53086 7/99
Prospectus Supplement
dated July 26, 1999 to:
Putnam Intermediate U.S. Government Income Fund
Prospectus dated March 30, 1999
Effective July 26, 1999, the fund will offer class C shares.
This document provides important information about class C shares
and supplements the Prospectus of the fund.
THE SECTION "FEES AND EXPENSES" IS SUPPLEMENTED AS FOLLOWS:
FEES AND EXPENSES
This table summarizes the fees and expenses you may pay if you buy and
hold class C shares of the fund. You pay shareholder fees directly.
Annual fund operating expenses are deducted from a fund's assets.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge NONE
(Load) Imposed On Purchases (as a
percentage of the offering
price)
Maximum Deferred Sales 1.00%
Charge (Load)
(as a percentage of the
original purchase price or redemption
proceeds, whichever is lower)
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from fund assets)
TOTAL
MANAGEME DISTRIBU OTHER ANNUAL
NT TION EXPENSES FUND
FEES (12B-1) OPERATIN
FEES G
EXPENSES
Class C 0.60% 1.00% 0.21% 1.81%
EXAMPLE
This example translates the "total annual fund operating
expenses" shown in the preceding table into dollar amounts. By
doing this, you can more easily compare the cost of investing in
the fund to the cost of investing in other mutual funds. The
example makes certain assumptions. It assumes that you invest
$10,000 in the fund for the time periods shown and, except as
stated, redeem all your shares at the end of those periods. It
also assumes a 5% return on your investment each year and that
the fund's operating expenses remain the same. The example is
hypothetical; your actual costs and returns may be higher or
lower.
1 YEAR
NO 1 YEAR 3 5 10
REDEMPTI YEARS YEARS YEARS
ON
Class C $184 $284 $569 $980 $2,127
THE SECTION "HOW DO I BUY FUND SHARES?" IS REPLACED BY THE
FOLLOWING (EXCEPT FOR THE TABLES OF CLASS A AND M INITIAL SALES
CHARGES AND CLASS A AND CLASS B DEFERRED SALES CHARGES, WHICH
REMAIN UNCHANGED):
HOW DO I BUY FUND SHARES?
You can open a fund account with as little as $500 and make
additional investments at any time with as little as $50. The
fund sells its shares at the offering price, which is the NAV
plus any applicable sales charge. Your financial advisor or
Putnam Investor Services generally must receive your completed
buy order before the close of regular trading on the New York
Stock Exchange for your shares to be bought at that day's
offering price.
You can buy shares
O THROUGH A FINANCIAL ADVISOR. Your advisor will be
responsible for furnishing all necessary documents to Putnam
Investor Services, and may charge you for his or her services.
O THROUGH SYSTEMATIC INVESTING. You can make regular
investments of $25 or more per month through automatic deductions
from your bank checking or savings account. Application forms are
available through your advisor or Putnam Investor Services at 1-
800-225-1581.
You may also complete an order form and write a check for the
amount you wish to invest, payable to the fund. Return the check
and completed form to Putnam Mutual Funds.
The fund may periodically close to new purchases of shares or
refuse any order to buy shares if the fund determines that doing
so would be in the best interests of the fund and its
shareholders.
WHICH CLASS OF SHARES IS BEST FOR ME?
This prospectus offers you a choice of four classes of fund
shares: A, B, C and M. This allows you to choose among different
types of sales charges and different levels of ongoing operating
expenses, as illustrated in the "Fees and expenses" section. The
class of shares that is best for you depends on a number of
factors, including the amount you plan to invest and how long you
plan to hold the shares. Here is a summary of the differences
among the classes of shares:
CLASS A SHARES
O Initial sales charge of up to 3.25%
O Lower sales charge for investments of $100,000 or more
O No deferred sales charge (except on certain redemptions of
shares bought without an initial sales charge)
O Lower annual expenses, and higher dividends, than class B, C
or M shares because of lower 12b-1 fee
CLASS B SHARES
O No initial sales charge; your entire investment goes to work
for you
O Deferred sales charge of up to 3% if you sell shares within
4 years after you bought them
O Higher annual expenses, and lower dividends, than class A or
M shares because of higher 12b-1 fee
O Convert automatically to class A shares after 8 years,
reducing the future 12b-1 fee (may convert sooner in some cases)
O Orders for class B shares for more than $250,000 are treated
as orders for class A shares or refused
CLASS C SHARES
O No initial sales charge; your entire investment goes to work
for you
O Deferred sales charge of up to 1.00% if you sell shares
within one year after you bought them
O Higher annual expenses, and lower dividends, than class A or
M shares because of higher 12b-1 fee
O No conversion to class A shares, so future 12b-1 fee does
not decrease
O Orders of $1,000,000 or more and orders which because of a
right of accumulation or statement of intent would qualify for
the purchase of class A shares without an initial sales charge
will be treated as orders for class A shares or declined.
CLASS M SHARES
O Initial sales charge of up to 2.00%
O Lower sales charges for larger investments of $100,000 or
more
O No deferred sales charge
O Lower annual expenses, and higher dividends, than class B
and class C shares because of lower 12b-1 fee
O Higher annual expenses, and lower dividends, than class A
shares because of higher 12b-1 fee
O No conversion to class A shares, so future 12b-1 fee does
not decrease
O YOU MAY BE ELIGIBLE FOR REDUCTIONS AND WAIVERS OF SALES
CHARGES. Sales charges may be reduced or waived under certain
circumstances and for certain groups. Information about
reductions and waivers of sales charges is included in the SAI.
You may consult your financial advisor or Putnam Mutual Funds for
assistance.
O DISTRIBUTION (12B-1) PLANS. The fund has adopted
distribution plans to pay for the marketing of fund shares and
for services provided to shareholders. The plans provide for
payments at annual rates (based on average net assets) of up to
0.35% on class A shares and 1.00% on class B, class C and class M
shares. The Trustees currently limit payments on class A, class B
and class M shares to 0.25%, 0.85% and 0.40% of average net
assets, respectively. Because these fees are paid out of the
fund's assets on an ongoing basis, they will increase the cost of
your investment. The higher fees for class B, class C and class M
shares may cost you more than paying the initial sales charge for
class A shares. Because class C and class M shares, unlike class
B shares, do not convert to class A shares, class C and class M
shares may cost you more over time than class B shares .
