<PAGE> 1
Putnam
Intermediate
Government
Income Trust
SEMIANNUAL REPORT
May 31, 1994
[LOGO]
BOSTON o LONDON o TOKYO
<PAGE> 2
PERFORMANCE HIGHLIGHTS
o "The Federal Reserve's actions have set the tone for this year's markets.
The central bank hiked interest rates four times in as many months to cool
the economic expansion lest it turn inflationary. The markets' decline was
a reaction to those rate increases."
--Business Week, June 20, 1994
o "What we saw through April of this year was an extreme situation. The
magnitude and speed of the rise in rates was unusual by historical
standards."
--Neil Powers, lead portfolio manager
o Performance should always be considered in light of a fund's investment
strategy. Putnam Intermediate Government Income Trust is designed for
investors seeking high current income and relative stability of net asset
value through a portfolio of U.S. government and foreign governmental
securities with limited maturities.
<TABLE>
<CAPTION>
SEMIANNUAL RESULTS AT A GLANCE
SIX MONTHS ENDED 5/31/94
TOTAL RETURN: NAV MARKET PRICE
<S> <C> <C>
(change in value plus
reinvested distributions) -2.58% -4.62%
SHARE VALUE: NAV MARKET PRICE
11/30/93 $9.05 $8.125
5/31/94 8.39 7.375
</TABLE>
<TABLE>
<CAPTION>
CAPITAL GAINS
SHORT- LONG-
DISTRIBUTIONS: NUMBER INCOME TERM TERM TOTAL
<S> <C> <C> <C> <C> <C>
SIX MONTHS ENDED 5/31/94 7 $0.288 $0.05 $0.065 $0.403
</TABLE>
<TABLE>
<CAPTION>
CURRENT RETURN: NAV MARKET PRICE
(END OF PERIOD)
<S> <C> <C>
Current dividend rate1 7.15% 8.14%
<FN>
Performance data represent past results. For performance over longer
periods, see pages 8 and 9.
1 Income portion of most recent distribution, annualized and divided by
NAV or market price at end of period.
</TABLE>
2
<PAGE> 3
FROM THE CHAIRMAN
[PHOTO]
(c) Karsh, Ottawa
DEAR SHAREHOLDER:
THE FEDERAL RESERVE BOARD'S PRIMARY CONCERN REMAINS FIGHTING NOT ONLY
INFLATION BUT THE FEAR OF INFLATION. IT IS PURSUING THIS GOAL BY GRADUALLY
RAISING THE SHORT-TERM INTEREST RATES UNDER ITS CONTROL TO SLOW THE
ECONOMY'S GROWTH TO WHAT IT REGARDS AS A SUSTAINABLE PACE.
THE POLICY CONTINUES AS THE EFFECTS OF LAST YEAR'S TAX INCREASE ARE BEING
KEENLY FELT BY INDIVIDUALS AND BUSINESSES. DR. ROBERT GOODMAN, PUTNAM
INVESTMENTS' SENIOR ECONOMIC ADVISOR, BELIEVES THIS CONFLUENCE COULD RESULT
IN A GREATER SLOWING OF BUSINESS THAN MANY OBSERVERS NOW EXPECT.
BOB ALSO BELIEVES THAT AS THIS SLOWING BECOMES MORE OBVIOUS, THE FED WILL
COME UNDER GROWING PRESSURE FROM BOTH THE WHITE HOUSE AND CAPITOL HILL TO
EASE UP. INSULATED AS IT IS FROM SUCH POLITICAL DEMANDS, THE FED IS NOT
LIKELY TO YIELD. BUT THE VERY FACT THAT INVESTORS THINK THE BOARD MIGHT
RELENT COULD CAUSE SOME MORE VOLATILITY IN THE BOND MARKETS IN THE MONTHS
AHEAD. IN THE FOLLOWING REPORT, NEIL POWERS, LEAD PORTFOLIO MANAGER, AND F.
MARK TURNER, WHO IS NOW MANAGING THE FUND'S INTERNATIONAL HOLDINGS, EXPLAIN
HOW THEY ARE POSITIONING YOUR FUND'S PORTFOLIO TO RESPOND TO 1994'S
UNFOLDING EVENTS. MARK HAS BEEN CHIEF INVESTMENT OFFICER OF PUTNAM'S GLOBAL
FIXED-INCOME GROUP SINCE 1992 AND WE ARE CERTAIN THAT THE FUND CAN BENEFIT
FROM HIS EXPERTISE.
RESPECTFULLY YOURS,
/s/ George Putnam
GEORGE PUTNAM
CHAIRMAN OF THE TRUSTEES
JULY 20, 1994
3
<PAGE> 4
REPORT FROM THE FUND MANAGERS
NEIL J. POWERS, LEAD MANAGER
F. MARK TURNER
During the six-month period ended May 31, 1994, bond markets made their
first significant retreat in three years. Although Putnam Intermediate
Government Income Trust posted a negative performance, it fared better
than many of the government funds that concentrated holdings in
longer-term securities.
o MARKET OVERVIEW: VOLATILITY AT HOME AND ABROAD
As you probably recall, the fund invests in two sectors, or "sleeves,"
both emphasizing investments in intermediate-term bonds. Generally, this
means an average maturity of four to six years. The United States sector,
ordinarily about 65% of the total portfolio, holds debt obligations issued
by the U.S. government and its agencies. The international sector holds
bonds issued by foreign governments and multinational organizations such
as the World Bank. Historically, the two sectors have performed
differently; strengths in one market have offset weaknesses in the other.
During the past six months, however, international markets followed U.S.
markets in a steep decline affecting performance in both sectors.
United States government securities In February, the Federal Reserve Board,
in what was billed as a preemptive strike against inflation, nudged
short-term rates higher by boosting the federal funds rate. Several more
increases have since followed, and initially, the entire fixed-income
market declined in response. This sector, then about 70% of the portfolio,
weakened as the yield curve narrowed and the difference between long- and
short-term interest rates diminished. Large investors whose holdings were
financed by borrowing, or "leverage," opted to sell their most liquid
holdings, primarily Treasuries. The resulting oversupply exacerbated the
decline.
4
<PAGE> 5
In anticipation of rising rates, we had shifted Treasury holdings into a
"barbell" configuration, a move that helped reduce the negative impact of
volatility. With holdings concentrated at either end of the intermediate
maturity spectrum, we avoided the three-year notes that were hardest hit
by the decline. Our mortgage-backed securities added some additional
cushioning. Bought when prepayment fears made their prices especially
appealing, these securities have recently been outperforming Treasuries.
