PUTNAM AMERICAN GOVERNMENT INCOME FUND
Prospectus Supplement dated August 1, 1996
to Prospectus dated February 1, 1996
At a shareholder meeting to be held on September 5, 1996, the
shareholders of the fund are being asked to approve amendments to
the fund's fundamental investment restrictions, including the
elimination of certain restrictions. If these amendments are
approved, the fund will be able to:
o Acquire more than 10% of the voting securities of any
issuer with respect to 25% of its total assets without
restriction based on class.
o Invest more than 5% of the total assets in the
securities of any issuer with respect to 25% of its
total assets (Investments in obligations issued or
guaranteed as to interest or principal by the U.S.
government or its agencies or instrumentalities are not
be subject to any limitation.)
The policies set forth above are fundamental and may not be
changed without shareholder approval. See the Statement of
Additional Information of the fund for the full text of these
policies as well as the fund's other fundamental policies, some
of which were also changed by vote of shareholders.
To the extent the fund invests a significant portion of its
assets in the securities of a particular issuer, such fund will
be subject to an increased risk of loss if the market value of
such issuer's securities declines.
If shareholders do not ultimately approve some or all of the
proposed changes, the prospectus will be revised accordingly.
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