-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D/e4HWxmx0pFzoS43FYbD/681DnLxoXi9+WwybNA81eQrEkTrX0TTNhdoXvRznPG 29gn/r8RpUZyVwjPgqKleA== 0000928816-02-000803.txt : 20021002 0000928816-02-000803.hdr.sgml : 20021002 20021002165644 ACCESSION NUMBER: 0000928816-02-000803 CONFORMED SUBMISSION TYPE: 497 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20021002 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM INTERMEDIATE US GOVT INCOME FUND CENTRAL INDEX KEY: 0000869797 IRS NUMBER: 046661044 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 033-37991 FILM NUMBER: 02780036 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQUARE STREET 2: MAILSTOP A 14 CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 8002551581 MAIL ADDRESS: STREET 1: NULL FORMER COMPANY: FORMER CONFORMED NAME: PUTNAM FOCUS GROWTH FUND DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: PUTNAM BALANCED MORTGAGE FUND DATE OF NAME CHANGE: 19921223 FORMER COMPANY: FORMER CONFORMED NAME: PUTNAM BALANCED GOVERNMENT FUND DATE OF NAME CHANGE: 19930121 497 1 usg1.txt PUTNAM INTERMEDIATE U.S. GOVERNMENT INCOME FUND Prospectus March 30, 2002, as revised September 30, 2002 Putnam Intermediate U.S. Government Income Fund Class A, B, C and M shares Investment Category: Income This prospectus explains what you should know about this mutual fund before you invest. Please read it carefully. Putnam Investment Management, LLC (Putnam Management), which has managed mutual funds since 1937, manages the fund. These securities have not been approved or disapproved by the Securities and Exchange Commission nor has the Commission passed upon the accuracy or adequacy of this prospectus. Any statement to the contrary is a crime. CONTENTS 2 Fund summary 2 Goal 2 Main investment strategies 2 Main risks 3 Performance information 4 Fees and expenses 5 What are the fund's main investment strategies and related risks? 7 Who manages the fund? 8 How does the fund price its shares? 8 How do I buy fund shares? 12 How do I sell fund shares? 14 How do I exchange fund shares? 15 Fund distributions and taxes 16 Financial highlights [SCALE LOGO OMITTED] Fund summary GOAL The fund seeks as high a level of current income as Putnam Management believes is consistent with preservation of capital. MAIN INVESTMENT STRATEGIES -- U.S. GOVERNMENT BONDS We invest in bonds that * are obligations of the U.S. government, its agencies and instrumentalities * are backed by the full faith and credit of the United States, such as U.S. Treasury bonds and Ginnie Mae mortgage-backed bonds, or by the credit of a federal agency or government sponsored entity, such as Fannie Mae mortgage-backed bonds and * have short to intermediate-term maturities (one to ten years). However, the fund will have a dollar weighted average maturity of three to ten years. We also invest in forward commitments and repurchase agreements relating to those investments. MAIN RISKS The main risks that could adversely affect the value of this fund's shares and the total return on your investment include: * The risk that the issuers of the fund's investments will not make timely payments of interest and principal. This credit risk is higher for debt that is not backed by the full faith and credit of the U.S. government. * The risk that movements in financial markets will adversely affect the value of the fund's investments. This risk includes interest rate risk, which means that the prices of the fund's investments are likely to fall if interest rates rise. * The risk that, compared to other debt, mortgage-backed investments may increase in value less when interest rates decline, and decline in value more when interest rates rise. You can lose money by investing in the fund. The fund may not achieve its goal, and is not intended as a complete investment program. An investment in the fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. PERFORMANCE INFORMATION The following information provides some indication of the fund's risks. The chart shows year-to-year changes in the performance of one of the fund's classes of shares, class A shares. The table following the chart compares the fund's performance to that of a broad measure of market performance. Of course, a fund's past performance is not an indication of future performance. [GRAPHIC OMITTED: vertical bar chart CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES] CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES 1994 -1.46% 1995 15.04% 1996 3.74% 1997 7.49% 1998 7.55% 1999 0.20% 2000 9.22% 2001 7.29% Performance figures in the bar chart do not reflect the impact of sales charges. If they did, performance would be less than that shown. During the periods shown in the bar chart, the highest return for a quarter was 5.06% (quarter ending 6/30/95) and the lowest return for a quarter was -1.56% (quarter ending 3/31/94). - ------------------------------------------------------------------------------- Average Annual Total Returns (for periods ending 12/31/01) - ------------------------------------------------------------------------------- Since Past Past inception 1 year 5 years (2/16/93) - ------------------------------------------------------------------------------- Class A before taxes 3.72% 5.61% 5.38% Class A after taxes on distributions 1.70% 3.41% 3.10% Class A after taxes on distributions and sale of fund shares 2.24% 3.37% 3.13% Class B before taxes 3.63% 5.70% 5.16% Class C before taxes 5.26% 5.41% 4.92% Class M before taxes 4.99% 5.74% 5.41% Lehman Intermediate Government Bond Index (no deduction for fees, expenses or taxes) 8.42% 7.06% 6.34% - ------------------------------------------------------------------------------- Unlike the bar chart, this performance information reflects the impact of sales charges. Class A and class M share performance reflects the current maximum initial sales charges; class B and class C share performance reflects the maximum applicable deferred sales charge if shares had been redeemed on 12/31/01, and, for class B shares, assumes conversion to class A shares after eight years. For periods before the inception of class B shares (2/16/93), class C shares (7/26/99) and class