PUTNAM ASSET ALLOCATION FUNDS
497, 1996-08-21
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               PUTNAM ASSET ALLOCATION FUNDS (the "Trust")
                                    
               PUTNAM ASSET ALLOCATION: GROWTH PORTFOLIO 
                          ("Growth Portfolio")
              PUTNAM ASSET ALLOCATION: BALANCED PORTFOLIO 
                         ("Balanced Portfolio")
            PUTNAM ASSET ALLOCATION:  CONSERVATIVE PORTFOLIO
                       ("Conservative Portfolio")
                  (each referred to herein as a "fund")
                                    
                                FORM N-1A
                                 PART B
                                    
               STATEMENT OF ADDITIONAL INFORMATION ("SAI")
             February 1, 1996    ,revised August 1, 1996    



This SAI is not a prospectus and is only authorized for
distribution when accompanied or preceded by a prospectus of the
Trust dated February 1, 1996, as revised from time to time.  This
SAI contains information which may be useful to investors but
which is not included in any of the Trust's prospectuses.  Each
reference to the prospectus in this SAI shall include all of the
Trust's prospectuses, unless otherwise noted.  The SAI should be
read together with the applicable prospectus.  Investors may
obtain a free copy of the applicable prospectus from Putnam
Investor Services, Mailing address:  P.O. Box 41203, Providence,
RI  02940-1203.

Part I of this SAI contains specific information about the Trust. 
Part II includes information about the Trust and the other Putnam
funds.
<PAGE>


                             Table of Contents
Part I Page

INVESTMENT RESTRICTIONS. . . . . . . . . . . . . . . . . . . . . . . . .1-3

MONEY MARKET INSTRUMENTS . . . . . . . . . . . . . . . . . . . . . . . .1-6

CHARGES AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . .1-6

INVESTMENT PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . . . 1-13

ADDITIONAL OFFICERS  . . . . . . . . . . . . . . . . . . . . . . . . . 1-16

INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS . . . . . . . . . . . 1-16


Part II

MISCELLANEOUS INVESTMENT PRACTICES . . . . . . . . . . . . . . . . . . II-1

TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .II-25

MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .II-31

DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . .II-40

HOW TO BUY SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . .II-42

DISTRIBUTION PLANS . . . . . . . . . . . . . . . . . . . . . . . . . .II-54

INVESTOR SERVICES. . . . . . . . . . . . . . . . . . . . . . . . . . .II-55

SIGNATURE GUARANTEES . . . . . . . . . . . . . . . . . . . . . . . . .II-61

SUSPENSION OF REDEMPTIONS. . . . . . . . . . . . . . . . . . . . . . .II-61

SHAREHOLDER LIABILITY. . . . . . . . . . . . . . . . . . . . . . . . .II-61

STANDARD PERFORMANCE MEASURES. . . . . . . . . . . . . . . . . . . . .II-62

COMPARISON OF PORTFOLIO PERFORMANCE. . . . . . . . . . . . . . . . . .II-63

DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .II-67


<PAGE>
                                    
                                   SAI
                                 PART I

INVESTMENT RESTRICTIONS

As fundamental investment restrictions, which may not be changed
without a vote of a majority of the outstanding voting securities
       ,  a fund        may not and will not        :

(1) Borrow money in excess of 10% of the value (taken at the
lower of cost or current value) of its total assets (not
including the amount borrowed) at the time the borrowing is made,
and then only from banks as a temporary measure to facilitate the
meeting of redemption requests (not for leverage) which might
otherwise require the untimely disposition of portfolio
investments or for extraordinary or emergency purposes.  Such
borrowings will be repaid before any additional investments are
purchased.

(2) Pledge, hypothecate, mortgage or otherwise encumber its
assets in excess of 15% of its total assets (taken at current
value) in connection with borrowings permitted by restriction 1
above.  (The deposit of underlying securities and other assets in
escrow and collateral arrangements with respect to margin for
futures contracts and options is not deemed to be a pledge or
other encumbrance.)

