funds?

Each fund's Trustees oversee the general conduct of the fund's business.

The Trustees have retained Putnam Management to be each fund's investment

manager, responsible for making investment decisions for the fund and

managing the fund's other affairs and business. Each fund pays Putnam

Management a quarterly management fee for these services based on each

fund's average net assets. Putnam Management's address is One Post Office

Square, Boston, MA 02109.

Each fund paid Putnam Management management fees in the following amounts

(reflected as a percentage of average net assets for each fund's last

fiscal year after giving effect to applicable waivers):

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

Fund Management Fees

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

The Arizona Fund 0.39%

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

The Florida Fund 0.48%

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

The Massachusetts Fund 0.50%

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

The Michigan Fund 0.49%

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

The Minnesota Fund 0.46%

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

The New Jersey Fund 0.49%

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

The Ohio Fund 0.49%

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

The Pennsylvania Fund 0.49%

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

* Investment management teams. Putnam Management's investment

professionals are organized into investment management teams, with

a particular team dedicated to a specific asset class. The members

of the Tax Exempt Fixed-Income Team manage each fund's

investments. The names of all team members can be found at

www.putnam.com.

The team members identified as each fund's Portfolio Leader and Portfolio

Members coordinate the team's efforts related to the fund and are primarily

responsible for the day-to-day management of the fund's portfolio. In

addition to these individuals, the team also includes other investment

professionals, whose analysis, recommendations and research inform

investment decisions made for the fund.

Joined Positions Over

Portfolio Leader Fund Employer Past Five Years

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

David Hamlin 2002 Putnam Management Team Leader, Tax Exempt

1998 - Present Fixed Income Team

Previously, Director, Tax Exempt

Investment Grade Team

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

Joined Positions Over

Portfolio Members Fund Employer Past Five Years

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

Paul Drury 2002 Putnam Management Tax Exempt Specialist

1989 - Present Previously, Portfolio Manager;

Senior Trader

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

Susan McCormack 2002* Putnam Management Tax Exempt Specialist

1994 - Present Previously, Portfolio Manager

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

James St. John 2003 Putnam Management Portfolio Construction Specialist

1998 - Present Previously, Quantitative Analyst

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

* Joined the Florida and Massachusetts funds in 2002 and joined the

Arizona, Michigan, Minnesota, New Jersey, Ohio and Pennsylvania funds in

1999.

* Other Putnam funds managed by the Portfolio Leader and Portfolio Members.

David Hamlin is also the Portfolio Leader and Paul Drury, Susan McCormack,

and James St. John are also Portfolio Members for Putnam's California and

New York state tax-exempt funds. The same group also manages Putnam AMT-Free

Insured Municipal Fund, Putnam California Investment Grade Municipal Trust,

Putnam High Yield Municipal Trust, Putnam Investment Grade Municipal Trust,

Putnam Managed Municipal Income Trust, Putnam Municipal Bond Fund, Putnam

Municipal Opportunities Trust, Putnam New York Investment Grade Municipal

Trust, Putnam Tax Exempt Income Fund, Putnam Tax-Free Health Care Fund, and

Putnam Tax-Free High Yield Fund. David Hamlin, Paul Drury, Susan McCormack,

and James St. John may also manage other accounts and variable trust funds

advised by Putnam Management or an affiliate. The SAI provides additional

information about other accounts managed by these individuals.

Other individuals who have served as Portfolio Leader of a Fund since May

2002, when Putnam Management introduced this designation, include Paul

Drury (November 2002 to September 2003) and Susan McCormack (May 2002 to

October 2002) for the Arizona and Minnesota funds; Richard Wyke (May 2002

to July 2002) for the Florida fund; Richard Wyke (May 2002 to September

2003) for the Massachusetts fund; and Susan McCormack (May 2002 to

September 2003) for the Michigan, New Jersey, Ohio and Pennsylvania funds.

* Changes in your fund's Portfolio Leader and Portfolio Members. During the

year ended May 31, 2005, Portfolio Member Richard Wyke left your fund's

management team.

* Fund ownership. The table below shows the dollar ranges of shares of the

funds owned by the professionals listed above at the end of the funds'

last two fiscal years, including investments by their immediate family

members and amounts invested through retirement and deferred compensation

plans.

Fund Portfolio Leader and Portfolio Members

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

$1 - $10,001 - $50,001- $100,001 - $500,001 - $1,000,001

Year $0 $10,000 $50,000 $100,000 $500,000 $1,000,000 and over

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

David Hamlin 2005 *

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

Portfolio Leader 2004 *

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

Paul Drury 2005 *

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

Portfolio Member 2004 *

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

Susan McCormack 2005 *

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

Portfolio Member 2004 *

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

James St. John 2005 *

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

Portfolio Member 2004 *

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

* Investment in the funds by Putnam employees and the Trustees. As of

May 31, 2005, all of the 12 Trustees of the Putnam funds owned fund shares.

The following table shows the approximate value of investments in the

funds and all Putnam funds as of that date by Putnam employees and the

fund's Trustees, including in each case investments by their immediate

family members and amounts invested through retirement and deferred

compensation plans.

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

Fund Putnam employees Trustees

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

The Arizona Fund $21,000 $28,000

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

The Florida Fund $27,000 $28,000

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

The Massachusetts Fund $3,200,000 $199,000

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

The Michigan Fund $20,000 $34,000

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

The Minnesota Fund $21,000 $34,000

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

The New Jersey Fund $68,000 $28,000

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

The Ohio Fund $21,000 $35,000

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

The Pennsylvania Fund $27,000 $34,000

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

All Putnam funds $456,000,000 $56,000,000

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

The following table shows how much the members of Putnam's Executive Board

have invested in the Massachusetts fund (in dollar ranges). Information

shown is as of May 31, 2005 and May 31, 2004.

Putnam Executive Board

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

$1 - $10,001 - $50,001- $100,001

Year $0 $10,000 $50,000 $100,000 and over

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

Philippe Bibi 2005 *

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

Chief Technology Officer 2004 *

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

Joshua Brooks 2005 *

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

Deputy Head of Investments N/A

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

William Connolly N/A

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

Head of Retail Management N/A

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

Kevin Cronin 2005 *

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

Head of Investments 2004 *

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

Charles Haldeman, Jr. 2005 *

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

President and CEO 2004 *

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

Amrit Kanwal 2005 *

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

Chief Financial Officer 2004 *

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

Steven Krichmar 2005 *

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

Chief of Operations 2004 *

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

Francis McNamara, III 2005 *

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

General Counsel 2004 *

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

Richard Robie, III 2005 *

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

Chief Administrative Officer 2004 *

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

Edward Shadek 2005 *

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

Deputy Head of Investments N/A

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

Sandra Whiston N/A

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

Head of Institutional Management N/A

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

N/A indicates the individual joined Putnam's Executive Board after the

reporting date.

The following table shows how much the members of Putnam's Executive Board

have invested in each of the Arizona, Florida, Michigan, Minnesota, New

Jersey, Ohio and Pennsylvania funds (in dollar ranges). Information shown

is as of May 31, 2005 and May 31, 2004.

Putnam Executive Board

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

$1 - $10,001 - $50,001- $100,001

Year $0 $10,000 $50,000 $100,000 and over

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

Philippe Bibi 2005 *

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

Chief Technology Officer 2004 *

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

Joshua Brooks 2005 *

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

Deputy Head of Investments N/A

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

William Connolly N/A

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

Head of Retail Management N/A

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

Kevin Cronin 2005 *

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

Head of Investments 2004 *

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

Charles Haldeman, Jr. 2005 *

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

President and CEO 2004 *

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

Amrit Kanwal 2005 *

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

Chief Financial Officer 2004 *

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

Steven Krichmar 2005 *

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

Chief of Operations 2004 *

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

Francis McNamara, III 2005 *

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

General Counsel 2004 *

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

Richard Robie, III 2005 *

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

Chief Administrative Officer 2004 *

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

Edward Shadek 2005 *

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

Deputy Head of Investments N/A

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

Sandra Whiston N/A

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

Head of Institutional Management N/A

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

* Compensation of investment professionals. Putnam Management believes that

its investment management teams should be compensated primarily based on

their success in helping investors achieve their goals. The portion of

Putnam Investments' total incentive compensation pool that is available

to Putnam Management's Investment Division is based primarily on its

delivery, across all of the portfolios it manages, of consistent,

dependable and superior performance over time. Each fund uses its

respective state's Lipper Municipal Debt Funds category average, which

is its broad investment category as determined by Lipper Inc., as its

peer group. The portion of the incentive compensation pool available to

your investment management team varies based primarily on its delivery,

across all of the portfolios it manages, of consistent, dependable and

superior performance over time on a tax-adjusted basis to recognize the

different federal income tax treatment for capital gains distributions

and exempt-interest distributions.

* Consistent performance means being above median over one year.

* Dependable performance means not being in the 4th quartile of the peer

group over one, three or five years.

* Superior performance (which is the largest component of Putnam Management's

incentive compensation program) means being in the top third of the peer

group over three and five years.

In determining an investment management team's portion of the incentive

compensation pool and allocating that portion to individual team members,

Putnam Management retains discretion to reward or penalize teams or

individuals, including the fund's Portfolio Leader and Portfolio Members,

as it deems appropriate, based on other factors. The size of the overall

incentive compensation pool each year is determined by Putnam Management's

parent company, Marsh & McLennan Companies, Inc., and depends in large part

on Putnam's profitability for the year, which is influenced by assets under

management. Incentive compensation is generally paid as cash bonuses, but a

portion of incentive compensation may instead be paid as grants of

restricted stock, options or other forms of compensation, based on the

factors described above. In addition to incentive compensation, investment

team members receive annual salaries that are typically based on seniority

and experience. Incentive compensation generally represents at least 70% of

the total compensation paid to investment team members.

* Regulatory matters and litigation. Putnam Management has entered into

agreements with the Securities and Exchange Commission and the

Massachusetts Securities Division settling charges connected with

excessive short-term trading by Putnam employees and, in the case of the

charges brought by the Massachusetts Securities Division, by

participants in some Putnam-administered 401(k) plans. Pursuant to these

settlement agreements, Putnam Management will pay a total of $193.5

million in penalties and restitution, with $153.5 million being paid to

shareholders and the funds. The restitution amount will be allocated to

shareholders pursuant to a plan developed by an independent consultant,

with payments to shareholders following approval of the plan by the SEC

and the Massachusetts Securities Division.

The SEC's and Massachusetts Securities Division's allegations and related

matters also serve as the general basis for numerous lawsuits, including

purported class action lawsuits filed against Putnam Management and certain

related parties, including certain Putnam funds. Putnam Management will

bear any costs incurred by Putnam funds in connection with these lawsuits.

Putnam Management believes that the likelihood that the pending private

lawsuits and purported class action lawsuits will have a material adverse

financial impact on the funds is remote, and the pending actions are not

likely to materially affect its ability to provide investment management

services to its clients, including the Putnam funds.

How does a fund price its shares?

The price of a fund's shares is based on its net asset value (NAV). The NAV

per share of each class equals the total value of its assets, less its

liabilities, divided by the number of its outstanding shares. Shares are

only valued as of the close of regular trading on the New York Stock

Exchange (NYSE) each day the exchange is open.

Each fund values its investments for which market quotations are readily

available at market value. It values short-term investments that will

mature within 60 days at amortized cost, which approximates market value.

