UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY



Investment Company Act file number: (811-03897)
Exact name of registrant as specified in charter: Putnam U.S. Government Income Trust
Address of principal executive offices: One Post Office Square, Boston, Massachusetts 02109
Name and address of agent for service: Robert T. Burns, Vice President
One Post Office Square
Boston, Massachusetts 02109
Copy to:         John W. Gerstmayr, Esq.
Ropes & Gray LLP
800 Boylston Street
Boston, Massachusetts 02199-3600
Registrant’s telephone number, including area code: (617) 292-1000
Date of fiscal year end: September 30, 2013
Date of reporting period: December 31, 2012



Item 1. Schedule of Investments:













Putnam U.S. Government Income Trust

The fund's portfolio
12/31/12 (Unaudited)
U.S. GOVERNMENT AND AGENCY MORTGAGE OBLIGATIONS (102.4%) (a)
Principal amount Value
U.S. Government Guaranteed Mortgage Obligations (80.5%)
Government National Mortgage Association Adjustable Rate Mortgages 1 3/4s, July 20, 2026 $26,868 $27,903
Government National Mortgage Association Graduated Payment Mortgages
     13 1/4s, December 20, 2014 5,486 5,882
     12 3/4s, with due dates from December 15, 2013 to July 20, 2014 3,472 3,636
     12 1/4s, with due dates from February 15, 2014 to March 15, 2014 9,577 9,921
     11 1/4s, with due dates from September 15, 2015 to December 15, 2015 15,141 16,432
     9 1/4s, with due dates from April 15, 2016 to May 15, 2016 11,943 12,865
Government National Mortgage Association Pass-Through Certificates
     8 1/2s, December 15, 2019 6,887 7,575
     7 1/2s, October 20, 2030 102,230 119,880
     5 1/2s, August 15, 2035 882 980
     5s, with due dates from May 20, 2033 to July 20, 2041 216,715,329 239,594,673
     4 1/2s, with due dates from June 20, 2040 to July 15, 2041 203,736,703 225,399,676
     4 1/2s, TBA, January 1, 2043 18,000,000 19,715,625
     3s, TBA, January 1, 2043 724,000,000 769,645,956
1,254,561,004
U.S. Government Agency Mortgage Obligations (21.9%)
    Federal Home Loan Mortgage Corporation Pass-Through Certificates 5.519s, May 1, 2037 (i) $312,353 $335,167
Federal National Mortgage Association Pass-Through Certificates
     4s, October 1, 2042 12,935,143 14,377,363
3 1/2s, November 1, 2042 6,924,706 7,430,872
3 1/2s, October 1, 2042 10,770,808 11,557,112
     3s, TBA, February 1, 2043 2,000,000 2,091,562
     3s, TBA, January 1, 2043 292,000,000 306,029,695
341,821,771
Total U.S. government and agency mortgage obligations (cost $1,587,610,471) $1,596,382,775