(3) Purchase securities on margin, except such short-term credits
as may be necessary for the clearance of purchases and sales of
securities, and except that it may make margin payments in
connection with futures contracts and options.

(4) Make short sales of securities or maintain a short sale
position for the account of the fund unless at all times when a
short position is open it owns an equal amount of such securities
or owns securities which, without payment of any further
consideration, are convertible into or exchangeable for
securities of the same issue as, and equal in amount to, the
securities sold short.

(5) Underwrite securities issued by other persons except to the
extent that, in connection with the disposition of its portfolio
investments, it may be deemed to be an underwriter under certain
federal securities laws.

(6) Purchase or sell real estate, although it may purchase
securities of issuers which deal in real estate, securities which
are secured by interests in real estate, and securities which
represent interests in real estate, and it may acquire and
dispose of real estate or interests in real estate acquired
through the exercise of its rights as a holder of debt
obligations secured by real estate or interests therein.

(7) Purchase or sell commodities or commodity contracts, except
that the fund may purchase and sell financial futures contracts
and options.

(8) Make loans, except by purchase of debt obligations in which
the fund may invest consistent with its investment policies, or
by entering into repurchase agreements with respect to not more
than 25% of its total assets (taken at current value) or through
the lending of its portfolio securities with respect to not more
than 25% of its assets.

(9) Invest in securities of any issuer if, to the knowledge of
the Trust, officers and Trustees of the Trust and officers and
directors of Putnam Management who beneficially own more than
0.5% of the shares or securities of that issuer together own more
than 5%.

(10) Invest in securities of any issuer if, immediately after
such investment, more than 5% of the total assets of the fund
(taken at current value) would be invested in the securities of
such issuer; provided that this limitation does not apply to
securities of the U.S. government or its agencies or
instrumentalities or, with respect to 25% of the fund's total
assets, to securities issued by, or backed by the credit of, any
foreign government, its agencies, or its instrumentalities.

(11) Acquire more than 10% of the voting securities of any
issuer.

(12) Purchase securities if, as a result of such purchase, more
than 25% of the fund's total assets would be invested in any one
industry.  (Securities of the U.S. government or its agencies or
instrumentalities, or of any foreign government or its agencies
or instrumentalities, securities of supranational entities, and
securities backed by the credit of a governmental entity are not
considered to represent industries.)

(13) Buy or sell oil, gas or other mineral leases, rights or
royalty contracts, although it may purchase securities of issuers
which deal in, represent interests in, or are secured by
interests in such leases, rights, or contracts, and it may 
acquire or dispose of such leases, rights, or contracts acquired
through the exercise of its rights as a holder of debt
obligations secured thereby.

<PAGE>
(14) Purchase securities restricted as to resale, if, as a
result, such investments would exceed 15% of the value of the
fund's net assets, excluding restricted securities that have been
determined by the Trustees of the Trust (or the person designated
by them to make such determinations) to be readily marketable.

(15) Make investments for the purpose of gaining control of a
company's management.

(16) Issue any class of securities which is senior to the fund's
shares of beneficial interest.

        It is contrary to a fund's present policy, which may be
changed without shareholder approval,         to        :

(1)  Invest in (a) securities which at the time of such investment
are not readily marketable, (b) securities restricted as to resale
(excluding securities determined by the Trustees of the Trust (or
the person designated by the Trustees of the Trust to make such
determinations) to be readily marketable), and (c) repurchase
agreements maturing in more than seven days, if, as a result, more
than 15% of the fund's net assets (taken at current value) would
be invested in securities described in (a), (b) and (c) above.

(2)  Invest in warrants (other than warrants acquired by the fund
as a part of a unit or attached to securities at the time of
purchase) if, as a result, such investments (valued at the lower
of cost or market) would exceed 5% of the value of the fund's net
assets; provided that not more than 2% of the fund's net assets
may be invested in warrants not listed on the New York or American
Stock Exchanges.