It values all other investments and assets at their fair value. The fair

value determined for an investment may differ from recent market prices for

the investment.

Each fund's tax-exempt investments are generally valued at fair value on

the basis of valuations provided by an independent pricing service approved

by the fund's Trustees. Such services determine valuations for normal

institutional-size trading units of such securities using information with

respect to transactions in the bond being valued, quotations from bond

dealers, market transactions in comparable securities and various

relationships, generally recognized by institutional traders, between

securities in determining value.

How do I buy fund shares?

You can open a fund account with as little as $500 and make additional

investments at any time with as little as $50 ($25 through systematic

investing). Each fund sells its shares at the offering price, which is the

NAV plus any applicable sales charge. Your financial advisor or Putnam

Investor Services generally must receive your completed buy order before

the close of regular trading on the NYSE for your shares to be bought at

that day's offering price.

You can buy shares:

* Through a financial advisor. Your advisor will be responsible for

furnishing all necessary documents to Putnam Investor Services, and

may charge you for his or her services.

* Through systematic investing. You can make regular investments of

$25 or more weekly, semi-monthly or monthly through automatic

deductions from your bank checking or savings account. Application forms

are available through your advisor or Putnam Investor Services at

1-800-225-1581.

* Subsequent investments via the Internet. If you have an existing Putnam

fund account and you have completed and returned an Electronic

Investment Authorization Form, you can buy additional shares online at

www.putnam.com. For more information, contact your advisor or Putnam

Investor Services at 1-800-225-1581.

You may also complete an order form and write a check for the amount you

wish to invest, payable to the appropriate fund. Return the check and

completed form to Putnam Investor Services.

Mutual funds must obtain and verify information that identifies investors

opening new accounts. If the fund is unable to collect the required

information, Putnam Investor Services may not be able to open your fund

account. Investors must provide their full name, residential or business

address, Social Security or tax identification number, and date of birth.

Entities, such as trusts, estates, corporations and partnerships, must also

provide other identifying information. Putnam Investor Services may share

identifying information with third parties for the purpose of verification.

If Putnam Investor Services cannot verify identifying information after

opening your account, the fund reserves the right to close your account.

A fund may periodically close to new purchases of shares or refuse any

order to buy shares if the fund determines that doing so would be in the

best interests of the fund and its shareholders.

WHICH CLASS OF SHARES IS BEST FOR ME?

This prospectus offers you a choice of three classes of fund shares: A, B

and M. In addition, this prospectus offers a fourth class of shares, class

C shares, for the Massachusetts fund. This allows you to choose among

different types of sales charges and different levels of ongoing operating

expenses, as illustrated in the "Fees and expenses" section. The class of

shares that is best for you depends on a number of factors, including the

amount you plan to invest and how long you plan to hold the shares. Please

consult your financial advisor as to which share class is most appropriate

for you. Here is a summary of the differences among the classes of shares:

Class A shares

* Initial sales charge of up to 3.75%

* Lower sales charges available for investments of $100,000 or more

* No deferred sales charge (except on certain redemptions of shares bought

without an initial sales charge)

* Lower annual expenses, and higher dividends, than class B, C or M shares

because of lower 12b-1 fees

Class B shares

* No initial sales charge; your entire investment goes to work immediately

* Deferred sales charge of up to 5.00% if shares are sold within six years

of purchase

* Higher annual expenses, and lower dividends, than class A or M shares

because of higher 12b-1 fees

* Convert automatically to class A shares after eight years, thereby reducing

the future 12b-1 fees

* Orders for class B shares of one or more Putnam funds will be refused when

the total value of the purchase, plus existing account balances that are

eligible to be linked under a right of accumulation for purchases of

class A shares (as described below), is $100,000 or more. Investors

considering cumulative purchases of $100,000 or more should consider

whether class A shares would be more advantageous and consult their

financial advisor.

Class C shares (available for the Massachusetts fund only)

* No initial sales charge; your entire investment goes to work immediately

* Deferred sales charge of 1.00% if shares are sold within one year of purchase

* Higher annual expenses, and lower dividends, than class A, B or M shares

because of higher 12b-1 fees

* No conversion to class A shares, so future 12b-1 fees do not decline over

time

* Orders for class C shares of one or more Putnam funds will be refused when

the total value of the purchase, plus existing account balances that are

eligible to be linked under a right of accumulation for purchases of

class A shares (as described below), is $1,000,000 or more. Investors

considering cumulative purchases of $1,000,000 or more should consider

whether class A shares would be more advantageous and consult their

financial advisor.

Class M shares

* Initial sales charge of up to 3.25%

* Lower sales charges available for investments of $50,000 or more

* No deferred sales charge

* Lower annual expenses, and higher dividends, than class B or C shares

because of lower 12b-1 fees

* Higher annual expenses, and lower dividends, than class A shares because

of higher 12b-1 fees

* No conversion to class A shares, so future 12b-1 fees do not decline over

time

* Orders for class M shares of one or more Putnam funds, other than class M

shares sold to qualified employee-benefit plans, will be refused when

the total value of the purchase, plus existing account balances that are

eligible to be linked under a right of accumulation for purchases of

class M shares (as described below), is $1,000,000 or more. Investors

considering cumulative purchases of $1,000,000 or more should consider

whether class A shares would be more advantageous and consult their

financial advisor.

Initial sales charges for class A and M shares

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

Class A sales charge Class M sales charge

as a percentage of*: as a percentage of*:

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

Amount of purchase Net amount Offering Net amount Offering

at offering price ($) invested price** invested price**

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

Under 50,000 3.90% 3.75% 3.36% 3.25%

50,000 but under 100,000 3.90 3.75 2.30 2.25

100,000 but under 250,000 3.09 3.00 1.27 1.25

250,000 but under 500,000 2.30 2.25 1.01 1.00

500,000 but under 1,000,000 2.04 2.00 1.01 1.00

1,000,000 and above NONE NONE NONE NONE

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

* Because of rounding in the calculation of offering price and the number

of shares purchased, actual sales charges you pay may be more or less than

these percentages.

** Offering price includes sales charge.

Each fund offers two principal ways for you to qualify for discounts on

initial sales charges on class A and class M shares, often referred to as

"breakpoint discounts:"

* Right of accumulation. You can add the amount of your current purchases

of class A or class M shares of a fund and other Putnam funds to the

value of your existing accounts in the fund and other Putnam funds.

Individuals can also include purchases by, and accounts owned by, their

spouse and minor children, including accounts established through

different financial advisors. For your current purchases, you will pay

the initial sales charge applicable to the total value of the linked

accounts and purchases, which may be lower than the sales charge

otherwise applicable to each of your current purchases. Shares of Putnam

money market funds, other than money market fund shares acquired by

exchange from other Putnam funds, are not included for purposes of the

right of accumulation.

To calculate the total value of your existing accounts and any linked

accounts, the fund will use the current maximum public offering price of

those shares.

* Statement of intention. A statement of intention is a document in which

you agree to make purchases of class A or class M shares in a specified

amount within a period of 13 months. For each purchase you make under

the statement of intention you will pay the initial sales charge

applicable to the total amount you have agreed to purchase. While a

statement of intention is not a binding obligation on you, if you do not

purchase the full amount of shares within 13 months, the fund will

redeem shares from your account in an amount equal to the higher initial

sales charge you would have paid in the absence of the statement of

intention.

Account types that may be linked with each other to obtain breakpoint

discounts using the methods described above include:

* Individual accounts

* Joint accounts

* Accounts established as part of a retirement plan and IRA accounts

(some restrictions may apply)

* Shares of Putnam funds owned through accounts in the name of your dealer

or other financial intermediary (with documentation identifying

beneficial ownership of shares)

* Accounts held as part of a Section 529 college savings plan managed by

Putnam Management (some restrictions may apply)

In order to obtain a breakpoint discount, you should inform your financial

advisor at the time you purchase shares of the existence of other accounts

or purchases that are eligible to be linked for the purpose of calculating

the initial sales charge. The fund or your financial advisor may ask you

for records or other information about other shares held in your accounts

and linked accounts, including accounts opened with a different financial

advisor. Restrictions may apply to certain accounts and transactions.

Further details about breakpoint discounts can be found on Putnam

Management's Web site at www.putnam.com/individual by selecting "Mutual

Funds," and in the SAI.

Deferred sales charges for class B, class C and certain

class A shares

If you sell (redeem) class B shares within six years of purchase, you will

generally pay a deferred sales charge according to the following schedule.

Year after purchase 1 2 3 4 5 6 7+

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

Charge 5% 4% 3% 3% 2% 1% 0%

A deferred sales charge of 1.00% will apply to class C shares (available

for the Massachusetts fund only) if redeemed within one year of purchase.

Unless otherwise agreed with Putnam Retail Management, class A shares that

are part of a purchase of $1 million or more (other than by a qualified

retirement plan) will be subject to a 1.00% deferred sales charge if

redeemed within one year of purchase and a 0.50% deferred sales charge if

redeemed in the second year after purchase.

Deferred sales charges will be based on the lower of the shares' cost

and current NAV. Shares not subject to any charge will be redeemed

first, followed by shares held longest. You may sell shares acquired by

reinvestment of distributions without a charge at any time.

* You may be eligible for reductions and waivers of sales charges.

In addition to the breakpoint discount methods described above, sales

charges may be reduced or waived under certain circumstances and for

certain groups. Information about reductions and waivers of sales charges,

including deferred sales charges, is included in the SAI. You may consult

your financial advisor or Putnam Retail Management for assistance.

* Distribution (12b-1) plans. Each fund has adopted distribution plans to pay

for the marketing of fund shares and for services provided to

shareholders. The plans provide for payments at annual rates (based on

average net assets) of up to 0.35% on class A shares and 1.00% on class

B, class C and class M shares. The Trustees currently limit payments on class

A, class B and class M shares to 0.25%, 0.85% and 0.50% of average net

assets, respectively. For class A shares, the annual payment rate will

equal the weighted average of (i) 0.20% on the net assets of the fund

attributable to Class A shares purchased and paid for prior to April 1,

2005 and (ii) 0.25% on all other net assets of the fund attributable to

Class A shares. Because these fees are paid out of a fund's assets on an

ongoing basis, they will increase the cost of your investment. The higher

fees for class B, class C and class M shares may cost you more than paying

the initial sales charge for class A shares. Because class C and class M

shares, unlike class B shares, do not convert to class A shares, class C

and class M shares may cost you more over time than class B shares.

* Payments to dealers. If you purchase your shares through a dealer (the term

"dealer" includes any broker, dealer, bank, bank trust department,

registered investment advisor, financial planner, retirement plan

administrator and any other institution having a selling, services or

any similar agreement with Putnam Retail Management or one of its

affiliates), your dealer generally receives payments from Putnam Retail

Management representing some or all of the sales charges and

distribution (12b-1) fees shown in the tables under the heading "Fees

and Expenses" at the front of this prospectus.

Putnam Retail Management and its affiliates also pay additional

compensation to selected dealers in recognition of their marketing support

and/or program servicing (each of which is described in more detail below).

These payments may create an incentive for a dealer firm or its

representatives to recommend or offer shares of the fund or other Putnam

funds to its customers. These additional payments are made by Putnam Retail

Management and its affiliates and do not increase the amount paid by you or

the fund as shown under the heading "Fees and Expenses."

