Putnam
New
Value
Fund
ANNUAL REPORT
August 31, 1996
[LOGO: BOSTON * LONDON * TOKYO]
Fund highlights
* Lipper Analytical Services ranked Putnam New Value Fund's class A
share performance in the top 10% of its category for the 12 month
period ended September 30, 1996. The fund was 50 of the 503 growth
and income funds tracked over this period.
* "Since the beginning of 1994, value investors, the restrained
doctrinaires of Wall Street, have chafed as their more-impetuous
growth cousins have flourished. . . . But July's sharp downdraft
dealt the growth players a severe blow. . . . On the heels of that
roller-coaster ride, growth players seem chastened while value
investors look ready to pounce on a slow-moving stock market."
-- Dave Kansas, The Wall Street Journal, August 26, 1996
CONTENTS
4 Report from Putnam Management
8 Fund performance summary
13 Portfolio holdings
16 Financial statements
*Lipper rankings are based on total return performance, vary over
time, and do not reflect the effects of sales charges. Lipper did
not include data for class B and class M shares because these shares
are not yet a year old. Past performance is not indicative of future
results.
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
(copyright) Karsh, Ottawa
Dear Shareholder:
During Putnam New Value Fund's first full fiscal year, the 12 months
ended August 31, 1996, the stock market continued its nearly nonstop
advance, pausing occasionally and then only briefly before moving
onward. The most recent interruption, although one of the sharpest
in several years, was characteristically short-lived.
Despite its unsettling moments, this market provided an amicable
environment for a young fund to put down its roots. The fund has
already established the validity of its strategy of owning stocks
shunned by other investors.
Fund Manager David King, who has guided the fund since its
inception, provides details of the first full fiscal year's
operation and looks ahead to the fiscal year just begun. Dave
believes, as we do, that the fund holds promise of a bright future.
Respectfully yours,
/S/George Putnam
George Putnam
Chairman of the Trustees
October 16, 1996
Report from the Fund Manager
David L. King
With a total return of 20.29% at net asset value and 13.40% at
public offering price for class A shares for the 12 months ended
August 31, 1996, Putnam New Value Fund has given investors an early
look at its overall performance potential under diverse market
conditions. Even this summer's market correction, combined with an
investing environment that favored growth over value, failed to
dampen returns from your fund's portfolio. Retail and real estate
stocks, added to the portfolio during last fall's growth-oriented
environment, assisted greatly in this favorable performance.
As your fund enters a new fiscal year, an increasing demand for
value stocks could further promote satisfying returns. Naturally,
wherever the possibility for high returns exists, there is an
accompanying amount of risk involved. However, the unique mix of
your fund's investment strategy has proved its resilience under an
array of different market conditions and there is every reason to
believe the fund can continue to do well in the future.
*CYCLICAL STRATEGY REAPS PLEASING RETAIL RETURNS
Your fund's value-oriented strategy focuses on those stocks that may
be mispriced in response to arbitrary and passing events, such as a
cyclical downturn in a particular sector. While individual investors
often react emotionally to stock price declines, a detached,
professional assessment of long-term value allows us to position the
portfolio to benefit from potential price recoveries. The retail
stocks in your fund's portfolio were selected as a result of such an
assessment.
In the first half of the fiscal year, as we indicated in the
semiannual report, the retail industry experienced a cyclical
downturn. Poor consumer spending and lack of investor interest were
key factors in these stocks' lackluster showing. In the belief that
this underperformance was temporary and with an eye toward the
fund's long-term strategy, we invested heavily in retail stocks. As
prices began to recover, returns from these investments rewarded
investors.
Dayton Hudson, a key retail holding, serves as a good example of the
characteristics we seek. Its stock price had lagged the broad market
in response to short-term profit declines in all three of its
divisions, and we anticipated that the company would either recover
on its own or be acquired by another retailer. Considering this a
win-win scenario, we established a position in Dayton Hudson stock
at a pre-split price of $77. Subsequently, JC Penney made an
unsolicited offer to buy the company. This news further solidified
our conviction about the stock's potential. Later in the fiscal
period, as the company's business improved, the stock price did, in
fact, recover to $110 and then split, three for one.
* MARKET CORRECTIONS HIGHLIGHT STRENGTH IN DIVERSITY
Your fund's outstanding relative performance during the July and
August market correction highlights the advantages inherent in its
three-pronged investment approach. With portfolio holdings spread
among ladder stocks (out-of-favor stocks offering the greatest
potential rewards along with correspondingly greater risk), anchor
stocks (chosen for their high sustainable current dividends that
provide the fund with a solid cushion of income), and ramp stocks
(stocks of well-established companies whose prices have declined in
response to what we see as short-term reasons), the fund had plenty
of breathing room during these potentially adverse market
conditions.
[GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY SECTORS*]
Insurance and finance 13.0%
Retail 11.3%
Real estate 9.2%
Food and beverages 6.4%
Utilities 6.3%
Footnote reads:
*Based on net assets as of 8/31/96. Allocations will vary over time.
One of the fund's more noteworthy ladder holdings, Warner-Lambert, a
pharmaceutical company, was added to the portfolio at a depressed
price. Initial research showed that while the company has two new
and important drugs in the pipeline, its stock had not been
performing well. Furthermore, the new drugs -- one that affects
insulin receptivity in diabetics and one that is designed to reduce
cholesterol -- were undergoing the lengthy process of FDA approval
and were thus unlikely to contribute to the company's profits over
the near term. Our assessment was that these characteristics could
make Warner Lambert susceptible to a takeover from a larger, more
successful company, and such a takeover would most likely boost the
price of the stock. Even without any sort of takeover or merger, we
believed the company's financial strength and earnings potential
were likely to improve dramatically once these new products reached
the market. Consequently we established a position in the stock and
have since been rewarded by a substantial recovery in its price.
One of the fund's best-performing anchor holdings has already
demonstrated its potential for growth in value. Holdings in Equity
Residential Properties -- the only nationwide apartment real estate
investment trust -- were originally bought at a time when the stock
had stagnated. Shortly thereafter, both the dividend and the stock's
price rose.
