Prospectus

September 30, 2001, as revised March 30, 2002

Putnam Tax Exempt Income Funds
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
Putnam Pennsylvania Tax Exempt Income Fund

Class A, B and M shares
Investment Category: Tax-Exempt

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 these 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.


    CONTENTS

 2  Fund summaries

 2  Goals

 2  Main investment strategies

 2  Main risks

 3  Performance information

 8  Fees and expenses

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

16  Who manages the funds?

17  How does a fund price its shares?

17  How do I buy fund shares?

20  How do I sell fund shares?

22  How do I exchange fund shares?

23  Fund distributions and taxes

25  Financial highlights


[SCALE LOGO OMITTED]


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 is the risk 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, or will
  be perceived to be unlikely to make, timely payments of interest and
  principal. This credit risk is generally greater for debt that is below
  investment grade in quality.

* The risk that interest the 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 a particular 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"
funds. These funds may invest more of their assets in the securities of
fewer companies than a "diversified" fund, and may therefore be more
exposed to the risk of loss from a few issuers 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 a 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

1992         9.03%
1993        12.04%
1994        -6.72%
1995        17.08%
1996         3.00%
1997         7.88%
1998         4.86%
1999        -3.11%
2000        10.22%


Year-to-date performance through 6/30/01 was 2.14%. 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 -5.59% (quarter
ending 3/31/94).

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

1991        12.09%
1992         9.62%
1993        11.17%
1994        -6.15%
1995        17.35%
1996         2.91%
1997         8.95%
1998         5.04%
1999        -3.51%
2000        11.27%


Year-to-date performance through 6/30/01 was 2.51%. 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 -6.10% (quarter
ending 3/31/94).


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

1991        13.66%
1992        10.75%
1993        12.31%
1994        -6.07%
1995        18.11%
1996         3.91%
1997         8.89%
1998         5.33%
1999        -3.55%
2000        11.35%


Year-to-date performance through 6/30/01 was 2.30%. 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 -4.98% (quarter
ending 3/31/94).

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

1991        12.60%
1992         8.73%
1993        11.55%
1994        -5.38%
1995        16.32%
1996         4.16%
1997         8.39%
1998         4.57%
1999        -4.45%
2000        10.06%


Year-to-date performance through 6/30/01 was 2.90%. 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 -4.42% (quarter
ending 3/31/94).

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

1991        10.23%
1992         7.83%
1993        11.62%
1994        -5.40%
1995        16.41%
1996         3.30%
1997         7.59%
1998         5.06%
1999        -4.02%
2000         9.93%


Year-to-date performance through 6/30/01 was 2.29%. 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 -4.72% (quarter
ending 3/31/94).

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

1991        11.97%
1992         8.72%
1993        12.42%
1994        -6.29%
1995        16.28%
1996         3.63%
1997         8.78%
1998         4.90%
1999        -3.50%
2000        10.30%


Year-to-date performance through 6/30/01 was 2.88%. 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 -5.42% (quarter
ending 3/31/94).

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

1991        11.34%
1992         9.35%
1993        11.00%
1994        -4.75%
1995        15.67%
1996         3.66%
1997         8.47%
1998         4.46%
1999        -3.69%
2000         6.17%


Year-to-date performance through 6/30/01 was 2.96%. 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 -4.22% (quarter
ending 3/31/94).

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

1991        12.77%
1992         9.62%
1993        12.46%
1994        -4.82%
1995        16.82%
1996         3.70%
1997         8.72%
1998         3.75%
1999        -4.23%
2000         9.82%


Year-to-date performance through 6/30/01 was 3.19%. 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 -4.65% (quarter
ending 3/31/94).

Average Annual Total Returns (for periods ending 12/31/00)
- -------------------------------------------------------------------------------
                                                         Since
                         Past      Past       Past     inception    Inception
Arizona Fund            1 year    5 years   10 years  (dates vary)    date
- -------------------------------------------------------------------------------
Class A                  4.98%     3.47%      N/A        5.83%       1/30/91
Class B                  4.63%     3.51%      N/A        5.61%       7/15/93
Class M                  6.42%     3.48%      N/A        5.65%       7/03/95
- -------------------------------------------------------------------------------
Florida Fund
- -------------------------------------------------------------------------------
Class A                  6.03%     3.79%      N/A        6.30%       8/24/90
Class B                  5.56%     3.80%      N/A        6.03%       1/04/93
Class M                  7.48%     3.79%      N/A        6.09%       5/01/95
- -------------------------------------------------------------------------------
Massachusetts Fund
- -------------------------------------------------------------------------------
Class A                  6.05%     4.05%     6.69%       6.80%      10/23/89
Class B                  5.64%     4.04%     6.44%       6.47%       7/15/93
Class M                  7.36%     4.05%     6.49%       6.56%       5/12/95
- -------------------------------------------------------------------------------
Michigan Fund
- -------------------------------------------------------------------------------
Class A                  4.86%     3.41%     5.92%       5.93%      10/23/89
Class B                  4.36%     3.43%     5.70%       5.63%       7/15/93
Class M                  6.22%     3.42%     5.73%       5.69%       4/17/95
- -------------------------------------------------------------------------------
Minnesota Fund
- -------------------------------------------------------------------------------
Class A                  4.70%     3.25%     5.54%       5.68%      10/23/89
Class B                  4.10%     3.25%     5.28%       5.34%       7/15/93
Class M                  5.94%     3.24%     5.34%       5.43%       4/03/95
- -------------------------------------------------------------------------------
New Jersey Fund
- -------------------------------------------------------------------------------
Class A                  5.02%     3.69%      N/A        6.19%       2/20/90
Class B                  4.46%     3.69%      N/A        5.88%       1/04/93
Class M                  6.36%     3.68%      N/A        5.97%       5/01/95
- -------------------------------------------------------------------------------
Ohio Fund
- -------------------------------------------------------------------------------
Class A                  4.97%     3.49%     5.87%       5.93%      10/23/89
Class B                  4.53%     3.52%     5.62%       5.62%       7/15/93
Class M                  6.35%     3.51%     5.67%       5.70%       4/03/95
- -------------------------------------------------------------------------------
Pennsylvania Fund
- -------------------------------------------------------------------------------
Class A                  4.62%     3.23%     6.12%       6.17%       7/21/89
Class B                  4.11%     3.23%     5.86%       5.82%       7/15/93
Class M                  6.10%     3.23%     5.92%       5.93%       7/03/95
- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
Lehman
Municipal
Bond Index              11.69%     5.84%     7.32%       7.45%      10/23/89
- -------------------------------------------------------------------------------

Unlike the bar charts, this performance information reflects the impact of
sales charges. Class A and class M share performance reflects the current
maximum initial sales charges; class B share performance reflects the
maximum applicable deferred sales charge if shares had been redeemed on
12/31/00 and, for class B shares, assumes conversion to class A shares
after eight years. "Since inception" performance shown for each fund is for
the period since class A share inception for that fund; for periods before
the inception (as noted above) of class B shares and class M shares,
performance of those classes shown in the table is based on performance of
the fund's class A shares, adjusted to reflect the appropriate sales charge
and the higher 12b-1 fees paid by class B and class M shares. Each fund's
performance is compared to the Lehman Brothers Municipal Bond Index, an
unmanaged index of long-term fixed-rate investment-grade tax-exempt bonds
generally considered representative of the municipal bond market.

FEES AND EXPENSES

These tables summarize the fees and expenses you may pay if you invest in a
fund. Expenses are based on the fund's last fiscal year.
- -------------------------------------------------------------------------------

Shareholder Fees (fees paid directly from your investment)
- -------------------------------------------------------------------------------
                                               Class A   Class B   Class M
- -------------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed
on Purchases (as a percentage of
the offering price)                             4.75%     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%     NONE
- -------------------------------------------------------------------------------

* A deferred sales charge of up to 1% may be imposed on certain redemptions
  of class A shares bought without an initial sales charge.

The following tables are provided to help you understand the expenses of
investing and your share of fund operating expenses.