MORTGAGE-BACKED SECURITIES (18.2%) (a)
Principal amount Value
Agency collateralized mortgage obligations (18.2%)
Federal Home Loan Mortgage Corp.
     IFB Ser. 3182, Class SP, 27.764s, 2032 $47,317 $77,353
     IFB Ser. 3408, Class EK, 24.952s, 2037 624,200 993,014
     IFB Ser. 2976, Class LC, 23.654s, 2035 3,387,064 5,618,007
     IFB Ser. 2979, Class AS, 23.507s, 2034 363,213 481,005
     IFB Ser. 3072, Class SM, 23.03s, 2035 1,636,724 2,594,593
     IFB Ser. 3072, Class SB, 22.884s, 2035 977,419 1,543,329
     IFB Ser. 3249, Class PS, 21.585s, 2036 701,276 1,066,004
     IFB Ser. 3065, Class DC, 19.233s, 2035 4,253,207 6,669,581
     IFB Ser. 2990, Class LB, 16.412s, 2034 3,724,779 5,221,805
     IFB Ser. 4074, Class US, IO, 6.441s, 2042 19,802,848 3,603,128
     IFB Ser. 4048, Class GS, IO, 6.441s, 2040 5,909,032 1,101,148
     IFB Ser. 3919, Class TS, IO, 6.441s, 2030 16,662,792 2,559,072
     IFB Ser. 4105, Class HS, IO, 6.391s, 2042 11,079,063 2,405,929
     IFB Ser. 3860, Class SP, IO, 6.391s, 2040 7,797,747 1,245,534
     IFB Ser. 4009, Class SG, IO, 6.341s, 2042 15,594,602 2,465,896
     IFB Ser. 3780, Class PS, IO, 6.241s, 2035 27,867,645 2,127,085
     IFB Ser. 3934, Class SA, IO, 6.191s, 2041 9,446,093 1,683,294
     IFB Ser. 4112, Class SC, IO, 5.941s, 2042 26,330,019 4,212,829
     IFB Ser. 4105, Class LS, IO, 5.941s, 2041 4,092,407 780,299
     IFB Ser. 3922, Class CS, IO, 5.891s, 2041 23,159,399 2,748,117
     IFB Ser. 3751, Class SB, IO, 5.831s, 2039 21,300,230 2,986,897
     IFB Ser. 4052, Class LS, IO, 5.791s, 2042 12,276,541 1,942,849
     IFB Ser. 4012, Class SM, IO, 5.741s, 2042 9,101,931 1,517,474
     Ser. 4122, Class TI, IO, 4 1/2s, 2042 13,273,997 1,884,908
     Ser. 4125, Class HI, IO, 4 1/2s, 2042 15,949,575 2,532,314
     Ser. 4024, Class PI, IO, 4 1/2s, 2041 15,086,050 1,659,450
     Ser. 4018, Class DI, IO, 4 1/2s, 2041 8,037,847 986,324
     Ser. 3747, Class HI, IO, 4 1/2s, 2037 906,673 69,152
     Ser. 4116, Class MI, IO, 4s, 2042 24,794,816 3,383,387
     Ser. 4090, Class BI, IO, 4s, 2042 12,241,573 1,326,497
     Ser. 4019, Class JI, IO, 4s, 2041 15,361,280 1,992,358
     Ser. 3756, Class IG, IO, 4s, 2037 36,304,867 2,420,446
     FRB Ser. T-57, Class 2A1, 3.394s, 2043 34,772 35,106
     Ser. 4077, Class AI, IO, 3s, 2027 16,646,055 1,757,823
     FRB Ser. T-59, Class 2A1, 2.912s, 2043 18,440 18,419
     Ser. T-56, Class A, IO, 0.524s, 2043 808,978 14,062
     Ser. T-56, Class 3, IO, 0.484s, 2043 703,023 9,200
     Ser. T-56, Class 1, IO, 0.298s, 2043 907,902 6,809
     Ser. T-8, Class A9, IO, 0.279s, 2028 2,959,770 31,448
     Ser. T-59, Class 1AX, IO, 0.274s, 2043 6,873,758 84,042
     Ser. T-48, Class A2, IO, 0.212s, 2033 10,041,393 96,884
     Ser. T-56, Class 2, IO, 0.132s, 2043 838,158 2,587
     Ser. 4077, Class TO, PO, zero %, 2041 4,736,466 4,016,807
     Ser. 3369, Class BO, PO, zero %, 2037 29,350 27,368
     Ser. 3391, PO, zero %, 2037 90,249 81,579
     Ser. 3300, PO, zero %, 2037 338,487 315,850
     Ser. 3314, PO, zero %, 2036 120,518 114,837
     Ser. 3206, Class EO, PO, zero %, 2036 21,288 19,866
     Ser. 3175, Class MO, PO, zero %, 2036 246,348 230,037
     Ser. 3210, PO, zero %, 2036 23,742 22,522
     Ser. 3145, Class GK, PO, zero %, 2036 4,769 4,767
     Ser. 2777, Class OE, PO, zero %, 2032 67,198 66,824
     FRB Ser. T-54, Class 2A, IO, zero %, 2043 4,047,545 632
     FRB Ser. 3117, Class AF, zero %, 2036 30,216 25,066
     FRB Ser. 3092, Class FA, zero %, 2035 4,088 4,088
     FRB Ser. 3326, Class WF, zero %, 2035 156,548 150,285
     FRB Ser. 3036, Class AS, zero %, 2035 49,566 42,819
Federal National Mortgage Association
     IFB Ser. 06-62, Class PS, 38.642s, 2036 1,430,207 2,697,400
     IFB Ser. 05-74, Class NK, 26.452s, 2035 2,575,287 4,662,583
     IFB Ser. 06-8, Class HP, 23.798s, 2036 1,104,277 1,868,613
     IFB Ser. 07-53, Class SP, 23.431s, 2037 1,439,293 2,328,759
     IFB Ser. 08-24, Class SP, 22.514s, 2038 5,635,868 9,017,462
     IFB Ser. 05-122, Class SE, 22.366s, 2035 1,194,295 1,814,360
     IFB Ser. 05-75, Class GS, 19.621s, 2035 803,168 1,177,361
     IFB Ser. 05-106, Class JC, 19.474s, 2035 1,562,745 2,496,735
     IFB Ser. 05-83, Class QP, 16.849s, 2034 535,920 747,452
     IFB Ser. 11-4, Class CS, 12.481s, 2040 4,292,639 5,167,622
     IFB Ser. 12-96, Class PS, IO, 6.49s, 2041 12,606,639 2,423,752
     IFB Ser. 10-119, Class PS, IO, 6.49s, 2030 11,976,533 1,990,859
     IFB Ser. 12-88, Class SB, IO, 6.46s, 2042 22,855,071 3,972,897
     IFB Ser. 10-135, Class SP, IO, 6.39s, 2040 17,469,356 2,995,470
     IFB Ser. 12-3, Class SD, IO, 6.3s, 2042 9,771,100 1,721,082
     IFB Ser. 11-27, Class AS, IO, 6.27s, 2041 8,493,094 1,221,137
     IFB Ser. 12-132, Class SB, IO, 5.99s, 2042 26,867,177 4,480,639
     IFB Ser. 12-113, Class SG, IO, 5.89s, 2042 7,276,681 1,275,311
     Ser. 12-129, Class TI, IO, 4 1/2s, 2040 13,870,095 2,077,740
     Ser. 12-30, Class PI, IO, 4s, 2042 31,098,747 4,274,834
     Ser. 409, Class C16, IO, 4s, 2040 17,561,995 1,770,839
     Ser. 12-31, Class LI, IO, 4s, 2040 17,887,156 2,221,920
     FRB Ser. 04-W7, Class A2, 3 3/4s, 2034 14,854 15,550
     FRB Ser. 03-W14, Class 2A, 3.43s, 2043 32,125 31,886
     FRB Ser. 03-W3, Class 1A4, 3.383s, 2042 57,542 57,279
     FRB Ser. 03-W11, Class A1, 3.316s, 2033 2,548 2,614
     FRB Ser. 04-W2, Class 4A, 2.98s, 2044 30,556 30,678
     Ser. 98-W5, Class X, IO, 0.914s, 2028 5,458,424 238,806
     Ser. 98-W2, Class X, IO, 0.558s, 2028 18,946,162 834,815
     FRB Ser. 07-95, Class A3, 0.46s, 2036 13,676,000 12,376,780
     Ser. 01-50, Class B1, IO, 0.409s, 2041 1,243,793 12,438
     Ser. 01-79, Class BI, IO, 0.312s, 2045 2,970,202 27,962
     Ser. 03-34, Class P1, PO, zero %, 2043 148,889 131,869
     Ser. 03-W1, Class 2A, IO, zero %, 2042 8,651,198 676
     Ser. 08-53, Class DO, PO, zero %, 2038 540,118 473,263
     Ser. 07-64, Class LO, PO, zero %, 2037 191,630 177,969
     Ser. 07-44, Class CO, PO, zero %, 2037 417,039 377,603
     Ser. 07-14, Class KO, PO, zero %, 2037 40,102 37,053
     Ser. 06-125, Class OX, PO, zero %, 2037 13,228 12,622
     Ser. 06-84, Class OT, PO, zero %, 2036 14,483 13,650
     Ser. 06-46, Class OC, PO, zero %, 2036 24,695 22,972
     Ser. 08-36, Class OV, PO, zero %, 2036 104,932 93,692
     Ser. 03-23, Class QO, PO, zero %, 2032 9,728 9,679
     Ser. 1988-12, Class B, zero %, 2018 9,579 9,004
Government National Mortgage Association
     IFB Ser. 11-56, Class SA, 23.611s, 2041 9,212,636 14,826,540
     IFB Ser. 10-158, Class SD, 14.368s, 2040 2,266,000 3,332,652
     IFB Ser. 11-70, Class WS, 9.279s, 2040 3,909,000 4,660,075
     IFB Ser. 11-72, Class SE, 7.127s, 2041 16,383,286 17,775,488
     IFB Ser. 11-56, Class MS, 6.863s, 2041 9,488,871 10,562,252
     IFB Ser. 11-81, Class SB, IO, 6.496s, 2036 17,498,619 2,982,640
     IFB Ser. 11-61, Class CS, IO, 6.469s, 2035 6,584,067 855,935
     IFB Ser. 10-26, Class QS, IO, 6.039s, 2040 9,079,381 1,588,892
     IFB Ser. 10-20, Class SC, IO, 5.939s, 2040 20,876,212 3,382,155
     IFB Ser. 10-115, Class TS, IO, 5.889s, 2038 13,636,781 1,961,651
     IFB Ser. 10-14, Class SH, IO, 5.791s, 2040 19,063,378 3,239,059
     IFB Ser. 11-70, Class SN, IO, 5.691s, 2041 3,260,000 810,729
     Ser. 10-58, Class VI, IO, 5s, 2038 1,799,441 80,975
     Ser. 11-18, Class PI, IO, 4 1/2s, 2040 11,352,682 1,708,579
     Ser. 10-35, Class QI, IO, 4 1/2s, 2040 30,895,887 5,039,892
     Ser. 11-81, Class PI, IO, 4 1/2s, 2037 19,058,392 1,690,479
     Ser. 10-116, Class IB, IO, 4 1/2s, 2036 627,171 44,686
     Ser. 10-19, Class IH, IO, 4 1/2s, 2034 1,178,614 58,931
     Ser. 10-116, Class QI, IO, 4s, 2034 10,407,126 669,726
     Ser. 11-116, Class BI, IO, 4s, 2026 8,641,681 861,230
     Ser. 12-48, Class AI, IO, 3 1/2s, 2036 22,701,553 3,393,882
     Ser. 11-70, PO, zero %, 2041 53,904,053 44,347,942
     Ser. 10-151, Class KO, PO, zero %, 2037 3,044,248 2,775,441
     Ser. 06-36, Class OD, PO, zero %, 2036 31,066 28,873
     Ser. 06-64, PO, zero %, 2034 78,165 76,970
GSMPS Mortgage Loan Trust 144A
     Ser. 99-2, IO, 0.612s, 2027 1,464,112 18,587
     Ser. 98-2, IO, 0.332s, 2027 796,539 5,725
     Ser. 98-3, IO, 0.317s, 2027 925,517 15,293
     Ser. 98-4, IO, zero %, 2026 1,169,020 42,742
283,310,513
Total mortgage-backed securities (cost $267,358,870) $283,310,513