The additional payments to dealers by Putnam Retail Management and its

affiliates are generally based on one or more of the following factors:

average net assets of a fund attributable to that dealer, sales of a fund

attributable to that dealer, or reimbursement of ticket charges (fees that

a dealer firm charges its representatives for effecting transactions in

fund shares), or on the basis of a negotiated lump sum payment for services

provided.

Marketing support payments, which are generally available to most dealers

engaging in significant sales of Putnam fund shares, are not expected, with

certain limited exceptions, to exceed 0.085% of the average net assets of

Putnam's retail mutual funds attributable to that dealer on an annual

basis.

Program servicing payments, which are paid in some instances to third

parties in connection with investments in the fund by retirement plans and

other investment programs, are not expected, with certain limited

exceptions, to exceed 0.15% of the total assets in the program on an annual

basis.

Putnam Retail Management and its affiliates may make other payments or

allow other promotional incentives to dealers to the extent permitted by

SEC and NASD rules and by other applicable laws and regulations. Certain

dealers also receive payments in recognition of subaccounting or other

services they provide to shareholders or plan participants who invest in

the fund or other Putnam funds through their retirement plan. See the

discussion in the SAI under the heading "Management -- Investor Servicing

Agent and Custodian" for more details.

You can find more details in the SAI about the payments made by Putnam

Retail Management and its affiliates and the services provided by your

dealer. Your dealer may charge you fees or commissions in addition to those

disclosed in this prospectus. You can also ask your dealer about any

payments it receives from Putnam Retail Management and its affiliates and

any services your dealer provides, as well as about fees and/or

commissions it charges.

How do I sell fund shares?

You can sell your shares back to the appropriate fund any day the NYSE is

open, either through your financial advisor or directly to the fund.

Payment for redemption may be delayed until the fund collects the purchase

price of shares, which may be up to 10 calendar days after the purchase

date.

Each fund will impose a short-term trading fee of 2.00% of the total

redemption amount (calculated at market value) if you sell or exchange your

shares after holding them for 5 days or less (including if you purchased

the shares by exchange). The short-term trading fee is paid directly to the

fund and is designed to offset brokerage commissions, market impact and

other costs associated with short-term trading. The short-term trading fee

will not apply in certain circumstances, such as redemptions in the event

of shareholder death or post-purchase disability, redemptions from accounts

established as part of a Section 529 college savings plan, redemptions from

certain omnibus accounts, redemptions made as part of a systematic

withdrawal plan, and redemptions in connection with periodic portfolio

rebalancings of certain wrap accounts or automatic rebalancing

arrangements. In addition, for investors in defined contribution plans

administered by Putnam or a Putnam affiliate, the short-term trading fee

will not apply to redemptions to pay distributions or loans from such

plans, redemptions of shares purchased directly with contributions by a

plan participant or sponsor and redemptions of shares purchased in

connection with loan repayments. These exceptions may also apply to defined

contribution plans administered by third parties that assess the fund's

short-term trading fee. For purposes of determining whether the short-term

trading fee applies, the shares that were held the longest will be redeemed

first. Some financial intermediaries, retirement plan sponsors or

recordkeepers that hold omnibus accounts with the fund are currently unable

or unwilling to assess the fund's short-term trading fee. Some of these

firms use different systems or criteria to assess fees that are currently

higher than, and in some cases in addition to, the fund's short-term trading

fee.

* Selling shares through your financial advisor. Your advisor must receive

your request in proper form before the close of regular trading on the

NYSE for you to receive that day's NAV, less any applicable deferred

sales charge and short-term trading fee. Your advisor will be

responsible for furnishing all necessary documents to Putnam Investor

Services on a timely basis and may charge you for his or her services.

* Selling shares directly to the fund. Putnam Investor Services must receive

your request in proper form before the close of regular trading on the

NYSE in order to receive that day's NAV, less any applicable sales

charge and short-term trading fee.

By mail. Send a letter of instruction signed by all registered owners or

their legal representatives to Putnam Investor Services. If you have

certificates for the shares you want to sell, you must include them along

with completed stock power forms.

By telephone. You may use Putnam's telephone redemption privilege to redeem

shares valued at less than $100,000 unless you have notified Putnam

Investor Services of an address change within the preceding 15 days, in

which case other requirements may apply. Unless you indicate otherwise on

the account application, Putnam Investor Services will be authorized to

accept redemption instructions received by telephone.

The telephone redemption privilege is not available if there are

certificates for your shares. The telephone redemption privilege may be

modified or terminated without notice.

* Additional requirements. In certain situations, for example, if you sell

shares with a value of $100,000 or more, the signatures of all

registered owners or their legal representatives must be guaranteed by a

bank, broker-dealer or certain other financial institutions. In

addition, Putnam Investor Services usually requires additional documents

for the sale of shares by a corporation, partnership, agent or

fiduciary, or surviving joint owner. For more information concerning

Putnam's signature guarantee and documentation requirements, contact

Putnam Investor Services.

* Payment information. A fund generally sends you payment for your shares the

business day after your request is received. Under unusual

circumstances, the fund may suspend redemptions, or postpone payment for

more than seven days, as permitted by federal securities law.

* Redemption by the fund. If you own fewer shares than the minimum set by

the Trustees (presently 20 shares), a fund may redeem your shares

without your permission and send you the proceeds. To the extent

permitted by applicable law, a fund may also redeem shares if you own

more than a maximum amount set by the Trustees. There is presently no

maximum, but the Trustees could set a maximum that would apply to both

present and future shareholders.

How do I exchange fund shares?

If you want to switch your investment from one Putnam fund to another, you

can exchange your fund shares for shares of the same class of another

Putnam fund at NAV. Not all Putnam funds offer all classes of shares or are

open to new investors. If you exchange shares subject to a deferred sales

charge, the transaction will not be subject to the deferred sales charge.

When you redeem the shares acquired through the exchange, the redemption

may be subject to the deferred sales charge, depending upon when you

originally purchased the shares. The deferred sales charge will be computed

using the schedule of any fund into or from which you have exchanged your

shares that would result in your paying the highest deferred sales charge

applicable to your class of shares. For purposes of computing the deferred

sales charge, the length of time you have owned your shares will be

measured from the date of original purchase and will not be affected by any

subsequent exchanges among funds.

To exchange your shares, complete and return an Exchange Authorization

Form, which is available from Putnam Investor Services. A telephone

exchange privilege is currently available for amounts up to $500,000.

The telephone exchange privilege is not available if the fund issued

certificates for your shares. You may also exchange shares via the Internet

at www.putnam.com. Ask your financial advisor or Putnam Investor Services

for prospectuses of other Putnam funds. Some Putnam funds

are not available in all states.

The exchange privilege is not intended as a vehicle for short-term trading.

In order to discourage excessive exchange activity and otherwise to promote

the best interests of a fund, the fund will impose a short-term trading fee

of 2.00% of the total exchange amount (calculated at market value) on

exchanges of shares held for 5 days or less (including shares purchased by

exchange). In the case of defined contribution plans administered by Putnam

or a Putnam affiliate, the 2.00% short-term trading fee will apply to

exchanges of shares purchased by exchange that are held in a plan

participant's account for 5 days or less. The short-term trading fee will

not apply in certain circumstances, such as exchanges in connection with

periodic portfolio rebalancings of certain wrap accounts or automatic

rebalancing arrangements. Some financial intermediaries, retirement plan

sponsors or recordkeepers that hold omnibus accounts with the fund are

currently unable or unwilling to assess the fund's short-term trading fee.

Some of these firms use different systems or criteria to assess fees that

are currently higher than, and in some cases in addition to, the fund's

short-term trading fee.

The fund also reserves the right to revise or terminate the exchange

privilege, limit the amount or number of exchanges or reject any exchange.

The fund into which you would like to exchange may also reject your

exchange. These actions may apply to all shareholders or only to those

shareholders whose exchanges Putnam Management determines are likely to

have a negative effect on the fund or other Putnam funds. Consult Putnam

Investor Services before requesting an exchange.

Policy on excessive short-term trading

* Risks of excessive short-term trading. Excessive short-term trading

activity may reduce a fund's performance and harm all fund shareholders

by interfering with portfolio management, increasing the fund's expenses

and diluting the fund's net asset value. Depending on the size and

frequency of short-term trades in a fund's shares, the fund may

experience increased cash volatility, which could require the fund to

maintain undesirably large cash positions or buy or sell portfolio

securities it would not have bought or sold. The need to execute

additional portfolio transactions due to these cash flows may also

increase the fund's brokerage and administrative costs and taxable

distributions to shareholders.

Because the funds invest in securities that may trade infrequently or may

be more difficult to value, such as lower-rated bonds, they may be

susceptible to trading by short-term traders who seek to exploit perceived

price inefficiencies in a fund's investments. In addition, the market for

lower-rated bonds may at times show "market momentum," in which positive or

negative performance may continue from one day to the next for reasons

unrelated to the fundamentals of the issuer. Short-term traders may seek to

capture this momentum by trading frequently in a fund's shares, which may

reduce the fund's performance and dilute the interests of other

shareholders. Because lower-rated debt may be less liquid than higher-rated

debt, a fund may also be unable to buy or sell these securities at

desirable prices when the need arises (for example, in response to volatile

cash flows caused by short-term trading). Similar risks may apply if the

fund holds other types of less liquid securities, such as stock of smaller

issuers.

* Fund policies. In order to protect the interests of long-term shareholders

of each fund, Putnam Management and each fund's Trustees have adopted

policies and procedures intended to discourage excessive short-term

trading. Each fund seeks to discourage excessive short-term trading by

imposing short-term trading fees and using fair value pricing procedures

to value investments under some circumstances. In addition, Putnam

Management monitors activity in shareholder accounts about which it

possesses the necessary information in order to detect excessive

short-term trading patterns and takes steps to deter excessive

short-term traders.

Putnam Management's Compliance Department currently uses multiple reporting

tools to monitor activity in retail customer accounts for which Putnam

Investor Services maintains records. This review is based on each fund's

internal parameters for detecting excessive short-term trading, which

consider the number of "round trip" transactions above a specified dollar

amount within a specified period of time. These parameters may change from

time to time. If a monitored account engages in short-term trading that

Putnam Management or each fund considers to be excessive or inappropriate,

Putnam Management will issue the investor and the financial intermediary

involved in the activity, if any, a written warning. Continued excessive

short-term trading activity by an investor or intermediary that has

received a warning may lead to the termination of the exchange privilege.

Each fund also reserves the right to terminate the exchange privilege

without a warning. In addition, Putnam Management will also communicate

instances of excessive short-term trading to the compliance staff of an

investor's broker, if one is identified.

In addition to enforcing these exchange parameters, Putnam Management and

each fund reserve the right to reject or restrict purchases or exchanges

for any reason. Putnam Management or a fund may determine that an

investor's trading activity is excessive or otherwise potentially harmful

based on various factors, including an investor's or financial

intermediary's trading history in each fund, other Putnam funds or other

investment products, and may aggregate activity in multiple accounts under

common ownership or control. If a fund identifies an investor or

intermediary as a potential excessive trader, it may, among other things,

require further trades to be submitted by mail rather than by phone or over

the Internet, impose limitations on the amount, number, or frequency of

future purchases or exchanges, or temporarily or permanently bar the

investor or intermediary from investing in each fund or other Putnam funds.

Each fund may take these steps in its discretion even if the investor's

activity may not have been detected by the fund's current monitoring

parameters.