Annual Fund Operating Expenses
(expenses that are deducted from fund assets)
- -------------------------------------------------------------------------------
                                                               Total Annual
                      Management   Distribution      Other    Fund Operating
                         Fees      (12b-1) Fees     Expenses     Expenses
- -------------------------------------------------------------------------------
Arizona Fund
Class A                  0.50%         0.20%         0.18%         0.88%
Class B                  0.50%         0.85%         0.18%         1.53%
Class M                  0.50%         0.50%         0.18%         1.18%
Florida Fund
Class A                  0.50%         0.20%         0.14%         0.84%
Class B                  0.50%         0.85%         0.14%         1.49%
Class M                  0.50%         0.50%         0.14%         1.14%
Massachusetts Fund
Class A                  0.50%         0.20%         0.12%         0.82%
Class B                  0.50%         0.85%         0.12%         1.47%
Class M                  0.50%         0.50%         0.12%         1.12%
Michigan Fund
Class A                  0.50%         0.20%         0.17%         0.87%
Class B                  0.50%         0.85%         0.17%         1.52%
Class M                  0.50%         0.50%         0.17%         1.17%
Minnesota Fund
Class A                  0.50%         0.20%         0.18%         0.88%
Class B                  0.50%         0.85%         0.18%         1.53%
Class M                  0.50%         0.50%         0.18%         1.18%
New Jersey Fund
Class A                  0.50%         0.20%         0.16%         0.86%
Class B                  0.50%         0.85%         0.16%         1.51%
Class M                  0.50%         0.50%         0.16%         1.16%

- -------------------------------------------------------------------------------
Annual Fund Operating Expenses (continued)
- -------------------------------------------------------------------------------
                                                               Total Annual
                      Management   Distribution      Other    Fund Operating
                         Fees      (12b-1) Fees     Expenses     Expenses
- -------------------------------------------------------------------------------
Ohio Fund
Class A                  0.50%         0.20%         0.18%         0.88%
Class B                  0.50%         0.85%         0.18%         1.53%
Class M                  0.50%         0.50%         0.18%         1.18%
Pennsylvania Fund
Class A                  0.50%         0.20%         0.17%         0.87%
Class B                  0.50%         0.85%         0.17%         1.52%
Class M                  0.50%         0.50%         0.17%         1.17%
- -------------------------------------------------------------------------------

EXAMPLE

This 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
shares, redeem all your shares at the end of those periods. It also assumes
a 5% return on your investment each year and that each 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
- -------------------------------------------------------------------------------
Arizona Fund
Class A                  $561          $742        $  939        $1,508
Class B                  $656          $783        $1,034        $1,648*
Class B
(no redemption)          $156          $483        $  834        $1,648*
Class M                  $441          $688        $  953        $1,710

Florida fund
Class A                  $557          $730        $  919        $1,463
Class B                  $652          $771        $1,013        $1,604*
Class B
(no redemption)          $152          $471        $  813        $1,604*
Class M                  $437          $675        $  932        $1,666

Massachusetts fund
Class A                  $555          $724        $  908        $1,440
Class B                  $650          $765        $1,003        $1,581*
Class B
(no redemption)          $150          $465        $  803        $1,581*
Class M                  $435          $669        $  922        $1,644

Michigan fund
Class A                  $560          $739        $  934        $1,497
Class B                  $655          $780        $1,029        $1,637*
Class B
(no redemption)          $155          $480        $  829        $1,637*
Class M                  $440          $685        $  948        $1,699

Minnesota fund
Class A                  $561          $742        $  939        $1,508
Class B                  $656          $783        $1,034        $1,648*
Class B
(no redemption)          $156          $483        $  834        $1,648*
Class M                  $441          $688        $  953        $1,710

New Jersey fund
Class A                  $559          $736        $  929        $1,485
Class B                  $654          $777        $1,024        $1,626*
Class B
(no redemption)          $154          $477        $  824        $1,626*
Class M                  $439          $682        $  943        $1,688

Ohio fund
Class A                  $560          $742        $  938        $1,505
Class B                  $655          $783        $1,033        $1,645*
Class B
(no redemption)          $155          $483        $  833        $1,645*
Class M                  $441          $687        $  952        $1,707

Pennsylvania Fund
Class A                  $560          $739        $  934        $1,497
Class B                  $655          $780        $1,029        $1,637*
Class B
(no redemption)          $155          $480        $  829        $1,637*
Class M                  $440          $685        $  948        $1,699
- -------------------------------------------------------------------------------

* Reflects the conversion of class B shares to class A shares, which pay
  lower 12b-1fees. Conversion occurs no more than 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 for each fund. 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 may
  make the income from some of these obligations taxable. Investments in
  securities of issuers located outside the respective state may be applied
  toward meeting a requirement to invest in a tax exempt investment if the
  security pays interest that is exempt from the federal and respective state
  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 policy in the Fund summary. Corporate
shareholders will be required to include all tax-exempt interest dividends
in determining their federal AMT. For more information, including possible
state 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 usually rise and
  fall in response to changes in interest rates. Declining interest rates
  generally increase the values of existing debt instruments, and rising
  interest rates generally decrease the values of existing debt instruments.
  Changes in a debt instrument's value usually will not affect the amount of
  income a fund receives from it, 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, them before
their maturity date. If an issuer "calls" its securities during a time of
declining interest rates, we might have to reinvest the proceeds in an
investment offering a lower yield, and therefore the fund might not benefit
from any increase in value as a result of declining interest rates.

"Premium investments" offer interest 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, the debt of issuers with lower credit
  ratings usually offers higher yields than debt of issuers with higher
  credit ratings. Higher-rated investments generally offer 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 that we
believe are of comparable quality. We may invest up to 25% of a fund's
total assets in non-investment-grade investments. However, we will not
invest in investments rated lower than BB or its equivalent by each agency
rating the investment, or unrated securities that we believe are of
comparable quality. We will not necessarily sell an investment if its
rating is reduced.

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 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
investments or to establish their fair value. Credit risk is generally
greater for investments that are issued at less than their face value and
make payments of interest 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 also 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. Derivatives may be used both
  for 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 and 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. A fund 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 increase the amount
of taxes payable by shareholders.

Other risks arise from our potential inability to terminate or sell
derivatives positions. A liquid secondary market may not always exist for a
fund's derivatives positions. 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 derivatives 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. 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. A fund's Trustees may change the fund's goal,
  investment strategies and other policies without shareholder approval,
  except as otherwise indicated.

Who manages the funds?

Each fund's Trustees oversee the general conduct of fund business. The
Trustees have retained Putnam Management to be each fund's investment
manager, responsible for making investment decisions for each fund and
managing each fund's other affairs and business. Each fund pays Putnam
Management a quarterly management fee for these services based on a fund's
average net assets. The management fee for the last fiscal year was 0.50%
for each fund. Putnam Management's address is One Post Office Square,
Boston, MA 02109.

Putnam Management's Tax Exempt Fixed-Income Team has primary
responsibility, and its members have joint responsibility, for the
day-to-day management of the fund's portfolio.

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 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.

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 New York Stock Exchange 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 per month 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.putnaminvestments.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.

The funds may periodically close to new purchases of shares or refuse any
order to buy shares if a 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. 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. Here is a summary of the differences among the
classes of shares:

Class A shares

* Initial sales charge of up to 4.75%

* Lower sales charge for investments of $25,000 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 or M shares
  because of lower 12b-1 fee

Class B shares

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

* Deferred sales charge of up to 5% if you sell shares within 6 years after
  you bought them

* Higher annual expenses, and lower dividends, than class A or M shares
  because of higher 12b-1 fee

* Convert automatically to class A shares after 8 years, reducing the
  future 12b-1 fee (may convert sooner in some cases)

* Orders for one or more funds totaling $250,000 or more per day and
  cumulative orders of $1,000,000 or more in accounts eligible to purchase
  class A shares with reduced or no initial sales charge under a right of
  accumulation will be treated as orders for class A shares or refused

Class M shares

* Initial sales charge of up to 3.25%

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

* No deferred sales charge

* Lower annual expenses, and higher dividends, than class B shares because
  of lower 12b-1 fee

* Higher annual expenses, and lower dividends, than class A shares because
  of higher 12b-1 fee

* No conversion to class A shares, so future 12b-1 fee does not decrease

- -------------------------------------------------------------------------------
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 25,000                4.99%        4.75%        3.36%        3.25%
25,000 but under 50,000     4.71         4.50         3.36         3.25
50,000 but under
100,000                     4.71         4.50         2.30         2.25
100,000 but under
250,000                     3.90         3.75         1.52         1.50
250,000 but under
500,000                     3.09         3.00         1.01         1.00
500,000 but under
1,000,000                   2.04         2.00         NONE         NONE
1,000,000 and above         NONE         NONE         NONE         NONE
- -------------------------------------------------------------------------------
* Offering price includes sales charge.