PURCHASED SWAP OPTIONS OUTSTANDING (0.2%) (a)
Counterparty Expiration Contract
Fixed right % to receive or (pay)/ Floating rate index/ Maturity date date/ strike amount Value
Credit Suisse International
     (2)/3 month USD-LIBOR-BBA/Mar-23 (E) Mar-13/2.00 $99,947,000 $718,619
     (2.25)/3 month USD-LIBOR-BBA/Mar-23 (E) Mar-13/2.25 191,952,000 512,512
     1.5/3 month USD-LIBOR-BBA/Mar-23 (E) Mar-13/1.50 99,947,000 120,936
     (1.75)/3 month USD-LIBOR-BBA/Mar-23 (E) Mar-13/1.75 5,808,000 102,221
     1.75/3 month USD-LIBOR-BBA/Mar-23 (E) Mar-13/1.75 5,808,000 37,752
     (2.25)/3 month USD-LIBOR-BBA/Mar-23 (E) Mar-13/2.25 2,623,700 6,822
Deutsche Bank AG
     (2.25)/3 month USD-LIBOR-BBA/Mar-23 (E) Mar-13/2.25 191,952,000 512,512
     1.4/3 month USD-LIBOR-BBA/Jan-23 (E) Jan-13/1.40 431,064,000 431
Goldman Sachs International
     (2.25)/3 month USD-LIBOR-BBA/Mar-23 (E) Mar-13/2.25 191,952,000 512,511
     1.4/3 month USD-LIBOR-BBA/Jan-23 (E) Jan-13/1.40 431,064,000 431
JPMorgan Chase Bank N.A.
     1.4/3 month USD-LIBOR-BBA/Jan-23 (E) Jan-13/1.40 431,064,000 431
Total purchased swap options outstanding (cost $7,509,201) $2,525,178

SHORT-TERM INVESTMENTS (49.9%) (a)
Principal amount/shares Value
Federal Home Loan Bank discount notes with an effective yield of 0.114%, March 13, 2013 $19,000,000 $18,998,157
Federal Home Loan Bank discount notes with an effective yield of 0.088%, January 25, 2013 31,400,000 31,398,116
Federal Home Loan Bank discount notes with an effective yield of 0.083%, January 18, 2013 27,500,000 27,498,896
Federal Home Loan Mortgage Corp. discount notes with an effective yield of 0.149%, May 13, 2013 7,600,000 7,597,515
Federal Home Loan Mortgage Corp. discount notes with an effective yield of 0.139%, May 1, 2013 6,851,000 6,848,965
Federal Home Loan Mortgage Corp. discount notes with an effective yield of 0.139%, April 23, 2013 15,935,000 15,931,558
Federal Home Loan Mortgage Corp. discount notes with an effective yield of 0.114%, March 11, 2013 25,000,000 24,997,650
Federal Home Loan Mortgage Corp. discount notes with an effective yield of 0.089%, April 25, 2013 30,000,000 29,993,400
Federal Home Loan Mortgage Corp. discount notes with an effective yield of 0.089%, April 3, 2013 27,000,000 26,995,221
Federal Home Loan Mortgage Corp. discount notes with an effective yield of 0.083%, January 22, 2013 18,500,000 18,499,083
Federal National Mortgage Association discount notes with an effective yield of 0.124%, March 13, 2013 33,000,000 32,996,799
Federal National Mortgage Association discount notes with an effective yield of 0.109%, March 6, 2013 8,200,000 8,199,278
Federal National Mortgage Association discount notes with an effective yield of 0.094%, March 27, 2013 12,929,000 12,927,487
Federal National Mortgage Association discount notes with an effective yield of 0.079%, February 27, 2013 25,000,000 24,996,833
Interest in $160,000,000 joint tri-party repurchase agreement dated 12/31/12 with JPMorgan Securities, Inc. due 1/2/13 - maturity value of $23,315,324 for an effective yield of 0.25% (collateralized by various mortgage backed securities with coupon rates ranging from 3.00% to 5.50% and due dates ranging from 12/1/25 to 12/1/42, valued at $160,001,279) 23,315,000 23,315,000
Interest in $130,000,000 joint tri-party repurchase agreement dated 12/31/12 with BNP Paribas due 1/2/13 - maturity value of $27,568,306 for an effective yield of 0.20% (collateralized by various mortgage backed securities with coupon rates ranging from 4.00% to 5.00% and due dates ranging from 4/15/39 to 10/20/41, valued at $132,600,000) 27,568,000 27,568,000
Straight-A Funding, LLC discounted commercial paper with an effective yield of 0.178%, February 5, 2013 7,000,000 6,998,775
Straight-A Funding, LLC discounted commercial paper with an effective yield of 0.178%, February 4, 2013 16,000,000 15,997,280
Straight-A Funding, LLC discounted commercial paper with an effective yield of 0.178%, January 18, 2013 25,030,000 25,027,872
U.S. Treasury Bills with an effective yield of 0.165%, November 14, 2013 (SEGSF)(SEGCCS) 35,000,000 34,956,285
U.S. Treasury Bills with an effective yield of 0.160%, October 17, 2013 35,000,000 34,962,935
U.S. Treasury Bills with an effective yield of 0.158%, April 4, 2013 (SEGSF) 40,000,000 39,993,601
U.S. Treasury Bills with an effective yield of 0.145%, December 12, 2013 (SEGSF) 34,000,000 33,953,760
U.S. Treasury Bills with an effective yield of 0.140%, September 19, 2013 25,000,000 24,977,000
U.S. Treasury Bills with an effective yield of 0.119%, July 25, 2013 15,000,000 14,989,380
U.S. Treasury Bills with an effective yield of 0.117%, August 22, 2013 25,000,000 24,979,475
Putnam Money Market Liquidity Fund 0.14% (AFF) 181,365,992 181,365,992
Total short-term investments (cost $776,915,139) $776,964,313

TOTAL INVESTMENTS
Total investments (cost $2,639,393,681) (b) $2,659,182,779













TBA SALE COMMITMENTS OUTSTANDING at 12/31/12 (proceeds receivable $300,433,125) (Unaudited)


Principal       Settlement
Agency amount       date Value
Federal National Mortgage Association, 3s, January 1, 2043 $287,000,000       1/14/13 $300,789,460
Total $300,789,460















