PUTNAM ASSET ALLOCATION FUNDS
Putnam Asset Allocation: ("Growth Portfolio")
Putnam Asset Allocation: "(Balanced Portfolio")
Putnam Asset Allocation: ("Conservative Portfolio")
Prospectus Supplement dated August 1, 1996 to
Prospectus dated February 1, 1996
At a shareholder meeting to be held on September 5, 1996, the
shareholders of each fund are being asked to approve amendments
to the funds' fundamental investment restrictions, including the
elimination of certain restrictions. If these amendments are
approved, a fund will be able to:
- - acquire more than 10% of the 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 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 funds for the full text of these
policies as well as the funds' other fundamental policies, some
of which are also proposed to be amended at the upcoming meeting.
In addition, the funds' restriction with respect to investments
in securities subject to restrictions on resale will be
eliminated, although each fund will remain subject to the non-
fundamental restriction which prohibits each fund from investing
more than 15% of its net assets in any combination of (a)
securities which are not readily marketable, (b) securities
restricted as to resale, and (c) repurchase agreements maturing
in more than seven days.
To the extent a fund invests a significant portion of its assets
in the securities of a particular issuer, such fund will be
subject to an increased risk of loss if the market value of such
issuer's securities declines.
If shareholders of each fund do not ultimately approve some or
all of the proposed changes, the prospectus will be revised
accordingly.
********
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.
********
The Trustees of Putnam Asset Allocation Funds have approved
changes in the funds' investment policies that will permit each
of the Growth and Balanced Portfolios to invest up to 60% of its
total assets in foreign securities and the Conservative Portfolio
to invest up to 40% of its total assets in foreign securities.
Eurodollar certificates of deposit are not considered foreign
securities for these purposes. The prospectus is supplemented by
adding the following disclosure:
Fund transactions in foreign currencies and hedging activities
will likely produce a difference between book income and taxable
income. This difference may cause a portion of income
distributions to constitute a return of capital for tax purposes
or require the fund to make distributions exceeding book income
to qualify as a regulated investment company for tax purposes.
If at the end of the fiscal year more than 50% of the value of
the fund's total assets represents securities of foreign
corporations, the fund intends to make an election permitted by
the Internal Revenue Code to treat any foreign taxes it paid as
paid by shareholders. In this case, shareholders who are U.S.
citizens, U.S. corporations and, in some cases, U.S. residents
generally will be required to include in U.S. taxable income
their pro rata share of such taxes, but may then generally be
entitled to claim a foreign tax credit or deduction (but not
both) for their share of such taxes.
<PAGE>
PUTNAM ASSET ALLOCATION FUNDS
Putnam Asset Allocation: ("Growth Portfolio")
Putnam Asset Allocation: "(Balanced Portfolio")
Putnam Asset Allocation: ("Conservative Portfolio")
Prospectus Supplement dated August 1, 1996 to Class A
Prospectuses dated February 1, 1996
At a shareholder meeting to be held on September 5, 1996, the
shareholders of each fund are being asked to approve amendments
to the funds' fundamental investment restrictions, including the
elimination of certain restrictions. If these amendments are
approved, a fund will be able to:
- - acquire more than 10% of the 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 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 funds for the full text of these
policies as well as the funds' other fundamental policies, some
of which are also proposed to be amended at the upcoming meeting.
In addition, the funds' restriction with respect to investments
in securities subject to restrictions on resale will be
eliminated, although each fund will remain subject to the non-
fundamental restriction which prohibits each fund from investing
more than 15% of its net assets in any combination of (a)
securities which are not readily marketable, (b) securities
restricted as to resale, and (c) repurchase agreements maturing
in more than seven days.
To the extent a fund invests a significant portion of its assets
in the securities of a particular issuer, such fund will be
subject to an increased risk of loss if the market value of such
issuer's securities declines.
If shareholders of each fund do not ultimately approve some or
all of the proposed changes, the prospectus will be revised
accordingly.
********
The following text replaces the fifth sentence of the first
paragraph under the heading "How to buy shares":
In order to be eligible to purchase shares at net asset value, a
defined contribution plan must either initially invest at least
$20 million in Putnam funds and other investments managed by
Putnam Management or its affiliates or, if the dealer of record
waives its commission, initially invest at least $1 million in
the fund.
