PUTNAM DIVERSIFIED INCOME TRUST (the "fund")
Prospectus Supplement dated July 14, 1997
to Prospectuses dated January 30, 1997
On July 10, 1997, the Trustees of the fund approved the following
changes to the fund's non-fundamental investment policies:
1. Investments in the U.S. Government Sector may include
privately issued debt securities that are rated at least BBB
or Baa by a nationally recognized securities ratings agency,
such as Standard & Poor's or Moody's Investors Service,
Inc., or, if unrated, are determined by Putnam Investment
Management, Inc. ("Putnam Management") to be of comparable
quality.
2. Investments in the International Sector are not subject
to any limitation based on securities ratings (other than
the limitation set forth below) and may be denominated in
any currency, including the U.S. dollar. Investments in
fixed income securities of foreign governments and
supranational entities will be allocated to the
International Sector. The High Yield Sector and the
International Sector may each make investments in foreign
corporate fixed income securities.
3. No more than 5% of the net assets of the fund,
regardless of whether they are allocated to the High Yield
Sector or the International Sector, may be invested in
securities rated below Caa or CCC by a nationally recognized
securities ratings agency or, if unrated, determined by
Putnam Management to be of comparable quality.
The foregoing investment limitations will be measured at the time
of investment and, to the extent a security is assigned a
different rating by one or more of the various rating agencies,
Putnam Management will use the highest rating assigned by any
agency.
35250 7/97
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