OTC INTEREST RATE SWAP CONTRACTS OUTSTANDING at 12/31/12 (Unaudited)
Upfront     Payments Payments Unrealized
Swap counterparty / premium     Termination made by received by appreciation/
Notional amount received (paid)     date fund per annum fund per annum (depreciation)
Bank of America N.A.
$22,149,100 (E) $(335,559)     3/20/23 1.75% 3 month USD-LIBOR-BBA $(89,704)
Barclays Bank PLC
276,641,000 (E) 324,283      3/20/15 0.45% 3 month USD-LIBOR-BBA 108,503
752,000 (E) 37,826      3/20/43 3 month USD-LIBOR-BBA 2.60% 7,204
75,420,000 (E) 959,672      3/20/23 3 month USD-LIBOR-BBA 1.75% 122,510
28,595,000 (E) 3,253      3/20/18 3 month USD-LIBOR-BBA 0.90% 679
9,661,000 (E) (36,905)     3/20/18 0.90% 3 month USD-LIBOR-BBA (36,036)
70,863,000 (E) (21,837)     3/20/15 3 month USD-LIBOR-BBA 0.45% 33,437
18,512,000 (E) (300,950)     3/20/23 1.75% 3 month USD-LIBOR-BBA (95,466)
Citibank, N.A.
1,887,000 (E) —      10/7/21 3 month USD-LIBOR-BBA 3.0625% 55,553
19,211,000 (E) 27,272      3/20/15 0.45% 3 month USD-LIBOR-BBA 12,288
9,051,000 (E) (58,379)     3/20/23 1.75% 3 month USD-LIBOR-BBA 42,087
9,051,000 (E) 87,795      3/20/23 3 month USD-LIBOR-BBA 1.75% (12,671)
Credit Suisse International
301,203,000 (E) 348,714      3/20/15 0.45% 3 month USD-LIBOR-BBA 113,776
78,538,000 (E) (754,645)     3/20/23 1.75% 3 month USD-LIBOR-BBA 117,126
81,320,000 (E) 892,080      3/20/23 3 month USD-LIBOR-BBA 1.75% (10,572)
28,881,000 (E) (25,306)     3/20/15 3 month USD-LIBOR-BBA 0.45% (2,778)
4,680,000 (E) 123,295      3/20/43 3 month USD-LIBOR-BBA 2.60% (67,275)
94,503,000 (E) (5,800)     3/20/18 0.90% 3 month USD-LIBOR-BBA 2,706
Deutsche Bank AG
787,000 (E) 616      3/20/18 0.90% 3 month USD-LIBOR-BBA 686
2,606,000 (E) 39,031      3/20/23 3 month USD-LIBOR-BBA 1.75% 10,104
71,914,000 (E) (810,741)     3/20/23 1.75% 3 month USD-LIBOR-BBA (12,495)
Goldman Sachs International
64,282,000 (E) 686,866      3/20/23 3 month USD-LIBOR-BBA 1.75% (26,664)
9,525,000 (E) (178,596)     3/20/23 1.75% 3 month USD-LIBOR-BBA (72,869)
6,107,000 (E) (4,886)     3/20/15 3 month USD-LIBOR-BBA 0.45% (122)
21,175,000 (E) 7,292      3/20/15 0.45% 3 month USD-LIBOR-BBA (9,225)
25,388,000 (E) 1,259,597      3/20/43 3 month USD-LIBOR-BBA 2.60% 225,798
JPMorgan Chase Bank N.A.
27,153,000 (E) (170,385)     3/20/23 1.75% 3 month USD-LIBOR-BBA 131,013
2,153,000 (E) (52,398)     3/20/43 2.60% 3 month USD-LIBOR-BBA 35,272
82,632,000 (E) 516,839      3/20/23 3 month USD-LIBOR-BBA 1.75% (400,377)
Total $182,488
(E)    Extended effective date.













CENTRALLY CLEARED INTEREST RATE SWAP CONTRACTS OUTSTANDING at 12/31/12 (Unaudited)
Upfront     Payments Payments Unrealized
premium     Termination made by received by appreciation/
Notional amount received (paid)     date fund per annum fund per annum (depreciation)
$9,151,800 (E) $(82,890)     3/20/23 1.75% 3 month USD-LIBOR-BBA $18,695
Total $18,695
(E)    Extended effective date.