Foreign government securities By January, the rally in international bonds
was showing signs of weakening. The major correction was not unexpected;
furthermore, in the foreign sector, we had already taken defensive action
by shifting into shorter-term holdings. However, the extent of
international reaction to rising U.S. interest rates and the ripple effect
of sell-offs by over-leveraged investors caused a larger-than-anticipated
decline in worldwide markets. We had currency hedging strategies in place
in order to help protect the value of the fund's international holdings,
but nevertheless, the overall decline dampened performance for this
sector.
o VOLATILITY, RISING YIELDS PROMPT STRATEGY SHIFTS
Throughout the period, the market overreacted to the rate increases.
Nevertheless, lower prices and investor nervousness quickly became a
reality. So did higher yields. By early May, interest rates had risen to
their highest level in two and a half years -- an increase of more than
two percentage points since February. Intermediate-term U.S. securities
became much more attractive on an absolute basis, due to higher yields and
also on a relative basis, compared to shorter- and longer-term notes.
5
<PAGE> 6
Recently, to take advantage of these shifts, we adjusted the fund's
Treasury position from its previous configuration into a more focused or
"bulleted" position on the yield curve. Over a third of the Treasury
holdings are now in 4-, 5-, and 10-year Treasuries. Most of the remaining
U.S. government holdings are in mortgage-backed securities, reflecting the
higher yields these securities are now providing. Other U.S. agency
obligations and cash make up the remainder of the sector.
About 65% of the international sector is in European bonds where
volatility lingers, fueled by unrealistic fears of inflation. Japan,
about 25% of the sector, is currently showing signs of recovery and more
confident markets. Australian bonds recently made a substantial
contribution to fund performance, benefiting from that country's currency
link to commodities, which surged with inflation fears.
The period has called for a long-term perspective while waiting out the
present volatility. While U.S. markets are rebuilding, those in the
international arena remain hesitant. For protection, we're focusing on the
shorter end of the intermediate sector, thus avoiding issues most
sensitive to interest rate shifts.
o SLOWER GROWTH SHOULD REASSURE BOND MARKETS
Recent numbers show that the U.S. economy now seems to be growing at
slower rates than earlier in the year. We believe this evidence that
higher interest rates have done their job should gradually quell
inflationary fears and when investors no longer fear inflation will eat
away at fixed rates of return, they will return to the bond market.
However, we believe future rallies, such as those we enjoyed for the past
two years, are unlikely. We expect interest rates to stabilize near
present levels, higher than in the recent past, and anticipate that the
resulting higher yields can make a significant contribution to the fund's
total performance.
6
<PAGE> 7
[GRAPH]
* Based on net assets 5/31/94. Foreign holdings were 27.9% of the
portfolio as of that date.
Foreign markets are still overreacting to recent turbulence and waiting
for official policies to stimulate growth. Yet opportunities abound and
today's higher yields, 5% to 8%, versus 3% earlier in the year, can mean
significant rewards. With these factors in mind, we see some potential for
solid gains over the remainder of the fiscal year and will work to
position the fund to take advantage of them.
7
<PAGE> 8
PERFORMANCE SUMMARY
This section provides, at a glance, information about your fund's
performance. Total return shows how the value of the fund's shares changed
over time, assuming you held the shares through the entire period and
reinvested all distributions back into the fund. We show total return in
two ways: On a cumulative long-term basis and how the fund might have
grown each year, on average, over varying periods. For comparative
purposes, we show how the fund performed relative to appropriate indexes
and benchmarks.
TOTAL RETURN FOR PERIODS ENDING 5/31/94
<TABLE>
<CAPTION>
LEHMAN BROS. CONSUMER
MARKET TREASURY PRICE
NAV PRICE BOND INDEX INDEX
--- ------ ------------ --------
<S> <C> <C> <C> <C>
6 months -2.58% -4.62% -3.53% 1.17%
1 year -0.44 -5.58 1.08 2.29
5 years 53.63 37.00 54.43 19.14
Annual average 8.97 6.50 9.08 3.57
Life of fund (since 6/27/88) 65.08 34.95 67.55 25.00
Annual average 8.82 5.18 9.11 3.83
</TABLE>
TOTAL RETURN FOR PERIODS ENDING 6/30/94
(MOST RECENT CALENDAR QUARTER)
<TABLE>
<CAPTION>
MARKET
NAV PRICE
--- ------
<S> <C> <C>
1 year -2.73% -4.54%
5 years 49.77 32.53
Annual average 8.41 5.79
Life of fund (since 6/27/88) 63.11 37.23
Annual average 8.48 5.41
</TABLE>
Performance data represent past results. Investment return, market price,
and net asset value will fluctuate so an investor's shares, when sold, may
be worth more or less than their original cost.
8
<PAGE> 9
TERMS AND DEFINITIONS
NET ASSET VALUE (NAV) is the value of all fund assets, minus liabilities,
divided by the number of outstanding shares.
MARKET PRICE is the current trading price of one share of the fund. Market
prices are set by transactions between buyers and sellers on the New York
Stock Exchange.
COMPARATIVE BENCHMARKS
LEHMAN BROTHERS TREASURY BOND INDEX is an unmanaged list of publicly
issued U.S. Treasury obligations. Performance figures for the index
reflect changes in market prices and reinvestment of all interest
payments. The fund's portfolio contains securities that do not match those
in the index.
CONSUMER PRICE INDEX is a commonly used measure of inflation. It does not
represent an investment return.
9
<PAGE> 10
REPORT OF INDEPENDENT ACCOUNTANTS
for the period ended May 31, 1994
To the Trustees and Shareholders of
Putnam Intermediate Government Income Trust
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments owned, and the related statements
of operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of Putnam
Intermediate Government Income Trust (the "fund") at May 31, 1994, and the
results of its operations, the changes in its net assets and the financial
highlights for the periods indicated, in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the fund's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted
our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which
included confirmation of investments owned at May 31, 1994 by
correspondence with the custodian and brokers and the application of
alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Boston, Massachusetts
July 20, 1994
10
<PAGE> 11
PORTFOLIO OF INVESTMENTS OWNED
May 31, 1994
<TABLE>
<CAPTION>
U.S. GOVERNMENT AND AGENCY
OBLIGATIONS (68.2%) (a)
PRINCIPAL AMOUNT VALUE
<S> <C>
FEDERAL FARM CREDIT BANK
$ 6,505,000 5.16s, May 1, 1995 $6,484,672
FEDERAL HOME LOAN MORTGAGE CORP.