M shares (4/3/95), performance shown for these classes in the table is based on the performance of the fund's class A shares, adjusted to reflect the appropriate sales charge and the higher 12b-1 fees paid by the class B, class C and class M shares. The fund's performance through 11/30/94 benefited from Putnam Management's agreement to limit the fund's expenses. The fund's performance is compared to the Lehman Intermediate Government Bond Index, an unmanaged index, which primarily includes publicly-issued U.S. Treasury obligations and debt obligations of U.S. government agencies (excluding mortgage-backed securities) that have maturities between one and 9.9 years. After-tax returns reflect the highest individual federal income tax rates and do not reflect state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown. After-tax returns are shown for class A shares only and will vary for other classes. After-tax returns are not relevant to those investing through 401(k) plans, IRAs or other tax-deferred arrangements. FEES AND EXPENSES This table summarizes the fees and expenses you may pay if you invest in the fund. Expenses are based on the fund's last fiscal year. Shareholder Fees (fees paid directly from your investment) - ------------------------------------------------------------------------------- Class A Class B Class C Class M - ------------------------------------------------------------------------------- Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of the offering price) 3.25% NONE NONE 2.00% Maximum Deferred Sales Charge (Load) (as a percentage of the original purchase price or redemption proceeds, whichever is lower) NONE* 3.00% 1.00% NONE* - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Annual Fund Operating Expenses (expenses that are deducted from fund assets) - ------------------------------------------------------------------------------- Total Annual Management Distribution Other Fund Operating Fees (12b-1) Fees Expenses Expenses - ------------------------------------------------------------------------------- Class A 0.50% 0.25% 0.21% 0.96% Class B 0.50% 0.85% 0.21% 1.56% Class C 0.50% 1.00% 0.21% 1.71% Class M 0.50% 0.40% 0.21% 1.11% - ------------------------------------------------------------------------------- * A deferred sales charge of up to 1% on class A shares and of 0.40% on class M shares may be imposed on certain redemptions of shares bought without an initial sales charge. EXAMPLE The example translates the 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 then, except as shown for class B shares and class C shares, 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 3 years 5 years 10 years - ------------------------------------------------------------------------------- Class A $420 $621 $839 $1,465 Class B $459 $693 $850 $1,695* Class B (no redemption) $159 $493 $850 $1,695* Class C $274 $539 $928 $2,019 Class C (no redemption) $174 $539 $928 $2,019 Class M $311 $546 $799 $1,525 - ------------------------------------------------------------------------------- * Reflects the conversion of class B shares to class A shares, which pay lower 12b-1 fees. Conversion occurs no more than eight years after purchase. What are the fund's main investment strategies and related risks? Any investment carries with it some level of risk that generally reflects its potential for reward. We pursue the fund's goal by investing in U.S. government bonds. We will consider, among other things, credit, interest rate and prepayment risks as well as general market conditions when deciding whether to buy or sell investments. A description of the risks associated with the fund's main investment strategies follows. * Interest rate risk. The values of bonds and other debt usually rise and fall in response to changes in interest rates. Declining interest rates generally increase the value of existing debt instruments, and rising interest rates generally decrease the value of existing debt instruments. Changes in a debt instrument's value usually will not affect the amount of interest income paid to the fund, but will affect the value of the fund's shares. Interest rate risk is generally greater for investments with longer maturities. Some investments give the issuer the option to call, or redeem, its securities before their maturity date. If an issuer calls its security during a time of declining interest rates, we might have to reinvest the proceeds in an investment offering a lower yield, and therefore might not benefit from any increase in value as a result of declining interest rates. "Premium investments" offer interest rates higher than prevailing market rates. However, they involve a greater risk of loss, because their values tend to decline over time. * Credit risk. U.S. government investments generally have the least credit risk but are not completely free of credit risk. Other bonds in which the fund may invest are subject to varying degrees of risk. These risk factors include the creditworthiness of the issuer and, in the case of mortgage-backed securities, the ability of the underlying borrowers to meet their obligations. * Prepayment risk. Traditional debt investments typically pay a fixed rate of interest until maturity, when the entire principal amount is due. By contrast, payments on mortgage-backed investments typically include both interest and partial payment of principal. Principal may also be prepaid voluntarily, or as a result of refinancing or foreclosure. We may have to invest the proceeds from prepaid investments in other investments with less attractive terms and yields. Compared to debt that cannot be prepaid, mortgage-backed investments are less likely to increase in value during periods of declining interest rates and have a higher risk of decline in value during periods of rising interest rates. They may increase the volatility of a fund. * Forward commitments and repurchase agreements. We may enter into contracts with dealers for future delivery of U.S. government investments, commonly known as forward commitments. A forward commitment involves a risk of loss if the value of the investment declines before the delivery date. We