PUTNAM INCOME FUND
Prospectus Supplement dated August 1, 1996
to Class Y shares prospectus dated March 1, 1996
At a meeting held on July 31, 1996, shareholders of the fund
approved a number of changes to the fundamental investment
restrictions of the fund, including the elimination of certain
restrictions. As a result, the fund may now:
-- acquire more than 10% of the outstanding voting
securities of any issuer with respect to 25% of its
total assets, without restriction based on class; and
-- invest more than 5% of its total assets in securities
of any issuer with respect to 25% of its total assets.
(Investments in obligations issued or guaranteed as to
interest or principal by the U.S. government or its
agencies or instrumentalities are not subject to any
limitation.)
To the extent the fund invests a significant portion of its
assets in the securities of a particular issuer, the fund will be
subject to an increased risk of loss if the market value of such
issuer's securities declines.
The policies set forth above are fundamental and may not be
changed without shareholder approval. See the statement of
additional information of the fund for the full text of these
policies as well as the fund's other fundamental policies, some
of which were also changed by vote of shareholders.
In addition, the fund's restriction with respect to investing up
to 5% of its assets in securities of issuers that have been in
operation for less than three years was made non-fundamental,
meaning that it could be changed in the future without
shareholder approval.
Also, the fund's restriction with respect to investments in
securities subject to restrictions on resale was eliminated,
although the fund will remain subject to the non-fundamental
restriction which prohibits the fund from investing more than 15%
of tis net assets in any combination of (a) securities which are
not readily marketable, (b) securities restricted as to resale,
and (c) repurchase agreements maturing in more than seven days.
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