*RAMP HOLDINGS FORGE IRONCLAD RETURNS
Intel, another ramp-category stock, also contributed favorably to
your fund's returns over the last 12 months. Amid cyclical concerns
in the technology sector and in the semiconductor industry in
particular, Intel's stock price declined significantly. At this
point, we purchased the stock, thus enabling the fund to benefit
from its subsequent recovery. Although an unusual holding for a
value fund in terms of company size and reputation, the fund's Intel
position supports our belief that value can be found in companies of
all sizes and within all industries.
While not in the portfolio at year's end, Philip Morris, another
ramp holding, also significantly increased returns. The fund's
holdings, initially purchased at $58 per share, were sold in the $90
range, more than achieving the objectives for this portfolio
category. A portion of the stock was sold last fall, while the
remainder was liquidated near the fiscal year's end. Given the
hubbub resulting from recent litigation against tobacco companies
and the fact that Philip Morris had more than achieved a 50% return
in under two years, we believed the stock would probably not come
close to such rewarding returns in the near future and therefore
seized the opportunity to take profits and lock in gains for the
fund.
TOP 10 HOLDINGS
Dayton Hudson Corp.
Retail
Intel Corp.
Electronics and electrical equipment
General Signal Corp.
Basic industrial products
Times Mirror, Co.
Publishing
Northrop Grumman Corp.
Aerospace and defense
Lockheed Martin Corp.
Aerospace and defense
Warner-Lambert Co.
Pharmaceuticals
Alumax, Inc.
Metals and mining
Nationwide Health Properties, Inc.
Real estate
Equity Residential Properties Trust
Real estate
Footnote reads:
These holdings represent 24.3% of the fund's assets as of 8/31/96.
Portfolio holdings will vary over time.
*VALUE INVESTORS ANTICIPATE COMEBACK
The contrarian nature of your fund's investment style allows for the
anticipation of potentially substantial returns after a down cycle
in market activity. The recent market corrections, since reversed,
along with corresponding economic factors, form the framework for a
possible resurgence in value investing. Under these conditions, your
fund may have the chance to reap rewarding returns from investments
made within a less growth-oriented environment. Of course, we cannot
guarantee the nature of the market over the next 12 months or expect
the fund to provide future returns of the magnitude realized under
the hothouse market conditions of the past two years; nevertheless,
it is certain that your fund has proved its ability to perform up to
- -- and sometimes beyond -- our expectations. We look forward to
continued demonstration of this ability in 1997.
The views expressed here are exclusively those of Putnam Management.
They are not meant as investment advice. Although the described
holdings were viewed favorably as of 8/31/96, there is no guarantee
the fund will continue to hold these securities in the future.
Performance Summary
Performance should always be considered in light of a fund's
investment strategy. Putnam New Value Fund is designed for investors
seeking long-term capital appreciation through investments in
undervalued common stocks.
This section provides, at a glance, information about your fund's
performance. Total return shows how the value of the fund's shares
changed over time, assuming you held the shares through the entire
period and reinvested all distributions in the fund.
TOTAL RETURN FOR PERIODS ENDED 8/31/96
Class A Class B Class M
(inception date) (1/3/95) (2/26/96) (2/26/96)
NAV POP NAV CDSC NAV POP
- -----------------------------------------------------------------
1 year 20.29% 13.40% -- -- -- --
- -----------------------------------------------------------------
Life of class 49.02 40.43 6.08% 1.08% 6.26% 2.58%
Annual average 27.16 22.69 -- -- -- --
- -----------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 8/31/96
Standard Standard
& Poor's & Poor's Barra
500 Index Value Index
- -----------------------------------------------------------------
1 year 18.70% 17.73%
- -----------------------------------------------------------------
Life of class A
(since 1/3/95) 47.09 46.39
Annual average 26.17 25.68
- -----------------------------------------------------------------
Life of class B and class M
(since 2/26/96) 2.92 2.79
- -----------------------------------------------------------------
Performance data represent past results, do not reflect future
performance, and will differ for each share class. They also reflect
an expense limitation that was in effect during the period without
which the fund's returns would have been lower. They do not take
into account any adjustment for taxes payable on reinvested
distributions. Investment returns and net asset value will fluctuate
so that an investor's shares, when sold, may be worth more or less
than their original cost. POP assumes 5.75% maximum sales charge for
class A shares and 3.50% for class M shares. CDSC for class B shares
assumes the applicable sales charge, with the maximum being 5%.
[GRAPHIC OMITTED: worm chart ]
GROWTH OF A $10,000 INVESTMENT
Cumulative total return of a $10,000 investment since 1/3/95
Starting value (ending total)
$9,425 Fund's class A shares at POP $14,043
$10,000 S & P 500 Index $14,709
$10,000 Consumer Price Index $10,508
(plot points for 10-year total return mountain chart)
Date/year Fund at POP S & P 500 Index CPI
- --------- ------------ ------------------ ------
1/3/95 9,425 10,000 10,000
1/31/95 9,490 10,243 10,040
2/28/95 9,800 10,612 10,080
3/31/95 9,967 10,971 10,114
4/30/95 10,288 11,277 10,147
5/31/95 10,698 11,687 10,167
6/30/95 10,953 12,014 10,187
7/31/95 11,452 12,396 10,187
8/31/95 11,674 12,392 10,214
9/30/95 12,029 12,966 10,234
10/31/95 11,752 12,902 10,267
11/30/95 12,361 13,431 10,261
12/31/95 12,538 13,744 10,254
01/31/96 12,683 14,193 10,314
02/29/96 13,023 14,291 10,347
03/31/96 13,484 14,481 10,401
04/30/96 13,666 14,676 10,441
05/31/96 14,067 15,011 10,461
06/31/96 14,030 15,130 10,468
07/31/96 13,545 14,438 10,488
08/31/96 14,043 14,709 10,508
Footnote reads:
Past performance is no assurance of future results. A $10,000
investment in the fund's class B shares at inception on 2/26/96
would have been valued at $10,608 on 8/31/96 ($10,108 with a
redemption at the end of the period), and class M at NAV, $10,626,
and at POP, 10,258.