Deferred sales charges for class B and certain class A

If you sell (redeem) class B shares within six years after you bought them,
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 up to 1% may apply to class A shares purchased
without an initial sales charge if redeemed within two years after
purchase. A deferred sales charge of up to 0.40% may apply to class M
shares purchased without a sales charge if redeemed within one year of
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. Sales
  charges may be reduced or waived under certain circumstances and for
  certain groups. Information about reductions and waivers of 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
  and class M shares. The Trustees currently limit payments on class A, class
  B and class M shares to 0.20%, 0.85% and 0.50% of average net assets,
  respectively. Because these fees are paid out of each fund's assets on an
  ongoing basis, they will increase the cost of your investment. The higher
  fees for class B and class M shares may cost you more than paying the
  initial sales charge for class A shares. Because class M shares, unlike
  class B shares, do not convert to class A shares, class M shares may cost
  you more over time than class B shares.

How do I sell fund shares?

You can sell your shares back to your fund any day the New York Stock
Exchange is open, either through your financial advisor or directly to the
fund. Payment for redemptions may be delayed until the fund collects the
purchase price of shares, which may take up to 15 calendar days after the
purchase date.

* Selling shares through your financial advisor. Your advisor must receive
  your request in proper form before the close of regular trading on the New
  York Stock Exchange to receive that day's NAV, less any applicable deferred
  sales charge. 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 New York Stock Exchange in order to receive that day's NAV, less any
  applicable sales charge.

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 and transfer 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 a surviving
  joint owner. For more information concerning Putnam's signature guarantee
  and documentation requirements, contact Putnam Investor Services.

* When will the fund pay me? 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), the fund may redeem your shares without
  your permission and send you the proceeds. Each 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.putnaminvestments.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.
Excessive exchange activity may interfere with portfolio management and
have an adverse effect on all shareholders. In order to limit excessive
exchange activity and otherwise to promote the best interests of the fund,
the fund 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.

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 "tax-exempt dividends" are not generally
subject to federal income tax. In addition, such distributions are not
generally subject to such states' income tax (or, in the case of Florida,
to Florida's intangibles tax). 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 the 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 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.

For federal income tax purposes, distributions of investment income other
than "tax-exempt dividends" are taxable as ordinary income. Generally,
gains realized by a fund on the sale or exchange of investments will be
taxable to you, even though the income from such investments generally will
be tax-exempt. Taxes on distributions of capital gains are determined by
how long the 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). Distributions of
gains from investments that the funds owned for more than one year will be
taxable as capital gains. Distributions of gains from investments that the
funds owned for one year or less will be taxable as ordinary income.
Distributions are taxable whether you received them in cash or reinvested
them in additional shares.

The fund's investments in certain 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.

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 state and local
taxes.

Financial highlights

The financial highlights tables are intended to help you understand each
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
for the year ended May 31, 2001 has been derived from each fund's financial
statements, which have been audited by PricewaterhouseCoopers LLP. Its
report 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
- ------------------------------------------------------------------------------------------------------------


Per-share
operating performance                                       Year ended May 31
- ------------------------------------------------------------------------------------------------------------
                                          2001        2000        1999        1998         1997
- ------------------------------------------------------------------------------------------------------------
                                                                          
Net asset value,
beginning of period                      $8.54       $9.22       $9.32       $9.03        $8.84
- ------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------
Net investment income                      .46         .47 (a)     .44 (a)     .44          .46
- ------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments                 .40        (.68)       (.11)        .29          .19
- ------------------------------------------------------------------------------------------------------------
Total from
investment operations                      .86        (.21)        .33         .73          .65
- ------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------
From net
investment income                         (.46)       (.47)       (.43)       (.44)        (.46)
- ------------------------------------------------------------------------------------------------------------
Total distributions                       (.46)       (.47)       (.43)       (.44)        (.46)
- ------------------------------------------------------------------------------------------------------------
Net asset value,
end of period                            $8.94       $8.54       $9.22       $9.32        $9.03
- ------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b)                   10.18       (2.28)       3.57        8.28         7.52
- ------------------------------------------------------------------------------------------------------------

Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands)                        $104,424     $90,602    $108,205    $120,649     $122,743
- ------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c)                  .88         .86 (a)     .84 (a)     .99          .98
- ------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)                 5.21        5.34 (a)    4.71 (a)    4.76         5.11
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover (%)                   23.67       11.44       21.60       29.63        73.61
- ------------------------------------------------------------------------------------------------------------

(a) Reflects a management fee waiver during the period. As a result of such waiver,  expenses of the fund
    for the year ended May 31, 2000, reflect a reduction of less than $.01 per share for each class.
    Expenses for the year ended May 31, 1999, reflect a reduction of $.02, $.01 and $.01 per share for
    class A, class B and class M, respectively.

(b) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

(c) Includes amounts paid through expense offset arrangements.








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
- ------------------------------------------------------------------------------------------------------------
                                          2001        2000        1999        1998         1997
- ------------------------------------------------------------------------------------------------------------
                                                                          
Net asset value,
beginning of period                      $8.53       $9.21       $9.30       $9.02        $8.82
- ------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------
Net investment income                      .40         .41 (a)     .38 (a)     .38          .40
- ------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments                 .40        (.68)       (.10)        .28          .20
- ------------------------------------------------------------------------------------------------------------
Total from
investment operations                      .80        (.27)        .28         .66          .60
- ------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------
From net
investment income                         (.40)       (.41)       (.37)       (.38)        (.40)
- ------------------------------------------------------------------------------------------------------------
Total distributions                       (.40)       (.41)       (.37)       (.38)        (.40)
- ------------------------------------------------------------------------------------------------------------
Net asset value,
end of period                            $8.93       $8.53       $9.21       $9.30        $9.02
- ------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b)                    9.47       (2.93)       3.01        7.47         6.94
- ------------------------------------------------------------------------------------------------------------

Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands)                         $21,714     $28,157     $33,480     $32,046      $28,340
- ------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c)                 1.53        1.51 (a)    1.49 (a)    1.64         1.63
- ------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)                 4.59        4.69 (a)    4.09 (a)    4.10         4.44
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover (%)                   23.67       11.44       21.60       29.63        73.61
- ------------------------------------------------------------------------------------------------------------

(a) Reflects a management fee waiver during the period. As a result of such waiver, expenses of the fund
    for the year ended May 31, 2000, reflect a reduction of less than $.01 per share for each class.
    Expenses for the year ended May 31, 1999, reflect a reduction of $.02, $.01 and $.01 per share for
    class A, class B and class M, respectively.

(b) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

(c) Includes amounts paid through expense offset arrangements.







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
- ------------------------------------------------------------------------------------------------------------
                                          2001        2000        1999        1998         1997
- ------------------------------------------------------------------------------------------------------------
                                                                          
Net asset value,
beginning of period                      $8.55       $9.23       $9.33       $9.04        $8.85
- ------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------
Net investment income                      .43         .44 (a)     .41 (a)     .41          .43 (b)
- ------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments                 .40        (.68)       (.11)        .30          .19
- ------------------------------------------------------------------------------------------------------------
Total from
investment operations                      .83        (.24)        .30         .71          .62
- ------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------
From net
investment income                         (.43)       (.44)       (.40)       (.42)        (.43)
- ------------------------------------------------------------------------------------------------------------
Total distributions                       (.43)       (.44)       (.40)       (.42)        (.43)
- ------------------------------------------------------------------------------------------------------------
Net asset value,
end of period                            $8.95       $8.55       $9.23       $9.33        $9.04
- ------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(c)                    9.84       (2.57)       3.26        7.96         7.19
- ------------------------------------------------------------------------------------------------------------

Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands)                            $880        $849        $570        $521         $503
- ------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(d)                 1.18        1.16 (a)    1.14 (a)    1.29         1.28
- ------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)                 4.92        5.08 (a)    4.44 (a)    4.47         4.75
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover (%)                   23.67       11.44       21.60       29.63        73.61
- ------------------------------------------------------------------------------------------------------------

(a) Reflects a management fee waiver during the period. As a result of such waiver, expenses of the fund
    for the year ended May 31, 2000, reflect a reduction of less than $.01 per share for each class.
    Expenses for the year ended May 31, 1999, reflect a reduction of $.02, $.01 and $.01 per share for
    class A, class B and class M, respectively.

