PUTNAM DAILY DIVIDEND TRUST
PROSPECTUS SUPPLEMENT DATED FEBRUARY 1, 1994
TO THE PROSPECTUS DATED MARCH 1, 1993, AS REVISED JULY 1, 1993
(1) The section entitled "Basic investment strategy" is replaced
by the following:
BASIC INVESTMENT STRATEGY
THE FUND INVESTS IN A PORTFOLIO OF HIGH-QUALITY MONEY MARKET
INSTRUMENTS. EXAMPLES OF THESE INSTRUMENTS INCLUDE:
o BANK CERTIFICATES OF DEPOSIT (CD'S): negotiable
certificates issued against funds deposited in a
commercial bank for a definite period of time and
earning a specified return.
o BANKERS' ACCEPTANCES: negotiable drafts or bills of
exchange, which have been "accepted" by a bank,
meaning, in effect, that the bank has unconditionally
agreed to pay the face value of the instrument on
maturity.
o PRIME COMMERCIAL PAPER: high-grade, short-term
obligations issued by banks, corporations and other
issuers.
o CORPORATE OBLIGATIONS: high-grade, short-term corporate
obligations other than prime commercial paper.
o MUNICIPAL OBLIGATIONS: high-grade, short-term municipal
obligations.
o U.S. GOVERNMENT SECURITIES: marketable securities
issued or guaranteed as to principal and interest by
the U.S. government or by its agencies or
instrumentalities.
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o REPURCHASE AGREEMENTS: with respect to U.S. Treasury or
U.S. Government agency obligations.
The Fund will invest only in high-quality securities that Putnam
Management believes present minimal credit risk. High-quality
securities are securities rated at the time of acquisition in one
of the two highest categories by at least two nationally
recognized rating services (or, if only one rating service has
rated the security, by that service) or if the security is
unrated, judged to be of equivalent quality by Putnam Management.
The Fund will maintain a dollar-weighted average maturity of 90
days or less and will not invest in securities with remaining
maturities of more than 397 days. The Fund follows investment
and valuation policies designed to maintain a stable net asset
value of $1.00 per share. There is no assurance that the Fund
will be able to maintain a stable net asset value of $1.00 per
share.
(2) The section "About Your Investment -- How to Buy Shares --
Contingent Deferred Sales Charge on Class B Shares" is
supplemented as follows:
Up to 12% of the value of Class B shares subject to a Systematic
Withdrawal Plan may also be redeemed each year without a CDSC.
See the Statement of Additional Information.