PRICE AND DISTRIBUTION INFORMATION
12 months ended 8/31/96
Class A Class B Class M
(inception date) (1/3/95) (2/26/96) (2/26/96)
- -------------------------------------------------------------------
Distributions (number) 1 -- --
- -------------------------------------------------------------------
Income $0.26 -- --
- -------------------------------------------------------------------
Capital gains
- -------------------------------------------------------------------
Long-term .001 -- --
- -------------------------------------------------------------------
Short-term .699 -- --
- -------------------------------------------------------------------
Total $0.96 -- --
- -------------------------------------------------------------------
Class A Class B Class M
- -------------------------------------------------------------------
Share value: NAV POP NAV NAV POP
- -------------------------------------------------------------------
8/31/95 $10.53 $11.17 -- -- --
- -------------------------------------------------------------------
2/26/96 $10.86 $10.86 $11.25
- -------------------------------------------------------------------
8/31/96 11.57 12.28 11.52 11.54 11.96
- -------------------------------------------------------------------
TOTAL RETURN FOR PERIODS ENDED 9/30/96
(most recent calendar quarter)
Class A Class B Class M
(inception date) (1/3/95) (2/26/96) (2/26/96)
NAV POP NAV CDSC NAV POP
- -------------------------------------------------------------------
1 year 22.39% 15.37% -- -- -- --
- -------------------------------------------------------------------
Life of class 56.23 47.22 11.14% 6.14% 11.42% 7.56%
Annual average 29.23 24.89 -- -- -- --
- -------------------------------------------------------------------
Performance data represent past results, do not reflect future
performance, and will differ for each share class. Investment
returns and net asset value will fluctuate so that an investor's
shares, when sold, may be worth more or less than their original
cost.
TERMS AND DEFINITIONS
Class A shares are generally subject to an initial sales charge.
Class B shares may be subject to a sales charge upon redemption.
Class M shares have a lower initial sales charge and a higher 12b-1
fee than class A shares and no sales charge on redemption.
Net asset value (NAV) is the value of all your fund's assets, minus
any liabilities, divided by the number of outstanding shares, not
including any initial or contingent deferred sales charge.
Public offering price (POP) is the price of a mutual fund share plus
the maximum sales charge levied at the time of purchase. POP
performance figures shown here assume the maximum 5.75% sales charge
for class A shares and 3.50% for class M shares.
COMPARATIVE BENCHMARKS
Standard & Poor's 500 Index is an unmanaged list of common stocks
that is frequently used as a general measure of stock market
performance.*
Consumer Price Index is a commonly used measure of inflation; it
does not represent an investment return.
Standard & Poor's/Barra Value Index is a capitalization-weighted
index of all the stocks in the S&P 500 that have low price-to-book
ratios. Indexes assume reinvestment of all distributions.
*Securities indexes assume reinvestment of all distributions and
interest payments and do not take in account brokerage fees or
taxes. Securities in the fund do not match those in the indexes and
performance of the fund will differ. It is not possible to invest
directly in an index.
PUTNAM GROWTH FUNDS
Asia Pacific Growth Fund
Capital Appreciation Fund
Diversified Equity Trust
Europe Growth Fund
Global Growth Fund
Global Natural Resources Fund *
Health Sciences Trust
International Growth Fund +
International New Opportunities Fund
Investors Fund
New Opportunities Fund
OTC Emerging Growth Fund
Vista Fund
Voyager Fund
Voyager Fund II
PUTNAM GROWTH
AND INCOME FUNDS
Balanced Retirement Fund
Convertible Income-Growth Trust
Equity Income Fund
The George Putnam Fund of Boston
The Putnam Fund for Growth and Income
Growth and Income Fund II
International Growth and Income Fund
New Value Fund
Utilities Growth and Income Fund
PUTNAM INCOME FUNDS
American Government Income Fund
Diversified Income Trust
Diversified Income Trust II
Federal Income Trust
Global Governmental Income Trust
High Yield Advantage Fund
High Yield Trust
Income Fund
Intermediate U.S. Government
Income Fund
Preferred Income Fund
U.S. Government Income Trust
PUTNAM TAX-FREE
INCOME FUNDS
Municipal Income Fund
Tax Exempt Income Fund
Tax-Free High Yield Fund
Tax-Free Insured Fund
State tax-free income funds [DOUBLE CROSS]
Arizona, California, Florida, Massachusetts, Michigan, Minnesota,
New Jersey, New York, Ohio and Pennsylvania
LIFESTAGESM FUNDS
Putnam Asset Allocation Funds--three investment portfolios that
spread your money across a variety of stocks, bonds, and money
market investments to help maximize your return and reduce your
risk.
The three portfolios:
Asset Allocation: Balanced Portfolio
Asset Allocation: Conservative Portfolio
Asset Allocation: Growth Portfolio
MOST CONSERVATIVE
INVESTMENTS [SECTION START]
Putnam money market funds: **
California Tax Exempt Money Market Fund
Money Market Fund
New York Tax Exempt Money Market Fund
Tax Exempt Money Market Fund
CDs and savings accounts ++
* Formerly Natural Resources Fund
+ Formerly Overseas Growth Fund
++ Not available in all states.
[SECTION START] Relative to above.
** An investment in a money market fund is neither insured nor
guaranteed by the U.S. government. These funds are managed to
maintain a price of $1.00 per share, although there is no
assurance that this price will be maintained in the future.
DOUBLE CROSS Not offered by Putnam Investments. Certificates of deposit
offer a fixed rate of return and may be insured up to certain
limits by federal/state agencies. Savings accounts may also
be insured up to certain limits. Please call your financial
advisor or Putnam at 1-800-225-1581 to obtain a prospectus
for any Putnam fund. It contains more complete information,
including charges and expenses. Please read it carefully
before you invest or send money.