1,597,354 10 1/2s, May 1, 2020 1,739,119
4,189,223 7 1/2s, January 1, 2020 4,076,637
FEDERAL HOME LOAN MORTGAGE CORP.
CERTIF. OF PARTICIPATION
5,756,081 8 1/2s, September 1, 2008 5,876,597
1,398,345 7s, July 1, 2008 1,370,378
697,820 7s, November 1, 1998 698,256
904,905 6 1/2s, September 1, 2002 873,516
FEDERAL HOME LOAN MORTGAGE CORP.
MULTI-CLASS CERTIF. OF PARTICIPATION
15,192 Ser. 143-A, 8 1/2s, June 15, 1997 15,277
7,417 Ser. 134-A, 8 1/2s, May 15, 1997 7,515
34,713 Ser. 123-A, 8 1/4s, February 15, 1995 34,561
FEDERAL NATIONAL MORTGAGE ASSOCIATION
1,448,678 11 1/2s, August 1, 2022 1,622,519
3,320,842 10 1/2s, with various due dates to December 1, 2018 3,648,775
1,479,275 10s, September 1, 2020 1,584,211
6,920,286 8 1/2s, January 1, 2012 7,034,903
5,600,000 Ser. G92-29-J, 8s, July 25, 2022 5,498,500
2,143,568 8s, January 1, 2009 2,136,200
14,071,131 8s, Dwarfs, with various due dates to June 1, 2007 14,242,623
FINANCING CORP. STRIPPED INTEREST PAYMENT COUPON SECURITIES
2,822,000 zero %, February 3, 2004 1,368,670
6,000,000 Ser. 13, zero %, December 27, 2003 2,940,000
13,100,000 zero %, October 6, 2003 6,525,438
6,747,000 zero %, September 26, 2003 3,373,500
15,400,000 Ser. 15, zero %, September 7, 2003 7,733,688
5,000,000 Ser. 8, zero %, August 3, 2003 2,528,125
4,000,000 Ser. 13, zero %, June 27, 2003 2,041,250
13,350,000 zero %, April 6, 2003 6,925,313
11,782,000 zero %, March 26, 2003 6,137,686
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
26,490,684 11s, with various due dates to September 15, 2015 29,755,865
184,317 9 1/2s, with various due dates to August 15, 2020 194,632
24,793,494 8s, with various due dates to June 15, 2017 24,752,561
17,732,265 7 1/2s, with various due dates to August 15, 2023 17,123,695
10,302,000 7 1/2s, TBA, June 14, 2024 (b) 9,947,869
43,776,525 7s, with various due dates to April 15, 2024 40,931,051
9,836,000 7s, TBA, June 14, 2024 (b) 9,196,660
14,825,070 6 1/2s, with various due dates to April 15, 2024 13,361,094
</TABLE>
11
<PAGE> 12
<TABLE>
<CAPTION>
U.S. GOVERNMENT AND AGENCY
OBLIGATIONS
PRINCIPAL AMOUNT VALUE
<S> <C>
U.S. TREASURY BONDS AND NOTES
$15,000,000 U.S. Treasury Bonds, 12 3/8s, May 15, 2004 $ 20,446,875
60,000,000 U.S. Treasury Notes, 9 1/4s, August 15, 1998 65,606,250
15,000,000 U.S. Treasury Notes, 8 7/8s, May 15, 2000 16,471,875
16,000,000 U.S. Treasury Notes, 8 7/8s, February 15, 1999 17,365,000
10,000,000 U.S. Treasury Notes, 8 1/4s, July 15, 1998 10,571,875
------------
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS
(cost $384,193,393) $372,243,231
------------
</TABLE>
<TABLE>
<CAPTION>
FOREIGN BONDS AND NOTES (27.9%) (a) (c)
PRINCIPAL AMOUNT VALUE
---------------- -----
<S> <C> <C>
A$ 2,000,000 Australia (Government of) bonds 9 1/2s, 2003 $ 1,541,250
A$ 13,935,000 Australia (Government of) bonds 7s, 2000 9,641,278
C$ 43,900,000 Canada (Government of) notes 5 3/4s, 1999 28,507,563
FIN 9,000,000 Finland (Republic of) notes 11s, 1999 1,811,250
FIN 27,000,000 Finland (Republic of) notes 10 3/4s, 2002 5,400,000
FIN 5,000,000 Finland (Government of) bonds 9 1/2s, 2004 940,625
ECU 15,300,000 France (Government of) OAT 8s, 2003 18,149,625
FF 3,800,000 France (Government of) Balladurs 6s, 1997 667,375
ITL 7,750,000,000 Italy (Government of) BTPS 11 1/2s, 1996 5,032,656
ITL 7,000,000,000 Italy (Government of) bonds 9s, 1998 4,305,000
Y. 2,540,200,000 Japan (Government of) bonds 5 1/2s, 2002 26,981,115
Y. 505,100,000 Japan (Government of) bonds 5s, 2002 5,196,216
Y. 754,800,000 Japan (Government of) bonds 4.6s, 2003 7,566,870
NLG 3,980,000 Netherlands (Government of) bonds 6 1/4s, 1998 2,146,712
SEK 11,000,000 Statens Bostads 11s, 1999 1,471,250
SEK 10,700,000 Sweden (Government of) notes 11s, 1999 1,477,938
SEK 48,000,000 Sweden (Government of) bonds 10 1/4s, 2003 6,450,000
UKS 1,380,000 United Kingdom Treasury notes 10 1/4s, 1999 2,235,600
UKS 2,660,000 United Kingdom Treasury notes 9 1/2s, 2004 4,197,812
UKS 1,390,000 United Kingdom Treasury notes 9s, 2000 2,140,600
UKS 11,100,000 United Kingdom Treasury notes 7 1/4s, 1998 16,317,000
------------
TOTAL FOREIGN BONDS AND NOTES
(cost $156,796,386) $152,177,735
------------
</TABLE>
12
<PAGE> 13
<TABLE>
<CAPTION>
COLLATERALIZED MORTGAGE
OBLIGATIONS (0.9%) (a) (d)
PRINCIPAL AMOUNT VALUE
<S> <C>
FEDERAL HOME LOAN MORTGAGE CORP. PAC
INTEREST ONLY (IO) STRIPS
$ 165,176 992.99s, June 15, 2012 $ 2,286,661
116,682 992.58s, July 15, 2016 2,439,385
------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(cost $5,255,689) $ 4,726,046
------------
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM INVESTMENTS (5.0%) (A)
PRINCIPAL AMOUNT VALUE
<S> <C> <C>
$17,420,000 Interest in $489,000,000 joint repurchase agreement
dated May 31, 1994 with Kidder Peabody & Co., Inc.