(b) Per share net investment income has been determined on the basis of the weighted average number of
    shares outstanding during the period.

(c) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

(d) Includes amounts paid through expense offset arrangements.







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
- ------------------------------------------------------------------------------------------------------------
                                          2001        2000        1999        1998         1997
- ------------------------------------------------------------------------------------------------------------
                                                                          
Net asset value,
beginning of period                      $8.62       $9.30       $9.45       $9.14        $8.91
- ------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------
Net investment income                      .46         .47         .46         .47          .48
- ------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments                 .53        (.68)       (.16)        .32          .23
- ------------------------------------------------------------------------------------------------------------
Total from
investment operations                      .99        (.21)        .30         .79          .71
- ------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------
From net
investment income                         (.46)       (.47)       (.45)       (.48)        (.48)
- ------------------------------------------------------------------------------------------------------------
Total distributions                       (.46)       (.47)       (.45)       (.48)        (.48)
- ------------------------------------------------------------------------------------------------------------
Net asset value,
end of period                            $9.15       $8.62       $9.30       $9.45        $9.14
- ------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a)                   11.61       (2.18)       3.20        8.80         8.12
- ------------------------------------------------------------------------------------------------------------

Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands)                        $217,697    $200,961    $233,454    $237,910     $239,196
- ------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b)                  .84         .86         .98         .96          .96
- ------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)                 5.04        5.35        4.87        5.06         5.28
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover (%)                   25.47       15.32       32.08       42.40        70.30
- ------------------------------------------------------------------------------------------------------------

(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 Florida Tax Exempt Income Fund
(For a common share outstanding throughout the period)

CLASS B
- ------------------------------------------------------------------------------------------------------------


Per-share
operating performance                                      Year ended May 31
- ------------------------------------------------------------------------------------------------------------
                                          2001        2000        1999        1998         1997
- ------------------------------------------------------------------------------------------------------------
                                                                          
Net asset value,
beginning of period                      $8.62       $9.30       $9.45       $9.14        $8.91
- ------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------
Net investment income                      .40         .42         .40         .42          .42
- ------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments                 .53        (.68)       (.16)        .31          .23
- ------------------------------------------------------------------------------------------------------------
Total from
investment operations                      .93        (.26)        .24         .73          .65
- ------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------
From net
investment income                         (.40)       (.42)       (.39)       (.42)        (.42)
- ------------------------------------------------------------------------------------------------------------
Total distributions                       (.40)       (.42)       (.39)       (.42)        (.42)
- ------------------------------------------------------------------------------------------------------------
Net asset value,
end of period                            $9.15       $8.62       $9.30       $9.45        $9.14
- ------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a)                   10.89       (2.81)       2.56        8.10         7.42
- ------------------------------------------------------------------------------------------------------------

Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands)                         $71,747     $70,805     $81,876     $71,925      $58,926
- ------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b)                 1.49        1.51        1.63        1.61         1.61
- ------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)                 4.39        4.70        4.23        4.40         4.62
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover (%)                   25.47       15.32       32.08       42.40        70.30
- ------------------------------------------------------------------------------------------------------------

(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 Florida Tax Exempt Income Fund
(For a common share outstanding throughout the period)

CLASS M
- ------------------------------------------------------------------------------------------------------------


Per-share
operating performance                                      Year ended May 31
- ------------------------------------------------------------------------------------------------------------
                                          2001        2000        1999        1998         1997
- ------------------------------------------------------------------------------------------------------------
                                                                          
Net asset value,
beginning of period                      $8.62       $9.29       $9.44       $9.14        $8.91
- ------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------
Net investment income                      .43         .45         .43         .45          .45
- ------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments                 .53        (.67)       (.16)        .30          .23
- ------------------------------------------------------------------------------------------------------------
Total from
investment operations                      .96        (.22)        .27         .75          .68
- ------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------
From net
investment income                         (.43)       (.45)       (.42)       (.45)        (.45)
- ------------------------------------------------------------------------------------------------------------
Total distributions                       (.43)       (.45)       (.42)       (.45)        (.45)
- ------------------------------------------------------------------------------------------------------------
Net asset value,
end of period                            $9.15       $8.62       $9.29       $9.44        $9.14
- ------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a)                   11.28       (2.37)       2.88        8.36         7.80
- ------------------------------------------------------------------------------------------------------------

Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands)                            $738        $520      $1,308      $1,244       $1,355
- ------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b)                 1.14        1.16        1.28        1.26         1.26
- ------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)                 4.73        5.02        4.60        4.74         4.97
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover (%)                   25.47       15.32       32.08       42.40        70.30
- ------------------------------------------------------------------------------------------------------------

(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 A
- ------------------------------------------------------------------------------------------------------------


Per-share
operating performance                                      Year ended May 31
- ------------------------------------------------------------------------------------------------------------
                                          2001        2000        1999        1998         1997
- ------------------------------------------------------------------------------------------------------------
                                                                          
Net asset value,
beginning of period                      $8.74       $9.45       $9.61       $9.31        $9.11
- ------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------
Net investment income                      .48         .50         .49         .51          .52
- ------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments                 .46        (.71)       (.15)        .30          .21
- ------------------------------------------------------------------------------------------------------------
Total from
investment operations                      .94        (.21)        .34         .81          .73
- ------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------
From net
investment income                         (.48)       (.50)       (.50)       (.51)        (.53)
- ------------------------------------------------------------------------------------------------------------
Total distributions                       (.48)       (.50)       (.50)       (.51)        (.53)
- ------------------------------------------------------------------------------------------------------------
Net asset value,
end of period                            $9.20       $8.74       $9.45       $9.61        $9.31
- ------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a)                   10.95       (2.20)       3.60        8.86         8.17
- ------------------------------------------------------------------------------------------------------------

Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands)                        $285,452    $259,479    $298,243    $293,978     $280,402
- ------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b)                  .82         .84         .97         .95          .96
- ------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)                 5.28        5.55        5.11        5.33         5.67
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover (%)                    6.91       15.17        9.42       31.13        19.12
- ------------------------------------------------------------------------------------------------------------

(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

(b) The ratio of expenses to average net assets 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
- ------------------------------------------------------------------------------------------------------------
                                          2001        2000        1999        1998         1997
- ------------------------------------------------------------------------------------------------------------
                                                                          
Net asset value,
beginning of period                      $8.73       $9.44       $9.61       $9.30        $9.10
- ------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------
Net investment income                      .42         .44         .43         .45          .46
- ------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments                 .46        (.71)       (.16)        .30          .21
- ------------------------------------------------------------------------------------------------------------
Total from
investment operations                      .88        (.27)        .27         .75          .67
- ------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------
From net
investment income                         (.42)       (.44)       (.44)       (.44)        (.47)
- ------------------------------------------------------------------------------------------------------------
Total distributions                       (.42)       (.44)       (.44)       (.44)        (.47)
- ------------------------------------------------------------------------------------------------------------
Net asset value,
end of period                            $9.19       $8.73       $9.44       $9.61        $9.30
- ------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a)                   10.24       (2.85)       2.81        8.27         7.47
- ------------------------------------------------------------------------------------------------------------

Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands)                        $121,881    $109,426    $122,654    $105,351      $85,192
- ------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b)                 1.47        1.49        1.62        1.60         1.61
- ------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)                 4.63        4.90        4.47        4.67         4.99
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover (%)                    6.91       15.17        9.42       31.13        19.12
- ------------------------------------------------------------------------------------------------------------

(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

(b) The ratio of expenses to average net assets 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
- ------------------------------------------------------------------------------------------------------------
                                          2001        2000        1999        1998         1997
- ------------------------------------------------------------------------------------------------------------
                                                                          