may also enter into repurchase agreements, under which we buy an investment from a firm that has an obligation to buy the investment back at a fixed price and time, typically within one week. Repurchase agreements involve the risk that the other party will default on its obligations, in which case we may find it difficult to recover the value of these investments. * Frequent trading. We may buy and sell investments relatively often, which involves higher brokerage commissions and other expenses, and may increase the amount of taxes payable by shareholders. * Other investments. In addition to the main investment strategies described above, we may make other investments, such as investments in derivatives including futures, options, warrants and swap contracts, and zero-coupon bonds, which may be subject to other risks, as described in the fund's statement of additional information (SAI). * Alternative strategies. Under normal market conditions, we keep the fund's portfolio fully invested, with minimal cash holdings. However, at times we may judge that market conditions make pursuing the fund's usual investment strategies inconsistent with the best interests of its shareholders. We then may temporarily use alternative strategies that are mainly designed to limit losses. However, we may choose not to use these strategies for a variety of reasons, even in very volatile market conditions. These strategies may cause the fund to miss out on investment opportunities, and may prevent the fund from achieving its goal. * Changes in policies. The Trustees may change the fund's goal, investment strategies and other policies without shareholder approval, except as otherwise indicated. Who manages the fund? The fund's Trustees oversee the general conduct of the fund's business. The Trustees have retained Putnam Management to be the fund's investment manager, responsible for making investment decisions for the fund and managing the fund's other affairs and business. The fund pays Putnam Management a quarterly management fee for these services based on the fund's average net assets. The fund paid Putnam Management a management fee of 0.50% of average net assets for the fund's last fiscal year. Putnam Management's address is One Post Office Square, Boston, MA 02109. Putnam Management's investment professionals are organized into investment management teams, with a particular team dedicated to each specific asset class. The members of the Core Fixed-Income Team are responsible for the day-to-day management of the fund. The names of all team members can be found at www.putnaminvestments.com. The following team members coordinate the team's management of the fund's portfolio. Their experience as investment professionals over at least the last five years is shown. - ------------------------------------------------------------------------------- Portfolio leader Since Experience - ------------------------------------------------------------------------------- Kevin M. Cronin 1998 1997 - Present Putnam Management - ------------------------------------------------------------------------------- Portfolio member Since Experience - ------------------------------------------------------------------------------- Rob A. Bloemker 2002 1999 - Present Putnam Management Prior to 1999 Lehman Brothers - ------------------------------------------------------------------------------- How does the fund price its shares? The price of the fund's shares is based on its net asset value (NAV). The NAV per share of each class equals the total value of its assets, less its liabilities, divided by the number of its outstanding shares. Shares are only valued as of the close of regular trading on the New York Stock Exchange each day the exchange is open. The fund values its investments for which market quotations are readily available at market value. It values short-term investments that will mature within 60 days at amortized cost, which approximates market value. It values all other investments and assets at their fair value. 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 ($25 through systematic investing). 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: * 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. * 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. * Subsequent investments via the Internet. If you have an existing Putnam fund account and you have completed and returned an Electronic Investment Authorization Form, you can buy additional shares online at www.putnaminvestments.com. For more information, contact 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 Investor Services. 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. The fund is an eligible investment for federal credit unions. 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 * Initial sales charge of up to 3.25% * Lower sales charge for investments of $50,000 or more * No deferred sales charge (except on certain redemptions of shares bought without an initial sales charge) * Lower annual expenses, and higher dividends, than class B, C or M shares because of lower 12b-1 fee Class B shares * No initial sales charge; your entire investment goes to work for you * Deferred sales charge of up to 3.00% if you sell shares within four years of purchase * Higher annual expenses, and lower dividends, than class A or M shares because of higher 12b-1 fee * Convert automatically to class A shares after eight years, reducing the future 12b-1 fee (may convert sooner in some cases) * Orders for one or more funds totaling $250,000 or more per day and cumulative orders of $1,000,000 or more in accounts eligible to purchase class A shares with reduced or no initial sales charge under a right of accumulation will be treated as orders for class A shares or refused Class C shares * No initial sales charge; your entire investment goes to work for you * Deferred sales charge of 1.00% if you sell shares within one year of purchase * Higher annual expenses, and lower dividends, than class A or M shares because of higher 12b-1 fee * No conversion to class A shares, so future 12b-1 fee does not decrease Class M shares * Initial sales charge of up to 