due June 1, 1994 with respect to various U.S. Treasury
obligations -- maturity value of $17,422,052 for an
effective yield of 4.24% $ 17,422,052
10,000,000 Merrill Lynch & Co., Inc. 4 1/4s, June 1, 1994 10,000,000
------------
TOTAL SHORT-TERM INVESTMENTS (COST $27,422,052) $ 27,422,052
------------
TOTAL INVESTMENTS (COST $573,667,520)(E) $556,569,064
------------
</TABLE>
Notes
(a) Percentages indicated are based on net assets of $545,936,464, which
correspond to a net asset value per share of $8.39.
(b) TBA's are mortgage backed securities traded under delayed delivery
commitments, settling after May 31, 1994. Although the unit price for the
trade has been established, the principal amount has not been finalized.
However, the amount of the commitments will not fluctuate more than 2.0%
from the principal amount. Income on such securities will not be earned
until settlement date. The cost of TBA purchases held at May 31, 1994 was
$19,352,056 or 3.5% of net assets.
TBA SALE COMMITMENT at May 31,1994
(proceeds receivable $13,539,393)
<TABLE>
<CAPTION>
Principal Delivery Coupon Market
Agency Amount Month Rate Value
- ------ --------- -------- ------ ------
<S> <C> <C> <C> <C>
GNMA $14,825,000 Jun/94 6 1/2% $13,361,031
</TABLE>
(c) Foreign currency-denominated. Market value is translated at the current
exchange rate.
(d) Interest Only (IO) Strips represent the right to receive the monthly
interest payments on an underlying pool of mortgage loans. Payments of
principal on the pool reduce the nominal value of the IO holders.
(e) The aggregate identified cost on a tax basis is $573,748,157, resulting in
gross unrealized appreciation and depreciation of $2,097,225 and
$19,276,318, respectively, or net unrealized depreciation of $17,179,093.
The accompanying notes are an integral part of these financial statements.
13
<PAGE> 14
FORWARD CURRENCY CONTRACTS OUTSTANDING
AT MAY 31, 1994
<TABLE>
<CAPTION>
Unrealized
Aggregate Delivery Appreciation/
Market Value Face Value Date (Depreciation)
------------ ---------- ---- --------------
<S> <C> <C> <C> <C>
Australian Dollars (Buy) $ 3,316,050 $ 3,293,055 07/29/94 $ 22,995
Australian Dollars (Buy) 3,242,360 3,209,052 08/22/94 33,308
Canadian Dollars (Buy) 5,121,940 5,149,032 07/19/94 (27,092)
Deutschemarks (Sell) 607,500 592,654 06/06/94 (14,846)
Deutschemarks (Sell) 11,047,400 10,896,735 07/11/94 (150,665)
Deutschemarks (Sell) 12,079,300 11,899,117 07/11/94 (180,183)
Deutschemarks (Sell) 10,865,300 10,413,031 07/11/94 (452,269)
Deutschemarks (Sell) 4,491,060 4,465,611 07/25/94 (25,449)
Deutschemarks (Sell) 21,420,040 21,138,484 08/09/94 (281,556)
Deutschemarks (Sell) 18,021,960 17,795,993 08/09/94 (225,967)
Japanese Yen (Sell) 11,582,846 11,777,531 07/11/94 194,685
Japanese Yen (Sell) 4,403,396 4,493,504 07/11/94 90,108
Japanese Yen (Sell) 9,008,584 9,038,462 07/29/94 29,878
Japanese Yen (Sell) 14,699,322 14,744,592 08/31/94 45,270
New Zealand Dollars (Buy) 6,768,180 6,690,238 07/27/94 77,942
------
$(863,841)
----------
</TABLE>
CROSS FORWARD CURRENCY CONTRACTS OUTSTANDING
AT MAY 31, 1994 (AGGREGATE FACE VALUE $26,459,071)
<TABLE>
<CAPTION>
MARKET IN EXCHANGE MARKET DELIVERY UNREALIZED
CONTRACTS VALUE FOR VALUE DATE (DEPRECIATION)
--------- ----- --- ----- ---- -------------
<S> <C> <C> <C> <C> <C>
Deutschemarks
(Sell) $ 4,561,023 French Francs $ 4,561,023 09/06/94 $ --
British Sterling
(Buy) 13,289,760 Deutschemarks 13,397,179 07/18/94 (107,419)
Deutschemarks
(Sell) 4,505,120 Swedish Krona 4,404,870 07/08/94 (100,250)
Deutschemarks
(Sell) 4,505,120 Swedish Krona 4,385,712 07/11/94 (119,408)
----------
$(327,077)
----------
</TABLE>
DIVERSIFICATION OF FOREIGN BONDS AND NOTES
AT MAY 31, 1994 (as a percentage of net assets):
<TABLE>
<S> <C> <C> <C>
Japan 7.3% Sweden 1.7%
Canada 5.2 Italy 1.7
United Kingdom 4.6 Finland 1.5
Multi-national 3.3 Netherlands 0.4
Australia 2.1 France 0.1
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
<PAGE> 15
STATEMENT OF ASSETS AND LIABILITIES
May 31, 1994
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value
(identified cost $573,667,520) (Note 1) $556,569,064
Interest and other receivables 6,518,179
Receivable for securities sold 58,706,436
Receivable for open forward currency contracts 494,186
Receivable for closed forward currency contracts 444,764
------------
TOTAL ASSETS 622,732,629
LIABILITIES
Payable to the subcustodian (Note 2) $ 2,154,552
Payable for securities purchased 53,268,079
Distributions payable to shareholders 3,257,365
Payable for compensation of Manager (Note 2) 1,035,707
Payable for administrative services (Note 2) 2,497
Payable for compensation of Trustees (Note 2) 365
Payable for investor servicing and custodian fees (Note 2) 162,635
Payable for open forward currency contracts 1,685,104
Payable for closed forward currency contracts 1,796,861
Other accrued expenses 71,969
TBA sale commitment, at value (proceeds receivable $13,539,393) 13,361,031