Net asset value,
beginning of period                      $8.74       $9.45       $9.61       $9.31        $9.10
- ------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------
Net investment income                      .45         .47         .46         .48          .50
- ------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments                 .46        (.71)       (.15)        .30          .21
- ------------------------------------------------------------------------------------------------------------
Total from
investment operations                      .91        (.24)        .31         .78          .71
- ------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------
From net
investment income                         (.45)       (.47)       (.47)       (.48)        (.50)
- ------------------------------------------------------------------------------------------------------------
Total distributions                       (.45)       (.47)       (.47)       (.48)        (.50)
- ------------------------------------------------------------------------------------------------------------
Net asset value,
end of period                            $9.20       $8.74       $9.45       $9.61        $9.31
- ------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a)                   10.61       (2.50)       3.29        8.55         7.96
- ------------------------------------------------------------------------------------------------------------

Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands)                          $5,855      $4,174      $5,349      $2,570       $2,839
- ------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b)                 1.12        1.14        1.27        1.25         1.26
- ------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)                 4.98        5.25        4.81        5.05         5.30
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover (%)                    6.91       15.17        9.42       31.13        19.12
- ------------------------------------------------------------------------------------------------------------

(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

(b) The ratio of expenses to average net assets 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
- ------------------------------------------------------------------------------------------------------------
                                          2001        2000        1999        1998         1997
- ------------------------------------------------------------------------------------------------------------
                                                                          
Net asset value,
beginning of period                      $8.38       $9.14       $9.35       $9.12        $8.85
- ------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------
Net investment income                      .45         .46         .44         .47          .48
- ------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments                 .45        (.76)       (.18)        .27          .27
- ------------------------------------------------------------------------------------------------------------
Total from
investment operations                      .90        (.30)        .26         .74          .75
- ------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------
From net
investment income                         (.45)       (.46)       (.44)       (.47)        (.48)
- ------------------------------------------------------------------------------------------------------------
From net realized gain
on investments                              --          --        (.03)       (.03)          --
- ------------------------------------------------------------------------------------------------------------
In excess of net gain
on investments                              --          --          --        (.01)          --
- ------------------------------------------------------------------------------------------------------------
Total distributions                       (.45)       (.46)       (.47)       (.51)        (.48)
- ------------------------------------------------------------------------------------------------------------
Net asset value,
end of period                            $8.83       $8.38       $9.14       $9.35        $9.12
- ------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a)                   10.95       (3.30)       2.77        8.28         8.67
- ------------------------------------------------------------------------------------------------------------

Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands)                        $130,071    $116,715    $145,438    $145,547     $142,038
- ------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b)                  .87         .88        1.00         .99          .99
- ------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)                 5.18        5.30        4.81        5.02         5.33
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover (%)                   14.46        7.36       19.51       32.44        55.30
- ------------------------------------------------------------------------------------------------------------

(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 B
- ------------------------------------------------------------------------------------------------------------


Per-share
operating performance                                      Year ended May 31
- ------------------------------------------------------------------------------------------------------------
                                          2001        2000        1999        1998         1997
- ------------------------------------------------------------------------------------------------------------
                                                                          
Net asset value,
beginning of period                      $8.36       $9.12       $9.34       $9.11        $8.84
- ------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------
Net investment income                      .39         .40         .38         .41          .43
- ------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments                 .48        (.76)       (.19)        .27          .26
- ------------------------------------------------------------------------------------------------------------
Total from
investment operations                      .87        (.36)        .19         .68          .69
- ------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------
From net
investment income                         (.40)       (.40)       (.38)       (.41)        (.42)
- ------------------------------------------------------------------------------------------------------------
From net realized gain
on investments                              --          --        (.03)       (.03)          --
- ------------------------------------------------------------------------------------------------------------
In excess of net gain
on investments                              --          --          --        (.01)          --
- ------------------------------------------------------------------------------------------------------------
Total distributions                       (.40)       (.40)       (.41)       (.45)        (.42)
- ------------------------------------------------------------------------------------------------------------
Net asset value,
end of period                            $8.83       $8.36       $9.12       $9.34        $9.11
- ------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a)                   10.50       (3.95)       2.00        7.58         7.99
- ------------------------------------------------------------------------------------------------------------

Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands)                         $45,406     $40,060     $46,827     $41,155      $35,041
- ------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b)                 1.52        1.53        1.65        1.64         1.64
- ------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)                 4.53        4.65        4.16        4.36         4.68
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover (%)                   14.46        7.36       19.51       32.44        55.30
- ------------------------------------------------------------------------------------------------------------

(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 M
- ------------------------------------------------------------------------------------------------------------


Per-share
operating performance                                      Year ended May 31
- ------------------------------------------------------------------------------------------------------------
                                          2001        2000        1999        1998         1997
- ------------------------------------------------------------------------------------------------------------
                                                                          
Net asset value,
beginning of period                      $8.37       $9.13       $9.35       $9.12        $8.85
- ------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------
Net investment income                      .43         .43         .42         .44          .46
- ------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments                 .46        (.76)       (.20)        .27          .27
- ------------------------------------------------------------------------------------------------------------
Total from
investment operations                      .89        (.33)        .22         .71          .73
- ------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------
From net
investment income                         (.43)       (.43)       (.41)       (.44)        (.46)
- ------------------------------------------------------------------------------------------------------------
From net realized gain
on investments                              --          --        (.03)       (.03)          --
- ------------------------------------------------------------------------------------------------------------
In excess of net gain
on investments                              --          --          --        (.01)          --
- ------------------------------------------------------------------------------------------------------------
Total distributions                       (.43)       (.43)       (.44)       (.48)        (.46)
- ------------------------------------------------------------------------------------------------------------
Net asset value,
end of period                            $8.83       $8.37       $9.13       $9.35        $9.12
- ------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a)                   10.75       (3.60)       2.36        7.95         8.36
- ------------------------------------------------------------------------------------------------------------

Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands)                          $2,320      $2,010      $1,922      $1,742         $719
- ------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b)                 1.17        1.18        1.30        1.29         1.29
- ------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)                 4.88        5.02        4.51        4.70         5.01
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover (%)                   14.46        7.36       19.51       32.44        55.30
- ------------------------------------------------------------------------------------------------------------

(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 Minnesota Tax Exempt Income Fund
(For a common share outstanding throughout the period)

CLASS A
- ------------------------------------------------------------------------------------------------------------


Per-share
operating performance                                      Year ended May 31
- ------------------------------------------------------------------------------------------------------------
                                          2001        2000        1999        1998         1997
- ------------------------------------------------------------------------------------------------------------
                                                                          
Net asset value,
beginning of period                      $8.31       $9.05       $9.19       $8.95        $8.76
- ------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------
Net investment income                      .45         .44 (a)     .45 (a)     .45          .47
- ------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments                 .42        (.74)       (.14)        .24          .19
- ------------------------------------------------------------------------------------------------------------
Total from
investment operations                      .87        (.30)        .31         .69          .66
- ------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------
From net
investment income                         (.45)       (.44)       (.45)       (.45)        (.47)
- ------------------------------------------------------------------------------------------------------------
Total distributions                       (.45)       (.44)       (.45)       (.45)        (.47)
- ------------------------------------------------------------------------------------------------------------
Net asset value,
end of period                            $8.73       $8.31       $9.05       $9.19        $8.95
- ------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b)                   10.61       (3.30)       3.38        7.90         7.73
- ------------------------------------------------------------------------------------------------------------

Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands)                         $94,147     $86,868    $102,869    $100,806      $98,307
- ------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c)                  .88         .89 (a)     .92 (a)    1.01         1.03
- ------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)                 5.17        5.15 (a)    4.81 (a)    4.89         5.32
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover (%)                   25.76       12.09       12.79       10.67        50.80
- ------------------------------------------------------------------------------------------------------------

(a) Reflects a management fee waiver during the period. As a result of such waiver, expenses of the fund
    for the year ended May 31, 2000, reflect a reduction of less than $0.01 per share. Expenses of the
    fund for the year ended May 31, 1999, reflect a reduction of $0.01 per share.

(b) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

(c) Includes amounts paid through expense offset arrangements.