(3)  Invest in securities of any issuer if the party responsible
for payment, together with any predecessors, has been in operation
for less than three consecutive years and, as a result of the
investment, the aggregate of such investments would exceed 5% of
the value of the fund's total assets; provided, however, that this
restriction shall not apply to any obligation of the United States
or its agencies or instrumentalities.

(4)  Invest in the securities of other open-end registered
investment companies, except by purchase in the open market
including only customary brokers' commissions, and except as they
may be acquired as part of a merger or consolidation or
acquisition of assets.

(5)  Purchase or sell real property (including limited partnership
interests), except that the fund may (a) purchase or sell readily
marketable interests in real estate investment Trusts or readily
marketable securities of companies which invest in real estate,
(b) purchase or sell securities that are secured by interests in
real estate or interests therein, or (c) acquire real estate
through exercise of its rights as a holder of obligations secured
by real estate or interests therein or sell real estate so
acquired.

                          ---------------------------

At a meeting to be held on September 5, 1996,  shareholders of
each fund are being asked to approve a number of changes to the
funds' fundamental investment restrictions, including the
elimination of certain of these restrictions. If these proposals
are approved at that meeting, the funds' fundamental and non-
fundamental investment restrictions will be as follows after that
date:

Fundamental restrictions

A fund may not or will not:

(1) Borrow money in excess of 10% of the value (taken at the lower
of cost or current value) of its total assets (not including the
amount borrowed) at the time the borrowing is made, and then only
from banks as a temporary measure to facilitate the meeting of
redemption requests (not for leverage) which might otherwise
require the untimely disposition of portfolio investments or for
extraordinary or emergency purposes.  Such borrowings will be
repaid before any additional investments are purchased.

(2) Underwrite securities issued by other persons except to the
extent that, in connection with the disposition of its portfolio
investments, it may be deemed to be an underwriter under certain
federal securities laws.

(3) Purchase or sell real estate, although it may purchase
securities of issuers which deal in real estate, securities which
are secured by interests in real estate, and securities which
represent interests in real estate, and it may acquire and dispose
of real estate or interests in real estate acquired through the
exercise of its rights as a holder of debt obligations secured by
real estate or interests therein.

(4) Purchase or sell commodities or commodity contracts, except
that the fund may purchase and sell financial futures contracts
and options and may enter into foreign exchange contracts and
other financial transactions not involving physical commodities.

(5) Make loans, except by purchase of debt obligations in which
the fund may invest consistent with its investment policies, by
entering into repurchase agreements, or by lending its portfolio
securities.
<PAGE>
(6) With respect to 75% of its total assets, invest in the
securities of any issuer if, immediately after such 
investment,

more than 5% of the total assets of the fund (taken at current
value) would be invested in the securities of such issuer;
provided that this limitation does not apply to obligations issued
or guaranteed as to interest or
 principal by the U.S. government
or its agencies or instrumentalities.

(7)      With respect to 75% of its total assets, acquire more than 10%
         of the outstanding voting securities of any issuer.

(8) Purchase securities if, as a result of such purchase, more
than 25% of the fund's total assets would be invested in any one
industry.  (Securities of the U.S. government or its agencies or
instrumentalities, or of any foreign government or its agencies or
instrumentalities, securities of supranational entities, and
securities backed by the credit of a governmental entity are not
considered to represent industries.)

(9) Issue any class of securities which is senior to the fund's
shares of beneficial interest, except for permitted borrowings.

Non-fundamental restrictions

A fund may not and will not:

(1)  Invest in (a) securities which at the time of such investment
are not readily marketable, (b) securities restricted as to resale
(excluding securities determined by the Trustees of the Trust (or
the person designated by the Trustees of the Trust to make such
determinations) to be readily marketable), and (c) repurchase
agreements maturing in more than seven days, if, as a result, more
than 15% of the fund's net assets (taken at current value) would
be invested in securities described in (a), (b) and (c) above.