------------
TOTAL LIABILITIES 76,796,165
------------
NET ASSETS $545,936,464
------------
REPRESENTED BY
Paid-in capital (Note 4) $587,948,574
Distributions in excess of net investment income (6,346,076)
Accumulated net realized loss on investment transactions (17,555,022)
Net unrealized depreciation of investments
and forward currency contracts (18,111,012)
-------------
TOTAL -- REPRESENTING NET ASSETS APPLICABLE
TO CAPITAL SHARES OUTSTANDING $545,936,464
------------
COMPUTATION OF NET ASSET VALUE
Net asset value per share
($545,936,464 divided by 65,098,252 shares) $8.39
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
15
<PAGE> 16
STATEMENT OF OPERATIONS
Six months ended May 31, 1994
<TABLE>
<S> <C>
INTEREST INCOME (net of foreign tax of $44,872) $ 20,028,605
------------
EXPENSES:
Compensation of Manager (Note 2) 2,087,084
Investor servicing and custodian fees (Note 2) 306,901
Compensation of Trustees (Note 2) 9,116
Reports to shareholders 4,833
Auditing 30,036
Legal 4,311
Postage 54,993
Administrative services (Note 2) 1,460
Exchange listing fees 52,937
Other expenses 6,080
------------
TOTAL EXPENSES 2,557,751
------------
NET INVESTMENT INCOME 17,470,854
------------
Net realized loss on investments (Notes 1 and 3) (9,627,477)
Net realized loss on options (Notes 1 and 3) (1,431,047)
Net realized loss on forward currency contracts (Notes 1 and 3) (3,467,126)
Net realized loss on foreign currency (Note 1) (312,104)
Net unrealized depreciation of investments, options, foreign
currency, and forward currency contracts during the period (19,689,136)
-------------
NET LOSS ON INVESTMENT TRANSACTIONS (34,526,890)
-------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(17,056,036)
-------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
16
<PAGE> 17
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INCREASE (DECREASE) IN NET ASSETS
---------------------------------
SIX MONTHS ENDED YEAR ENDED
MAY 31 NOVEMBER 30
---------------- -----------
1994 1993
---------------- -----------
<S> <C> <C>
Operations:
Net investment income $ 17,470,854 $ 35,669,322
Net realized gain (loss) on investments (9,627,477) 10,950,035
Net realized loss on options (1,431,047) (400,852)
Net realized loss on forward currency contracts (3,467,126) (3,692,956)
Net realized loss on foreign currency (312,104) (69,619)
Net unrealized foreign currency
translations gains -- 21,920
Net unrealized appreciation (depreciation) of
investments, options, foreign currency, and
forward currency contracts (19,689,136) 7,068,587
NET INCREASE (DECREASE) IN NET ASSETS ------------ ------------
RESULTING FROM OPERATIONS (17,056,036) 49,546,437
------------ ------------
Distributions to shareholders from:
Net investment income (18,748,241) (35,669,322)
In excess of net investment income -- (2,519,510)
Net realized gain on investments (7,486,280) (28,856,348)
Increase in capital share transactions -- 5,152,532
------------ ------------
TOTAL DECREASE IN NET ASSETS (43,290,557) (12,346,211)
NET ASSETS
Beginning of period 589,227,021 601,573,232
End of period (including distributions in excess of
net investment income of $6,346,076 and
$2,519,510, respectively) $545,936,464 $589,227,021
NUMBER OF FUND SHARES
Shares outstanding at beginning of period 65,098,252 64,528,505
Shares issued in connection with
reinvestment of distributions -- 569,747
------------ ------------
SHARES OUTSTANDING AT END OF PERIOD 65,098,252 65,098,252
</TABLE>
The accompanying notes are an integral part of these financial statements.
17
<PAGE> 18
FINANCIAL HIGHLIGHTS*
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
Six months
ended
May 31
----------
1994 1993
---------- ----
<S> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $9.05 $9.32
Investment Operations:
Net Investment Income .27 .55
Net Realized and Unrealized
Gain (Loss) on Investments (.53) .21
Total from Investment Operations (.26) .76
Less Distributions from:
Net Investment Income (.29) (.55)
In Excess of Net Investment Income -- (.04)
From Net Realized Gain on Investments (.11) (.44)
Paid-in Capital -- --
TOTAL DISTRIBUTIONS (.40) (1.03)
NET ASSET VALUE, END OF PERIOD $8.39 $9.05
MARKET PRICE, END OF PERIOD $7.375 $8.125
TOTAL INVESTMENT RETURN AT
MARKET PRICE (%)(c) (9.24)(a) (.01)
Net Assets, End of Period
(in thousands) $545,936 $589,227
Ratio of Expenses to Average
Net Assets (%) .90(a) .89
Ratio of Net Investment Income
to Average Net Assets (%) 6.14(a) 5.98
Portfolio Turnover (%) 140.27(b) 303.68
</TABLE>
* Financial highlights for periods ended through November 30, 1992 have been
restated to conform with requirements issued by the SEC in December 1992.
(a) Annualized.
(b) Not annualized.
(c) Total investment return assumes dividend reinvestment and does not
reflect the effect of sales charges.
The accompanying notes are an integral part of these financial statements.
