PUTNAM INCOME FUND
Prospectus Supplement dated August 1, 1996
to Prospectus dated March 1, 1996
At a meeting held on July 31, 1996, shareholders of the fund
approved a number of changes to the fundamental investment
restrictions of the fund, including the elimination of certain
restrictions. As a result, the fund may now:
-- 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).
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.
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 was made non-fundamental,
meaning that it could be changed in the future without
shareholder approval.
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.
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The fourth sentence in the first paragraph under the heading
"Risk factors -- Investments in fixed-income securities" in the
prospectuses 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 Standard & Poor's ("S&P"), or in unrated
securities which Putnam Management determines are of
comparable quality.
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The second and third paragraphs 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.
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.
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.
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