(2)  Invest in warrants (other than warrants acquired by the fund
as a part of a unit or attached to securities at the time of
purchase) if, as a result, such investments (valued at the lower
of cost or market) would exceed 5% of the value of the fund's net
assets; provided that not more than 2% of the fund's net assets
may be invested in warrants not listed on the New York or American
Stock Exchanges.

(3)  Invest in securities of any issuer if the party responsible
for payment, together with any predecessors, has been in operation
for less than three consecutive years and, as a result of the
investment, the aggregate of such investments would exceed 5% of
the value of the fund's total assets; provided, however, that this
restriction shall not apply to any obligation of the United States
or its agencies or instrumentalities.

(4)  Invest in the securities of other open-end registered
investment companies, except by purchase in the open market
including only customary brokers' commissions, and except as they
may be acquired as part of a merger or consolidation or
acquisition of assets.

(5)  Purchase or sell real property (including limited partnership
interests), except that the fund may (a) purchase or sell readily
marketable interests in real estate investment trusts or readily
marketable securities of companies which invest in real estate,
(b) purchase or sell securities that are secured by interests in
real estate or interests therein, or (c) acquire real estate
through exercise of its rights as a holder of obligations secured
by real estate or interests therein or sell real estate so
acquired.
<PAGE>
(6)  Invest in the securities of any issuer, if, to the knowledge
of the Trust, officers and Trustees of the Trust and officers and
directors of Putnam Management who beneficially own more than 0.5%
of the securities of that issuer together own more than 5% of such
securities.

(7)  Purchase securities on margin, except such short-term credits
as may be necessary for the clearance of purchases and sales of
securities, and except that it may make margin payments in
connection with financial futures contracts or options.

(8)  Make short sales of securities or maintain a short position
for the account of the fund unless at all times when a short
position is open it owns an equal amount of such securities or own
securities which, without payment of any further consideration,
are convertible into or exchangeable for securities of the same
issue as, and in equal amount to, the securities sold short.

(9)  Pledge, hypothecate, mortgage or otherwise encumber its
assets in excess of 33 1/3%
 of its total assets (taken at cost) in
connection with permitted borrowings.

(10) Buy
 or sell oil, gas or other mineral leases, rights or
royalty contracts, although it may purchase securities which
represent interests in, are secured by interests in, or which are
issued by issuers which deal in, such leases, rights or contracts,
and it may acquire and dispose of such leases, rights or contracts
acquired through the exercise of its rights as a holder of debt
obligations secured thereby.

If shareholders of each fund do not ultimately approve some or all
of the proposed changes, this SAI will be revised accordingly.
    
                            ---------------------

Although certain of the funds' fundamental investment restrictions
permit the funds to borrow money to a limited extent, the funds do
not currently intend to do so and did not do so last year. 

                        ----------------------       

The Investment Company Act of 1940 provides that a "vote of a
majority of the outstanding voting securities" of a fund means the
affirmative vote of the lesser of (1) more than 50% of the
outstanding fund shares        , or (2) 67% or more of the shares
        present at a meeting if more than 50% of the outstanding
fund shares are represented at the meeting in person or by proxy. 

All percentage limitations on investments will apply at the time
of the making of an investment and shall not be considered
violated unless an excess or deficiency occurs or exists
immediately after and as a result of such investment.

MONEY MARKET INSTRUMENTS

The funds may invest in high quality money market instruments,
which 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.

