Prospectus Supplement 44579
7/98
dated July 13, 1998 to:
____________________________________________________________
_____
Putnam High Quality Bond Fund (the "fund")
Prospectuses dated February 28, 1998
The first paragraph under the heading "How the fund pursues
its objectives - Options and futures portfolio strategies"
is replaced with the following:
The fund may engage in a variety of transactions involving
the use of options and futures contracts. The fund may
purchase and sell futures contracts in order to hedge
against changes in the values of securities the fund owns or
expects to purchase or to hedge against interest rate
changes. For example, if Putnam Investment Management, Inc.
expected interest rates to increase, the fund might sell
futures contracts on U.S. government securities. If rates
were to increase, the value of the fund's fixed-income
securities would decline, but this decline might be offset
in whole or in part by an increase in the value of the
futures contracts. The fund may also purchase and sell call
and put options on futures contracts or on securities it is
permitted to purchase in addition to or as an alternative to
purchasing and selling futures contracts. The fund may also
buy and sell combinations of put and call options on the
same underlying security. The fund may also engage in
futures and options transactions for nonhedging purposes,
such as to substitute for direct investment or to manage the
fund's effective duration. Duration is a commonly used
measure of the longevity of debt instruments.