Report of independent accountants
For the fiscal year ended August 31, 1996
To the Trustees and Shareholders of
Putnam New Value Fund
We have audited the accompanying statement of assets and liabilities
of Putnam New Value Fund (formerly the Putnam Basic Value Fund),
including the portfolio of investments owned, as of August 31, 1996,
and the related statement of operations for the year then ended, and
the statements of changes in net assets and the financial highlights
for each of the periods indicated therein. These financial
statements and financial highlights are the responsibility of the
fund's management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned as of
August 31, 1996, by correspondence with the custodian and brokers.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of Putnam New Value Fund (formerly the Putnam
Basic Value Fund) as of August 31, 1996, and the results of its
operations for the year then ended, the changes in its net assets,
and the financial highlights for each of the periods indicated
therein, in conformity with generally accepted accounting
principles.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
October 15, 1996
<TABLE>
<CAPTION>
Portfolio of investments owned
August 31, 1996
<S> <C> <C> <C>
COMMON STOCKS (94.8%) *
NUMBER OF SHARES VALUE
Aerospace and Defense (4.8%)
- ---------------------------------------------------------------------------------------------------
57,200 Lockheed Martin Corp. $ 4,811,950
69,100 Northrop Grumman Corp. 4,957,925
------------
9,769,875
Automotive (6.2%)
- ---------------------------------------------------------------------------------------------------
85,200 General Motors Corp. 4,238,700
93,000 Magna International, Inc. Class A (Canada) 4,487,250
78,600 Varity Corp. + 3,949,650
------------
12,675,600
Basic Industrial Products (4.4%)
- ---------------------------------------------------------------------------------------------------
124,100 Ball Corp. 2,931,863
125,000 General Signal Corp. 5,015,625
27,200 Harnischfeger Industries, Inc. 1,026,800
------------
8,974,288
Computer Services and Software (2.3%)
- ---------------------------------------------------------------------------------------------------
40,250 IBM Corp. 4,603,594
Conglomerates (4.3%)
- ---------------------------------------------------------------------------------------------------
76,500 General Motors Corp. Class H 4,274,438
227,100 Ogden Corp. 4,456,838
------------
8,731,276
Consumer Durable Goods (2.1%)
- ---------------------------------------------------------------------------------------------------
85,100 Whirlpool Corp. 4,169,900
Consumer Non Durables (2.2%)
- ---------------------------------------------------------------------------------------------------
245,900 Dimon Inc. 4,518,413
Electronics and Electrical Equipment (4.8%)
- ---------------------------------------------------------------------------------------------------
67,000 Intel Corp. 5,347,438
95,200 Texas Instruments, Inc. 4,450,600
------------
9,798,038
Food and Beverages (6.4%)
- ---------------------------------------------------------------------------------------------------
249,725 Archer Daniels Midland Co. 4,432,619
112,575 Dole Food Co. 4,657,791
178,600 Whitman Corp. 3,996,175
------------
13,086,585
Insurance and Finance (13.0%)
- ---------------------------------------------------------------------------------------------------
172,000 Ahmanson (H.F.) & Co. 4,343,000
60,800 Bankers Trust New York Corp. (CUS) 4,727,200
73,200 Beneficial Corp. 4,126,650
106,600 Fleet Financial Group, Inc. 4,450,550
76,300 Franklin Resources, Inc. 4,539,850
267,900 USF&G Corp. 4,319,888
------------
26,507,138
Metals and Mining (4.3%)
- ---------------------------------------------------------------------------------------------------
144,600 Alumax, Inc. + 4,771,800
133,444 Freeport-McMoRan Copper & Gold Co., Inc. Class B 3,919,918
------------
8,691,718
Oil and Gas (2.1%)
- ---------------------------------------------------------------------------------------------------
187,700 Occidental Petroleum Corp. 4,364,025
Pharmaceuticals (4.5%)
- ---------------------------------------------------------------------------------------------------
103,150 Pharmacia & Upjohn, Inc. 4,332,300
80,200 Warner-Lambert Co. 4,771,900
------------
9,104,200
Photography (2.1%)
- ---------------------------------------------------------------------------------------------------
103,100 Polaroid Corp. 4,368,863
Publishing (2.5%)
- ---------------------------------------------------------------------------------------------------
115,200 Times Mirror Co. Class A 4,996,800
Real Estate (9.2%)
- ---------------------------------------------------------------------------------------------------
35,366 Castle & Cooke, Inc. + 539,332
134,000 Equity Residential Properties Trust (R) 4,740,250
123,300 Meditrust Corp. (R) 4,223,025
213,700 Nationwide Health Properties, Inc. (R) 4,754,825
185,124 Simon DeBartolo Group, Inc. (R) 4,604,960
------------
18,862,392
Retail (11.3%)
- ---------------------------------------------------------------------------------------------------
157,050 Dayton Hudson Corp. 5,418,225
419,500 K mart Corp. 4,195,000
127,244 Lowe's Cos., Inc. 4,596,690
103,400 Melville Corp. 4,368,650
84,000 Penney (J.C.) Co., Inc. 4,441,500
------------
23,020,065
Transportation (2.0%)
- ---------------------------------------------------------------------------------------------------
1,100,000 Railtrack Group PLC (United Kingdom) 4,171,210
Utilities (6.3%)
- ---------------------------------------------------------------------------------------------------
246,100 Long Island Lighting Co. 4,245,225
346,000 Northeast Utilities Co. 4,411,500
145,500 US West, Inc. 4,292,250
------------
12,948,975
------------
Total Common Stocks (cost $190,797,431) $193,362,955
SHORT-TERM INVESTMENTS (5.7%) *(cost $11,707,420)
PRINCIPAL AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
$11,704,000 Interest in $883,204,000 joint repurchase agreement dated
August 30, 1996, with Goldman Sachs & Co., due September 3,
1996, with respect to various U.S. Treasury obligations-
maturity value of $11,710,840 for an effective yield of 5.26% $ 11,707,420
- ---------------------------------------------------------------------------------------------------
Total Investments (cost $202,504,851) *** $205,070,375
- ---------------------------------------------------------------------------------------------------
* Percentages indicated are based on net assets of $203,940,394.