* Limitations on each fund's policies. There is no guarantee that a fund

will be able to detect excessive short-term trading in all accounts. For

example, Putnam Management currently does not have access to sufficient

information to identify each investor's trading history, and in certain

circumstances there are operational or technological constraints on its

ability to enforce the fund's policies. In addition, even when Putnam

Management has sufficient information, its detection methods may not

capture all excessive short-term trading.

In particular, many purchase, redemption and exchange orders are received

from financial intermediaries that hold omnibus accounts with each fund.

Omnibus accounts, in which shares are held in the name of an intermediary

on behalf of multiple beneficial owners, are a common form of holding

shares among retirement plans and financial intermediaries such as brokers,

advisers and third-party administrators. A fund is generally not able to

identify trading by a particular beneficial owner within an omnibus

account, which makes it difficult or impossible to determine if a

particular shareholder is engaging in excessive short-term trading. Putnam

Management monitors aggregate cash flows in omnibus accounts on an ongoing

basis. If high cash flows or other information indicate that excessive

short-term trading may be taking place, Putnam Management will

contact the financial intermediary, plan sponsor or recordkeeper that

maintains accounts for the underlying beneficial owner and attempt to

identify and remedy any excessive trading. However, each fund's ability to

monitor and deter excessive short-term traders in omnibus accounts

ultimately depends on the capabilities and cooperation of these third-party

financial firms. The fund's policies on exchanges may also be modified for

accounts held by certain retirement plans to conform to plan exchange

limits or Department of Labor requirements. A financial intermediary or

plan sponsor may impose different or additional limits on short-term

trading.

* Blackout periods for Putnam employees. Putnam Investments imposes blackout

periods on investments in the Putnam funds (other than money market

funds) by its employees and certain family members. Employees of Putnam

Investments and covered family members may not make a purchase followed

by a sale, or a sale followed by a purchase, in any non-money market Putnam

fund within any 90-calendar day period. Members of Putnam Management's

Investment Division, certain senior executives, and certain other employees

with access to investment information, as well as their covered family

members, are subject to a blackout period of one year. These blackout

periods are subject to limited exceptions.

Fund distributions and taxes

Each fund declares a distribution daily of all its net income. Each fund

normally distributes any net investment income monthly and any net realized

capital gains annually. You may choose to:

* reinvest all distributions in additional shares;

* receive any distributions from net investment income in cash while

reinvesting capital gains distributions in additional shares; or

* receive all distributions in cash.

If you do not select an option when you open your account, all

distributions will be reinvested. If you do not cash a distribution check

within a specified period or notify Putnam Investor Services to issue a new

check, the distribution will be reinvested in the fund. You will not

receive any interest on uncashed distribution or redemption checks.

Similarly, if any correspondence sent by the fund or Putnam Investor

Services is returned as "undeliverable," fund distributions will

automatically be reinvested in the fund or in another Putnam fund.

Fund distributions designated as "exempt-interest dividends" are generally

not subject to federal income tax. In addition, distributions from interest

on tax-exempt investments, with respect to the relevant state, are

generally exempt from the personal income tax (if any) of that state.

However, if you receive social security or railroad retirement benefits,

you should consult your tax advisor to determine what effect, if any, an

investment in the fund may have on the federal taxation of your benefits.

In addition, an investment in a fund may result in liability for federal

alternative minimum tax, both for individual and corporate shareholders.

In order for any portion of a fund's distributions to be exempt from the

personal income tax of the relevant state (or for the fund's shares to be

exempt from the Florida intangibles tax, in the case of the Florida fund),

the fund and its investments must meet certain requirements that vary

according to the relevant state. A fund or its investments may fail to meet

the relevant state's requirements for a variety of reasons, which may

increase the amount of taxes payable by shareholders. In addition, a fund's

distributions may be subject to other state or local taxes, such as a

state's alternative minimum tax. Please refer to the SAI for further

information concerning the taxation of fund distributions by the relevant

state.

Each fund may at times buy tax-exempt investments at a discount from the

price at which they were originally issued, especially during periods of

rising interest rates. For federal income tax purposes, some or all of this

market discount will be included in the fund's ordinary income and will be

taxable to you as such when it is distributed.

A fund's investments in these and certain other debt obligations may cause

the fund to recognize taxable income in excess of the cash generated by

such obligations. Thus, the fund could be required at times to liquidate

other investments in order to satisfy its distribution requirements.

For federal income tax purposes, distributions of investment income other

than "exempt-interest dividends" are taxable as ordinary income. Generally,

gains realized by a fund on the sale or exchange of investments are taxable

to you, even though the income from such investments generally is

tax-exempt. Taxes on distributions of capital gains are determined by how

long a fund owned the investments that generated them, rather than how long

you have owned your shares. Distributions are taxable to you even if they

are paid from income or gains earned by the funds before your investment

(and thus were included in the price you paid). Properly designated

distributions of gains from investments that the funds owned for more than

one year are taxable as long-term capital gains. Distribu tions of gains

from investments that the funds owned for one year or less and gains on the

sale of bonds characterized as market discount are taxable as ordinary

income. Distributions are taxable whether you receive them in cash or

reinvest them in additional shares.

Any gain resulting from the sale or exchange of your shares will generally

also be subject to tax. You should consult your tax advisor for more

information on your own tax situation, including possible foreign, state

and local taxes.

Financial highlights

The financial highlights tables are intended to help you understand a

fund's recent financial performance. Certain information reflects financial

results for a single fund share. The total returns represent the rate that

an investor would have earned or lost on an investment in the fund,

assuming reinvestment of all dividends and distributions. This information

has been derived from each fund's financial statements, which for the

Massachusetts, Michigan, Minnesota, New Jersey, Ohio and Pennsylvania funds

have been audited by PricewaterhouseCoopers LLP, and which for the Arizona

and Florida funds have been audited by KPMG LLP. Their reports and each

fund's financial statements are included in the respective fund's annual

report to shareholders, which is available upon request.

FINANCIAL HIGHLIGHTS

Putnam Arizona Tax Exempt Income Fund

(For a common share outstanding throughout the period)

CLASS A

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Per-share

operating performance Year ended May 31

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

2005 2004 2003 2002 2001

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

Net asset value,

beginning of period $9.10 $9.51 $9.06 $8.94 $8.54

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

Investment operations:

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

Net investment income .37 (c) .37 (c) .37 .43 .46

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

Net realized and unrealized

gain (loss) on investments .30 (.42) .46 .13 .40

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

Total from

investment operations .67 (.05) .83 .56 .86

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

Less distributions:

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

From net

investment income (.38) (.36) (.38) (.44) (.46)

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

Total distributions (.38) (.36) (.38) (.44) (.46)

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

Net asset value,

end of period $9.39 $9.10 $9.51 $9.06 $8.94

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

Total return at

net asset value (%)(a) 7.45 (.52) 9.41 6.36 10.18

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

Ratios and supplemental data

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

Net assets, end of period

(in thousands) $85,282 $90,981 $115,322 $113,783 $104,424

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

Ratio of expenses to

average net assets (%)(b) .83 (c) .88 (c) .91 .88 .88

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

Ratio of net investment income

to average net assets (%) 3.99 (c) 3.91 (c) 4.02 4.77 5.21

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

Portfolio turnover (%) 17.54 5.91 37.41 20.63 23.67

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

(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

(b) Includes amounts paid through expense offset arrangements.

such limitation, the expenses of the fund for the periods ended May 31, 2005 and May 31, 2004 reflect

a reduction of 0.11% and 0.03%, respectively, of average net assets for class A shares.

FINANCIAL HIGHLIGHTS

Putnam Arizona Tax Exempt Income Fund

(For a common share outstanding throughout the period)

CLASS B

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

Per-share

operating performance Year ended May 31

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

2005 2004 2003 2002 2001

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

Net asset value,

beginning of period $9.09 $9.50 $9.06 $8.93 $8.53

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

Investment operations:

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

Net investment income .31 (c) .31 (c) .31 .37 .40

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

Net realized and unrealized

gain (loss) on investments .30 (.42) .45 .14 .40

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

Total from

investment operations .61 (.11) .76 .51 .80

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

Less distributions:

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

From net

investment income (.32) (.30) (.32) (.38) (.40)

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

Total distributions (.32) (.30) (.32) (.38) (.40)

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

Net asset value,

end of period $9.38 $9.09 $9.50 $9.06 $8.93

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

Total return at

net asset value (%)(a) 6.77 (1.17) 8.59 5.79 9.47

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

Ratios and supplemental data

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

Net assets, end of period

(in thousands) $13,774 $18,617 $26,703 $24,642 $21,714

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

Ratio of expenses to

average net assets (%)(b) 1.48 (c) 1.53 (c) 1.56 1.53 1.53

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

Ratio of net investment income

to average net assets (%) 3.34 (c) 3.25 (c) 3.37 4.12 4.59

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

Portfolio turnover (%) 17.54 5.91 37.41 20.63 23.67

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

(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

(b) Includes amounts paid through expense offset arrangements.

such limitation, the expenses of the fund for the periods ended May 31, 2005 and May 31, 2004 reflect

a reduction of 0.11% and 0.03%, respectively, of average net assets for class B shares.

FINANCIAL HIGHLIGHTS

Putnam Arizona Tax Exempt Income Fund

(For a common share outstanding throughout the period)

CLASS M

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

Per-share

operating performance Year ended May 31

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

2005 2004 2003 2002 2001

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

Net asset value,

beginning of period $9.11 $9.52 $9.08 $8.95 $8.55

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

Investment operations:

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

Net investment income .34 (c) .34 (c) .35 .41 .43

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

Net realized and unrealized

gain (loss) on investments .30 (.41) .45 .13 .40

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

Total from

investment operations .64 (.07) .80 .54 .83

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

Less distributions:

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

From net

investment income (.35) (.34) (.36) (.41) (.43)

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

Total distributions (.35) (.34) (.36) (.41) (.43)

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

Net asset value,

end of period $9.40 $9.11 $9.52 $9.08 $8.95

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

Total return at

net asset value (%)(a) 7.14 (.82) 8.96 6.16 9.84

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

Ratios and supplemental data

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

Net assets, end of period

(in thousands) $1,398 $1,268 $1,047 $1,088 $880

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

Ratio of expenses to

average net assets (%)(b) 1.13 (c) 1.18 (c) 1.21 1.18 1.18

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

Ratio of net investment income

to average net assets (%) 3.69 (c) 3.61 (c) 3.72 4.47 4.92

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

Portfolio turnover (%) 17.54 5.91 37.41 20.63 23.67

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

(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

(b) Includes amounts paid through expense offset arrangements.

such limitation, the expenses of the fund for the periods ended May 31, 2005 and May 31, 2004 reflect

a reduction of 0.11% and 0.03%, respectively, of average net assets for class M shares.