18
<PAGE> 19
<TABLE>
<CAPTION>
For the period
June 27, 1988
(commencement of
Year ended operations) to
November 30 November 30
----------- ----------------
1992 1991 1990 1989 1988
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $9.21 $9.08 $9.11 $9.38 $9.30
Investment Operations:
Net Investment Income .60 .68 .73 .79 .35
Net Realized and Unrealized
Gain (Loss) on Investments .28 .34 .22 (.05) .07
Total from Investment Operations .88 1.02 .95 .74 .42
Less Distributions from:
Net Investment Income (.60) (.68) (.73) (.79) (.34)
In Excess of Net Investment Income -- -- -- -- --
From Net Realized Gain on Investment (.17) (.05) (.08) (.22) --
Paid-in Capital -- (.16) (.17) -- --
TOTAL DISTRIBUTIONS (.77) (.89) (.98) (1.01) (.34)
NET ASSET VALUE, END OF PERIOD $9.32 $9.21 $9.08 $9.11 $9.38
MARKET PRICE, END OF PERIOD $9.125 $9.125 $9.000 $9.000 $9.250
TOTAL INVESTMENT RETURN AT
MARKET PRICE (%)(c) 8.69 11.80 11.90 8.52 (9.56)(a)
Net Assets, End of Period
(in thousands) $601,573 $585,649 $567,117 $562,115 $569,990
Ratio of Expenses to Average
Net Assets (%) .92 1.01 1.02 1.00 .98(a)
Ratio of Net Investment Income
to Average Net Assets (%) 6.51 7.51 8.19 8.43 8.63(a)
Portfolio Turnover (%) 216.24 255.49 268.42 174.57 34.74(b)
</TABLE>
* Financial highlights for periods ended through November 30, 1992 have been
restated to conform with requirements issued by the SEC in December 1992.
(a) Annualized.
(b) Not annualized.
(c) Total investment return assumes dividend reinvestment and does not
reflect the effect of sales charges.
The accompanying notes are an integral part of these financial statements.
19
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS
May 31, 1994
NOTE 1
SIGNIFICANT ACCOUNTING POLICIES
The fund is registered under the Investment Company Act of 1940, as
amended, as a diversified, closed-end management investment company. The
fund's investment objective is to seek, with equal emphasis, high current
income and relative stability of net asset value by investing in a
portfolio of U.S. government and agency obligations and foreign
governmental obligations with limited maturities.
The following is a summary of significant accounting policies consistently
followed by the fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
A) SECURITY VALUATION Investments for which market quotations are readily
available are stated at market value, which is determined using the last
reported sale price, or, if no sales are reported -- as in the case of some
securities traded over-the-counter -- the last reported bid price, except
that certain U.S. government obligations are stated at the mean between the
bid and asked prices. Securities quoted in foreign currencies are
translated into U.S. dollars at the current exchange rate. Short-term
investments having remaining maturities of 60 days or less are stated at
amortized cost, which approximates market value, and other investments are
stated at fair value following procedures approved by the Trustees.
B) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME Security
transactions are accounted for on the trade date (date the order to buy or
sell is executed). Interest income is recorded on the accrual basis.
Discount on zero coupon bonds is accreted according to the effective yield
method.
Upon receipt or payment for foreign currency-denominated receivables and
payables, the fund realizes a gain or loss on foreign currency amounting to
the difference between the original value and the ending value of the
receivable or payable. Foreign currency gains and losses related to
interest receivable are reported as part of interest income.
C) JOINT TRADING ACCOUNT Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the fund may transfer uninvested cash
balances into a joint trading account along with the cash of other
registered investment companies managed by
20
<PAGE> 21
Putnam Investment Management, Inc. (Putnam Management), the fund's Manager,
a wholly-owned subsidiary of Putnam Investments, Inc., and certain other
accounts. These balances may be invested in one or more repurchase
agreements and/or short-term money market instruments.
D) REPURCHASE AGREEMENTS The fund, or any joint trading account, through
its custodian, receives delivery of the underlying securities, the market
value of which at the time of purchase is required to be in an amount at
least equal to the resale price, including accrued interest. The fund's
Manager is responsible for determining that the value of these underlying
securities is at all times at least equal to the resale price, including
accrued interest.
E) TBA PURCHASE COMMITMENTS The fund may enter into "TBA" (to be announced)
purchase commitments to purchase securities for a fixed price at a future
date beyond customary settlement time. Although the unit price has been
established, the principal value has not been finalized. However, the
amount of the commitment will not fluctuate more than 2% from the principal
amount. The fund holds, and maintains until the settlement date, cash or
high-grade debt obligations in an amount sufficient to meet the purchase
price, or the fund enters into offsetting contracts for the forward sale of
other securities it owns. TBA purchase commitments may be considered
securities in themselves, and involve a risk of loss if the value of the
security to be purchased declines prior to the settlement date, which risk
is in addition to the risk of decline in the value of the fund's other
assets. Unsettled TBA purchase commitments are valued at the current
market value of the underlying securities, generally according to the
procedures described under "Security valuation" above.
Although the fund will generally enter into TBA purchase commitments with
the intention of acquiring securities for its portfolio or for delivery
pursuant to options contracts it has entered into, the fund may dispose of
a commitment prior to settlement if the fund Manager deems it appropriate
to do so.
TBA SALES COMMITMENTS The fund may enter into TBA sale commitments to hedge
its portfolio positions or to sell mortgage-backed securities it owns under
delayed delivery arrangements. Proceeds of TBA sale commitments are not
received until the contractual settlement date. During the time a
21
<PAGE> 22
TBA sale commitment is outstanding, equivalent deliverable securities, or
an offsetting TBA purchase commitment deliverable on or before the sale
commitment date, are held as "cover" for the transaction.
Unsettled TBA sale commitments are valued at the current market value of
the underlying securities, generally according to the procedures described
under "Security valuation" above. The contract is "marked-to-market" daily
and the change in market value is recorded by the fund as an unrealized
gain or loss. If the TBA sale commitment is closed through the acquisition
of an offsetting purchase commitment, the fund realizes a gain or loss on
the commitment without regard to any unrealized gain or loss on the
underlying security. If the fund delivers securities under the commitment,
the fund realizes a gain or loss from the sale of the securities based upon
the unit price established at the date the commitment was entered into.
F) OPTION ACCOUNTING PRINCIPLES When the fund writes a call option or put
option, an amount equal to the premium received by the fund is included in
the fund's "Statement of assets and liabilities'' as an asset and an
equivalent liability. The amount of the liability is subsequently
"marked-to-market'' to reflect the current market value of the option
written. The current market value of an option is the last sale price or,
in the absence of a sale, the last offering price, except that certain
options on U.S. government obligations are stated at fair value on the
basis of valuations furnished by a pricing service approved by the
Trustees. If an option expires on its stipulated expiration date, or if the
fund enters into a closing purchase transaction, the fund realizes a gain
(or loss if the cost of a closing purchase transaction exceeds the premium
received when the option was written) without regard to any unrealized gain
or loss on the underlying security, and the liability related to such
option is extinguished.