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
- ------------------------------------------------------------------------------------------------------------
                                          2001        2000        1999        1998         1997
- ------------------------------------------------------------------------------------------------------------
                                                                          
Net asset value,
beginning of period                      $8.29       $9.02       $9.16       $8.92        $8.73
- ------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------
Net investment income                      .39         .38 (a)     .38 (a)     .39          .41
- ------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments                 .41        (.73)       (.13)        .24          .19
- ------------------------------------------------------------------------------------------------------------
Total from
investment operations                      .80        (.35)        .25         .63          .60
- ------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------
From net
investment income                         (.39)       (.38)       (.39)       (.39)        (.41)
- ------------------------------------------------------------------------------------------------------------
Total distributions                       (.39)       (.38)       (.39)       (.39)        (.41)
- ------------------------------------------------------------------------------------------------------------
Net asset value,
end of period                            $8.70       $8.29       $9.02       $9.16        $8.92
- ------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b)                    9.78       (3.84)       2.70        7.20         7.04
- ------------------------------------------------------------------------------------------------------------

Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands)                         $47,678     $45,249     $51,360     $44,100      $35,333
- ------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c)                 1.53        1.54 (a)    1.57 (a)    1.66         1.68
- ------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)                 4.52        4.50 (a)    4.16 (a)    4.22         4.67
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover (%)                   25.76       12.09       12.79       10.67        50.80
- ------------------------------------------------------------------------------------------------------------

(a) Reflects a management fee waiver during the period. As a result of such waiver, expenses of the fund
    for the year ended May 31, 2000, reflect a reduction of less than $0.01 per share. Expenses of the
    fund for the year ended May 31, 1999, reflect a reduction of $0.01 per share.

(b) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

(c) Includes amounts paid through expense offset arrangements.







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
- ------------------------------------------------------------------------------------------------------------
                                          2001        2000        1999        1998         1997
- ------------------------------------------------------------------------------------------------------------
                                                                          
Net asset value,
beginning of period                      $8.31       $9.04       $9.19       $8.94        $8.76
- ------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------
Net investment income                      .42         .42 (a)     .41 (a)     .42          .45
- ------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments                 .41        (.73)       (.14)        .26          .18
- ------------------------------------------------------------------------------------------------------------
Total from
investment operations                      .83        (.31)        .27         .68          .63
- ------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------
From net
investment income                         (.42)       (.42)       (.42)       (.43)        (.45)
- ------------------------------------------------------------------------------------------------------------
Total distributions                       (.42)       (.42)       (.42)       (.43)        (.45)
- ------------------------------------------------------------------------------------------------------------
Net asset value,
end of period                            $8.72       $8.31       $9.04       $9.19        $8.94
- ------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b)                   10.15       (3.49)       2.96        7.70         7.29
- ------------------------------------------------------------------------------------------------------------

Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands)                          $2,180      $2,185      $1,613      $1,492       $1,106
- ------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c)                 1.18        1.19 (a)    1.22 (a)    1.31         1.33
- ------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)                 4.88        4.87 (a)    4.51 (a)    4.64         5.01
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover (%)                   25.76       12.09       12.79       10.67        50.80
- ------------------------------------------------------------------------------------------------------------

(a) Reflects a management fee waiver during the period. As a result of such waiver, expenses of the fund
    for the year ended May 31, 2000, reflect a reduction of less than $0.01 per share. Expenses of the
    fund for the year ended May 31, 1999, reflect a reduction of $0.01 per share.

(b) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

(c) Includes amounts paid through expense offset arrangements.







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
- ------------------------------------------------------------------------------------------------------------
                                          2001        2000        1999        1998         1997
- ------------------------------------------------------------------------------------------------------------
                                                                          
Net asset value,
beginning of period                      $8.47       $9.15       $9.32       $9.02        $8.76
- ------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------
Net investment income                      .46         .47         .45         .45          .47
- ------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments                 .47        (.68)       (.17)        .30          .26
- ------------------------------------------------------------------------------------------------------------
Total from
investment operations                      .93        (.21)        .28         .75          .73
- ------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------
From net
investment income                         (.46)       (.47)       (.45)       (.45)        (.47)
- ------------------------------------------------------------------------------------------------------------
Total distributions                       (.46)       (.47)       (.45)       (.45)        (.47)
- ------------------------------------------------------------------------------------------------------------
Net asset value,
end of period                            $8.94       $8.47       $9.15       $9.32        $9.02
- ------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a)                   11.16       (2.32)       3.05        8.48         8.57
- ------------------------------------------------------------------------------------------------------------

Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands)                        $187,400    $173,872    $214,876    $218,312     $228,361
- ------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b)                  .86         .86         .99         .96          .96
- ------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)                 5.17        5.35        4.87        4.84         5.28
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover (%)                   12.68       14.61        7.19       29.03        27.14
- ------------------------------------------------------------------------------------------------------------

(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 New Jersey Tax Exempt Income Fund
(For a common share outstanding throughout the period)

CLASS B
- ------------------------------------------------------------------------------------------------------------


Per-share
operating performance                                      Year ended May 31
- ------------------------------------------------------------------------------------------------------------
                                          2001        2000        1999        1998         1997
- ------------------------------------------------------------------------------------------------------------
                                                                          
Net asset value,
beginning of period                      $8.46       $9.14       $9.31       $9.01        $8.75
- ------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------
Net investment income                      .40         .41         .39         .39          .41
- ------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments                 .48        (.68)       (.17)        .30          .27
- ------------------------------------------------------------------------------------------------------------
Total from
investment operations                      .88        (.27)        .22         .69          .68
- ------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------
From net
investment income                         (.40)       (.41)       (.39)       (.39)        (.42)
- ------------------------------------------------------------------------------------------------------------
Total distributions                       (.40)       (.41)       (.39)       (.39)        (.42)
- ------------------------------------------------------------------------------------------------------------
Net asset value,
end of period                            $8.94       $8.46       $9.14       $9.31        $9.01
- ------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a)                   10.57       (2.97)       2.37        7.78         7.87
- ------------------------------------------------------------------------------------------------------------

Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands)                         $90,274     $84,296     $99,781     $95,315      $82,407
- ------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b)                 1.51        1.51        1.64        1.61         1.61
- ------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)                 4.52        4.70        4.22        4.18         4.63
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover (%)                   12.68       14.61        7.19       29.03        27.14
- ------------------------------------------------------------------------------------------------------------

(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 New Jersey Tax Exempt Income Fund
(For a common share outstanding throughout the period)

CLASS M
- ------------------------------------------------------------------------------------------------------------


Per-share
operating performance                                      Year ended May 31
- ------------------------------------------------------------------------------------------------------------
                                          2001        2000        1999        1998         1997
- ------------------------------------------------------------------------------------------------------------
                                                                          
Net asset value,
beginning of period                      $8.46       $9.15       $9.33       $9.02        $8.76
- ------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------
Net investment income                      .43         .44         .42         .42          .45 (c)
- ------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments                 .48        (.69)       (.18)        .31          .26
- ------------------------------------------------------------------------------------------------------------
Total from
investment operations                      .91        (.25)        .24         .73          .71
- ------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------
From net
investment income                         (.43)       (.44)       (.42)       (.42)        (.45)
- ------------------------------------------------------------------------------------------------------------
Total distributions                       (.43)       (.44)       (.42)       (.42)        (.45)
- ------------------------------------------------------------------------------------------------------------
Net asset value,
end of period                            $8.94       $8.46       $9.15       $9.33        $9.02
- ------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a)                   10.96       (2.73)       2.63        8.28         8.25
- ------------------------------------------------------------------------------------------------------------

Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands)                            $909        $675      $1,127        $668         $372
- ------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b)                 1.16        1.16        1.29        1.26         1.26
- ------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)                 4.86        5.05        4.61        4.48         4.95
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover (%)                   12.68       14.61        7.19       29.03        27.14
- ------------------------------------------------------------------------------------------------------------

(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

(b) Includes amounts paid through expense offset arrangements.

(c) Per share net investment income has been determined on the basis of the weighted average number of
    shares outstanding during the period.