FINANCIAL HIGHLIGHTS

Putnam Florida Tax Exempt Income Fund

(For a common share outstanding throughout the period)

CLASS A

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

Per-share

operating performance Year ended May 31

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

2005 2004 2003 2002 2001

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

Net asset value,

beginning of period $9.22 $9.73 $9.29 $9.15 $8.62

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

Investment operations:

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

Net investment income .35 (c) .36 (c) .39 .44 .46

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

Net realized and unrealized

gain (loss) on investments .34 (.50) .44 .14 .53

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

Total from

investment operations .69 (.14) .83 .58 .99

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

Less distributions:

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

From net

investment income (.34) (.37) (.39) (.44) (.46)

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

From net realized gain

on investments (.22) -- -- -- --

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

Total distributions (.56) (.37) (.39) (.44) (.46)

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

Net asset value,

end of period $9.35 $9.22 $9.73 $9.29 $9.15

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

Total return at

net asset value (%)(a) 7.72 (1.41) 9.13 6.47 11.61

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

Ratios and supplemental data

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

Net assets, end of period

(in thousands) $157,933 $166,574 $230,300 $225,859 $217,697

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

Ratio of expenses to

average net assets (%)(b) .87 (c) .87 (c) .86 .85 .84

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

Ratio of net investment income

to average net assets (%) 3.73 (c) 3.84 (c) 4.10 4.77 5.04

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

Portfolio turnover (%) 22.74 53.31 20.22 18.26 25.47

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

(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

(b) Includes amounts paid through expense offset arrangements.

such limitation, the expenses of the fund for the periods ended May 31, 2005 and May 31, 2004 reflect

a reduction of 0.02% and 0.01%, respectively, of average net assets for class A shares.

FINANCIAL HIGHLIGHTS

Putnam Florida Tax Exempt Income Fund

(For a common share outstanding throughout the period)

CLASS B

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

Per-share

operating performance Year ended May 31

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

2005 2004 2003 2002 2001

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

Net asset value,

beginning of period $9.22 $9.73 $9.29 $9.15 $8.62

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

Investment operations:

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

Net investment income .29 (c) .30 (c) .33 .38 .40

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

Net realized and unrealized

gain (loss) on investments .34 (.50) .44 .14 .53

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

Total from

investment operations .63 (.20) .77 .52 .93

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

Less distributions:

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

From net

investment income (.28) (.31) (.33) (.38) (.40)

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

From net realized gain

on investments (.22) -- -- -- --

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

Total distributions (.50) (.31) (.33) (.38) (.40)

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

Net asset value,

end of period $9.35 $9.22 $9.73 $9.29 $9.15

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

Total return at

net asset value (%)(a) 7.03 (2.06) 8.43 5.78 10.89

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

Ratios and supplemental data

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

Net assets, end of period

(in thousands) $26,890 $35,891 $53,191 $59,987 $71,747

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

Ratio of expenses to

average net assets (%)(b) 1.52 (c) 1.52 (c) 1.51 1.50 1.49

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

Ratio of net investment income

to average net assets (%) 3.09 (c) 3.19 (c) 3.45 4.12 4.39

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

Portfolio turnover (%) 22.74 53.31 20.22 18.26 25.47

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

(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

(b) Includes amounts paid through expense offset arrangements.

of such limitation, the expenses of the fund for the periods ended May

31, 2005 and May 31, 2004 reflect a reduction of 0.02% and 0.01%,

respectively, of average net assets for class B shares.

HIGHLIGHTS

Putnam Florida Tax Exempt Income Fund

(For a common share outstanding throughout the period)

CLASS M

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

Per-share

operating performance Year ended May 31

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

2005 2004 2003 2002 2001

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

Net asset value,

beginning of period $9.22 $9.72 $9.29 $9.15 $8.62

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

Investment operations:

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

Net investment income .32 (c) .33 (c) .36 .41 .43

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

Net realized and unrealized

gain (loss) on investments .35 (.49) .43 .14 .53

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

Total from

investment operations .67 (.16) .79 .55 .96

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

Less distributions:

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

From net

investment income (.32) (.34) (.36) (.41) (.43)

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

From net realized gain

on investments (.22) -- -- -- --

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

Total distributions (.54) (.34) (.36) (.41) (.43)

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

Net asset value,

end of period $9.35 $9.22 $9.72 $9.29 $9.15

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

Total return at

net asset value (%)(a) 7.42 (1.62) 8.69 6.16 11.28

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

Ratios and supplemental data

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

Net assets, end of period

(in thousands) $713 $744 $1,372 $1,065 $738

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

Ratio of expenses to

average net assets (%)(b) 1.17 (c) 1.17 (c) 1.16 1.15 1.14

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

Ratio of net investment income

to average net assets (%) 3.43 (c) 3.55 (c) 3.80 4.47 4.73

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

Portfolio turnover (%) 22.74 53.31 20.22 18.26 25.47

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

(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

(b) Includes amounts paid through expense offset arrangements.

of such limitation, the expenses of the fund for the periods ended May

31, 2005 and May 31, 2004 reflect a reduction of 0.02% and 0.01%,

respectively, of average net assets for class M shares.

FINANCIAL HIGHLIGHTS

Putnam Massachusetts Tax Exempt Income Fund

(For a common share outstanding throughout the period)

CLASS A

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

Per-share

operating performance Year ended May 31

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

2005 2004 2003 2002 2001

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

Net asset value,

beginning of period $9.35 $9.79 $9.34 $9.20 $8.74

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

Investment operations:

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

Net investment income .38 .38 .42 .46 .48

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

Net realized and unrealized

gain (loss) on investments .33 (.43) .44 .14 .46

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

Total from

investment operations .71 (.05) .86 .60 .94

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

Less distributions:

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

From net

investment income (.37) (.39) (.41) (.46) (.48)

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

From net realized gain

on investments (.06) -- -- -- --

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

Total distributions (.43) (.39) (.41) (.46) (.48)

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

Redemption fees -- (c) -- -- -- --

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

Net asset value,

end of period $9.63 $9.35 $9.79 $9.34 $9.20

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

Total return at

net asset value (%)(a) 7.78 (.53) 9.39 6.61 10.95

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

Ratios and supplemental data

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

Net assets, end of period

(in thousands) $267,460 $270,640 $344,042 $337,865 $285,452

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

Ratio of expenses to

average net assets (%)(b) .86 .86 .84 .83 .82

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

Ratio of net investment income

to average net assets (%) 3.93 3.98 4.42 4.89 5.28

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

Portfolio turnover (%) 17.88 7.27 29.10 24.33 6.91

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

(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

(b) Includes amounts paid through expense offset arrangements.

FINANCIAL HIGHLIGHTS

Putnam Massachusetts Tax Exempt Income Fund

(For a common share outstanding throughout the period)

CLASS B

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

Per-share

operating performance Year ended May 31

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

2005 2004 2003 2002 2001

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

Net asset value,

beginning of period $9.35 $9.78 $9.33 $9.19 $8.73

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

Investment operations:

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

Net investment income .31 .32 .36 .40 .42

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

Net realized and unrealized

gain (loss) on investments .34 (.42) .44 .14 .46

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

Total from

investment operations .65 (.10) .80 .54 .88

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

Less distributions:

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

From net

investment income (.31) (.33) (.35) (.40) (.42)

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

From net realized gain

on investments (.06) -- -- -- --

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

Total distributions (.37) (.33) (.35) (.40) (.42)

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

Redemption fees -- (c) -- -- -- --

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

Net asset value,

end of period $9.63 $9.35 $9.78 $9.33 $9.19

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

Total return at

net asset value (%)(a) 7.07 (1.08) 8.69 5.91 10.24

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

Ratios and supplemental data

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

Net assets, end of period

(in thousands) $69,429 $88,253 $122,436 $118,486 $121,881

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

Ratio of expenses to

average net assets (%)(b) 1.51 1.51 1.49 1.48 1.47

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

Ratio of net investment income

to average net assets (%) 3.28 3.33 3.77 4.25 4.63

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

Portfolio turnover (%) 17.88 7.27 29.10 24.33 6.91

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

(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

(b) Includes amounts paid through expense offset arrangements.

FINANCIAL HIGHLIGHTS

Putnam Massachusetts Tax Exempt Income Fund

(For a common share outstanding throughout the period)

CLASS C

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

For the period

August 19,

Per-share Year ended 2003+

operating performance May 31 to May 31

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

2005 2004

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

Net asset value,

beginning of period $9.36 $9.35

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

Investment operations:

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

Net investment income .30 .24

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

Net realized and unrealized

gain on investments .34 .02

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

Total from

investment operations .64 .26

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

Less distributions:

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

From net

investment income (.30) (.25)

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

From net realized gain

on investments (.06) --

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

Total distributions (.36) (.25)

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

Redemption fees -- (c) --

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

Net asset value,

end of period $9.64 $9.36

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

Total return at

net asset value (%)(a) 6.90 2.71 *

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

Ratios and supplemental data

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

Net assets, end of period

(in thousands) $1,994 $987

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

Ratio of expenses to

average net assets (%)(b) 1.66 1.30 *

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

Ratio of net investment income

to average net assets (%) 3.11 2.52 *

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

Portfolio turnover (%) 17.88 7.27

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

+ Commencement of operations.

* Not annualized.

(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

(b) Includes amounts paid through expense offset arrangements.

FINANCIAL HIGHLIGHTS

Putnam Massachusetts Tax Exempt Income Fund

(For a common share outstanding throughout the period)

CLASS M

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

Per-share

operating performance Year ended May 31

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

2005 2004 2003 2002 2001

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

Net asset value,

beginning of period $9.35 $9.79 $9.33 $9.20 $8.74

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

Investment operations:

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

Net investment income .35 .36 .39 .43 .45

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

Net realized and unrealized

gain (loss) on investments .33 (.44) .45 .13 .46

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

Total from

investment operations .68 (.08) .84 .56 .91

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

Less distributions:

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

From net

investment income (.34) (.36) (.38) (.43) (.45)

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

From net realized gain

on investments (.06) -- -- -- --

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

Total distributions (.40) (.36) (.38) (.43) (.45)

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

Redemption fees -- (c) -- -- -- --

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

Net asset value,

end of period $9.63 $9.35 $9.79 $9.33 $9.20

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

Total return at

net asset value (%)(a) 7.45 (.83) 9.18 6.17 10.61

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

Ratios and supplemental data

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

Net assets, end of period

(in thousands) $4,983 $4,832 $6,007 $6,324 $5,855

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

Ratio of expenses to

average net assets (%)(b) 1.16 1.16 1.14 1.13 1.12

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

Ratio of net investment income

to average net assets (%) 3.63 3.69 4.12 4.60 4.98

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

Portfolio turnover (%) 17.88 7.27 29.10 24.33 6.91

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

(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

(b) Includes amounts paid through expense offset arrangements.

FINANCIAL HIGHLIGHTS

Putnam Michigan Tax Exempt Income Fund

(For a common share outstanding throughout the period)

CLASS A

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

Per-share

operating performance Year ended May 31

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

2005 2004 2003 2002 2001

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

Net asset value,

beginning of period $8.86 $9.26 $8.95 $8.83 $8.38

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

Investment operations:

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

Net investment income .35 (c) .37 (c) .38 .43 .45

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

Net realized and unrealized

gain (loss) on investments .24 (.40) .32 .12 .45

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

Total from

investment operations .59 (.03) .70 .55 .90

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

Less distributions:

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

From net

investment income (.34) (.37) (.39) (.43) (.45)

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

Total distributions (.34) (.37) (.39) (.43) (.45)

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

Redemption fees -- (d) -- -- -- --

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

Net asset value,

end of period $9.11 $8.86 $9.26 $8.95 $8.83

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

Total return at

net asset value (%)(a) 6.74 (.34) 8.03 6.39 10.95

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

Ratios and supplemental data

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

Net assets, end of period

(in thousands) $109,105 $116,485 $146,255 $142,706 $130,071

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

Ratio of expenses to

average net assets (%)(b) .91 (c) .90 (c) .89 .87 .87

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

Ratio of net investment income

to average net assets (%) 3.85 (c) 4.12 (c) 4.23 4.82 5.18

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

Portfolio turnover (%) 18.35 9.90 24.48 20.71 14.46

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

(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

(b) Includes amounts paid through expense offset arrangements.

result of such limitation, the expenses of the fund for the periods ended May 31, 2005 and

May 31, 2004, reflect a reduction of 0.01% and less than 0.01%, respectively, of average net

assets for class A shares.