22
<PAGE> 23
If a written call option is exercised, the fund realizes a gain or loss
from the sale of the underlying security and the proceeds of the sale are
increased by the premium originally received. If a written put option is
exercised, the amount of the premium originally received reduces the cost
of the security that the fund purchases upon exercise of the option.
Accordingly, the risk in writing a call option is that the fund
relinquishes the opportunity to profit if the market price of the
underlying security increases and the option is exercised. In writing a put
option, the fund assumes the risk of incurring a loss if the market price
of the underlying security decreases and the option is exercised.
The premium paid by the fund for the purchase of a call option or put
option is included in the fund's "Statement of assets and liabilities" as
an investment and subsequently "marked-to-market" to reflect the current
market value of the option. If an option the fund has purchased expires on
the stipulated expiration date the fund realizes a loss in the amount of
the cost of the option. If the fund enters into a closing sale transaction,
it realizes a gain or loss, depending on whether the proceeds from the
closing sale are greater or less than the cost of the option. If the fund
exercises a put option, it realizes a gain or loss from the sale of the
underlying security and the proceeds from such sale will be decreased by
the premium originally paid. If the fund exercises a call option, the cost
of the securities acquired by exercising the call is increased by the
premium originally paid.
OPTIONS ON FOREIGN CURRENCIES The fund writes and purchases put and call
options on foreign currencies. The accounting principles and risks involved
are similar to those described above relating to options on securities.
23
<PAGE> 24
FORWARD CURRENCY CONTRACTS A forward currency contract is an agreement
between two parties to buy and sell a currency at a set price on a future
date. The market value of the contract will fluctuate with changes in
currency exchange rates. The contract is marked-to-market daily and the
change in market value is recorded by the fund as an unrealized gain or
loss. When the contract is closed, the fund records a realized gain or loss
equal to the difference between the value of the contract at the time it
was opened and the value at the time it was closed. The maximum potential
loss from forward currency contracts is the aggregate face value in U.S.
dollars at the time the contract was opened; however, management of the
fund believes the likelihood of such loss to be remote.
G) FEDERAL TAXES It is the policy of the fund to distribute all of its
income within the prescribed time and otherwise comply with the provisions
of the Internal Revenue Code applicable to regulated investment companies.
It is also the intention of the fund to distribute an amount sufficient to
avoid imposition of any excise tax under Section 4982 of the Internal
Revenue Code of 1986. Therefore, no provision has been made for federal
taxes on income, capital gains or unrealized appreciation of securities
held and excise tax on income and capital gains.
H) DISTRIBUTIONS TO SHAREHOLDERS Distributions to shareholders are recorded
by the fund on the ex-dividend date. At certain times, the fund may pay
distributions at a level rate even though, as a result of market conditions
or investment decisions, the fund may not achieve projected investment
results for a given period.
24
<PAGE> 25
NOTE 2
MANAGEMENT FEE, ADMINISTRATIVE SERVICES, AND OTHER TRANSACTIONS
Compensation of Putnam Management for management and investment advisory
services is paid quarterly at the annual rate of: 0.75% of the first $500
million of average weekly net assets, 0.65% of the next $500 million, 0.60%
of the next $500 million, 0.55% of any amount over $1.5 billion.
The fund also reimburses the Manager for the compensation and related
expenses of certain officers of the fund and their staff who provide
administrative services to the fund. The aggregate amount of all such
reimbursements is determined annually by the Trustees. For the six months
ended May 31, 1994, the fund paid $1,460 for these services.
Trustees of the fund receive an annual Trustee's fee of $1,360 and an
additional fee for each Trustees' meeting attended. Trustees who are not
interested persons of the Manager and who serve on committees of the
Trustees receive additional fees for attendance at certain committee
meetings.
Custodial functions for the fund are provided by Putnam Fiduciary Trust
Company (PFTC), a subsidiary of Putnam Investments, Inc. Investor
servicing agent functions are provided by Putnam Investor Services, a
division of PFTC. Fees paid for these investor servicing and custodial
functions for the six months ended May 31, 1994, amounted to $306,901.
Investor servicing and custodian fees reported in the Statement of
operations for the six months ended May 31, 1994 have been reduced by
credits allowed by PFTC.
As part of the custodian contract between PFTC and its subcustodians, the
subcustodian has a lien on the securities of the fund, to the extent
permitted by the fund's investment restrictions, to cover any advances made
by the subcustodian for the settlement of securities purchased by the fund.
At May 31, 1994, the payable to subcustodian represents the amount due for
cash advanced for the settlement of a security purchased.
25
<PAGE> 26
NOTE 3
PURCHASES AND SALES OF SECURITIES
During the six months ended May 31, 1994, purchases and sales of investment
securities other than U.S. government obligations and short-term
investments aggregated $187,082,046 and $190,234,878 respectively.
Purchases and sales of U.S. government obligations aggregated $587,337,381
and $586,079,006, respectively. In determining the net gain or loss on
securities sold, the cost of securities has been determined on the
identified cost basis.
Written option transactions on investments during the period are summarized
as follows:
<TABLE>
<CAPTION>
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
<S> <C> <C>
Options written 99,250 $ 212,864
Options exercised (71,860) (144,389)
Options expired (27,390) (68,475)
WRITTEN OPTIONS
OUTSTANDING AT END OF PERIOD $ --
---------
</TABLE>
Purchased option transactions on investments during the period are
summarized as follows:
<TABLE>
<CAPTION>
COST
----
<S> <C>
Options open at
beginning of period $ 666,789
Options purchased 4,947,318
Options exercised (4,277,109)
Options expired (1,336,998)
----------
PURCHASED OPTIONS
OUTSTANDING AT END OF PERIOD $ --
----------
</TABLE>
Transactions in forward currency contracts during the period are summarized
as follows:
<TABLE>
<CAPTION>
PURCHASES OF FORWARD
CURRENCY CONTRACTS
------------------
AGGREGATE FACE VALUE
<S> <C>
Contracts open at
beginning of period $25,205,925
Contracts purchased 259,589,294
Contracts closed (253,223,062)
------------
OPEN AT END OF PERIOD $31,572,157
------------
</TABLE>
<TABLE>
<CAPTION>
SALES OF FORWARD
CURRENCY CONTRACTS
------------------
AGGREGATE FACE VALUE
<S> <C>
Contracts open at
beginning of period $ 126,071,719
Contracts written 568,516,420
Contracts closed (564,104,134)
-------------
OPEN AT END OF PERIOD $ 130,484,005
-------------
</TABLE>
26
<PAGE> 27
NOTE 4:
RECLASSIFICATION OF CAPITAL ACCOUNTS
Effective December 1, 1993, Putnam Intermediate Government Income Trust
adopted the provisions of Statement of Position 93-2 "Determination,
Disclosure and Financial Statement Presentation of Income, Capital Gain and
Return of Capital distributions by Investment Companies (SOP)". The purpose
of this SOP is to report the undistri-buted net investment income
(accumulated loss) and accumulated net realized gain (loss) accounts in
such a manner as to approximate amounts available for future distributions
(or to offset future realized capital gains) and to achieve uniformity in
the presentation of distributions by investment companies).