CHARGES AND EXPENSES

MANAGEMENT FEES

Under a Management Contract dated November 8, 1993, the Trust pays
a quarterly fee to Putnam Management based on the average net
assets of each fund, as determined at the close of each business
day during the quarter, at an annual rate of 0.70% of the first
$500 million of the average net asset value of the fund, 0.60% of
the next $500 million, 0.55% of the next $500 million and 0.50% of
any excess over $1.5 billion. For the past two fiscal years,
pursuant to the Management Contract, the funds incurred the
following fees:<PAGE>



                                               Reflecting a
                                               reduction in the
                                               following 
                                                    amounts 
                                                    pursuant to an
                     Fiscal       Management        expense
                     year         fee paid          limitation
                    ------        ----------        ----------------


Growth Portfolio    1995         $1,216,103          $94,394
                    1994                 $0         $197,278

Balanced Portfolio  1995         $2,052,911          $64,532
                    1994           $112,923         $292,659

Conservative 
Portfolio           1995           $278,517         $392,573
                    1994                 $0         $151,451

Brokerage commissions 

The following table shows brokerage commissions paid during the fiscal
periods indicated.

                      Fiscal                        Brokerage
                       year                         commissions
                      ------                        ------------

Growth Portfolio      1995                          $527,394
                      1994                          $178,577
                      

Balanced Portfolio    1995                          $611,612
                      1994                          $314,177
                      

Conservative Portfolio                                      1995   $120,247
                      1994                           $74,606


<PAGE>
The following table shows transactions placed with brokers and dealers 
during the most recent fiscal year to recognize research, statistical and
quotation services Putnam Management considered to be particularly useful
to it and its affiliates.

                       Dollar
                       value           Percent of
                       of these        total             Amount of
                       transactions    transactions    commissions
                       ------------    ------------    -----------

Growth Portfolio        $171,222,644     64.98%         $350,852
Balanced Portfolio      $199,855,574     64.88%         $392,982
Conservative Portfolio   $46,336,297     69.32%          $78,893

Administrative expense reimbursement 

Each fund reimbursed Putnam Management in the following amounts for
administrative services during fiscal 1995, including the following amounts
for compensation of certain officers of that fund and contributions to the
Putnam Investments, Inc. Profit Sharing Retirement Plan for their benefit:

                                                  Portion of total
                                                  reimbursement for
                                                    compensation
                                Total                   and
                            reimbursement          contributions
                            -------------         ----------------

Growth Portfolio              $8,445                 $8,206
Balanced Portfolio           $10,297                $10,037
Conservative Portfolio        $7,212                 $7,030


Trustee Fees

Each Trustee receives a fee for his or her services.  Each Trustee also
receives fees for serving as Trustee of other Putnam funds.  The Trustees
periodically review their fees to assure that such fees continue to be
appropriate in light of their responsibilities as well as in relation to
fees paid to Trustees of other mutual fund complexes.  The Trustees meet
monthly over a two-day period, except in August.  The Compensation
Committee, which consists solely of Trustees not affiliated with Putnam
Management and is responsible for recommending Trustee compensation,
estimates that Committee and Trustee meeting time together with the
appropriate preparation requires the equivalent of at least three business
days per Trustee meeting.  The following table shows the year each Trustee
was first elected a Trustee of the Putnam funds, the fees paid to each
Trustee by each fund for fiscal 1995 and the fees paid to each Trustee by
all of the Putnam funds during calendar year 1995:
<PAGE>
<TABLE>
<CAPTION>
COMPENSATION TABLE

                                                     Aggregate compensation* from:

                                        Growth              Balanced            Conservative       All Putnam
Trustee/Year                            Portfolio           Portfolio           Portfolio          funds**
                                                                                                                                   
<C>                                        <C>               <C>                <C>                  <C>                 
Jameson A. Baxter/1994                     $854              $901               $690                 $150,854
Hans H. Estin/1972                          854               902                      690                           150,854
John A. Hill/1985***                        847               895                      686                           149,854
Elizabeth T. Kennan/1992                    845               891                      683                           148,854
Lawrence J. Lasser/1992                     854               902                      690                           150,854
Robert E. Patterson/1984                    864               913                      698                           152,854
Donald S. Perkins/1982                      854               902                      690                           150,854
William F. Pounds/1971                      847               895                      686                           149,854
George Putnam/1957                          854               902                      690                           150,854
George Putnam, III/1984                     854               902                      690                           150,854
Eli Shapiro/1995***                         394               412                      330                            95,372
A.J.C. Smith/1986                           848               896                      686                           149,854
W. Nicholas Thorndike/1992                  864               913                      698                           152,854