(d) Amount represents less than $0.01 per share.

FINANCIAL HIGHLIGHTS

Putnam Michigan Tax Exempt Income Fund

(For a common share outstanding throughout the period)

CLASS B

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

Per-share

operating performance Year ended May 31

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

2005 2004 2003 2002 2001

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

Net asset value,

beginning of period $8.85 $9.25 $8.94 $8.83 $8.36

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

Investment operations:

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

Net investment income .29 (c) .31 (c) .33 .37 .39

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

Net realized and unrealized

gain (loss) on investments .24 (.40) .31 .12 .48

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

Total from

investment operations .53 (.09) .64 .49 .87

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

Less distributions:

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

From net

investment income (.28) (.31) (.33) (.38) (.40)

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

Total distributions (.28) (.31) (.33) (.38) (.40)

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

Redemption fees -- (d) -- -- -- --

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

Net asset value,

end of period $9.10 $8.85 $9.25 $8.94 $8.83

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

Total return at

net asset value (%)(a) 6.06 (1.00) 7.33 5.58 10.50

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

Ratios and supplemental data

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

Net assets, end of period

(in thousands) $26,378 $32,165 $43,632 $43,308 $45,406

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

Ratio of expenses to

average net assets (%)(b) 1.56 (c) 1.55 (c) 1.54 1.52 1.52

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

Ratio of net investment income

to average net assets (%) 3.20 (c) 3.47 (c) 3.58 4.17 4.53

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

Portfolio turnover (%) 18.35 9.90 24.48 20.71 14.46

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

(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

(b) Includes amounts paid through expense offset arrangements.

result of such limitation, the expenses of the fund for the periods ended May 31, 2005 and

May 31, 2004, reflect a reduction of 0.01% and less than 0.01%, respectively, of average

net assets for class B shares.

(d) Amount represents less than $0.01 per share.

FINANCIAL HIGHLIGHTS

Putnam Michigan Tax Exempt Income Fund

(For a common share outstanding throughout the period)

CLASS M

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

Per-share

operating performance Year ended May 31

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

2005 2004 2003 2002 2001

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

Net asset value,

beginning of period $8.86 $9.26 $8.95 $8.83 $8.37

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

Investment operations:

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

Net investment income .32 (c) .35 (c) .36 .40 .43

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

Net realized and unrealized

gain (loss) on investments .24 (.41) .32 .13 .46

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

Total from

investment operations .56 (.06) .68 .53 .89

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

Less distributions:

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

From net

investment income (.31) (.34) (.37) (.41) (.43)

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

Total distributions (.31) (.34) (.37) (.41) (.43)

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

Redemption fees -- (d) -- -- -- --

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

Net asset value,

end of period $9.11 $8.86 $9.26 $8.95 $8.83

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

Total return at

net asset value (%)(a) 6.41 (.65) 7.70 6.07 10.75

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

Ratios and supplemental data

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

Net assets, end of period

(in thousands) $1,343 $1,404 $2,023 $2,852 $2,320

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

Ratio of expenses to

average net assets (%)(b) 1.21 (c) 1.20 (c) 1.19 1.17 1.17

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

Ratio of net investment income

to average net assets (%) 3.54 (c) 3.82 (c) 3.93 4.53 4.88

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

Portfolio turnover (%) 18.35 9.90 24.48 20.71 14.46

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

(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

(b) Includes amounts paid through expense offset arrangements.

result of such limitation, the expenses of the fund for the periods ended May 31, 2005 and

May 31, 2004, reflect a reduction of 0.01% and less than 0.01%, respectively, of average

net assets for class M shares.

(d) Amount represents less than $0.01 per share.

FINANCIAL HIGHLIGHTS

Putnam Minnesota Tax Exempt Income Fund

(For a common share outstanding throughout the period)

CLASS A

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

Per-share

operating performance Year ended May 31

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

2005 2004 2003 2002 2001

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

Net asset value,

beginning of period $8.91 $9.24 $8.84 $8.73 $8.31

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

Investment operations:

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

Net investment income .35 (c) .37 (c) .39 .44 .45

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

Net realized and unrealized

gain (loss) on investments .21 (.33) .40 .10 .42

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

Total from

investment operations .56 .04 .79 .54 .87

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

Less distributions:

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

From net

investment income (.36) (.37) (.39) (.43) (.45)

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

Total distributions (.36) (.37) (.39) (.43) (.45)

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

Net asset value,

end of period $9.11 $8.91 $9.24 $8.84 $8.73

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

Total return at

net asset value (%)(a) 6.32 .40 9.12 6.36 10.61

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

Ratios and supplemental data

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

Net assets, end of period

(in thousands) $97,211 $99,447 $115,107 $105,533 $94,147

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

Ratio of expenses to

average net assets (%)(b) .90 (c) .90 (c) .91 .88 .88

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

Ratio of net investment income

to average net assets (%) 3.88 (c) 4.01 (c) 4.36 4.97 5.17

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

Portfolio turnover (%) 10.90 5.79 26.67 12.16 25.76

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

(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

(b) Includes amounts paid through expense offset arrangements.

result of such limitation, the expenses of the fund for the periods ended May 31, 2005 and

May 31, 2004 reflect a reduction of 0.04% and 0.02%, respectively, of average net assets

for class A shares.

FINANCIAL HIGHLIGHTS

Putnam Minnesota Tax Exempt Income Fund

(For a common share outstanding throughout the period)

CLASS B

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

Per-share

operating performance Year ended May 31

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

2005 2004 2003 2002 2001

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

Net asset value,

beginning of period $8.88 $9.21 $8.82 $8.70 $8.29

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

Investment operations:

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

Net investment income .29 (c) .31 (c) .33 .38 .39

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

Net realized and unrealized

gain (loss) on investments .22 (.33) .39 .12 .41

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

Total from

investment operations .51 (.02) .72 .50 .80

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

Less distributions:

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

From net

investment income (.30) (.31) (.33) (.38) (.39)

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

Total distributions (.30) (.31) (.33) (.38) (.39)

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

Net asset value,

end of period $9.09 $8.88 $9.21 $8.82 $8.70

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

Total return at

net asset value (%)(a) 5.74 (.27) 8.31 5.80 9.78

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

Ratios and supplemental data

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

Net assets, end of period

(in thousands) $28,242 $34,527 $46,152 $45,367 $47,678

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

Ratio of expenses to

average net assets (%)(b) 1.55 (c) 1.55 (c) 1.56 1.53 1.53

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

Ratio of net investment income

to average net assets (%) 3.24 (c) 3.35 (c) 3.71 4.32 4.52

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

Portfolio turnover (%) 10.90 5.79 26.67 12.16 25.76

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

(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

(b) Includes amounts paid through expense offset arrangements.

result of such limitation, the expenses of the fund for the periods ended May 31, 2005 and

May 31, 2004 reflect a reduction of 0.04% and 0.02%, respectively, of average net assets for

class B shares.

FINANCIAL HIGHLIGHTS

Putnam Minnesota Tax Exempt Income Fund

(For a common share outstanding throughout the period)

CLASS M

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

Per-share

operating performance Year ended May 31

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

2005 2004 2003 2002 2001

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

Net asset value,

beginning of period $8.91 $9.24 $8.84 $8.72 $8.31

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

Investment operations:

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

Net investment income .32 (c) .34 (c) .36 .41 .42

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

Net realized and unrealized

gain (loss) on investments .21 (.33) .40 .12 .41

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

Total from

investment operations .53 .01 .76 .53 .83

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

Less distributions:

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

From net

investment income (.33) (.34) (.36) (.41) (.42)

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

Total distributions (.33) (.34) (.36) (.41) (.42)

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

Net asset value,

end of period $9.11 $8.91 $9.24 $8.84 $8.72

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

Total return at

net asset value (%)(a) 6.01 .09 8.80 6.16 10.15

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

Ratios and supplemental data

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

Net assets, end of period

(in thousands) $1,034 $1,202 $1,470 $1,414 $2,180

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

Ratio of expenses to

average net assets (%)(b) 1.20 (c) 1.20 (c) 1.21 1.18 1.18

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

Ratio of net investment income

to average net assets (%) 3.58 (c) 3.71 (c) 4.06 4.67 4.88

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

Portfolio turnover (%) 10.90 5.79 26.67 12.16 25.76

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

(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

(b) Includes amounts paid through expense offset arrangements.

result of such limitation, the expenses of the fund for the periods ended May 31, 2005 and

May 31, 2004 reflect a reduction of 0.04% and 0.02%, respectively, of average net assets

for class M shares.

FINANCIAL HIGHLIGHTS

Putnam New Jersey Tax Exempt Income Fund

(For a common share outstanding throughout the period)

CLASS A

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

Per-share

operating performance Year ended May 31

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

2005 2004 2003 2002 2001

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

Net asset value,

beginning of period $8.99 $9.37 $9.05 $8.94 $8.47

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

Investment operations:

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

Net investment income .35 (c) .35 (c) .39 .43 .46

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

Net realized and unrealized

gain (loss) on investments .31 (.38) .32 .10 .47

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

Total from

investment operations .66 (.03) .71 .53 .93

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

Less distributions:

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

From net

investment income (.33) (.35) (.39) (.42) (.46)

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

Total distributions (.33) (.35) (.39) (.42) (.46)

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

Redemption fees -- (d) -- -- -- --

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

Net asset value,

end of period $9.32 $8.99 $9.37 $9.05 $8.94

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

Total return at

net asset value (%)(a) 7.46 (.35) 7.99 6.09 11.16

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

Ratios and supplemental data

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

Net assets, end of period

(in thousands) $166,909 $175,142 $215,339 $211,584 $187,400

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

Ratio of expenses to

average net assets (%)(b) .88 (c) .88 (c) .86 .86 .86

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

Ratio of net investment income

to average net assets 3.79 (c) 3.75 (c) 4.25 4.71 5.17

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

Portfolio turnover (%) 19.42 13.46 26.49 11.90 12.68

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

(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

(b) Includes amounts paid through expense offset arrangements.

result of such limitation, expenses of the fund for the periods ended May 31, 2005 and

May 31, 2004, reflect a reduction of 0.01% and less than 0.01%, respectively, based on

average net assets for class A shares.

(d) Amount represents less than $0.01 per share.

