PUTNAM BALANCED RETIREMENT FUND
Prospectus Supplement dated September 1, 1996
to Prospectus dated March 1, 1996
At a meeting to be held on October 3, 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:
-- acquire more than 10% of the outstanding voting
securities of any issuer with respect to 25% of its
total assets; and
-- invest more than 5% of its total assets in 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 subject to any
limitation.)
To the extent the fund invests a significant portion of its
assets in the securities of a particular issuer, the fund will be
subject to an increased risk of loss if the market value of such
issuer's securities declines.
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 are also proposed to be amended at the upcoming meeting.
In addition, the fund's restriction with respect to investing up
to 5% of its assets in securities of issuers that have been in
operation for less than three years would be made non-
fundamental, meaning that it may be changed in the future without
shareholder approval.
If shareholders do not ultimately approve some or all of the
proposed changes, the prospectus will be revised accordingly.
**********
The third sentence in the second paragraph under the heading "How
the fund pursues its objectives" is replaced with the following:
The fund will invest in securities rated at the time of
purchase at least B by Moody's Investors Service, Inc.
("Moody's") or by Standard & Poor's ("S&P"), or in
unrated securities which Putnam Investment Management,
Inc. ("Putnam Management") determines are of comparable
quality.
**********
The second and third paragraph and the first sentence of the
fourth paragraph under the heading "How to buy shares--Class A
shares" is replaced with the following:
There is no initial sales charge on purchases of class
A shares of $1 million or more. However, a CDSC of
1.00% or 0.50%, respectively, will be imposed on
redemptions (other than redemptions by certain
participant-directed qualified retirement plans, which
are subject to a two-year CDSC of 1.00%, as described
below) within the first or second year after purchase.
There are also no initial sales charges on class A
shares purchased by participant-directed qualified
retirement plans with at least 200 eligible employees.
A CDSC of 1.00% will, however, be imposed upon the
redemption of shares purchased after July 31, 1996 at
net asset value by a participant-directed qualified
retirement plan (including a plan with at least 200
eligible employees) that initially invested less than
$20 million in Putnam funds and other investments
managed by Putnam Management or its affiliates and that
sells 90% or more of the amount initially invested
within two years after its initial purchase.
Any CDSC will be based on the lower of the shares' cost
and current net asset value. Any shares acquired by
reinvestment of distributions will be redeemed without
a CDSC.
Shares purchased by certain investors (including
participant-directed qualified retirement plans with at
least 200 eligible employees) investing $1 million or
more who have made arrangements with Putnam Mutual
Funds and whose dealer of record waived the commission
as described below are not subject to the CDSC.
27648 9/96