OTC TOTAL RETURN SWAP CONTRACTS OUTSTANDING at 12/31/12 (Unaudited)
Upfront     Fixed payments Total return Unrealized
Swap counterparty / premium     Termination received (paid) by received by appreciation/
Notional amount received (paid)     date fund per annum or paid by fund (depreciation)
Bank of America N.A.
$10,109,060 $—      1/12/41 4.00% (1 month USD-LIBOR) Synthetic TRS Index 4.00% 30 year Fannie Mae pools $2,230
2,059,120 —      1/12/41 4.00% (1 month USD-LIBOR) Synthetic TRS Index 4.00% 30 year Fannie Mae pools 454
Barclays Bank PLC
8,293,694 —      1/12/38 (6.50%) 1 month USD-LIBOR Synthetic MBX Index 6.50% 30 year Fannie Mae pools (11,795)
2,677,979 —      1/12/40 4.50% (1 month USD-LIBOR) Synthetic MBX Index 4.50% 30 year Fannie Mae pools 11,043
18,769,770 —      1/12/38 (6.50%) 1 month USD-LIBOR Synthetic MBX Index 6.50% 30 year Fannie Mae pools (26,693)
12,765,673 —      1/12/40 5.00% (1 month USD-LIBOR) Synthetic MBX Index 5.00% 30 year Fannie Mae pools 24,058
10,668,234 —      1/12/41 5.00% (1 month USD-LIBOR) Synthetic MBX Index 5.00% 30 year Fannie Mae pools 16,755
10,532,193 —      1/12/41 4.00% (1 month USD-LIBOR) Synthetic TRS Index 4.00% 30 year Fannie Mae pools 2,323
6,202,061 —      1/12/41 4.00% (1 month USD-LIBOR) Synthetic TRS Index 4.00% 30 year Fannie Mae pools 1,368
7,142,485 —      1/12/40 (4.00%) 1 month USD-LIBOR Synthetic TRS Index 4.00% 30 year Fannie Mae pools (7,173)
20,215,519 —      1/12/41 4.00% (1 month USD-LIBOR) Synthetic TRS Index 4.00% 30 year Fannie Mae pools 4,459
49,048,666 —      1/12/38 (6.50%) 1 month USD-LIBOR Synthetic MBX Index 6.50% 30 year Fannie Mae pools (69,754)
27,803,622 —      1/12/41 5.00% (1 month USD-LIBOR) Synthetic MBX Index 5.00% 30 year Fannie Mae pools 43,666
283,660 —      1/12/40 5.00% (1 month USD-LIBOR) Synthetic TRS Index 5.00% 30 year Fannie Mae pools 477
7,055,968 —      1/12/40 4.00% (1 month USD-LIBOR) Synthetic MBX Index 4.00% 30 year Fannie Mae pools 19,529
1,836,794 —      1/12/41 5.00% (1 month USD-LIBOR) Synthetic MBX Index 5.00% 30 year Fannie Mae pools 2,885
105,697,731 —      1/12/40 4.00% (1 month USD-LIBOR) Synthetic MBX Index 4.00% 30 year Fannie Mae pools 292,536
21,947,630 —      1/12/41 4.50% (1 month USD-LIBOR) Synthetic TRS Index 4.50% 30 year Fannie Mae pools 55,178
4,232,762 —      1/12/39 6.00% (1 month USD-LIBOR) Synthetic TRS Index 6.00% 30 year Fannie Mae pools 12,012
26,492,369 —      1/12/41 5.00% (1 month USD-LIBOR) Synthetic MBX Index 5.00% 30 year Fannie Mae pools 41,607
41,994,480 —      1/12/38 (6.50%) 1 month USD-LIBOR Synthetic MBX Index 6.50% 30 year Fannie Mae pools (59,722)
35,115,674 —      1/12/41 5.00% (1 month USD-LIBOR) Synthetic MBX Index 5.00% 30 year Fannie Mae pools 55,150
11,696,872 —      1/12/40 4.00% (1 month USD-LIBOR) Synthetic MBX Index 4.00% 30 year Fannie Mae pools 32,373
405,968 —      1/12/38 6.50% (1 month USD-LIBOR) Synthetic TRS Index 6.50% 30 year Fannie Mae pools 877
2,226,342 —      1/12/38 (6.50%) 1 month USD-LIBOR Synthetic MBX Index 6.50% 30 year Fannie Mae pools (3,166)
238,462 —      1/12/39 (5.50%) 1 month USD-LIBOR Synthetic TRS Index 5.50% 30 year Fannie Mae pools (726)
238,462 —      1/12/39 (5.50%) 1 month USD-LIBOR Synthetic TRS Index 5.50% 30 year Fannie Mae pools (726)
1,337,269 —      1/12/41 5.00% (1 month USD-LIBOR) Synthetic MBX Index 5.00% 30 year Fannie Mae pools 2,100
5,570,730 —      1/12/41 3.50% (1 month USD-LIBOR) Synthetic MBX Index 3.50% 30 year Fannie Mae pools 7,858
1,140,023 —      1/12/41 3.50% (1 month USD-LIBOR) Synthetic MBX Index 3.50% 30 year Fannie Mae pools 1,608
572,734 —      1/12/39 (5.50%) 1 month USD-LIBOR Synthetic TRS Index 5.50% 30 year Fannie Mae pools (1,744)
371,392 —      1/12/40 4.50% (1 month USD-LIBOR) Synthetic TRS Index 4.50% 30 year Fannie Mae pools 935
95,809 —      1/12/39 (5.50%) 1 month USD-LIBOR Synthetic TRS Index 5.50% 30 year Fannie Mae pools (292)
5,248,430 —      1/12/34 (5.50%) 1 month USD-LIBOR Synthetic TRS Index 5.50% 30 year Fannie Mae pools (15,967)
17,724,699 —      1/12/38 (6.50%) 1 month USD-LIBOR Synthetic MBX Index 6.50% 30 year Fannie Mae pools (25,207)
1,369,676 —      1/12/40 5.00% (1 month USD-LIBOR) Synthetic MBX Index 5.00% 30 year Fannie Mae pools 2,581
82,477,883 —      1/12/41 5.00% (1 month USD-LIBOR) Synthetic MBX Index 5.00% 30 year Ginnie Mae II pools 90,994
7,774,500 —      1/12/40 4.50% (1 month USD-LIBOR) Synthetic MBX Index 4.50% 30 year Fannie Mae pools 32,060
23,308,550 —      1/12/41 5.00% (1 month USD-LIBOR) Synthetic MBX Index 5.00% 30 year Fannie Mae pools 36,607
367,815 —      1/12/40 5.00% (1 month USD-LIBOR) Synthetic MBX Index 5.00% 30 year Fannie Mae pools 693
1,192,509 —      1/12/40 5.00% (1 month USD-LIBOR) Synthetic MBX Index 5.00% 30 year Fannie Mae pools 2,247
864,653 —      1/12/40 5.00% (1 month USD-LIBOR) Synthetic MBX Index 5.00% 30 year Fannie Mae pools 1,630
18,244,323 —      1/12/38 (6.50%) 1 month USD-LIBOR Synthetic TRS Index 6.50% 30 year Fannie Mae pools (39,417)
13,666,545 —      1/12/39 5.50% (1 month USD-LIBOR) Synthetic TRS Index 5.50% 30 year Fannie Mae pools 41,619
Citibank, N.A.
232,103 —      1/12/39 (5.50%) 1 month USD-LIBOR Synthetic TRS Index 5.50% 30 year Fannie Mae pools (707)
Credit Suisse International
1,300,846 —      1/12/41 5.00% (1 month USD-LIBOR) Synthetic MBX Index 5.00% 30 year Fannie Mae pools 2,043
2,956,736 —      1/12/41 4.00% (1 month USD-LIBOR) Synthetic TRS Index 4.00% 30 year Fannie Mae pools 652
19,089,763 —      1/12/41 4.00% (1 month USD-LIBOR) Synthetic TRS Index 4.00% 30 year Fannie Mae pools 4,210
8,739,302 —      1/12/36 5.00% (1 month USD-LIBOR) Synthetic TRS Index 5.00% 30 year Fannie Mae pools 20,192
5,248,430 —      1/12/34 5.50% (1 month USD-LIBOR) Synthetic TRS Index 5.50% 30 year Fannie Mae pools 15,967
238,462 —      1/12/39 (5.50%) 1 month USD-LIBOR Synthetic TRS Index 5.50% 30 year Fannie Mae pools (726)
3,861,030 —      1/12/42 4.00% (1 month USD-LIBOR) Synthetic TRS Index 4.00% 30 year Fannie Mae pools 7,484
3,861,030 —      1/12/42 4.00% (1 month USD-LIBOR) Synthetic MBX Index 4.00% 30 year Fannie Mae pools 10,077
2,058,471 —      1/12/41 4.00% (1 month USD-LIBOR) Synthetic TRS Index 4.00% 30 year Fannie Mae pools 454
631,458 —      1/12/41 5.00% (1 month USD-LIBOR) Synthetic MBX Index 5.00% 30 year Ginnie Mae II pools 697
Deutsche Bank AG
211,808 —      1/12/40 4.00% (1 month USD-LIBOR) Synthetic TRS Index 4.00% 30 year Fannie Mae pools 213
371,392 —      1/12/40 (4.50%)1 month USD-LIBOR Synthetic TRS Index 4.50% 30 year Fannie Mae pools (935)