FINANCIAL HIGHLIGHTS

Putnam New Jersey Tax Exempt Income Fund

(For a common share outstanding throughout the period)

CLASS B

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

Per-share

operating performance Year ended May 31

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

2005 2004 2003 2002 2001

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

Net asset value,

beginning of period $8.98 $9.36 $9.04 $8.94 $8.46

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

Investment operations:

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

Net investment income .29 (c) .29 (c) .33 .37 .40

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

Net realized and unrealized

gain (loss) on investments .32 (.38) .32 .10 .48

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

Total from

investment operations .61 (.09) .65 .47 .88

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

Less distributions:

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

From net

investment income (.27) (.29) (.33) (.37) (.40)

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

Total distributions (.27) (.29) (.33) (.37) (.40)

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

Redemption fees -- (d) -- -- -- --

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

Net asset value,

end of period $9.32 $8.98 $9.36 $9.04 $8.94

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

Total return at

net asset value (%)(a) 6.88 (1.00) 7.29 5.29 10.57

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

Ratios and supplemental data

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

Net assets, end of period

(in thousands) $63,276 $75,363 $100,977 $99,225 $90,274

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

Ratio of expenses to

average net assets (%)(b) 1.53 (c) 1.53 (c) 1.51 1.51 1.51

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

Ratio of net investment income

to average net assets (%) 3.13 (c) 3.10 (c) 3.60 4.06 4.52

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

Portfolio turnover (%) 19.42 13.46 26.49 11.90 12.68

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

(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

(b) Includes amounts paid through expense offset arrangements.

result of such limitation, expenses of the fund for the periods ended May 31, 2005 and

May 31, 2004, reflect a reduction of 0.01% and less than 0.01%, respectively, based on

average net assets for class B shares.

(d) Amount represents less than $0.01 per share.

FINANCIAL HIGHLIGHTS

Putnam New Jersey Tax Exempt Income Fund

(For a common share outstanding throughout the period)

CLASS M

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

Per-share

operating performance Year ended May 31

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

2005 2004 2003 2002 2001

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

Net asset value,

beginning of period $8.99 $9.36 $9.04 $8.94 $8.46

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

Investment operations:

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

Net investment income .32 (c) .32 (c) .36 .40 .43

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

Net realized and unrealized

gain (loss) on investments .31 (.37) .32 .10 .48

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

Total from

investment operations .63 (.05) .68 .50 .91

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

Less distributions:

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

From net

investment income (.30) (.32) (.36) (.40) (.43)

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

Total distributions (.30) (.32) (.36) (.40) (.43)

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

Redemption fees -- (d) -- -- -- --

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

Net asset value,

end of period $9.32 $8.99 $9.36 $9.04 $8.94

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

Total return at

net asset value (%)(a) 7.13 (.54) 7.67 5.66 10.96

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

Ratios and supplemental data

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

Net assets, end of period

(in thousands) $1,473 $2,011 $2,070 $1,827 $909

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

Ratio of expenses to

average net assets (%)(b) 1.18 (c) 1.18 (c) 1.16 1.16 1.16

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

Ratio of net investment income

to average net assets (%) 3.49 (c) 3.44 (c) 3.94 4.41 4.86

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

Portfolio turnover (%) 19.42 13.46 26.49 11.90 12.68

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

(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

(b) Includes amounts paid through expense offset arrangements.

result of such limitation, expenses of the fund for the periods ended May 31, 2005 and

May 31, 2004, reflect a reduction of 0.01% and less than 0.01%, respectively based on

average net assets for class M shares.

(d) Amount represents less than $0.01 per share.

FINANCIAL HIGHLIGHTS

Putnam Ohio Tax Exempt Income Fund

(For a common share outstanding throughout the period)

CLASS A

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

Per-share

operating performance Year ended May 31

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

2005 2004 2003 2002 2001

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

Net asset value,

beginning of period $8.94 $9.33 $8.87 $8.77 $8.29

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

Investment operations:

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

Net investment income .35 (c) .34 (c) .36 .42 .44

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

Net realized and unrealized

gain (loss) on investments .28 (.38) .46 .10 .47

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

Total from

investment operations .63 (.04) .82 .52 .91

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

Less distributions:

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

From net

investment income (.35) (.35) (.36) (.42) (.43)

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

Total distributions (.35) (.35) (.36) (.42) (.43)

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

Redemption fees -- (d) -- -- -- --

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

Net asset value,

end of period $9.22 $8.94 $9.33 $8.87 $8.77

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

Total return at

net asset value (%)(a) 7.15 (.49) 9.48 5.98 11.22

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

Ratios and supplemental data

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

Net assets, end of period

(in thousands) $153,016 $153,317 $183,383 $167,223 $153,806

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

Ratio of expenses to

average net assets (%)(b) .89 (c) .89 (c) .88 .91 .88

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

Ratio of net investment

income to average

net assets (%) 3.88 (c) 3.75 (c) 3.94 4.70 5.03

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

Portfolio turnover (%) 12.34 17.43 25.66 17.26 11.88

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

(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

(b) Includes amounts paid through expense offset arrangements.

result of such limitation, expenses of the fund for the periods ended May 31, 2005 and

May 31, 2004 reflect a reduction of 0.01% based on average net assets for class A shares.

(d) Amount represents less than $0.01 per share.

FINANCIAL HIGHLIGHTS

Putnam Ohio Tax Exempt Income Fund

(For a common share outstanding throughout the period)

CLASS B

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

Per-share

operating performance Year ended May 31

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

2005 2004 2003 2002 2001

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

Net asset value,

beginning of period $8.93 $9.32 $8.86 $8.76 $8.28

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

Investment operations:

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

Net investment income .29 (c) .28 (c) .30 .36 .38

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

Net realized and unrealized

gain (loss) on investments .28 (.38) .47 .10 .48

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

Total from

investment operations .57 (.10) .77 .46 .86

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

Less distributions:

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

From net

investment income (.29) (.29) (.31) (.36) (.38)

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

Total distributions (.29) (.29) (.31) (.36) (.38)

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

Redemption fees -- (d) -- -- -- --

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

Net asset value,

end of period $9.21 $8.93 $9.32 $8.86 $8.76

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

Total return at

net asset value (%)(a) 6.47 (1.15) 8.78 5.30 10.51

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

Ratios and supplemental data

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

Net assets, end of period

(in thousands) $25,898 $33,382 $43,983 $43,696 $51,687

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

Ratio of expenses to

average net assets (%)(b) 1.54 (c) 1.54 (c) 1.53 1.56 1.53

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

Ratio of net investment income

to average net assets (%) 3.23 (c) 3.10 (c) 3.30 4.05 4.38

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

Portfolio turnover (%) 12.34 17.43 25.66 17.26 11.88

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

(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

(b) Includes amounts paid through expense offset arrangements.

result of such limitation, expenses of the fund for the periods ended May 31, 2005 and

May 31, 2004 reflect a reduction of 0.01% based on average net assets for class B shares.

(d) Amount represents less than $0.01 per share.

FINANCIAL HIGHLIGHTS

Putnam Ohio Tax Exempt Income Fund

(For a common share outstanding throughout the period)

CLASS M

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

Per-share

operating performance Year ended May 31

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

2005 2004 2003 2002 2001

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

Net asset value,

beginning of period $8.94 $9.33 $8.88 $8.77 $8.29

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

Investment operations:

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

Net investment income .33 (c) .32 (c) .33 .39 .41

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

Net realized and unrealized

gain (loss) on investments .28 (.39) .46 .11 .48

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

Total from

investment operations .61 (.07) .79 .50 .89

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

Less distributions:

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

From net

investment income (.32) (.32) (.34) (.39) (.41)

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

Total distributions (.32) (.32) (.34) (.39) (.41)

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

Redemption fees -- (d) -- -- -- --

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

Net asset value,

end of period $9.23 $8.94 $9.33 $8.88 $8.77

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

Total return at

net asset value (%)(a) 6.94 (.80) 9.03 5.78 10.88

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

Ratios and supplemental data

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

Net assets, end of period

(in thousands) $865 $907 $3,457 $2,988 $1,932

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

Ratio of expenses to

average net assets (%)(b) 1.19 (c) 1.19 (c) 1.18 1.21 1.18

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

Ratio of net investment income

to average net assets (%) 3.58 (c) 3.41 (c) 3.64 4.39 4.73

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

Portfolio turnover (%) 12.34 17.43 25.66 17.26 11.88

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

(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

(b) Includes amounts paid through expense offset arrangements.

result of such limitation, expenses of the fund for the periods ended May 31, 2005 and

May 31, 2004 reflect a reduction of 0.01% based on average net assets for class M shares.

(d) Amount represents less than $0.01 per share.

FINANCIAL HIGHLIGHTS

Putnam Pennsylvania Tax Exempt Income Fund

(For a common share outstanding throughout the period)

CLASS A

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

Per-share

operating performance Year ended May 31

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

2005 2004 2003 2002 2001

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

Net asset value,

beginning of period $8.88 $9.27 $8.91 $8.78 $8.35

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

Investment operations:

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

Net investment income .37 (c) .37 (c) .42 .44 .47

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

Net realized and unrealized

gain (loss) on investments .33 (.39) .36 .14 .43

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

Total from

investment operations .70 (.02) .78 .58 .90

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

Less distributions:

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

From net

investment income (.36) (.37) (.42) (.45) (.47)

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

Total distributions (.36) (.37) (.42) (.45) (.47)

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

Redemption fees -- (d) -- -- -- --

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

Net asset value,

end of period $9.22 $8.88 $9.27 $8.91 $8.78

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

Total return at

net asset value (%)(a) 8.01 (.21) 8.98 6.79 11.04

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

Ratios and supplemental data

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

Net assets, end of period

(in thousands) $150,997 $152,997 $187,002 $175,619 $159,363

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

Ratio of expenses to

average net assets (%)(b) .90 (c) .89 (c) .88 .86 .87

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

Ratio of net investment income

to average net assets (%) 4.04 (c) 4.08 (c) 4.62 4.98 5.45

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

Portfolio turnover (%) 16.25 17.09 21.79 12.88 13.31

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

(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

(b) Includes amounts paid through expense offset arrangements.

result of such limitation, expenses of the fund for the periods ended May 31, 2005 and

May 31, 2004 reflect a reduction of 0.01% and 0.01%, respectively, based on average net

assets for class A shares.

(d) Amount represents less than $.01 per share.

FINANCIAL HIGHLIGHTS

Putnam Pennsylvania Tax Exempt Income Fund

(For a common share outstanding throughout the period)

CLASS B

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

Per-share

operating performance Year ended May 31

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

2005 2004 2003 2002 2001

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

Net asset value,

beginning of period $8.87 $9.26 $8.90 $8.77 $8.34

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

Investment operations:

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

Net investment income .31 (c) .31 (c) .36 .39 .42

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

Net realized and unrealized

gain (loss) on investments .33 (.39) .36 .14 .43

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

Total from

investment operations .64 (.08) .72 .53 .85

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

Less distributions:

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

From net

investment income (.30) (.31) (.36) (.40) (.42)

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

Total distributions (.30) (.31) (.36) (.40) (.42)

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

Redemption fees -- (d) -- -- -- --

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

Net asset value,

end of period $9.21 $8.87 $9.26 $8.90 $8.77

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

Total return at

net asset value (%)(a) 7.29 (.87) 8.29 6.10 10.33

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

Ratios and supplemental data

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

Net assets, end of period

(in thousands) $41,114 $50,613 $74,250 $71,421 $67,541

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

Ratio of expenses to

average net assets (%)(b) 1.55 (c) 1.54 (c) 1.53 1.51 1.52

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

Ratio of net investment income

to average net assets (%) 3.40 (c) 3.43 (c) 3.97 4.33 4.80

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

Portfolio turnover (%) 16.25 17.09 21.79 12.88 13.31

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

(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

(b) Includes amounts paid through expense offset arrangements.

result of such limitation, expenses of the fund for the periods ended May 31, 2005 and

May 31, 2004 reflect a reduction of 0.01% and 0.01%, respectively, based on average net

assets for class B shares.