2.00% * Lower sales charge for investments of $100,000 or more * No deferred sales charge (except on certain redemptions of shares bought without an initial sales charge) * Lower annual expenses, and higher dividends, than class B or C shares because of lower 12b-1 fee * Higher annual expenses, and lower dividends, than class A shares because of higher 12b-1 fee * No conversion to class A shares, so future 12b-1 fee does not decrease Initial sales charges for class A and M shares - ------------------------------------------------------------------------------- Class A sales charge Class M sales charge as a percentage of: as a percentage of: - ------------------------------------------------------------------------------- Amount of purchase Net amount Offering Net amount Offering at offering price ($) invested price* invested price* - ------------------------------------------------------------------------------- Under 100,000 3.36% 3.25% 2.04% 2.00% 100,000 but under 250,000 2.56 2.50 1.52 1.50 250,000 but under 500,000 2.04 2.00 1.01 1.00 500,000 but under 1,000,000 1.52 1.00 NONE NONE 1,000,000 and above NONE NONE NONE NONE - ------------------------------------------------------------------------------- * Offering price includes sales charge. Deferred sales charges for class B, class C and certain class A and class M shares If you sell (redeem) class B shares within four years of purchase, you will generally pay a deferred sales charge according to the following schedule. Year after purchase 1 2 3 4 5+ - ------------------------------------------------------------------------------- Charge 3% 3% 2% 1% 0% A deferred sales charge of 1% will apply to class C shares if redeemed within one year of purchase. A deferred sales charge of up to 1% may apply to class A shares purchased without an initial sales charge if redeemed within two years of purchase. A deferred sales charge of 0.40% may apply to class M shares purchased without a sales charge if redeemed within one year of purchase. Deferred sales charges will be based on the lower of the shares' cost and current NAV. Shares not subject to any charge will be redeemed first, followed by shares held longest. You may sell shares acquired by reinvestment of distributions without a charge at any time. * 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 Retail Management for assistance. * 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. How do I sell fund shares? You can sell your shares back to the fund any day the New York Stock Exchange is open, either through your financial advisor or directly to the fund. Payment for redemption may be delayed until the fund collects the purchase price of shares, which may be up to 15 calendar days after the purchase date. * Selling shares through your financial advisor. Your advisor must receive your request in proper form before the close of regular trading on the New York Stock Exchange for you to receive that day's NAV, less any applicable deferred sales charge. Your advisor will be responsible for furnishing all necessary documents to Putnam Investor Services on a timely basis and may charge you for his or her services. * Selling shares directly to the fund. Putnam Investor Services must receive your request in proper form before the close of regular trading on the New York Stock Exchange in order to receive that day's NAV, less any applicable sales charge. By mail. Send a letter of instruction signed by all registered owners or their legal representatives to Putnam Investor Services. If you have certificates for the shares you want to sell, you must include them along with completed stock power forms. By telephone. You may use Putnam's telephone redemption privilege to redeem shares valued at less than $100,000 unless you have notified Putnam Investor Services of an address change within the preceding 15 days, in which case other requirements may apply. Unless you indicate otherwise on the account application, Putnam Investor Services will be authorized to accept redemption instructions received by telephone. The telephone redemption privilege is not available if there are certificates for your shares. The telephone redemption privilege may be modified or terminated without notice. * Selling shares by check. If you would like to use the check-writing service, mark the proper box on the application or authorization form and complete the signature card (and, if applicable, the resolution). The fund will send you checks when it receives these properly completed documents. You can then make the checks for $250 or more payable to the order of anyone. When the check is presented for payment, the fund will redeem a sufficient number of full and fractional shares in your account at that day's NAV to cover the amount of the check and any applicable deferred sales charge. The use of checks is subject to the rules of your fund's designated bank for its checking accounts. If you do not have a sufficient number of shares in your account to cover the amount of the check and any applicable deferred sales charge, the check will be returned and no shares will be redeemed. Because it is not possible to determine your account's value in advance, you should not write a check for the entire value of your account or try to close your account by writing a check. The fund may change or end check-writing privileges at any time without notice. The check-writing service is not available for tax-qualified retirement plans, or if there are certificates for your shares. * Additional requirements. In certain situations, for example, if you sell shares with a value of $100,000 or more, the signatures of all registered owners or their legal representatives must be guaranteed by a bank, broker-dealer or certain other financial institutions. In addition, Putnam Investor Services usually requires additional documents for the sale of shares by a corporation, partnership, agent or fiduciary, or a surviving joint owner. For more information concerning Putnam's signature guarantee and documentation requirements, contact Putnam Investor Services. * When will the fund pay me? The fund generally sends you payment for your