197,773 —      1/12/40 5.00% (1 month USD-LIBOR) Synthetic TRS Index 5.00% 30 year Fannie Mae pools 333
707,702 —      1/12/41 4.50% (1 month USD-LIBOR) Synthetic MBX Index 4.50% 30 year Ginnie Mae II pools 3,138
8,739,302 —      1/12/36 (5.00%) 1 month USD-LIBOR Synthetic TRS Index 5.00% 30 year Fannie Mae pools (20,192)
Goldman Sachs International
7,942,693 —      1/12/41 4.00% (1 month USD-LIBOR) Synthetic TRS Index 4.00% 30 year Fannie Mae pools 1,752
8,027,190 —      1/12/41 4.00% (1 month USD-LIBOR) Synthetic TRS Index 4.00% 30 year Fannie Mae pools 1,770
3,165,460 —      1/12/38 6.50% (1 month USD-LIBOR) Synthetic TRS Index 6.50% 30 year Fannie Mae pools 6,839
11,094,140 —      1/12/38 6.50% (1 month USD-LIBOR) Synthetic TRS Index 6.50% 30 year Fannie Mae pools 23,969
8,558,390 —      1/12/38 6.50% (1 month USD-LIBOR) Synthetic TRS Index 6.50% 30 year Fannie Mae pools 18,491
10,230,605 —      1/12/41 4.00% (1 month USD-LIBOR) Synthetic TRS Index 4.00% 30 year Fannie Mae pools 2,256
3,249,875 —      1/12/41 4.00% (1 month USD-LIBOR) Synthetic TRS Index 4.00% 30 year Fannie Mae pools 717
3,093,592 —      1/12/40 (4.00%) 1 month USD-LIBOR Synthetic TRS Index 4.00% 30 year Fannie Mae pools (3,107)
9,605,152 —      1/12/38 6.50% (1 month USD-LIBOR) Synthetic TRS Index 6.50% 30 year Fannie Mae pools 20,752
2,984,035 —      1/12/41 4.00% (1 month USD-LIBOR) Synthetic TRS Index 4.00% 30 year Fannie Mae pools 658
174,843 —      1/12/41 4.00% (1 month USD-LIBOR) Synthetic TRS Index 4.00% 30 year Fannie Mae pools 39
10,555,592 —      1/12/41 4.00% (1 month USD-LIBOR) Synthetic TRS Index 4.00% 30 year Fannie Mae pools 2,328
8,328,128 —      1/12/41 4.00% (1 month USD-LIBOR) Synthetic TRS Index 4.00% 30 year Fannie Mae pools 1,837
19,880,996 —      1/12/41 4.50% (1 month USD-LIBOR) Synthetic TRS Index 4.50% 30 year Fannie Mae pools 49,982
2,724,643 —      1/12/41 4.50% (1 month USD-LIBOR) Synthetic TRS Index 4.50% 30 year Fannie Mae pools 6,850
6,773,420 —      1/12/40 (4.00%) 1 month USD-LIBOR Synthetic TRS Index 4.00% 30 year Fannie Mae pools (6,802)
6,913,783 —      1/12/41 4.00% (1 month USD-LIBOR) Synthetic TRS Index 4.00% 30 year Fannie Mae pools 1,525
2,950,886 —      1/12/41 4.00% (1 month USD-LIBOR) Synthetic TRS Index 4.00% 30 year Fannie Mae pools 651
14,618,039 —      1/12/38 (6.50%) 1 month USD-LIBOR Synthetic MBX Index 6.50% 30 year Fannie Mae pools (20,789)
5,491,557 —      1/12/38 (6.50%) 1 month USD-LIBOR Synthetic MBX Index 6.50% 30 year Fannie Mae pools (7,810)
10,814,932 —      1/12/41 4.00% (1 month USD-LIBOR) Synthetic TRS Index 4.00% 30 year Fannie Mae pools 2,385
11,400,349 —      1/12/39 (5.50%) 1 month USD-LIBOR Synthetic TRS Index 5.50% 30 year Fannie Mae pools (34,718)
173,238 —      1/12/39 (5.50%) 1 month USD-LIBOR Synthetic TRS Index 5.50% 30 year Fannie Mae pools (528)
21,161,676 —      1/12/41 4.50% (1 month USD-LIBOR) Synthetic TRS Index 4.50% 30 year Fannie Mae pools 53,202
9,199,934 —      1/12/41 4.50% (1 month USD-LIBOR) Synthetic TRS Index 4.50% 30 year Fannie Mae pools 23,129
3,099,080 —      1/12/41 4.00% (1 month USD-LIBOR) Synthetic TRS Index 4.00% 30 year Fannie Mae pools 684
3,167,287 —      1/12/39 6.00% (1 month USD-LIBOR) Synthetic TRS Index 6.00% 30 year Fannie Mae pools 8,988
5,234,892 —      1/12/39 6.00% (1 month USD-LIBOR) Synthetic TRS Index 6.00% 30 year Fannie Mae pools 14,855
609,234 —      1/12/38 6.50% (1 month USD-LIBOR) Synthetic TRS Index 6.50% 30 year Fannie Mae pools 1,316
5,502,844 —      1/12/39 6.00% (1 month USD-LIBOR) Synthetic TRS Index 6.00% 30 year Fannie Mae pools 15,616
3,287,010 —      1/12/39 6.00% (1 month USD-LIBOR) Synthetic TRS Index 6.00% 30 year Fannie Mae pools 9,328
11,005,478 —      1/12/39 6.00% (1 month USD-LIBOR) Synthetic TRS Index 6.00% 30 year Fannie Mae pools 31,231
2,209,623 —      1/12/38 6.50% (1 month USD-LIBOR) Synthetic TRS Index 6.50% 30 year Fannie Mae pools 4,774
8,265,890 —      1/12/38 6.50% (1 month USD-LIBOR) Synthetic TRS Index 6.50% 30 year Fannie Mae pools 17,859
12,923,451 —      1/12/41 4.00% (1 month USD-LIBOR) Synthetic TRS Index 4.00% 30 year Fannie Mae pools 2,850
7,207,038 —      1/12/40 (4.00%) 1 month USD-LIBOR Synthetic TRS Index 4.00% 30 year Fannie Mae pools (7,238)
8,446,424 —      1/12/41 4.00% (1 month USD-LIBOR) Synthetic TRS Index 4.00% 30 year Fannie Mae pools 1,863
5,097,103 —      1/12/41 4.00% (1 month USD-LIBOR) Synthetic TRS Index 4.00% 30 year Fannie Mae pools 1,124
11,170,411 —      1/12/38 6.50% (1 month USD-LIBOR) Synthetic TRS Index 6.50% 30 year Fannie Mae pools 24,134
20,026,186 —      1/12/38 (6.50%) 1 month USD-LIBOR Synthetic MBX Index 6.50% 30 year Fannie Mae pools (28,480)
1,425,678 —      1/12/38 6.50% (1 month USD-LIBOR) Synthetic TRS Index 6.50% 30 year Fannie Mae pools 3,080
2,645,085 —      1/12/38 6.50% (1 month USD-LIBOR) Synthetic TRS Index 6.50% 30 year Fannie Mae pools 5,715
742,427 —      1/12/38 (6.50%) 1 month USD-LIBOR Synthetic MBX Index 6.50% 30 year Fannie Mae pools (1,056)
1,979,869 —      1/12/38 (6.50%) 1 month USD-LIBOR Synthetic MBX Index 6.50% 30 year Fannie Mae pools (2,816)
1,761,950 —      1/12/38 (6.50%) 1 month USD-LIBOR Synthetic MBX Index 6.50% 30 year Fannie Mae pools (2,506)
2,567,123 —      1/12/38 6.50% (1 month USD-LIBOR) Synthetic TRS Index 6.50% 30 year Fannie Mae pools 5,546
5,134,433 —      1/12/38 6.50% (1 month USD-LIBOR) Synthetic TRS Index 6.50% 30 year Fannie Mae pools 11,093
3,477,873 —      1/12/38 6.50% (1 month USD-LIBOR) Synthetic TRS Index 6.50% 30 year Fannie Mae pools 7,514
793,010 —      1/12/41 (4.00%) 1 month USD-LIBOR Synthetic MBX Index 4.00% 30 year Ginnie Mae II pools (2,564)
1,518,991 —      1/12/41 4.00% (1 month USD-LIBOR) Synthetic TRS Index 4.00% 30 year Fannie Mae pools 335
2,911,888 —      1/12/41 4.00% (1 month USD-LIBOR) Synthetic TRS Index 4.00% 30 year Fannie Mae pools 642
1,696,198 —      1/12/38 6.50% (1 month USD-LIBOR) Synthetic TRS Index 6.50% 30 year Fannie Mae pools 3,665
1,671,735 —      1/12/41 4.00% (1 month USD-LIBOR) Synthetic TRS Index 4.00% 30 year Fannie Mae pools 369
11,302,854 —      1/12/38 6.50% (1 month USD-LIBOR) Synthetic TRS Index 6.50% 30 year Fannie Mae pools 24,420
9,610,529 —      1/12/41 4.00% (1 month USD-LIBOR) Synthetic TRS Index 4.00% 30 year Fannie Mae pools 2,120
JPMorgan Chase Bank N.A.
14,284,268 —      1/12/41 4.50% (1 month USD-LIBOR) Synthetic TRS Index 4.50% 30 year Fannie Mae pools 35,912
Total $956,181