+ Non-income-producing security.
(CUS) Bankers Trust New York corp. provides sub-custodian services to the fund.
(R) Real Estate Investment Trust
*** The aggregate identified cost on a tax basis is
$202,634,495, resulting in gross unrealized appreciation and
depreciation of $7,600,257 and $5,164,377, respectively,
or net unrealized appreciation of $2,435,880.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
August 31, 1996
<S> <C>
Assets
- -----------------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $ 202,504,851) (Note 1) $205,070,375
- -----------------------------------------------------------------------------------------------------
Cash 568
- -----------------------------------------------------------------------------------------------------
Dividends and other receivables 732,421
- -----------------------------------------------------------------------------------------------------
Receivable for shares sold 4,871,563
- -----------------------------------------------------------------------------------------------------
Unamortized organization expenses (Note 1) 5,619
- -----------------------------------------------------------------------------------------------------
Total assets 210,680,546
Liabilities
- -----------------------------------------------------------------------------------------------------
Payable for securities purchased 6,049,026
- -----------------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 232,454
- -----------------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 165,323
- -----------------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 58,519
- -----------------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 222
- -----------------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 1,287
- -----------------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 118,067
- -----------------------------------------------------------------------------------------------------
Payable for organizational expenses (Note 1) 6,425
- -----------------------------------------------------------------------------------------------------
Other accrued expenses 108,829
- -----------------------------------------------------------------------------------------------------
Total liabilities 6,740,152
- -----------------------------------------------------------------------------------------------------
Net assets $203,940,394
Represented by
- -----------------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $199,847,767
- -----------------------------------------------------------------------------------------------------
Undistributed net investment income (Note 1) 1,036,338
- -----------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments (Note 1) 490,765
- -----------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and assets
and liabilities in foreign currencies 2,565,524
- -----------------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to capital
shares outstanding $203,940,394
Computation of net asset value and offering price
- -----------------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($97,718,470 divided by 8,447,628 shares) $11.57
- -----------------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $11.57)* $12.28
- -----------------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($94,369,603 divided by 8,194,659 shares)** $11.52
- -----------------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($11,852,321 divided by 1,027,152 shares) $11.54
- -----------------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $11.54)* $11.96
- -----------------------------------------------------------------------------------------------------
* On single retail sales of less than $50,000. On sales of $50,000
or more and on group sales the offering price is reduced.
**Redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
Year ended August 31, 1996
<S> <C>
Investment Income:
- ---------------------------------------------------------------------------------------------------
Dividends (net of foreign tax of $46,425) $1,701,718
- ---------------------------------------------------------------------------------------------------
Interest 114,516
- ---------------------------------------------------------------------------------------------------
Total investment income 1,816,234
Expenses:
- ---------------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) $354,699
- ---------------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 193,858
- ---------------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 3,347
- ---------------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 59,298
- ---------------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 222,791
- ---------------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 19,683
- ---------------------------------------------------------------------------------------------------
Administrative services (Note 2) 4,487
- ---------------------------------------------------------------------------------------------------
Reports to shareholders 28,322
- ---------------------------------------------------------------------------------------------------
Registration fees 68,272
- ---------------------------------------------------------------------------------------------------
Auditing 23,485
- ---------------------------------------------------------------------------------------------------
Legal 4,936
- ---------------------------------------------------------------------------------------------------
Postage 6,014
- ---------------------------------------------------------------------------------------------------
Other 3,567
- ---------------------------------------------------------------------------------------------------
Fees waived by Manager (Note 2) (185,030)
- ---------------------------------------------------------------------------------------------------
Total expenses 807,729
- ---------------------------------------------------------------------------------------------------
Expense reduction (Note 2) (47,119)
- ---------------------------------------------------------------------------------------------------
Net expenses 760,610
- ---------------------------------------------------------------------------------------------------
Net investment income 1,055,624
- ---------------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 566,617
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation on foreign currency translation during the year 777
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments during the year 2,257,142
- ---------------------------------------------------------------------------------------------------
Net gain on investments 2,824,536
- ---------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $3,880,160
- ---------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
For the period
January 3, 1995
(commencement of
Year ended operations) to
August 31 August 31
1996 1995
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Increase in net assets
- --------------------------------------------------------------------------------------------------------------
Operations:
- --------------------------------------------------------------------------------------------------------------
Net investment income $ 1,055,624 $ 34,989
- --------------------------------------------------------------------------------------------------------------
Net realized gain on investments 566,617 116,239
- --------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and
assets and liabilities in foreign currencies 2,257,919 307,605
- --------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 3,880,160 458,833
- --------------------------------------------------------------------------------------------------------------
Distributions to shareholders
- --------------------------------------------------------------------------------------------------------------
From net investment income:
Class A (66,271) --
- --------------------------------------------------------------------------------------------------------------
From net realized gain on investments:
Class A (178,420) --
- --------------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 197,832,270 1,993,822
- --------------------------------------------------------------------------------------------------------------
Total increase in net assets 201,467,739 2,452,655
- --------------------------------------------------------------------------------------------------------------
Net Assets
- --------------------------------------------------------------------------------------------------------------
Beginning of period 2,472,655 20,000
- --------------------------------------------------------------------------------------------------------------
End of period (including undistributed net
investment income of $1,036,338 and $34,280, respectively) $203,940,394 $2,472,655
- --------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
For the Period For the Period
February 26, 1996 February 26, 1996
(commencement (commencement