shares the business day after your request is received. Under unusual circumstances, the fund may suspend redemptions, or postpone payment for more than seven days, as permitted by federal securities law. * Redemption by the fund. If you own fewer shares than the minimum set by the Trustees (presently 20 shares), the fund may redeem your shares without your permission and send you the proceeds. The fund may also redeem shares if you own more than a maximum amount set by the Trustees. There is presently no maximum, but the Trustees could set a maximum that would apply to both present and future shareholders. How do I exchange fund shares? If you want to switch your investment from one Putnam fund to another, you can exchange your fund shares for shares of the same class of another Putnam fund at NAV. Not all Putnam funds offer all classes of shares or are open to new investors. If you exchange shares subject to a deferred sales charge, the transaction will not be subject to the deferred sales charge. When you redeem the shares acquired through the exchange, the redemption may be subject to the deferred sales charge, depending upon when you originally purchased the shares. The deferred sales charge will be computed using the schedule of any fund into or from which you have exchanged your shares that would result in your paying the highest deferred sales charge applicable to your class of shares. Class B shares of most other Putnam funds have a higher deferred sales charge than the fund. For purposes of computing the deferred sales charge, the length of time you have owned your shares will be measured from the date of original purchase and will not be affected by any subsequent exchanges among funds. To exchange your shares, complete and return an Exchange Authorization Form, which is available from Putnam Investor Services. A telephone exchange privilege is currently available for amounts up to $500,000. The telephone exchange privilege is not available if the fund issued certificates for your shares. You may also exchange shares via the Internet at www.putnaminvestments.com. Ask your financial advisor or Putnam Investor Services for prospectuses of other Putnam funds. Some Putnam funds are not available in all states. The exchange privilege is not intended as a vehicle for short-term trading. Excessive exchange activity may interfere with portfolio management and have an adverse effect on all shareholders. In order to limit excessive exchange activity and otherwise to promote the best interests of the fund, the fund reserves the right to revise or terminate the exchange privilege, limit the amount or number of exchanges or reject any exchange. The fund into which you would like to exchange may also reject your exchange. These actions may apply to all shareholders or only to those shareholders whose exchanges Putnam Management determines are likely to have a negative effect on the fund or other Putnam funds. Consult Putnam Investor Services before requesting an exchange. Fund distributions and taxes The fund declares a distribution daily based on our projections of its estimated net income. The fund normally distributes any net investment income monthly and any net realized capital gains annually. You may choose to: * reinvest all distributions in additional shares; * receive any distributions from net investment income in cash while reinvesting capital gains distributions in additional shares; or * receive all distributions in cash. If you do not select an option when you open your account, all distributions will be reinvested. If you do not cash a distribution check within a specified period or notify Putnam Investor Services to issue a new check, the distribution will be reinvested in the fund. You will not receive any interest on uncashed distribution or redemption checks. Similarly, if any correspondence sent by the fund or Putnam Investor Services is returned as "undeliverable," fund distributions will automatically be reinvested in the fund or in another Putnam fund. For federal income tax purposes, distributions of investment income are taxable as ordinary income. Taxes on distributions of capital gains are determined by how long the fund owned the investments that generated them, rather than how long you have owned your shares. Distributions are taxable to you even if they are paid from income or gains earned by the fund before your investment (and thus were included in the price you paid). Distributions of gains from investments that the fund owned for more than one year are taxable as capital gains. Distributions of gains from investments that the fund owned for one year or less and gains on the sale of bonds characterized as market discount are taxable as ordinary income. Distributions are taxable whether you receive them in cash or reinvest them in additional shares. Any gain resulting from the sale or exchange of your shares will generally also be subject to tax. You should consult your tax advisor for more information on your own tax situation, including possible foreign, state and local taxes. Financial highlights The financial highlights tables are intended to help you understand the fund's recent financial performance. Certain information reflects financial results for a single fund share. The total returns represent the rate that an investor would have earned or lost on an investment in the fund, assuming reinvestment of all dividends and distributions. This information for the years ended November 30, 2001, 2000 and 1999 has been derived from the fund's financial statements, which have been audited by KPMG LLP. Its report and the fund's financial statements are included in the fund's annual report to shareholders, which is available upon request. The information for all periods prior to the year ended November 30, 1999 has been derived from the fund's financial statements which have been audited by the fund's previous independent accountants.