Key to holding's abbreviations
FRB Floating Rate Bonds: the rate shown is the current interest rate at the close of the reporting period
IFB Inverse Floating Rate Bonds, which are securities that pay interest rates that vary inversely to changes in the market interest rates. As interest rates rise, inverse floaters produce less current income. The rate shown is the current interest rate at the close of the reporting period.
IO Interest Only
PO Principal Only
TBA To Be Announced Commitments
Notes to the fund's portfolio
Unless noted otherwise, the notes to the fund's portfolio are for the close of the fund's reporting period, which ran from October 1, 2012 through December 31, 2012 (the reporting period). Within the following notes to the portfolio, references to “ASC 820” represent Accounting Standards Codification ASC 820  Fair Value Measurements and Disclosures  and references to “Putnam Management” represent Putnam Investment Management, LLC, the fund's manager, an indirect wholly-owned subsidiary of Putnam Investments, LLC.
(a) Percentages indicated are based on net assets of $1,558,407,958.
(b) The aggregate identified cost on a tax basis is $2,641,184,941, resulting in gross unrealized appreciation and depreciation of $37,809,792 and $19,811,954, respectively, or net unrealized appreciation of $17,997,838.
(AFF) Affiliated company. The rate quoted in the security description is the annualized 7-day yield of the fund at the close of the reporting period. Transactions during the period with Putnam Money Market Liquidity Fund, which is under common ownership and control, were as follows:
Name of affiliate Market value at the beginning of the reporting period Purchase cost Sale proceeds Investment income Market value at the end of the reporting period
Putnam Money Market Liquidity Fund * $181,365,197 $795 $— $70,611 $181,365,992
* Management fees charged to Putnam Money Market Liquidity Fund have been waived by Putnam Management.
(SEGSF) This security, in part or in entirety, was pledged and segregated with the custodian for collateral on certain derivative contracts at the close of the reporting period.
(SEGCCS) This security, in part or in entirety, was pledged and segregated with the custodian for collateral on the initial margin on certain centrally cleared derivative contracts at the close of the reporting period.
(E) Extended settlement date on premium.
(i) Security was pledged, or purchased with cash that was pledged, to the fund for collateral on certain derivative contracts.
At the close of the reporting period, the fund maintained liquid assets totaling $795,117,405 to cover certain derivatives contracts.
Debt obligations are considered secured unless otherwise indicated.
144A after the name of an issuer represents securities exempt from registration under Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.
The dates shown on debt obligations are the original maturity dates.
Security valuation: Investments, including mortgage backed securities, are valued on the basis of valuations provided by an independent pricing service approved by the Trustees or dealers selected by Putnam Management. Such service providers use information with respect to transactions in bonds, quotations from bond dealers, market transactions in comparable securities and various relationships between securities in determining value. These securities will generally be categorized as Level 2.
Investments in open-end investment companies (excluding exchange traded funds), if any, which can be classified as Level 1 or Level 2 securities, are based on their net asset value. The net asset value of such investment companies equals the total value of their assets less their liabilities and divided by the number of their outstanding shares.
Certain investments, including certain restricted and illiquid securities and derivatives, are also valued at fair value following procedures approved by the Trustees. These valuations consider such factors as significant market or specific security events such as interest rate or credit quality changes, various relationships with other securities, discount rates, U.S. Treasury, U.S. swap and credit yields, index levels, convexity exposures and recovery rates. These securities are classified as Level 2 or as Level 3 depending on the priority of the significant inputs.
Such valuations and procedures are reviewed periodically by the Trustees. Certain securities may be valued on the basis of a price provided by a single source. The fair value of securities is generally determined as the amount that the fund could reasonably expect to realize from an orderly disposition of such securities over a reasonable period of time. By its nature, a fair value price is a good faith estimate of the value of a security in a current sale and does not reflect an actual market price, which may be different by a material amount.
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. Collateral for certain tri-party repurchase agreements is held at the counterparty’s custodian in a segregated account for the benefit of the fund and the counterparty. Putnam Management 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. In the event of default or bankruptcy by the other party to the agreement, retention of the collateral may be subject to legal proceedings.
Stripped securities: The fund may invest in stripped securities which represent a participation in securities that may be structured in classes with rights to receive different portions of the interest and principal. Interest-only securities receive all of the interest and principal-only securities receive all of the principal. If the interest-only securities experience greater than anticipated prepayments of principal, the fund may fail to recoup fully its initial investment in these securities. Conversely, principal-only securities increase in value if prepayments are greater than anticipated and decline if prepayments are slower than anticipated. The market value of these securities is highly sensitive to changes in interest rates.
Options contracts: The fund used options contracts to hedge duration and convexity and to isolate prepayment risk.
The potential risk to the fund is that the change in value of options contracts may not correspond to the change in value of the hedged instruments. In addition, losses may arise from changes in the value of the underlying instruments if there is an illiquid secondary market for the contracts, if interest or exchange rates move unexpectedly or if the counterparty to the contract is unable to perform. Realized gains and losses on purchased options are included in realized gains and losses on investment securities. If a written call option is exercised, the premium originally received is recorded as an addition to sales proceeds. If a written put option is exercised, the premium originally received is recorded as a reduction to the cost of investments.
Exchange traded options are valued at the last sale price or, if no sales are reported, the last bid price for purchased options and the last ask price for written options. Options traded over-the-counter are valued using prices supplied by dealers. Certain options contracts include premiums that do not settle until the expiration date of the contract.
For the fund's average contract amount on options contracts, see the appropriate table at the end of these footnotes.
Interest rate swap contracts: The fund entered into OTC and/or centrally cleared interest rate swap contracts, which are arrangements between two parties to exchange cash flows based on a notional principal amount, to hedge interest rate risk.
An OTC interest rate swap can be purchased or sold with an upfront premium. An upfront payment received by the fund is recorded as a liability on the fund's books. An upfront payment made by the fund is recorded as an asset on the fund's books. Upfront payments are recorded as realized gains and losses at the closing of the contract. OTC and centrally cleared interest rate swap contracts are marked to market daily based upon quotations from an independent pricing service or market makers. Any change is recorded as an unrealized gain or loss on OTC interest rate swaps. Daily fluctuations in the value of centrally cleared interest rate swaps are recorded as a receivable or payable for variation margin on the Statement of assets and liabilities. Payments received or made are recorded as realized gains or losses. Certain OTC and centrally cleared interest rate swap contracts may include extended effective dates. Payments related to these swap contracts are accrued based on the terms of the contract.
The fund could be exposed to credit or market risk due to unfavorable changes in the fluctuation of interest rates or if the counterparty defaults on its obligation to perform. The fund’s maximum risk of loss from counterparty risk is the fair value of the contract. This risk may be mitigated for OTC interest rate swap contracts by having a master netting arrangement between the fund and the counterparty. There is minimal counterparty risk with respect to centrally cleared interest rate swap contracts due to the contracts being exchange traded and the exchange’s clearinghouse guaranteeing the contract from default. Risk of loss may exceed amounts recognized on the Statement of assets and liabilities.
For the fund's average notional amount on interest rate swap contracts, see the appropriate table at the end of these footnotes.
Total return swap contracts: The fund entered into OTC total return swap contracts, which are arrangements to exchange a market linked return for a periodic payment, both based on a notional principal amount, to hedge sector exposure, to manage exposure to specific sectors or industries and to gain exposure to specific sectors or industries.
To the extent that the total return of the security, index or other financial measure underlying the transaction exceeds or falls short of the offsetting interest rate obligation, the fund will receive a payment from or make a payment to the counterparty. OTC total return swap contracts are marked to market daily based upon quotations from an independent pricing service or market makers and the change, if any, is recorded as an unrealized gain or loss. Payments received or made are recorded as realized gains or losses. Certain OTC total return swap contracts may include extended effective dates. Payments related to these swap contracts are accrued based on the terms of the contract. The fund could be exposed to credit or market risk due to unfavorable changes in the fluctuation of interest rates or in the price of the underlying security or index, the possibility that there is no liquid market for these agreements or that the counterparty may default on its obligation to perform. The fund’s maximum risk of loss from counterparty risk is the fair value of the contract. This risk may be mitigated by having a master netting arrangement between the fund and the counterparty.
For the fund's average notional amount on OTC total return swap contracts, see the appropriate table at the end of these footnotes.
Master agreements: The fund is a party to ISDA (International Swaps and Derivatives Association, Inc.) Master Agreements (Master Agreements) with certain counterparties that govern OTC derivative and foreign exchange contracts entered into from time to time. The Master Agreements may contain provisions regarding, among other things, the parties’ general obligations, representations, agreements, collateral requirements, events of default and early termination. With respect to certain counterparties, in accordance with the terms of the Master Agreements, collateral posted to the fund is held in a segregated account by the fund’s custodian and with respect to those amounts which can be sold or repledged, are presented in the fund’s portfolio.
Collateral pledged by the fund is segregated by the fund’s custodian and identified in the fund’s portfolio. Collateral can be in the form of cash or debt securities issued by the U.S. Government or related agencies or other securities as agreed to by the fund and the applicable counterparty. Collateral requirements are determined based on the fund’s net position with each counterparty.
Termination events applicable to the fund may occur upon a decline in the fund’s net assets below a specified threshold over a certain period of time. Termination events applicable to counterparties may occur upon a decline in the counterparty’s long-term and short-term credit ratings below a specified level. In each case, upon occurrence, the other party may elect to terminate early and cause settlement of all derivative and foreign exchange contracts outstanding, including the payment of any losses and costs resulting from such early termination, as reasonably determined by the terminating party. Any decision by one or more of the fund’s counterparties to elect early termination could impact the fund's future derivative activity.
At the close of the reporting period, the fund had a net liability position of $6,691,799 on open derivative contracts subject to the Master Agreements. Collateral posted by the fund totaled $4,937,654.
TBA purchase commitments: The fund may enter into TBA commitments to purchase securities for a fixed unit price at a future date beyond customary settlement time. Although the unit price has been established, the principal value has not been finalized. However, it is anticipated that the amount of the commitments will not significantly differ from the principal amount. The fund holds, and maintains until settlement date, cash or high-grade debt obligations in an amount sufficient to meet the purchase price, or the fund may enter into offsetting contracts for the forward sale of other securities it owns. Income on the securities will not be earned until settlement date.
TBA purchase commitments may be considered securities 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 fair value of the underlying securities, 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.
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 Putnam Management deems it appropriate to do so.
TBA sale 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 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 fair 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 TBA purchase commitment, the fund realizes a gain or loss. If the fund delivers securities under the commitment, the fund realizes a gain or a loss from the sale of the securities based upon the unit price established at the date the commitment was entered into.