On sales at net asset value to defined contribution plans
initially investing at least $20 million in Putnam funds and
other investments managed by Putnam Management or its affiliates,
Putnam Mutual Funds pays commissions on the initial investment
and on subsequent net quarterly sales at the rate of 0.15%.
********
The Trustees of Putnam Asset Allocation Funds have approved
changes in the funds' investment policies that will permit each
of the Growth and Balanced Portfolios to invest up to 60% of its
total assets in foreign securities and the Conservative Portfolio
to invest up to 40% of its total assets in foreign securities.
Eurodollar certificates of deposit are not considered foreign
securities for these purposes. The prospectus is supplemented by
adding the following disclosure:
Fund transactions in foreign currencies and hedging activities
will likely produce a difference between book income and taxable
income. This difference may cause a portion of income
distributions to constitute a return of capital for tax purposes
or require the fund to make distributions exceeding book income
to qualify as a regulated investment company for tax purposes.
If at the end of the fiscal year more than 50% of the value of
the fund's total assets represents securities of foreign
corporations, the fund intends to make an election permitted by
the Internal Revenue Code to treat any foreign taxes it paid as
paid by shareholders. In this case, shareholders who are U.S.
citizens, U.S. corporations and, in some cases, U.S. residents
generally will be required to include in U.S. taxable income
their pro rata share of such taxes, but may then generally be
entitled to claim a foreign tax credit or deduction (but not
both) for their share of such taxes.
<PAGE>
PUTNAM ASSET ALLOCATION FUNDS
Putnam Asset Allocation: ("Growth Portfolio")
Putnam Asset Allocation: "(Balanced Portfolio")
Putnam Asset Allocation: ("Conservative Portfolio")
Prospectus Supplement dated August 1, 1996 to Class Y
Prospectuses dated February 1, 1996
At a shareholder meeting to be held on September 5, 1996, the
shareholders of each fund are being asked to approve amendments
to the funds' fundamental investment restrictions, including the
elimination of certain restrictions. If these amendments are
approved, a fund will be able to:
- - acquire more than 10% of the 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 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 funds for the full text of these
policies as well as the funds' other fundamental policies, some
of which are also proposed to be amended at the upcoming meeting.
In addition, the funds' restriction with respect to investments
in securities subject to restrictions on resale will be
eliminated, although each fund will remain subject to the non-
fundamental restriction which prohibits each fund from investing
more than 15% of its net assets in any combination of (a)
securities which are not readily marketable, (b) securities
restricted as to resale, and (c) repurchase agreements maturing
in more than seven days.
To the extent a fund invests a significant portion of its assets
in the securities of a particular issuer, such fund will be
subject to an increased risk of loss if the market value of such
issuer's securities declines.
If shareholders of each fund do not ultimately approve some or
all of the proposed changes, the prospectus will be revised
accordingly.
********
The Trustees of Putnam Asset Allocation Funds have approved
changes in the funds' investment policies that will permit each
of the Growth and Balanced Portfolios to invest up to 60% of its
total assets in foreign securities and the Conservative Portfolio
to invest up to 40% of its total assets in foreign securities.
Eurodollar certificates of deposit are not considered foreign
securities for these purposes. The prospectus is supplemented by
adding the following disclosure:
Fund transactions in foreign currencies and hedging activities
will likely produce a difference between book income and taxable
income. This difference may cause a portion of income
distributions to constitute a return of capital for tax purposes
or require the fund to make distributions exceeding book income
to qualify as a regulated investment company for tax purposes.
If at the end of the fiscal year more than 50% of the value of
the fund's total assets represents securities of foreign
corporations, the fund intends to make an election permitted by
the Internal Revenue Code to treat any foreign taxes it paid as
paid by shareholders. In this case, shareholders who are U.S.
citizens, U.S. corporations and, in some cases, U.S. residents
generally will be required to include in U.S. taxable income
their pro rata share of such taxes, but may then generally be
entitled to claim a foreign tax credit or deduction (but not
both) for their share of such taxes.