FINANCIAL HIGHLIGHTS (For a common share outstanding throughout the period) CLASS A - --------------------------------------------------------------------------------------------------- Per-share operating performance Year ended November 30 - --------------------------------------------------------------------------------------------------- 2001 2000 1999 1998 1997 - --------------------------------------------------------------------------------------------------- Net asset value, beginning of period $4.90 $4.81 $5.01 $4.90 $4.90 - --------------------------------------------------------------------------------------------------- Investment operations: - --------------------------------------------------------------------------------------------------- Net investment income .26 (c) .28 .25 .25 (c) .28 - --------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments .19 .06 (.20) .14 -- - --------------------------------------------------------------------------------------------------- Total from investment operations .45 .34 .05 .39 .28 - --------------------------------------------------------------------------------------------------- Less distributions: - --------------------------------------------------------------------------------------------------- From net investment income (.25) (.25) (.25) (.25) (.28) - --------------------------------------------------------------------------------------------------- In excess of net investment income -- -- -- (.03) -- - --------------------------------------------------------------------------------------------------- Total distributions (.25) (.25) (.25) (.28) (.28) - --------------------------------------------------------------------------------------------------- Net asset value, end of period $5.10 $4.90 $4.81 $5.01 $4.90 - --------------------------------------------------------------------------------------------------- Total return at net asset value (%)(a) 9.29 7.23 1.09 8.19 5.98 - --------------------------------------------------------------------------------------------------- Ratios and supplemental data - --------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $327,332 $217,197 $243,927 $242,140 $135,283 - --------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(b) .96 1.00 .99 1.06 1.15 - --------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets (%) 5.15 5.84 5.20 5.00 5.77 - --------------------------------------------------------------------------------------------------- Portfolio turnover (%) 224.31 (d) 401.30 318.67 223.06 188.39 - --------------------------------------------------------------------------------------------------- (a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges. (b) The ratio of expenses to average net assets includes amounts paid through expense offset arrangements. (c) Per share net investment income has been determined on the basis of the weighted average number of shares outstanding during the periods. (d) Portfolio turnover excludes certain treasury note transactions executed in connection with a short-term trading strategy.
FINANCIAL HIGHLIGHTS (For a common share outstanding throughout the period) CLASS B - --------------------------------------------------------------------------------------------------- Per-share operating performance Year ended November 30 - --------------------------------------------------------------------------------------------------- 2001 2000 1999 1998 1997 - --------------------------------------------------------------------------------------------------- Net asset value, beginning of period $4.91 $4.81 $5.01 $4.91 $4.90 - --------------------------------------------------------------------------------------------------- Investment operations: - --------------------------------------------------------------------------------------------------- Net investment income .23 (c) .25 .22 .22 (c) .26 - --------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments .19 .07 (.20) .13 -- - --------------------------------------------------------------------------------------------------- Total from investment operations .42 .32 .02 .35 .26 - --------------------------------------------------------------------------------------------------- Less distributions: - --------------------------------------------------------------------------------------------------- From net investment income (.22) (.22) (.22) (.22) (.25) - --------------------------------------------------------------------------------------------------- In excess of net investment income -- -- -- (.03) -- - --------------------------------------------------------------------------------------------------- Total distributions (.22) (.22) (.22) (.25) (.25) - --------------------------------------------------------------------------------------------------- Net asset value, end of period $5.11 $4.91 $4.81 $5.01 $4.91 - --------------------------------------------------------------------------------------------------- Total return at net asset value (%)(a) 8.61 6.79 .48 7.32 5.56 - --------------------------------------------------------------------------------------------------- Ratios and supplemental data - --------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $194,202 $103,543 $137,130 $137,569 $68,137 - --------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(b) 1.56 1.60 1.59 1.66 1.75 - --------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets (%) 4.49 5.24 4.60 4.39 5.16 - --------------------------------------------------------------------------------------------------- Portfolio turnover (%) 224.31 (d) 401.30 318.67 223.06 188.39 - --------------------------------------------------------------------------------------------------- (a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges. (b) The ratio of expenses to average net assets includes amounts paid through expense offset arrangements. (c) Per share net investment income has been determined on the basis of the weighted average number of shares outstanding during the periods. (d) Portfolio turnover excludes certain treasury note transactions executed in connection with a short-term trading strategy.