As a result of the SOP, the fund has reclassified $2,603,305 to increase
accumulated net realized loss, $2,549,179 to increase distributions in
excess of net investment income, with an increase of $5,152,484 to
additional paid-in capital. These adjustments represent the cumulative
amounts necessary to report these balances on a tax basis through November
30, 1993, the close of the fund's most recent fiscal year-end, for
financial reporting and tax purposes. These reclassifications, which have
no impact on the total net asset value of the fund are primarily attributed
to market discount, gains and losses on foreign exchange transactions and
paydowns for mortgage-backed securities, returns of shareholder capital and
market discount, which are treated differently in the computation of
distributable income and capital gains under federal income tax rules and
regulations versus generally accepted accounting principles.
27
<PAGE> 28
<TABLE>
SELECTED QUARTERLY DATA
(Unaudited)
<CAPTION>
May 31 February 28 November 30 August 31
------ ----------- ----------- ---------
1994
----
<S> <C> <C> <C> <C>
TOTAL INVESTMENT INCOME
Total $ 10,370,334 $ 9,658,271 $ 9,416,897 $ 10,122,570
Per Share $ .16 $ .15 $ .15 $ .15
NET INVESTMENT INCOME
Total $ 9,094,386 $ 8,376,468 $ 8,175,281 $ 8,808,242
Per Share $ .14 $ .13 $ .13 $ .13
NET REALIZED AND
UNREALIZED GAIN
(LOSS) ON
INVESTMENTS
Total $ (27,030,125) $ (7,496,765) $ (13,054,383) $ 7,879,731
Per Share $ (.42) $ (.11) $ (.21) $ .13
NET INCREASE
(DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS
Total $ (17,935,739) $ 879,703 $ (4,879,102) $ 16,687,973
Per Share $ (.28) $ .02 $ (.08) $ .26
NET ASSETS AT END OF
PERIOD
Total $ 545,936,464 $ 574,368,277 $ 589,227,021 $603,871,402
Per Share $ 8.39 $ 8.82 $ 9.05 $ 9.28
</TABLE>
28
<PAGE> 29
<TABLE>
<CAPTION>
Three months ended
May 31 February 28 November 30 August 31 May 31 February 28
------ ----------- ----------- --------- ------ -----------
1993 1992
---- ----
<S> <C> <C> <C> <C> <C> <C>
TOTAL INVESTMENT INCOME
Total $ 10,923,417 $ 10,522,893 $ 9,486,368 $ 11,818,592 $ 11,421,240 $ 11,432,832
Per Share $ .17 $ .16 $ .15 $ .18 $ .18 $ .18
NET INVESTMENT INCOME
Total $ 9,474,981 $ 9,210,818 $ 8,164,154 $ 10,428,221 $ 10,053,157 $ 10,062,197
Per Share $ .15 $ .14 $ .12 $ .16 $ .16 $ .16
NET REALIZED AND
UNREALIZED GAIN
(LOSS) ON
INVESTMENTS
Total $ 3,870,296 $ 15,181,471 $ (144,023) $ 17,524,842 $ 973,099 $ (297,066)
Per Share $ .05 $ .24 $ -- $ .28 $ .01 $ (.01)
NET INCREASE
(DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS
Total $ 13,345,277 $ 24,392,289 $ 8,020,131 $ 27,953,063 $ 11,026,256 $ 9,765,131
Per Share $ .20 $ .38 $ .12 $ .44 $ .17 $ .15
NET ASSETS AT END OF
PERIOD
Total $596,948,092 $593,400,171 $601,573,232 $603,882,234 $586,216,506 $583,588,249
Per Share $ 9.17 $ 9.12 $ 9.32 $ 9.38 $ 9.12 $ 9.15
</TABLE>
29
<PAGE> 30
DIVIDEND POLICY
May 31, 1994
It is the fund's dividend policy to pay monthly distributions from net
investment income and any net realized short-term gains (including gains
from options and futures transactions). Long-term capital gains, if any,
are distributed at least annually. In an effort to maintain a more stable
level of distributions, the fund's monthly distribution rate will be based
on Putnam Management's projections of the net investment income and net
realized short-term capital gains that the fund is likely to earn over the
long term. Such distributions at times may exceed the current earnings of
the fund, resulting in a return of capital to shareholders.
At the time of each distribution, shareholders are furnished Putnam
Management's current estimate of the sources of such distributions. These
estimates are subject to adjustment depending on investment results for the
fund's entire fiscal year. Final information regarding such matters is
furnished to shareholders in tax information provided following the end of
each calendar year.
30
<PAGE> 31
FUND INFORMATION
INVESTMENT MANAGER
Putnam Investment
Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
TRUSTEES
George Putnam, Chairman
William F. Pounds, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
John A. Hill
Elizabeth T. Kennan
Lawrence J. Lasser
Donald S. Perkins
Robert E. Patterson
George Putnam, III
A.J.C. Smith
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Gary N. Coburn
Vice President
Alan J. Bankart
Vice President
Neil J. Powers
Vice President
and Fund Manager
William N. Shiebler
Vice President
John R. Verani
Vice President
Paul O'Neil
Vice President
John D. Hughes
Vice President
and Treasurer
Beverly Marcus
Clerk and Assistant Treasurer
This report is for the information of shareholders of Putnam Intermediate
Government Income Trust. It may also be used as sales literature when
preceded or accompanied by the current prospectus, which gives details of
sales charges, investment objectives, and operating policies of the fund.
31
<PAGE> 32
PUTNAM INVESTMENTS Bulk Rate
U.S. Postage
THE PUTNAM FUNDS PAID
One Post Office Square Boston, MA
Boston, Massachusetts 02109 Permit No. 53749
76-12995