of operations) of operations) Year ended
to August 31 to August 31 August 31
- -----------------------------------------------------------------------------------------------------------------------
1996 1996 1996
- -----------------------------------------------------------------------------------------------------------------------
Class M Class B
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $10.86 $10.86 $10.53
- -----------------------------------------------------------------------------------------------------------------------
Investment operations
- -----------------------------------------------------------------------------------------------------------------------
Net investment income (c) .11 * .10 * .18
- -----------------------------------------------------------------------------------------------------------------------
Net realized gain on investments .57 .56 1.82
- -----------------------------------------------------------------------------------------------------------------------
Total from investment operations .68 .66 2.00
- -----------------------------------------------------------------------------------------------------------------------
Less distributions from:
- -----------------------------------------------------------------------------------------------------------------------
Net investment income -- -- (.26)
- -----------------------------------------------------------------------------------------------------------------------
Net realized gain on investments -- -- (.70)
- -----------------------------------------------------------------------------------------------------------------------
Total distributions -- -- (.96)
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.54 $11.52 $11.57
- -----------------------------------------------------------------------------------------------------------------------
Total investment return at net asset value (%)(a) 6.26(d) 6.08(d) 20.29
- -----------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $11,852 $94,370 $97,718
- -----------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (%)(b)(c) .91(d) 1.04(d) 1.24
- -----------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets (%)(c) 1.05(d) .88(d) 2.45
- -----------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 33.57 33.57 33.57
- -----------------------------------------------------------------------------------------------------------------------
Average commission rate paid (e) $.0322 $.0322 $.0322
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
Financial highlights (continued)
(For a share outstanding throughout the period)
For the Period
January 3, 1995
(commencement
of operations)
to August 31
------------
1995
------------
Class A
------------
<S> <C>
Net asset value, beginning of period $8.50
- --------------------------------------------------------------------------------
Investment operations
- --------------------------------------------------------------------------------
Net investment income (c) .15
- --------------------------------------------------------------------------------
Net realized gain on investments 1.88
- --------------------------------------------------------------------------------
Total from investment operations 2.03
- --------------------------------------------------------------------------------
Less distributions from:
- --------------------------------------------------------------------------------
Net investment income --
- --------------------------------------------------------------------------------
Net realized gain on investments --
- --------------------------------------------------------------------------------
Total distributions --
- --------------------------------------------------------------------------------
Net asset value, end of period $10.53
- --------------------------------------------------------------------------------
Total investment return at net asset value (%)(a) 23.88(d)
- --------------------------------------------------------------------------------
Net assets, end of period (in thousands) $2,473
- --------------------------------------------------------------------------------
Ratio of expenses to average net assets (%)(b)(c) .51(d)
- --------------------------------------------------------------------------------
Ratio of net investment income to average net assets (%)(c) 1.67(d)
- --------------------------------------------------------------------------------
Portfolio turnover (%) 51.07(d)
- --------------------------------------------------------------------------------
Average commission rate paid (e)
- --------------------------------------------------------------------------------
* Per share net investment income has been determined on
the basis of the weighted average number of shares
outstanding during the period.
(a) Total investment return assumes dividend reinvestment and
does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the
period ended August 31, 1996, includes amounts paid through
expense offset arrangements. Prior period ratios exclude
these amounts (Note 2).
(c) Reflects an expense limitation during the period (Note 2).
As result of such limitation, expenses of the fund reflect
a reduction of approximately $0.14 per share for the period
ended August 31, 1995. Expenses for the period ended
August 31, 1996, reflect a reduction of $0.01 for class A
shares and $0.02 for class B and M shares.
(d) Not annualized.
(e) Average commission rate paid is required for fiscal periods beginning
on or after September 1, 1995.
The accompanying notes are an integral part of these financial statements.
</TABLE>
Notes to financial statements
August 31, 1996
Note 1
Significant accounting policies
Putnam New Value Fund (formerly Putnam Basic Value Fund) is a series
of Putnam Investment Funds (the "Trust"), which is registered under
the Investment Company Act of 1940, as amended, as a diversified,
open-end management investment company. The objective of the fund is
to seek long term capital appreciation by investing primarily in
common stocks which are undervalued at the time of purchase.
The fund offers class A, class B and class M shares. Class A shares
are sold with a maximum front-end sales charge of 5.75%. Class B and
class M shares commenced operations on February 26, 1996. Class B
shares, which convert to class A shares after approximately eight
years, do not pay a front-end sales charge, but pay a higher ongoing
distribution fee than class A shares, and are subject to a
contingent deferred sales charge, if those shares are redeemed
within six years of purchase. Class M shares are sold with a maximum
front-end sales charge of 3.50% and pay an ongoing distribution fee
that is lower than class B shares and higher than class A shares.
Expenses of the fund are borne pro-rata by the holders of each class
of shares, except that each class bears expenses unique to that
class (including the distribution fees applicable to such class).
Each class votes as a class only with respect to its own
distribution plan or other matters on which a class vote is required
by law or determined by the Trustees. Shares of each class would
receive their pro-rata share of the net assets of the fund, if the
fund were liquidated. In addition, the Trustees declare separate
dividends on each class of shares.
The following is a summary of significant accounting policies
consistently followed by the fund in the preparation of its
financial statements. The preparation of financial statements is in
conformity with generally accepted accounting principles and
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities. Actual results could
differ from those estimates.
A) Security valuation Investments for which market quotations are
readily available are stated at market value which is determined
using the last reported sale price, or if no sales are reported-as
in the case of some securities traded over-the-counter -- the last
bid price. Short-term investments having remaining maturities of 60
days or less are stated at amortized cost, which approximates market
value, following procedures approved by the Trustees.
B) Joint trading account Pursuant to an exemptive order issued by
the Securities and Exchange Commission, the fund may transfer
uninvested cash balances into a joint trading account along with the
cash of other registered investment companies and certain other
accounts managed by Putnam Investment Management, Inc. ("Putnam
Management"), the fund's Manager, a wholly-owned subsidiary of
Putnam Investments, Inc. These balances may be invested in one or
more repurchase agreements and/or short-term money market
instruments.
C) Repurchase agreements The fund, or any joint trading account,
through its custodian, receives delivery of the underlying
securities, the market value of which at the time of purchase is
required to be in an amount at least equal to the resale price,
including accrued interest. Putnam Management is responsible for
determining that the value of these underlying securities is at all
times at least equal to the resale price, including accrued
interest.