FINANCIAL HIGHLIGHTS (For a common share outstanding throughout the period) CLASS C - --------------------------------------------------------------------------------------------------- For the period Per-share July 26, 1999+ operating performance Year ended November 30 to Nov. 30 - --------------------------------------------------------------------------------------------------- 2001 2000 1999 - --------------------------------------------------------------------------------------------------- Net asset value, beginning of period $4.90 $4.81 $4.81 - --------------------------------------------------------------------------------------------------- Investment operations: - --------------------------------------------------------------------------------------------------- Net investment income .21 (c) .24 .07 - --------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments .20 .06 -- - --------------------------------------------------------------------------------------------------- Total from investment operations .41 .30 .07 - --------------------------------------------------------------------------------------------------- Less distributions: - --------------------------------------------------------------------------------------------------- From net investment income (.21) (.21) (.07) - --------------------------------------------------------------------------------------------------- In excess of net investment income -- -- -- - --------------------------------------------------------------------------------------------------- Total distributions (.21) (.21) (.07) - --------------------------------------------------------------------------------------------------- Net asset value, end of period $5.10 $4.90 $4.81 - --------------------------------------------------------------------------------------------------- Total return at net asset value (%)(a) 8.46 6.38 1.53* - --------------------------------------------------------------------------------------------------- Ratios and supplemental data - --------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $18,335 $5,221 $2,746 - --------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(b) 1.71 1.75 .61* - --------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets (%) 4.23 5.12 1.58* - --------------------------------------------------------------------------------------------------- Portfolio turnover (%) 224.31 (d) 401.30 318.67 - --------------------------------------------------------------------------------------------------- + Commencement of operations. * Not annualized. (a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges. (b) The ratio of expenses to average net assets includes amounts paid through expense offset arrangements. (c) Per share net investment income has been determined on the basis of the weighted average number of shares outstanding during the periods. (d) Portfolio turnover excludes certain treasury note transactions executed in connection with a short-term trading strategy.
FINANCIAL HIGHLIGHTS (For a common share outstanding throughout the period) CLASS M - --------------------------------------------------------------------------------------------------- Per-share operating performance Year ended November 30 - --------------------------------------------------------------------------------------------------- 2001 2000 1999 1998 1997 - --------------------------------------------------------------------------------------------------- Net asset value, beginning of period $4.92 $4.82 $5.02 $4.91 $4.90 - --------------------------------------------------------------------------------------------------- Investment operations: - --------------------------------------------------------------------------------------------------- Net investment income .25 (c) .26 .24 .24 (c) .28 - --------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments .18 .08 (.20) .14 .01 - --------------------------------------------------------------------------------------------------- Total from investment operations .43 .34 .04 .38 .29 - --------------------------------------------------------------------------------------------------- Less distributions: - --------------------------------------------------------------------------------------------------- From net investment income (.24) (.24) (.24) (.24) (.28) - --------------------------------------------------------------------------------------------------- In excess of net investment income -- -- -- (.03) -- - --------------------------------------------------------------------------------------------------- Total distributions (.24) (.24) (.24) (.27) (.28) - --------------------------------------------------------------------------------------------------- Net asset value, end of period $5.11 $4.92 $4.82 $5.02 $4.91 - --------------------------------------------------------------------------------------------------- Total return at net asset value (%)(a) 8.88 7.26 .93 8.01 6.03 - --------------------------------------------------------------------------------------------------- Ratios and supplemental data - --------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $15,244 $9,121 $10,918 $10,181 $7,158 - --------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(b) 1.11 1.15 1.14 1.21 1.30 - --------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets (%) 4.95 5.69 5.09 4.88 5.55 - --------------------------------------------------------------------------------------------------- Portfolio turnover (%) 224.31 (d) 401.30 318.67 223.06 188.39 - --------------------------------------------------------------------------------------------------- (a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges. (b) The ratio of expenses to average net assets includes amounts paid through expense offset arrangements. (c) Per share net investment income has been determined on the basis of the weighted average number of shares outstanding during the periods. (d) Portfolio turnover excludes certain treasury note transactions executed in connection with a short-term trading strategy.