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
- ------------------------------------------------------------------------------------------------------------
                                          2001        2000        1999        1998         1997
- ------------------------------------------------------------------------------------------------------------
                                                                          
Net asset value,
beginning of period                      $8.29       $8.99       $9.26       $8.99        $8.76
- ------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------
Net investment income                      .44         .45 (a)     .46 (a)     .47          .46
- ------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments                 .47        (.70)       (.19)        .27          .23
- ------------------------------------------------------------------------------------------------------------
Total from
investment operations                      .91        (.25)        .27         .74          .69
- ------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------
From net
investment income                         (.43)       (.45)       (.47)       (.47)        (.46)
- ------------------------------------------------------------------------------------------------------------
From net realized gain
on investments                              --          --        (.07)         --           --
- ------------------------------------------------------------------------------------------------------------
Total distributions                       (.43)       (.45)       (.54)       (.47)        (.46)
- ------------------------------------------------------------------------------------------------------------
Net asset value,
end of period                            $8.77       $8.29       $8.99       $9.26        $8.99
- ------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b)                   11.22       (2.72)       2.93        8.35         8.05
- ------------------------------------------------------------------------------------------------------------

Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands)                        $153,806    $149,434    $186,170    $186,130     $185,030
- ------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c)                  .88         .87 (a)     .91 (a)     .98          .98
- ------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)                 5.03        5.24 (a)    4.96 (a)    5.06         5.22
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover (%)                   11.88       10.84        7.80       31.07        33.92
- ------------------------------------------------------------------------------------------------------------

(a) Reflects a management fee waiver during the period. As a result of such waiver, expenses of the fund
    for the year ended May 31, 2000, reflect a reduction of less than $0.01 per share for class A,
    Class B and Class M, respectively. Expenses for the period ended May 31, 1999, reflect a reduction of
    $0.01 per share for class A, class B and class M, respectively.

(b) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

(c) Includes amounts paid through expense offset arrangements .







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
- ------------------------------------------------------------------------------------------------------------
                                          2001        2000        1999        1998         1997
- ------------------------------------------------------------------------------------------------------------
                                                                          
Net asset value,
beginning of period                      $8.28       $8.98       $9.25       $8.98        $8.75
- ------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------
Net investment income                      .38         .39 (a)     .40 (a)     .41          .41
- ------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments                 .48        (.69)       (.20)        .27          .22
- ------------------------------------------------------------------------------------------------------------
Total from
investment operations                      .86        (.30)        .20         .68          .63
- ------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------
From net
investment income                         (.38)       (.40)       (.40)       (.41)        (.40)
- ------------------------------------------------------------------------------------------------------------
From net realized gain
on investments                              --          --        (.07)         --           --
- ------------------------------------------------------------------------------------------------------------
Total distributions                       (.38)       (.40)       (.47)       (.41)        (.40)
- ------------------------------------------------------------------------------------------------------------
Net asset value,
end of period                            $8.76       $8.28       $8.98       $9.25        $8.98
- ------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b)                   10.51       (3.37)       2.27        7.65         7.35
- ------------------------------------------------------------------------------------------------------------

Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands)                         $51,687     $48,424     $58,763     $53,689      $47,050
- ------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c)                 1.53        1.52 (a)    1.56 (a)    1.63         1.63
- ------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)                 4.38        4.59 (a)    4.31 (a)    4.40         4.56
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover (%)                   11.88       10.84        7.80       31.07        33.92
- ------------------------------------------------------------------------------------------------------------

(a) Reflects a management fee waiver during the period. As a result of such waiver, expenses of the fund
    for the year ended May 31, 2000, reflect a reduction of less than $0.01 per share for class A,
    Class B and Class M, respectively. Expenses for the period ended May 31, 1999, reflect a reduction of
    $0.01 per share for class A, class B and class M, respectively.

(b) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

(c) Includes amounts paid through expense offset arrangements .







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
- ------------------------------------------------------------------------------------------------------------
                                          2001        2000        1999        1998         1997
- ------------------------------------------------------------------------------------------------------------
                                                                          
Net asset value,
beginning of period                      $8.29       $8.99       $9.26       $9.00        $8.76
- ------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------
Net investment income                      .41         .42 (a)     .43 (a)     .43          .44
- ------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments                 .48        (.69)       (.19)        .27          .23
- ------------------------------------------------------------------------------------------------------------
Total from
investment operations                      .89        (.27)        .24         .70          .67
- ------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------
From net
investment income                         (.41)       (.43)       (.44)       (.44)        (.43)
- ------------------------------------------------------------------------------------------------------------
From net realized gain
on investments                              --          --        (.07)         --           --
- ------------------------------------------------------------------------------------------------------------
Total distributions                       (.41)       (.43)       (.51)       (.44)        (.43)
- ------------------------------------------------------------------------------------------------------------
Net asset value,
end of period                            $8.77       $8.29       $8.99       $9.26        $9.00
- ------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b)                   10.88       (3.02)       2.62        7.90         7.85
- ------------------------------------------------------------------------------------------------------------

Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands)                          $1,932      $1,626      $1,998      $2,212         $911
- ------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c)                 1.18        1.17 (a)    1.21 (a)    1.28         1.28
- ------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)                 4.73        4.94 (a)    4.67 (a)    4.76         4.87
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover (%)                   11.88       10.84        7.80       31.07        33.92
- ------------------------------------------------------------------------------------------------------------

(a) Reflects a management fee waiver during the period. As a result of such waiver, expenses of the fund
    for the year ended May 31, 2000, reflect a reduction of less than $0.01 per share for class A,
    Class B and Class M, respectively. Expenses for the period ended May 31, 1999, reflect a reduction of
    $0.01 per share for class A, class B and class M, respectively.

(b) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

(c) Includes amounts paid through expense offset arrangements .







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
- ------------------------------------------------------------------------------------------------------------
                                          2001        2000        1999        1998         1997
- ------------------------------------------------------------------------------------------------------------
                                                                          
Net asset value
beginning of period                      $8.35       $9.12       $9.49       $9.21        $9.08
- ------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------
Net investment income                      .47         .47         .46         .49          .50
- ------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments                 .43        (.77)       (.28)        .31          .20
- ------------------------------------------------------------------------------------------------------------
Total from
investment operations                      .90        (.30)        .18         .80          .70
- ------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------
From net
investment income                         (.47)       (.47)       (.46)       (.48)        (.49)
- ------------------------------------------------------------------------------------------------------------
From net realized gain
on investments                              --          --        (.09)       (.04)        (.08)
- ------------------------------------------------------------------------------------------------------------
Total distributions                       (.47)       (.47)       (.55)       (.52)        (.57)
- ------------------------------------------------------------------------------------------------------------
Net asset value,
end of period                            $8.78       $8.35       $9.12       $9.49        $9.21
- ------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a)                   11.04       (3.30)       1.91        8.92         7.94
- ------------------------------------------------------------------------------------------------------------

Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands)                        $159,363    $141,406    $179,327    $187,272     $185,041
- ------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b)                  .87         .87         .98         .98          .98
- ------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)                 5.45        5.44        4.89        5.16         5.39
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover (%)                   13.31       14.85       14.28       40.76        38.10
- ------------------------------------------------------------------------------------------------------------

(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 Pennsylvania Tax Exempt Income Fund
(For a common share outstanding throughout the period)

CLASS B
- ------------------------------------------------------------------------------------------------------------


Per-share
operating performance                                      Year ended May 31
- ------------------------------------------------------------------------------------------------------------
                                          2001        2000        1999        1998         1997
- ------------------------------------------------------------------------------------------------------------
                                                                          
Net asset value
beginning of period                      $8.34       $9.11       $9.48       $9.20        $9.07
- ------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------
Net investment income                      .42         .41         .40         .42          .44
- ------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments                 .43        (.77)       (.28)        .32          .20
- ------------------------------------------------------------------------------------------------------------
Total from
investment operations                      .85        (.36)        .12         .74          .64
- ------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------
From net
investment income                         (.42)       (.41)       (.40)       (.42)        (.43)
- ------------------------------------------------------------------------------------------------------------
From net realized gain
on investments                              --          --        (.09)       (.04)        (.08)
- ------------------------------------------------------------------------------------------------------------
Total distributions                       (.42)       (.41)       (.49)       (.46)        (.51)
- ------------------------------------------------------------------------------------------------------------
Net asset value,
end of period                            $8.77       $8.34       $9.11       $9.48        $9.20
- ------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a)                   10.33       (3.94)       1.24        8.22         7.24
- ------------------------------------------------------------------------------------------------------------

Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands)                         $67,541     $76,921     $98,447     $90,303      $77,399
- ------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b)                 1.52        1.52        1.63        1.63         1.63
- ------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)                 4.80        4.79        4.24        4.51         4.73
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover (%)                   13.31       14.85       14.28       40.76        38.10
- ------------------------------------------------------------------------------------------------------------

(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 Pennsylvania Tax Exempt Income Fund
(For a common share outstanding throughout the period)