*    Includes an annual retainer and an attendance fee for each meeting attended.
**   Reflects total payments received from all Putnam funds in the most recent calendar year.  As of December 31, 1995, there 
     were 99 funds in the Putnam family.
***  Includes amounts of compensation deferred pursuant to a Trustee Compensation Deferral Plan. The total amount of
     deferred compensation payable to Mr. Hill by all Putnam funds as of September 30, 1996 was $26,395.14, including income
     earned on such amounts.
**** Elected as a Trustee in April 1995.
/TABLE
<PAGE>
The Trustees have approved Retirement Guidelines for Trustees of
the Putnam funds.  These Guidelines provide generally that a
Trustee who retires after reaching age 72 and who has at least 10
years of continuous service will be eligible to receive a
retirement benefit from each Putnam fund for which he or she
served as a Trustee.  The amount and form of such benefit is
subject to determination annually by the Trustees and, unless
otherwise determined by the Trustees, will be an annual cash
benefit payable for life equal to one-half of the Trustee
retainer fees paid by each fund at the time of retirement. 
Several retired Trustees are currently receiving benefits
pursuant to the Guidelines and it is anticipated that the current
Trustees will receive similar benefits upon their retirement.  A
Trustee who retired in calendar 1995 and was eligible to receive
benefits under these Guidelines would have received an annual
benefit of $66,749, based upon the aggregate retainer fees paid
by the Putnam funds for such year.  The Trustees reserve the
right to amend or terminate such Guidelines and the related
payments at any time, and may modify or waive the foregoing
eligibility requirements when deemed appropriate.

For additional information concerning the Trustees, see
"Management" in Part II of this SAI.
Share ownership

At December 31, 1995, the officers and Trustees of the each fund
as a group owned less than 1% of the outstanding shares of each
class of each fund, and, except as noted below, to the knowledge
of each fund no person owned of record or beneficially 5% or more
of the shares of any class of that fund. 

                               Shareholder
               Name            Percentage
Fund name      Class           and address             owned
- -----------    -----      --------------------       --------

Growth Portfolio A      Omni Hotel Savings Plan*       6.85%

                 A       Chemical Bank TTEE FBO        7.00%
                              P.O. Box 231
                            Midland, MI 8640

                 Y       Illinois Toolworks, Inc         
                      Savings and Investment Plan*    99.98%
                                    
Balanced Portfolio                  Y         Illinois Toolworks, Inc   
                      Savings and Investment Plan*     100%

Conservative Portfolio              A       Baldwin Technology Profit-
                        Sharing and Savings Plan*     12.40%

                 B    Merrill Lynch Pierce Fenner &
                                  Smith                5.40%
                             P.O. Box 30561
                         New Brunswick, NJ 08980

                 C          Charles E. Dickey          7.50%
                           6901 Heritage Lane
                          Fort Worth, TX 76134

                 M     Edward D. Jones & Co. F/A/O    14.40%
                              P.O. Box 2500
                       Maryland Heights. MO 63043

                 M          W. Wayne Davidson          7.50%
                           612 Highway 1137 W
                            Crowley, TX 76036

                 M          Elmer C. Schmidt           7.20%
                             Route 1, Box 6
                           Anamoose, ND 58710

                 M           Joseph Cordaro            5.70%
                          41 B Beehunter Court
                         East Amherst, NY 14051          
                 
                 Y       Illinois Toolworks, Inc
                      Savings and Investment Plan*    99.99%

*The address is c/o Putnam Fiduciary Trust Co., as Trustee or agent,
859 Willard St., Quincy, MA 02269.