Make the most of your Putnam privileges The following services are available to you as a Putnam mutual fund shareholder. * SYSTEMATIC INVESTMENT PLAN Invest as much as you wish ($25 or more) on any business day of the month except for the 29th, 30th or 31st. The amount you choose will be automatically transferred from your checking or savings account. * SYSTEMATIC WITHDRAWAL Make regular withdrawals of $50 or more monthly, quarterly, semiannually, or annually from your Putnam mutual fund account valued at $10,000 or more. Your automatic with drawal may be made on any business day of the month except for the 29th, 30th or 31st. * SYSTEMATIC EXCHANGE Transfer assets automatically from one Putnam account to another on a regular, prearranged basis. There is no additional charge for this service. * FREE EXCHANGE PRIVILEGE Exchange money between Putnam funds in the same class of shares without charge. The exchange privilege allows you to adjust your investments as your objectives change. A signature guarantee is required for exchanges of more than $500,000 and shares of all Putnam funds may not be available to all investors. Investors may not maintain, within the same fund, simultaneous plans for systematic investment or exchange (into the fund) and systematic withdrawal or exchange (out of the fund). These privileges are subject to change or termination. Many of these services can be accessed online at www.putnaminvestments.com. For more information about any of these services and privileges, call your financial advisor or a Putnam customer service representative toll free at 1-800-225-1581. Putnam Family of Funds a The following is a complete list of Putnam's open-end mutual funds. Please call your financial advisor or Putnam at 1-800-225-1581 to obtain a prospectus for any Putnam fund. It contains more complete information, including charges and expenses. Please read it carefully before you invest or send money. PUTNAM GROWTH FUNDS Putnam Balanced Fund b Putnam Growth Opportunities Fund Putnam Health Sciences Trust Putnam International New Opportunities Fund Putnam New Century Growth Fund b Putnam New Opportunities Fund Putnam OTC & Emerging Growth Fund Putnam Small Cap Growth Fund Putnam Technology Fund b Putnam Vista Fund Putnam Voyager Fund Putnam Voyager Fund II PUTNAM BLEND FUNDS Putnam Asia Pacific Growth Fund b Putnam Capital Appreciation Fund Putnam Capital Opportunities Fund Putnam Emerging Markets Fund b Putnam Europe Growth Fund Putnam Global Equity Fund c Putnam Global Growth Fund Putnam Global Natural Resources Fund Putnam International Growth Fund Putnam International Voyager Fund Putnam Investors Fund Putnam Research Fund Putnam Tax Smart Equity Fund Putnam Utilities Growth and Income Fund PUTNAM VALUE FUNDS Putnam Balanced Retirement Fund b Putnam Classic Equity Fund Putnam Convertible Income-Growth Trust Putnam Equity Income Fund The George Putnam Fund of Boston Putnam Global Growth and Income Fund b The Putnam Fund for Growth and Income Putnam International Growth and Income Fund Putnam Mid Cap Value Fund Putnam New Value Fund Putnam Small Cap Value Fund d PUTNAM INCOME FUNDS Putnam American Government Income Fund Putnam Diversified Income Trust Putnam Global Income Trust e Putnam High Yield Advantage Fund d Putnam High Yield Trust Putnam Income Fund Putnam Intermediate U.S. Government Income Fund Putnam Money Market Fund f Putnam U.S. Government Income Trust PUTNAM TAX-FREE INCOME FUNDS Putnam Municipal Income Fund Putnam Tax Exempt Income Fund Putnam Tax Exempt Money Market Fund f Putnam Tax-Free High Yield Fund Putnam Tax-Free Insured Fund Putnam State tax-free income funds g Arizona, California, Florida, Massachusetts, Michigan, Minnesota, New Jersey, New York, Ohio and Pennsylvania Putnam State tax-free money market funds f,g California, New York PUTNAM ASSET ALLOCATION FUNDS Putnam Asset Allocation Funds -- three investment portfolios that spread your money across a variety of stocks, bonds, and money market investments. The three portfolios: Putnam Asset Allocation: Balanced Portfolio Putnam Asset Allocation: Conservative Portfolio Putnam Asset Allocation: Growth Portfolio a As of 6/30/02. b In anticipation of mergers expected later this year, these funds are closed to new investors. c It is expected that this fund will merge into Putnam Global Growth Fund later this year. d Closed to new investors. e Formerly Putnam Global Governmental Income Trust. f An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although these funds seek to preserve your investment at $1.00 per share, it is possible to lose money by investing in the fund. g Not available in all states. For more information about Putnam Intermediate U.S. Government Income Fund The fund's statement of additional information (SAI) and annual and semi-annual reports to shareholders include additional information about the fund. The SAI, and the independent accountants' reports and financial statements included in the fund's four most recent annual reports to its shareholders, are incorporated by reference into this prospectus, which means they are part of this prospectus for legal purposes. The fund's annual report discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. You may get free copies of these materials, request other information about any Putnam fund, or make shareholder inquiries, by contacting your financial advisor, by visiting Putnam's Internet site, or by calling Putnam toll-free at 1-800-225-1581. You may review and copy information about a fund, including its SAI, at the Securities and Exchange Commission's public reference room in Washington, D.C. You may call the Commission at 1-202-942-8090 for information about the operation of the public reference room. You may also access reports and other information about the fund on the EDGAR Database on the Commission's Internet site at http://www.sec.gov. You may get copies of this information, with payment of a duplication fee, by electronic request at the following E-mail address: publicinfo@sec.gov., or by writing the Commission's Public Reference Section, Washington, D.C. 20549-0102. You may need to refer to the fund's file number. PUTNAM INVESTMENTS One Post Office Square Boston, Massachusetts 02109 1-800-225-1581 Address correspondence to Putnam Investor Services P.O. Box 41203 Providence, Rhode Island 02940-1203 www.putnaminvestments.com File No. 811-6257 NP036 83659 10/02 -----END PRIVACY-ENHANCED MESSAGE-----