Prospectus Supplement 42633 5/98
dated May 11, 1998 to:
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PUTNAM STRATEGIC INCOME FUND (the "fund")
Prospectus dated July 30, 1997 as revised February 28, 1998
The following changes are made to the prospectus:
The first three sentences in the third paragraph under the
heading "How the fund pursues its objective - Basic investment
strategy" on page 9 of the prospectus are replaced with the
following:
The fund may invest up to 85% of its total assets in
securities rated below BBB or Baa by each nationally
recognized securities rating agency, such as Standard &
Poor's ("S&P") or Moody's Investors Service, Inc.
("Moody's"), rating such securities and in unrated
securities determined by Putnam Investment Management, Inc.
the fund's investment manager ("Putnam Management") to be of
comparable quality. Securities rated below BBB and Baa (and
comparable unrated securities) are commonly known as "junk
bonds." The fund will not invest more than 20% of its total
assets in securities rated below CCC or Caa by each of the
agencies rating such securities (and in unrated securities
determined by Putnam Management to be of comparable
quality), which may include securities in the lowest rating
category of each rating agency.
The first sentence in the seventh paragraph under the heading
"Foreign investments" on page 15 is replaced with the following:
The fund may invest without limit in foreign securities.