(d) Amount represents less than $.01 per share.

FINANCIAL HIGHLIGHTS

Putnam Pennsylvania Tax Exempt Income Fund

(For a common share outstanding throughout the period)

CLASS M

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

Per-share

operating performance Year ended May 31

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

2005 2004 2003 2002 2001

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

Net asset value,

beginning of period $8.89 $9.28 $8.91 $8.79 $8.36

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

Investment operations:

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

Net investment income .34 (c) .34 (c) .39 .42 .45

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

Net realized and unrealized

gain (loss) on investments .33 (.39) .37 .13 .43

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

Total from

investment operations .67 (.05) .76 .55 .88

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

Less distributions:

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

From net

investment income (.33) (.34) (.39) (.43) (.45)

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

Total distributions (.33) (.34) (.39) (.43) (.45)

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

Redemption fees -- (d) -- -- -- --

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

Net asset value,

end of period $9.23 $8.89 $9.28 $8.91 $8.79

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

Total return at

net asset value (%)(a) 7.68 (.52) 8.78 6.34 10.70

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

Ratios and supplemental data

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

Net assets, end of period

(in thousands) $2,269 $2,220 $3,440 $3,363 $2,874

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

Ratio of expenses to

average net assets (%)(b) 1.20 (c) 1.19 (c) 1.18 1.16 1.17

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

Ratio of net investment income

to average net assets (%) 3.75 (c) 3.77 (c) 4.31 4.69 5.16

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

Portfolio turnover (%) 16.25 17.09 21.79 12.88 13.31

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

(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

(b) Includes amounts paid through expense offset arrangements.

result of such limitation, expenses of the fund for the periods ended May 31, 2005 and

May 31, 2004 reflect a reduction of 0.01% and 0.01%, respectively, based on average net

assets for class M shares.

(d) Amount represents less than $.01 per share.

Glossary of terms

Bond An IOU issued by a government or corporation that

usually pays interest.

Capital A profit or loss on the sale of securities

gain/loss (generally stocks or bonds).

Class A, B, C, Types of shares, each class offering investors a

M, R, T shares different way to pay sales charges and

distribution fees. A fund's prospectus explains

the availability and attributes of each type.

Common A unit of ownership of a corporation.

stock

Distribution A payment from a mutual fund to shareholders. It

may include interest from bonds and dividends from

stocks (dividend distributions). It may also

include profits from the sale of securities from

the fund's portfolio (capital gains

distributions).

Net asset The value of one share of a mutual fund without

value (NAV) regard to sales charges. Some bond

funds aim for a steady NAV, representing

stability; most stock funds aim to raise NAV,

representing growth in the value of an investment.

Public offering The purchase price of one class A or class M

price (POP) share of a mutual fund, including the applicable

"front-end" sales charge.

Short-term Fee charged to shareholders of certain funds who

trading fee redeem fund shares that they have held for less

than a stated minimum amount of time. Short-term

trading fees are withheld from the proceeds of

the shareholder's redemption and are payable to

the fund.

Total return A measure of performance showing the change in the

value of an investment over a given period,

assuming all earnings are reinvested.

Yield The percentage rate at which a fund has earned

income from its investments over the indicated

period.

Make the most of your Putnam privileges

As a Putnam mutual fund shareholder, you have access to a number of services

that can help you build a more effective and flexible financial program.

Here are some of the ways you can use these privileges to make the most of

your Putnam mutual fund investment.

* SYSTEMATIC INVESTMENT PLAN

Invest as much as you wish ($25 or more). The amount you choose will be

automatically transferred weekly, semi-monthly or monthly from your checking

or savings account.

* SYSTEMATIC WITHDRAWAL

Make regular withdrawals of $50 or more monthly, quarterly, semiannually,

or annually from your Putnam mutual fund account valued at $5,000 or more.

* SYSTEMATIC EXCHANGE

Transfer assets automatically from one Putnam account to another on a

regular, prearranged basis.

* EXCHANGE PRIVILEGE

Exchange money between Putnam funds in the same class of shares. The exchange

privilege allows you to adjust your investments as your objectives change.

A signature guarantee is required for exchanges of more than $500,000 and

shares of all Putnam funds may not be available to all investors.

A 2.00% short-term trading fee will apply to exchanges of shares from

Putnam funds (other than money market funds) held for 5 days or less. A

separate 1.00% short-term trading fee may apply to exchanges of shares of

certain Putnam funds that occur within 6 to 90 days of purchase. Please

read the prospectus of the applicable fund for more details.

Investors may not maintain, within the same fund, simultaneous plans for

systematic investment or exchange (into the fund) and system atic

withdrawal or exchange (out of the fund). These privileges are subject

to change or termination.

* DIVIDENDS PLUS

Diversify your portfolio by investing dividends and other distributions from

one Putnam fund automatically into another at net asset value.

* STATEMENT OF INTENTION

To reduce a front-end sales charge, you may agree to invest a minimum

dollar amount over 13 months. Depending on your fund, the minimum is

$50,000 or $100,000. Whenever you make an investment under this

arrangement, you or your financial advisor should notify Putnam Investor

Services that a Statement of Intention is in effect.

Many of these services can be accessed online at www.putnam.com.

For more information about any of these services and privileges, call your

financial advisor or a Putnam customer service representative toll free at

1-800-225-1581.

Putnam Family of Funds a

The following is a complete list of Putnam's open-end mutual funds offered

to the public. Please call your financial advisor or Putnam at

1-800-225-1581 to obtain a prospectus for any Putnam fund. It contains

more complete information, including charges and expenses. Please read it

carefully before you invest or send money.

PUTNAM GROWTH FUNDS

Putnam Discovery Growth Fund

Putnam Growth Opportunities Fund

Putnam Health Sciences Trust

Putnam International New Opportunities Fund

Putnam New Opportunities Fund

Putnam OTC & Emerging Growth Fund

Putnam Small Cap Growth Fund

Putnam Vista Fund

Putnam Voyager Fund

PUTNAM BLEND FUNDS

Putnam Capital Appreciation Fund

Putnam Capital Opportunities Fund

Putnam Europe Equity Fund

Putnam Global Equity Fund

Putnam Global Natural Resources Fund

Putnam International Capital Opportunities Fund

Putnam International Equity Fund

Putnam Investors Fund

Putnam Research Fund

Putnam Tax Smart Equity Fund[REGISTRATION MARK]

Putnam Utilities Growth and Income Fund

PUTNAM VALUE FUNDS

Putnam Classic Equity Fund

Putnam Convertible Income-Growth Trust

Putnam Equity Income Fund

The George Putnam Fund of Boston

The Putnam Fund for Growth and Income

Putnam International Growth and Income Fund

Putnam Mid Cap Value Fund

Putnam New Value Fund

Putnam Small Cap Value Fund b

PUTNAM INCOME FUNDS

Putnam American Government Income Fund

Putnam Diversified Income Trust

Putnam Floating Rate Income Fund

Putnam Global Income Trust

Putnam High Yield Advantage Fund b

Putnam High Yield Trust

Putnam Income Fund

Putnam Limited Duration Government Income Fund c

Putnam Money Market Fund d

Putnam Prime Money Market Fund d

Putnam U.S. Government Income Trust

PUTNAM TAX-FREE INCOME FUNDS

Putnam AMT-Free Insured Municipal Fund e

Putnam Tax Exempt Income Fund

Putnam Tax Exempt Money Market Fund d

Putnam Tax-Free High Yield Fund

Putnam State Tax-Free Income Funds f

Arizona, California, Florida, Massachusetts, Michigan, Minnesota, New Jersey,

New York, Ohio and Pennsylvania

PUTNAM ASSET ALLOCATION FUNDS

Putnam Asset Allocation Funds -- three investment portfolios that spread your

money across a variety of stocks, bonds, and money market investments.

The three portfolios:

Putnam Asset Allocation: Balanced Portfolio

Putnam Asset Allocation: Conservative Portfolio

Putnam Asset Allocation: Growth Portfolio

PUTNAM RETIREMENTREADY[REGISTRATION MARK] FUNDS

Putnam RetirementReady Funds -- ten investment portfolios that offer

diversification among stocks, bonds and money market instruments and

adjust to become more conservative over time based on a target date for

withdrawing assets.

Putnam RetirementReady 2050 Fund

Putnam RetirementReady 2045 Fund

Putnam RetirementReady 2040 Fund

Putnam RetirementReady 2035 Fund

Putnam RetirementReady 2030 Fund

Putnam RetirementReady 2025 Fund

Putnam RetirementReady 2020 Fund

Putnam RetirementReady 2015 Fund

Putnam RetirementReady 2010 Fund

Putnam RetirementReady Maturity Fund

a As of 6/30/05.

b Closed to new investors.

c Prior to 11/30/04, Putnam Intermediate U.S. Government Income Fund.

d An investment in a money market fund is not insured or guaranteed by the

Federal Deposit Insurance Corporation or any other government agency.

Although these funds seek to preserve your investment at $1.00 per share,

it is possible to lose money by investing in such funds.

e Prior to 11/30/04, Putnam Tax-Free Insured Fund.

f Not available in all states.

For more information about Putnam Arizona Tax Exempt Income Fund, Putnam

Florida Tax Exempt Income Fund, Putnam Massachusetts Tax Exempt Income

Fund, Putnam Michigan Tax Exempt Income Fund, Putnam Minnesota Tax Exempt

Income Fund, Putnam New Jersey Tax Exempt Income Fund, Putnam Ohio Tax

Exempt Income Fund and Putnam Pennsylvania Tax Exempt Income Fund

Each fund's SAI and annual and semi-annual reports to shareholders include

additional information about the fund. The SAI, and the independent

registered public accounting firm's report and the financial statements

included in each fund's most recent annual report to its shareholders, are

incorporated by reference into this prospectus, which means they are part

of this prospectus for legal purposes. Each fund's annual report discusses

the market conditions and investment strategies that significantly

affected the fund's performance during its last fiscal year. You may get

free copies of these materials, request other information about any Putnam

fund, or make shareholder inquiries, by contacting your financial advisor,

by visiting Putnam's Internet Web site at www.putnam.com/individual, or by

calling Putnam toll-free at 1-800-225-1581.

You may review and copy information about a fund, including its SAI, at

the Securities and Exchange Commission's Public Reference Room in

Washington, D.C. You may call the Commission at 1-202-942-8090 for

information about the operation of the Public Reference Room. You may also

access reports and other information about the fund on the EDGAR Database

on the Commission's Internet site at http://www.sec.gov. You may get

copies of this information, with payment of a duplication fee, by

electronic request at the following E-mail address: publicinfo@sec.gov, or

by writing the Commission's Public Reference Section, Washington, D.C.

20549-0102. You may need to refer to the fund's file number.

PUTNAM INVESTMENTS

One Post Office Square

Boston, Massachusetts 02109

1-800-225-1581

Address correspondence to

Putnam Investor Services

P.O. Box 41203

Providence, Rhode Island 02940-1203

www.putnam.com

File Nos.:

Arizona Fund 811-06258 Minnesota Fund 811-04527

Florida Fund 811-06129 New Jersey Fund 811-05977

Massachusetts Fund 811-04518 Ohio Fund 811-04528

Michigan Fund 811-04529 Pennsylvania Fund 811-05802

NP047 227327 9/05

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