D) Security transactions and related investment income Security
transactions are accounted for on the trade date (date the order to
buy or sell is executed).
Interest income is recorded on the accrual basis. Dividend income is
recorded on the ex-dividend date except that certain dividends from
foreign securities are recorded as soon as the fund is informed of
the ex-dividend date.
E) Foreign currency translation The accounting records of the fund
are maintained in U.S. dollars. The market value of foreign
securities, currency holdings, other assets and liabilities are
recorded in the books and records of the fund after translation to
U.S. dollars based on the exchange rates on that day. The cost of
each security is determined using historical exchange rates. Income
and withholding taxes are translated at prevailing exchange rates
when accrued or incurred. The fund does not isolate that portion of
realized or unrealized gains or losses resulting from changes in the
foreign exchange rate on investments from fluctuations arising from
changes in the market prices of the securities. Such fluctuations
are included with the net realized and unrealized gain or loss on
investments. Net realized gains and losses on foreign currency
transactions represent net exchange gains or losses on closed
forward currency contracts, disposition of foreign currencies and
the difference between the amount of investment income and foreign
withholding taxes recorded on the fund's books and the U.S. dollar
equivalent amounts actually received or paid. Net unrealized gains
and losses on foreign currency transactions arise from changes in
the value of open forward currency contracts and assets and
liabilities other than investments at the period end, resulting from
changes in the exchange rate.
F) Federal taxes It is the policy of the fund to distribute all of
its taxable income within the prescribed time and otherwise comply
with the provisions of the Internal Revenue Code applicable to
regulated investment companies. It is also the intention of the fund
to distribute an amount sufficient to avoid imposition of any excise
tax under Section 4982 of the Internal Revenue Code of 1986.
Therefore, no provision has been made for federal taxes on income,
capital gains or unrealized appreciation on securities held and for
excise tax on income and capital gains.
G) Distributions to shareholders Distributions to shareholders from
net investment income are recorded by the fund on the ex-dividend
date. Capital gain distributions, if any, are recorded on the ex-
dividend date and paid annually. The amount and character of income
and gains to be distributed are determined in accordance with income
tax regulations which may differ from generally accepted accounting
principles.
These differences include treatment of losses on wash sale
transactions, non taxable dividends, market discount and
organization expenses. Reclassifications are made to the fund's
capital accounts to reflect income and gains available for
distribution (or available capital loss carryovers) under income tax
regulations. For the year ended August 31, 1996, the fund
reclassified $12,705 to increase undistributed net investment income
and $966 to increase paid-in-capital, with a decrease to accumulated
net realized gains of $13,671. The calculation of net investment
income per share in the financial highlights table excludes these
adjustments.
H) Expenses of the trust Expenses directly charged or attributable
to any fund will be paid from the assets of that fund. Generally,
expenses of the trust will be allocated among and charged to the
assets of each fund on a basis that the Trustees deem fair and
equitable, which may be based on the relative assets of each fund or
the nature of the services performed and relative applicability to
each fund.
I) Unamortized organization expenses Expenses incurred by the fund
in connection with its organization, its registration with the
Securities and Exchange Commission and with various states and the
initial public offering of its shares were $6,425. These expenses
are being amortized on projected net asset levels over a five-year
period. The fund will reimburse Putnam Management for the payment of
these expenses.
Note 2
Management fee, administrative services and other transactions
Compensation of Putnam Management, for management and investment
advisory services is paid quarterly based on the average net assets
of the fund. Such fee is based on the following annual rates: 0.70%
of the first $500 million of average net assets, 0.60% of the next
$500 million, 0.55% of the next $500 million, 0.50% of the next $5
billion, 0.475% of the next $5 billion, 0.455% of the next $5
billion, 0.44% of the next $5 billion, and 0.43% thereafter subject,
under current law, to reduction in any year by the amount of certain
brokerage commissions and fees (less expenses) received by
affiliates of Putnam Management on the fund's portfolio
transactions.
Through October 31, 1996, Putnam Management has agreed to limit
expenses to an annual rate of 1.00% of the fund's average net
assets. The fund's expenses subject to this limitation are exclusive
of distribution fees, brokerage, interest, taxes, amortization of
deferred organization expenses, extraordinary expenses and credits
from Putnam Fiduciary Trust Company ("PFTC"), a wholly-owned
subsidiary of Putnam Investments, Inc., if any.
The fund reimburses Putnam Management for the compensation and
related expenses of certain officers of the fund and their staff who
provide administrative services to the fund. The aggregate amount of
all such reimbursements is determined annually by the Trustees.
Trustees of the fund receive an annual Trustees fee of $100 and an
additional fee for each Trustee's meeting attended. Trustees who are
not interested persons of Putnam Management and who serve on
committees of the Trustees receive additional fees for attendance at
certain committee meetings.
The fund adopted a Trustee Fee Deferral Plan (the "Plan") which
allows the Trustees to defer the receipt of all or a portion of
Trustees Fees payable on or after July 1, 1995. The deferred fees
remain in the fund and are invested in certain Putnam funds until
distribution in accordance with the Plan.
Custodial functions for the fund's assets are provided by PFTC.
Investor servicing agent functions are provided by Putnam Investor
Services, a division of PFTC.
For the year ended August 31, 1996, fund expenses were reduced by
$47,119 under expense offset arrangements with PFTC and brokerage
service arrangements. Investor servicing and custodian fees reported
in the Statement of operations exclude these credits. The fund could
have invested a portion of the assets utilized in connection with
the expense offset arrangements in an income producing asset if it
had not entered into such arrangements.
The fund has adopted distribution plans (the "Plans") with respect
to its class A, class B and class M shares pursuant to Rule 12b-1
under the Investment Company Act of 1940. The purpose of the Plans
is to compensate Putnam Mutual Funds Corp., a wholly-owned
subsidiary of Putnam Investments Inc., for services provided and
expenses incurred by it in distributing shares of the fund. The
Plans provide for payments by the fund to Putnam Mutual Funds Corp.
at an annual rate up to 0.35%, 1.00% and 1.00% of the average net
assets attributable to class A, class B and class M shares,
respectively. The Trustees have approved payment by the fund at an
annual rate of 0.25%, 1.00% and 0.75% of the average net assets
attributable to class A, class B and class M shares respectively.