ASC 820 establishes a three-level hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of the fund’s investments. The three levels are defined as follows:
Level 1: Valuations based on quoted prices for identical securities in active markets.
Level 2: Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
Level 3: Valuations based on inputs that are unobservable and significant to the fair value measurement.
The following is a summary of the inputs used to value the fund’s net assets as of the close of the reporting period:

Valuation inputs
Investments in securities: Level 1 Level 2 Level 3
Mortgage-backed securities $— $283,310,513 $—
Purchased swap options outstanding — 2,525,178 —
U.S. Government and agency mortgage obligations — 1,596,382,775 —
Short-term investments 181,365,992 595,598,321 —
Totals by level $181,365,992 $2,477,816,787 $—



Valuation inputs
Other financial instruments: Level 1 Level 2 Level 3
TBA sale commitments $— $(300,789,460) $—
Interest rate swap contracts — (2,273,971) —
Total return swap contracts — 956,181 —
Totals by level $— $(302,107,250) $—


Market Values of Derivative Instruments as of the close of the reporting period

Asset derivatives Liability derivatives
Derivatives not accounted for as hedging instruments under ASC 815 Market value Market value
Interest rate contracts $6,850,481 $5,643,093
Total $6,850,481 $5,643,093


The average volume of activity for the reporting period for any derivative type that was held at the close of the period is listed below and was as follows:
Purchased swap option contracts (contract amount) $1,818,900,000
OTC interest rate swap contracts (notional) $1,739,100,000
Centrally Cleared interest rate swap contracts (notional) $6,900,000
OTC total return swap contracts (notional) $1,037,700,000
For additional information regarding the fund please see the fund's most recent annual or semiannual shareholder report filed on the Securities and Exchange Commission's Web site, www.sec.gov, or visit Putnam's Individual Investor Web site at www.putnaminvestments.com



Item 2. Controls and Procedures:
(a) The registrant’s principal executive officer and principal financial officer have concluded, based on their evaluation of the effectiveness of the design and operation of the registrant’s disclosure controls and procedures as of a date within 90 days of the filing date of this report, that the design and operation of such procedures are generally effective to provide reasonable assurance that information required to be disclosed by the registrant in this report is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms.

(b) Changes in internal control over financial reporting: Not applicable
Item 3. Exhibits:
Separate certifications for the principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940, as amended, are filed herewith.

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Putnam U.S. Government Income Trust
By (Signature and Title):
/s/ Janet C. Smith
Janet C. Smith
Principal Accounting Officer
Date: February 28, 2013

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By (Signature and Title):
/s/ Jonathan S. Horwitz
Jonathan S. Horwitz
Principal Executive Officer
Date: February 28, 2013

By (Signature and Title):
/s/ Steven D. Krichmar
Steven D. Krichmar
Principal Financial Officer
Date: February 28, 2013

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