Distribution fees

During fiscal 1995, the funds paid the following 12b-1 fees to Putnam
Mutual Funds:

Fund name                Class A     Class B      Class C      Class M
- -----------              -------     -------      -------      ------

Growth Portfolio       $224,160     $814,059     $43,080      $8,460
Balanced Portfolio     $271,389   $1,200,355     $64,000      $7,275
Conservative Portfolio  $95,434     $525,548     $37,312      $3,969


Class A sales charges and contingent deferred sales charges 

Putnam Mutual Funds received sales charges with respect to class A shares
in the following amounts during the periods indicated: 

                                      Sales charges
                                   retained by Putnam    Contingent
                       Total          Mutual Funds        deferred
                     front-end            after             sales
                   sales charges   dealer concessions     charges 
                   -------------   ------------------     --------
                                             
Growth Portfolio

Fiscal year
1995                $1,056,923        $155,805            $7,730
1994                $1,439,250         $79,514                $0
   
Balanced Portfolio

Fiscal year
1995                $1,136,612        $168,465            $1,217
1994                $1,726,531         $95,753                $0

Conservative Portfolio

Fiscal year                   
1995                  $485,967         $74,774                $0
1994                  $868,239         $45,156                $0

<PAGE>
Class B and class C contingent deferred sales charges

Putnam Mutual Funds received contingent deferred sales charges upon
redemptions of class B shares and class C shares in the following amounts
during the periods indicated:

                                             Contingent deferred
                                                sales charges
                                             -------------------

                                             Class B     Class C

Growth Portfolio                             

Fiscal year
1995                                        $153,704       $4,284
1994                                         $27,887           $0

Balanced Portfolio

Fiscal year
1995                                        $246,928       $1,709
1994                                         $46,357           $0

Conservative Portfolio                                     

Fiscal year                                                
1995                                        $176,199       $2,193
1994                                         $38,120           $0

Class M sales charges

Putnam Mutual Funds received sales charges with respect to class M shares
in the following amounts during the 1995 fiscal year:

                                                  Sales charges
                                                   retained by
                                                     Putnam
                                                  Mutual Funds
                                   Total             after 
                               sales charges   dealer concessions
                               -------------   ------------------

Growth Portfolio                $47,591            $6,872
Balanced Portfolio              $60,916           $10,721
Conservative Portfolio          $22,787            $3,142


Investor servicing and custody fees and expenses

During the 1995 fiscal year,  each fund incurred the following fees and
out-of-pocket expenses for investor servicing and custody services provided
by Putnam Fiduciary Trust Company:

Growth Portfolio                                  $805,416
Balanced Portfolio                                $940,720
Conservative Portfolio                            $438,866<TABLE>
<CAPTION>
INVESTMENT PERFORMANCE

Standard performance measures
(for periods ended September 30, 1995)


Growth Portfolio

<C>            <C>               <C>             <C>             <C>             <C>
               Class A           Class B         Class C         Class M*        Class Y
Inception
date           2/8/94                 2/16/94         9/1/94          2/3/95          7/14/94

Total
return    NAV**  POP***  NAV         CDSC  NAV      CDSC  NAV       POP    NAV
- ------------------------------------------------------------------------------------------
     
1 year    20.45% 13.58%  19.57%  14.57%    19.46% 18.46%   ---      ---    20.94%
Life of
class     11.37   7.44   10.75        8.43 17.00  17.00   19.37%  15.19%   16.89


Yield           POP               NAV             NAV            POP            NAV     
- ------------------------------------------------------------------------------------------
     
30-day
Yield          1.69%              1.06%           1.07%          0.81%           1.81% 


*    Period represents cumulative, rather than average annual total return.
**   net asset value
***  public offering price

/TABLE
<PAGE>
<TABLE>
<CAPTION>

Balanced Portfolio

<C>             <C>               <C>             <C>            <C>             <C>
               Class A           Class B         Class C         Class M*        Class Y
Inception
date           2/7/94                 2/11/94         9/1/94          2/6/95          7/5/94