For the year ended August 31, 1996, Putnam Mutual Funds Corp.,
acting as underwriter received net commissions of $292,640 and
$20,131 from the sale of class A and class M shares, respectively
and $23,071 in contingent deferred sales charges from redemptions of
class B shares. A deferred sales charge of up to 1% is assessed on
certain redemptions of class A shares. For the year ended August 31,
1996, Putnam Mutual Funds Corp., acting as underwriter received no
monies on class A redemptions.
Note 3
Purchase and sales of securities
During the year ended August 31, 1996, purchases and sales of
investment securities other than short-term investments aggregated
$205,446,226 and $17,279,176, respectively. There were no purchases
and sales of U.S. government obligations. In determining the net
gain or loss on securities sold, the cost of securities has been
determined on the identified cost basis.
Note 4
Capital shares
At August 31, 1996, there was an unlimited number of shares of
beneficial interest authorized. Transactions in capital shares were
as follows:
Year ended
August 31, 1996
- ----------------------------------------------------
Class A Shares Amount
- ----------------------------------------------------
Shares sold 8,571,175 $97,356,430
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 24,155 244,691
- ----------------------------------------------------
8,595,330 97,601,121
Shares
repurchased (382,562) (4,366,497)
- ----------------------------------------------------
Net increase 8,212,768 $93,234,624
- ----------------------------------------------------
For the period
January 3, 1995
(commencement of
operations) to
August 31, 1995
- ----------------------------------------------------
Class A Shares Amount
- ----------------------------------------------------
Shares sold 233,313 $2,001,821
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- ----------------------------------------------------
233,313 2,001,821
Shares
repurchased (806) (7,999)
- ----------------------------------------------------
Net increase 232,507 $1,993,822
- ----------------------------------------------------
For the period
February 26, 1996
(commencement of
operations) to
August 31, 1996
- ----------------------------------------------------
Class B Shares Amount
- ----------------------------------------------------
Shares sold 8,521,256 $96,626,977
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- ----------------------------------------------------
8,521,256 96,626,977
Shares
repurchased (326,597) (3,707,666)
- ----------------------------------------------------
Net increase 8,194,659 $92,919,311
- ----------------------------------------------------
For the period
February 26, 1996
(commencement of
operations) to
August 31, 1996
- ----------------------------------------------------
Class M Shares Amount
- ----------------------------------------------------
Shares sold 1,094,106 $12,434,719
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- ----------------------------------------------------
1,094,106 12,434,719
Shares
repurchased (66,954) (756,384)
- ----------------------------------------------------
Net increase 1,027,152 $11,678,335
- ----------------------------------------------------
Federal tax information
(Unaudited)
The fund has designated 89.92% of the distributions from net
investment income as qualifying for the dividends received deduction
for corporations.
Pursuant to section 852 of the Internal Revenue Code, the fund
hereby designates $.001 per share (or if different, the amount
necessary to offset net capital gain earned by the Fund) for share
class A as capital gain dividends for its taxable year ended August
31, 1996.
The Form 1099 you receive in January 1997 will show the tax status
of all distributions paid to your account in calendar 1996.
Our commitment to quality service
*CHOOSE AWARD-WINNING SERVICE
Putnam Investor Services has won the DALBAR Quality Tested Service
Seal for the past six years. In 1995, over 146,000 tests of 56
shareholder service components demonstrated that Putnam outperformed
the industry standard in every category.
*HELP YOUR INVESTMENT GROW
Set up a systematic program for investing with as little as $25 a
month from a Putnam money market fund or from your checking or
savings account.*
*SWITCH FUNDS EASILY
You can move money from one account to another with the same class
of shares without a service charge. (This privilege is subject to
change or termination.)
*ACCESS YOUR MONEY QUICKLY
You can get checks sent regularly or redeem shares any business day
at the then-current net asset value, which may be more or less than
the original cost of the shares.
For details about any of these or other services, contact your
financial advisor or call the toll-free number shown below and speak
with a helpful Putnam representative.
To make an additional investment in this or any other Putnam fund,
contact your financial advisor or call our toll-free number: 1-800-
225-1581.
*Regular investing of course, does not guarantee a profit or protect
against a loss in a declining market.
Fund information
INVESTMENT MANAGER
Putnam Investment
Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
TRUSTEES
George Putnam, Chairman
William F. Pounds, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
John A. Hill
Ronald J. Jackson
Elizabeth T. Kennan
Lawrence J. Lasser
Robert E. Patterson
Donald S. Perkins
George Putnam, III
Eli Shapiro
A.J.C. Smith
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
John D. Hughes
Senior Vice President and Treasurer
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Peter Carman
Vice President
Brett C. Browchuk
Vice President
Thomas V. Reilly
Vice President
David L. King
Vice President and Fund Manager
William N. Shiebler
Vice President
John R. Verani
Vice President
Paul M. O'Neil
Vice President
Beverly Marcus
Clerk and Assistant Treasurer
This report is for the information of shareholders of Putnam New
Value Fund. It may also be used as sales literature when preceded or
accompanied by the current prospectus, which gives details of sales
charges, investment objectives, and operating policies of the fund,
and the most recent copy of Putnam's Quarterly Performance Summary.
For more information, or to request a prospectus, call toll free: 1-
800-225-1581.
Shares of mutual funds are not deposits or obligations of, or
guaranteed or endorsed by, any financial institution, are not
insured by the Federal Deposit Insurance Corporation (FDIC), the
Federal Reserve Board or any other agency, and involve risk,
including the possible loss of principal amount invested.
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
- --------------
Bulk Rate
U.S. Postage
PAID
Putnam
Investments
- --------------
27667-274/2BF/2BG 10/96
