PUTNAM ADJUSTABLE RATE U.S. GOVERNMENT FUND
Supplement dated December 1, 1995
to Prospectus dated March 1, 1995
Effective as of the date of this Supplement, employee
benefit plans of companies with at least 200 eligible
employees may purchase shares of the Fund without a sales
charge. Also, contingent deferred sales charges may be
waived under certain circumstances. Accordingly, the
Fund's Prospectus is revised as follows:
(1) The second footnote following "Examples" under the
heading "Expenses summary" is replaced by the following:
** A deferred sales charge of up to 1.00% is assessed
on certain redemptions of Class A shares that were
purchased without an initial sales charge. See
"How to buy shares -- Class A shares."
(2) The section "Class A shares" under the heading
"Alternative Sales Arrangements" is replaced with the
following:
Class A shares. An investor who purchases Class A
shares pays a sales charge at the time of
purchase. As a result, Class A shares are not
subject to any charges when they are redeemed,
except for certain sales at net asset value that
are subject to a contingent deferred sales charge
("CDSC"). Certain purchases of Class A shares
qualify for reduced sales charges. Class A shares
bear a lower 12b-1 fee than Class B and Class M
shares. See "How to buy shares -- Class A shares"
and "Distribution Plans."
(3) The second, third and fourth paragraphs under the
heading "How to buy shares -- Class A shares" are 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 if you redeem these shares within the
first or second year after purchase, 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.
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In addition, there are no sales charges on shares
purchased by participant-directed employee benefit
plans with at least 200 eligible employees.
Shares purchased by certain investors 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. In determining whether a
CDSC is payable, the Fund will first redeem shares
not subject to any charge. Putnam Mutual Funds
receives the entire amount of any CDSC you pay.
See the Statement of Additional Information for
more information about the CDSC.
Except as stated below, Putnam Mutual Funds pays
investment dealers of record commissions on sales
of Class A shares of $1 million or more based on
an investor's cumulative purchases during the one-
year period beginning with the date of the initial
purchase at net asset value. Each subsequent one-
year measuring period for these purposes will
begin with the first net asset value purchase
following the end of the prior period. Such
commissions are paid at the rate of 1.00% of the
amount under $3 million, 0.50% of the next $47
million and 0.25% thereafter.
On sales at net asset value to a participant-
directed qualified retirement plan initially
investing less than $20 million in Putnam funds
and other investments managed by Putnam Management
or its affiliates (including a plan with at least
200 eligible employees), Putnam Mutual Funds pays
commissions during each one-year measuring period,
determined as described above, at the rate of
1.00% of the first $2 million, 0.80% of the next
$1 million and 0.50% thereafter. On sales at net
asset value to all other participant-directed
qualified retirement plans, Putnam Mutual Funds
pays commissions on the initial investment and on
subsequent net quarterly sales at the rate of
0.15%.
You may be eligible to buy Class A shares at
reduced sales charges.
Consult your investment dealer or Putnam Mutual
Funds for details about Putnam's combined purchase
privilege, cumulative quantity discount, statement
of intention, group sales plan, employee benefit
plans, and other plans. Descriptions are also
included in the order form and in the Statement of
Additional Information.
A participant-directed employee benefit plan
participating in a "multi-fund" program approved
by Putnam Mutual Funds may include amounts
invested in other mutual funds participating in
such program for purposes of determining whether
the plan may purchase Class A shares at net asset
value. These investments will also be included
for purposes of the discount privileges and
programs described above.
(4) Effective December 1, 1995, any applicable contingent
deferred sales charge will be waived on redemptions of
shares following the death or post-purchase disability of a
settlor of a living trust account. Up to 12% of the value
of shares subject to a systematic withdrawal plan may also
be redeemed each year without a CDSC.
(5) The second sentence in the second paragraph under the
heading "Distribution Plans - Class A Distribution Plan" is
replaced with the following:
This calculation excludes until one year after
purchase shares purchased at net asset value,
known as "NAV shares," by shareholders investing
$1 million or more. Also excluded until one year
after purchase are NAV shares purchased by
participant-directed qualified retirement plans
with at least 200 eligible employees. NAV shares
are not subject to the one-year exclusion
provision in cases where certain shareholders who
invested $1 million or more have made arrangements
with Putnam Mutual Funds and the dealer of record
waived the sales commission.