Total
return     NAV** POP***  NAV         CDSC  NAV        CDSC          NAV    POP         NAV
- ------------------------------------------------------------------------------------------
     
1 year     18.73%       11.88%      17.83%  12.83%  17.89%  16.89%  ___   ___          18.89%
Life of
class       9.97   6.09              9.27    6.947  15.55   15.55  17.46% 13.38%       18.05


Yield           POP               NAV             NAV            POP            NAV     
- ------------------------------------------------------------------------------------------
     
30-day
Yield           2.89%             2.28%           2.10%          2.13%           3.12% 


*    Period represents cumulative, rather than average annual total return.
**   net asset value
***  public offering price

</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Conservative Portfolio


<C>             <C>               <C>             <C>            <C>             <C>
               Class A           Class B         Class C         Class M*       Class Y
Inception
date           2/7/94                 2/18/94         9/1/94          2/7/95         7/14/94

Total
return     NAV*  POP**   NAV         CDSC  NAV        CDSC          NAV    POP         NAV
- ------------------------------------------------------------------------------------------
     
1 year    15.27%   8.67%           14.22%   9.22%   14.41%  13.41%  ---    ---        15.54%
Life of
class      7.36    3.56             6.69    4.29    12.44   12.44  13.92%  9.90%      13.35


Yield +         POP               NAV             NAV            POP            NAV     
- ------------------------------------------------------------------------------------------
     
30-day
Yield           4.07%             3.57%           3.29%          2.95%           4.06% 


*    Period represents cumulative, rather than average annual total return.
**   net asset value
***  public offering price
+    Reflecting an expense limitation then in effect. In the absence of the expense limitation, the
     Conservative fund's yield for class A, class B, class C, class M and class Y would have been
     3.84%, 3.32%, 3.04%, 2.71% and 3.82%, respectively. 

/TABLE
<PAGE>


Data represent past performance and are not indicative of future
results.  Total return and yield at POP for class A and class M
shares reflects the deduction of the maximum sales charge of
5.75% and 3.50%, respectively.  Total return at CDSC for class B
and class C shares reflects the deduction of the applicable
contingent deferred sales charge (CDSC).  The maximum CDSC for
class B and class C shares is 5.00% and 1.00%, respectively.  See
"Standard performance measures" in Part II of this SAI for
information on how performance is calculated. Past performance is
no guarantee of future results.

ADDITIONAL OFFICERS 

In addition to the persons listed as officers of the Trust in
Part II of this SAI, each of the following persons is also a Vice
President of the Trust and Vice President of certain of the
Putnam funds.  Officers of Putnam Management hold the same
offices in Putnam Management's parent company, Putnam
Investments, Inc.

Peter Carman.  Senior Managing Director of Putnam Management. 
Prior to August 1, 1993, Mr. Carman was Chief Investment Officer,
Chairman of the U.S. Equity Investment Policy Committee and a
Director of Sanford C. Bernstein & Company, Inc. 

Gary N. Coburn.  Senior Managing Director of Putnam Management.   
 
William J. Landes. Managing Director of Putnam Management.


INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS 

Price Waterhouse LLP, 160 Federal Street, Boston, MA 02110, are
the Trust's independent accountants, providing audit services,
tax return review and other tax consulting services and
assistance and consultation in connection with the review of
various Securities and Exchange Commission filings.  The Report
of Independent Accountants, financial highlights and financial
statements included in the Trust's Annual Report for the fiscal
year ended September 30, 1995, filed electronically on December
7, 1995 (File No. 811-7121), are incorporated by reference into
this SAI. The financial highlights included in the prospectus and
incorporated by reference into this SAI and the financial
statements incorporated by reference into the prospectus and this
SAI have been so included and incorporated in reliance upon the
report of the independent accountants, given on their authority
as experts in auditing and accounting.



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