CLASS M
- ------------------------------------------------------------------------------------------------------------


Per-share
operating performance                                      Year ended May 31
- ------------------------------------------------------------------------------------------------------------
                                          2001        2000        1999        1998         1997
- ------------------------------------------------------------------------------------------------------------
                                                                          
Net asset value
beginning of period                      $8.36       $9.12       $9.49       $9.22        $9.09
- ------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------
Net investment income                      .45         .44         .43         .46          .47
- ------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments                 .43        (.76)       (.28)        .30          .21
- ------------------------------------------------------------------------------------------------------------
Total from
investment operations                      .88        (.32)        .15         .76          .68
- ------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------
From net
investment income                         (.45)       (.44)       (.43)       (.45)        (.47)
- ------------------------------------------------------------------------------------------------------------
From net realized gain
on investments                              --          --        (.09)       (.04)        (.08)
- ------------------------------------------------------------------------------------------------------------
Total distributions                       (.45)       (.44)       (.52)       (.49)        (.55)
- ------------------------------------------------------------------------------------------------------------
Net asset value,
end of period                            $8.79       $8.36       $9.12       $9.49        $9.22
- ------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a)                   10.70       (3.48)       1.60        8.47         7.61
- ------------------------------------------------------------------------------------------------------------

Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands)                          $2,874      $2,197      $3,363      $1,994         $660
- ------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b)                 1.17        1.17        1.28        1.28         1.28
- ------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)                 5.16        5.14        4.59        4.85         5.04
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover (%)                   13.31       14.85       14.28       40.76        38.10
- ------------------------------------------------------------------------------------------------------------

(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

(b) Includes amounts paid through expense offset arrangements.




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) on any business day of the month
except for the 29th, 30th or 31st. The amount you choose  will be
automatically transferred 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 $10,000 or more.
Your automatic withdrawal may be made on any business day of the month
except for the 29th, 30th or 31st.

* SYSTEMATIC EXCHANGE

Transfer assets automatically from one Putnam account to another on a
regular, prearranged basis. There is no additional charge for this
service.

* FREE EXCHANGE PRIVILEGE

Exchange money between Putnam funds in the same class of shares without
charge. 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.

* 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
$25,000, $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.

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.

Many of these services can be accessed online at www.putnaminvestments.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

PUTNAM GROWTH FUNDS

Putnam Balanced Fund
Putnam Global Growth Fund
Putnam Growth Opportunities Fund
Putnam Health Sciences Trust
Putnam International New Opportunities Fund
Putnam Investors Fund
Putnam New Century Growth Fund b
Putnam New Opportunities Fund b
Putnam OTC & Emerging Growth Fund
Putnam Technology Fund
Putnam Vista Fund
Putnam Voyager Fund
Putnam Voyager Fund II

PUTNAM BLEND FUNDS

Putnam Asia Pacific Growth Fund
Putnam Capital Appreciation Fund b
Putnam Capital Opportunities Fund
Putnam Emerging Markets Fund
Putnam Europe Growth Fund
Putnam Global Equity Fund
Putnam Global Natural Resources Fund
Putnam International Growth Fund
Putnam International Voyager Fund
Putnam Research Fund
Putnam Tax Smart Equity Fund
Putnam Utilities Growth and Income Fund

PUTNAM VALUE FUNDS

Putnam Balanced Retirement Fund
Putnam Classic Equity Fund
Putnam Convertible Income-Growth Trust
Putnam Equity Income Fund
The George Putnam Fund of Boston
Putnam Global Growth and Income Fund
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 Global Governmental Income Trust
Putnam High Yield Advantage Fund b
Putnam High Yield Trust b
Putnam High Yield Trust II
Putnam Income Fund
Putnam Intermediate U.S. Government Income Fund
Putnam Preferred Income Fund
Putnam Strategic Income Fund
Putnam U.S. Government Income Trust

PUTNAM TAX-FREE INCOME FUNDS

Putnam Municipal Income Fund
Putnam New York Tax Exempt Opportunities Fund c
Putnam Tax Exempt Income Fund
Putnam Tax-Free High Yield Fund
Putnam Tax-Free Insured Fund
Putnam State tax-free income funds c
Arizona, California, Florida, Massachusetts, Michigan, Minnesota, New
Jersey, New York, Ohio and Pennsylvania

LIFESTAGE SM FUNDS

Putnam Asset Allocation Funds--three investment portfolios that spread your
money across a variety of stocks, bonds, and money market investments
seeking to help maximize your return and reduce your risk.

The three portfolios:

Balanced Portfolio
Conservative Portfolio
Growth Portfolio

PUTNAM MONEY MARKET FUNDS d

Putnam Money Market Fund
Putnam California Tax Exempt Money Market Fundc
Putnam New York Tax Exempt Money Market Fundc
Putnam Tax Exempt Money Market Fund

a As of 12/31/01.

b New investments restricted; see your financial advisor for details.

c Not available in all states.

d Investments in money market funds are not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency.
Although these funds seek to preserve an investment's net asset value at
$1.00 per share, it is possible to lose money by investing in them.

Please call your financial advisor or Putnam Investor Services to obtain a
prospectus for any Putnam fund. It contains more complete information,
including charges and expenses. Read it carefully before you invest or send
money.



Glossary of terms

Bond               An IOU issued by a government or corporation that usually
                   pays interest.

Capital            A rise in an investment's principal value.  Also used to
appreciation       describe the investment objective of a mutual fund whose
                   primary criterion for choosing securities is the potential
                   to rise in value rather than to provide dividend income.

Capital            A profit or loss on the sale of securities (generally stocks
gain/loss          or bonds).

Class A, B, C,     Types of shares, each class offering investors a different
M, T shares        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

Contingent         A charge applied at the time of redemption of certain
deferred sales     mutual fund shares, rather than at the time of purchase.
charge             A fund's CDSC generally declines each year after purchase,
(CDSC)             until it no longer applies.

Declaration        The date on which the Trustees approve the amount of
date               a mutual fund's next distribution.

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).

Dividend           For mutual fund shares, a payment derived solely from
                   dividends or interest paid on securities held in the
                   portfolio (i.e. not including capital gains).

Equity             Securities representing ownership in a corporation.
securities         Common stock and preferred stock are equity securities.

Ex-dividend        The date on or after which a holder of newly-issued
date               shares will not receive the fund's next distribution. For
                   Putnam funds, it is the same as the record date.

Net asset          The value of one share of a mutual fund without regard to
value (NAV)        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.

Payable date       The date on which a mutual fund pays its distributions to
                   shareholders.

Public             The purchase price of one class A or class M share
offering price     of a mutual fund, including the applicable "front-end"
(POP)              sales charge.

Record date        The date used to determine which shareholders are
                   entitled to a distribution.  After the record date, shares
                   are sold "ex-dividend," or without the dividend. For
                   Putnam funds, the ex-dividend date is the same as the
                   record date.

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. "Dividend rate"
                   is a current return that includes interest and dividend
                   income, net of all fund expenses.  "Distribution rate" is a
                   current return that includes  short-term capital gains, as
                   well as net investment  income. "SEC yield" is a current
                   return based on net investment income over a recent 30-day
                   period, computed on a yield-to-maturity basis, which may
                   differ from net investment income as determined for
                   financial reporting purposes.  All of these returns are
                   calculated by annualizing the dividends or distributions
                   over the indicated period and dividing by the price of a
                   share at the end of the period.


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 statement of additional information (SAI) and annual and
semi-annual reports to shareholders include additional information about
the fund. The SAI, and the independent accountant's report and 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 a fund and other Putnam funds, or make shareholder
inquiries, by contacting your financial advisor, by visiting Putnam's
Internet site, or by calling Putnam toll-free at 1-800-225-1581.

You may review and copy information about each 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
             Toll-free 1-800-225-1581

             Address correspondence to
             Putnam Investor Services
             P.O. Box 41203
             Boston, Rhode Island 02940-1203

             www.putnaminvestments.com

File Nos.:
Arizona Fund 811-6258              Minnesota Fund 811-4527
Florida Fund 811-6129              New Jersey Fund 811-5977
Massachusetts Fund 811-4518        Ohio Fund 811-4528
Michigan Fund 811-4529             Pennsylvania Fund 811-5802

                                             NP047 79778 3/02