Putnam
New Value
Fund
SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK
2-28-99
[LOGO: BOSTON * LONDON * TOKYO]
Fund highlights
* "The high dividends make value stocks less volatile and sometimes help
to buoy them in difficult markets."
-- Individual Investor, April 1999
* "With Putnam New Value Fund, we practice a more opportunistic selection
strategy than is common to value funds. We are willing to consider a wide
variety of large U.S. companies that the market has discounted
unreasonably, confident that our rigorous financial analysis can determine
which stocks are undervalued and poised to experience positive changes."
-- David L. King, manager
CONTENTS
4 Report from Putnam Management
9 Fund performance summary
12 Portfolio holdings
16 Financial statements
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
[copyright] Karsh, Ottawa
Dear Shareholder:
When opportunity knocks, Putnam New Value Fund's management is quick to
answer. Indeed, the fund's mission is to seek out established companies
that are undervalued in the stock market but are likely in Putnam's view
to achieve positive changes that can improve performance. In the wake of
last fall's sharp stock market decline, several such opportunities became
apparent.
While Fund Manager David King fully expects to see the fund ultimately
benefit from these opportunities, he was pleasantly surprised at how
quickly some of them materialized. In fact, as you will see in the
following report, he is already taking profits on a few.
All future market environments will not be as favorable for your fund's
investment strategy as the present one has been, of course. But Dave and
his team firmly believe the fund's philosophy is sound and that it should
continue to provide above-average results over the long term.
Respectfully yours,
/S/GEORGE PUTNAM
George Putnam
Chairman of the Trustees
April 21, 1999
Report from the Fund Manager
David L. King
In the first six months of Putnam New Value Fund's 1999 fiscal year, U.S.
equities staged a strong recovery from their summer lows. We are pleased
to report that your fund benefited considerably from this rally. By
adhering to our value strategy, we were able to establish positions in
high-quality companies that were deeply discounted in a market consumed
with shortsighted worries. The effectiveness of this approach became
apparent when many holdings experienced strong gains in the final months
of 1998 and the early weeks of 1999. The overall portfolio achieved a
return of 25.72% at NAV (18.51% at POP), one of its strongest six-month
results ever. For more information on the fund's results over longer
periods and for the results of other share classes, please turn to the
performance section that begins on page 9.
* FUND WELL POSITIONED FOR MARKET'S RALLY
As the semiannual period opened on September 1, 1998, the U.S. stock
market was in the midst of a retrenchment. We, the managers and analysts
in Putnam's value investment team, interpreted the selling pressure as a
result of investor pessimism regarding slowing economic growth abroad and
Russia's currency crisis. We analyzed the stocks in our investment
universe -- undervalued stocks of established companies -- and saw many
buying opportunities created by the market's excessive pessimism. In our
view, the global economic situation would depress short-term earnings for
the many U.S. companies with global operations, but it would not cause
lasting damage. With this outlook, we continued to execute the fund's
tactics, which are more opportunistic than more standard value-oriented
funds, and bought many stocks as they fell out of favor.
Our numerous purchases in September, when many stocks were trading at
prices well below their highs of earlier in the year, put the fund in a
position to benefit from the market's subsequent rise. We established
unusually large overweightings in the financial and technology sectors.
While we were confident in our expectations of a rebound, we did not
anticipate how quickly it would occur. In late September, after
identifying the possibility of a sudden credit shortfall, the Federal
Reserve Board decided to initiate a series of interest-rate cuts. This
unexpected policy shift bolstered investor confidence. In addition to this
psychological lift, lower interest rates made stocks appear undervalued.
By December, many stocks were approaching new highs and the fund benefited
accordingly.
* FINANCIAL AND TECHNOLOGY STOCKS LED SURGE
Many of the fund's top-performing holdings in the period were financial
and technology stocks. We had been interested in technology hardware
companies in particular since the spring of 1998. Prices of many of these
stocks had fallen because of slowing global demand for semiconductors.
We built positions in IBM, Texas Instruments, Motorola, and Micron
Technology, a leading producer of low-cost DRAM chips. A stock such as
Micron in a dynamic industry usually carries a high price and therefore
rarely meets our valuation criteria. Our decision to establish positions
in these stocks highlighted our willingness to consider any stocks that
the market unfairly punishes.
[GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY SECTORS]
TOP INDUSTRY SECTORS*
Insurance and finance 25.7%
Oil and gas 9.4%
Telecommunications 6.5%
Business equipment
and services 5.8%
Food and beverages 5.5%
Footnote reads:
*Based on net assets as of 2/28/99. Holdings will vary over time.
When semiconductor prices unexpectedly firmed and sales of PCs remained
strong, several of our tech holdings appreciated by more than 50% and
allowed us to take profits on some of the positions, including Micron and
Texas Instruments. While the technology stocks remaining in the portfolio,
as well as others mentioned in this report, were viewed favorably at the
end of the reporting period, all are subject to review and adjustment in
accordance with the fund's investment strategy and may vary in the future.
Unlike its technology weighting, the fund's stake in financials is often
near 20% because stocks of large banks and insurance companies often sell
for attractive prices and pay generous dividends. During the summer, our
purchases brought this sector weighting closer to 30%. Several of the
financial holdings qualified as "ramp" stocks in our terminology, meaning
that we expected them to recover fairly quickly from their sharp drop.
American Express was one of our major new additions and was a good example
of our thinking at the time. The stock of this large multinational fell by
nearly 50% during the summer because the company has sizable operations in
Asia's weak economies and offers travel services throughout the world. We
believed its earnings would remain largely intact, however, and at such a
deep discount that it was a classic ramp stock. After a mere three months,
American Express had rebounded by more than 30% and we sold the holding at
a profit.
Other financial companies to which we added during the summer included
Chase Manhattan Bank, Lehman Brothers Holdings, and Equitable Companies, a
financial company that also owns the investment banking firm Donaldson,
Lufkin & Jenrette. All three have performed well for the fund.
* RECENT TAKEOVERS ENCOURAGING FOR VALUE STOCKS
During the period, the fund continued to benefit from the increasing
amount of corporate mergers. This activity set a record in 1998 with the
total value of mergers rising to $1.2 trillion by some estimates, or
roughly twice the previous record, which had been set in 1997. As we have
mentioned in previous reports, we do not buy stocks in anticipation of
mergers, but the discounted prices of the fund's holdings make many of
them natural targets for acquisition by other companies.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
TOP 10 HOLDINGS
Pharmacia & Upjohn, Inc.
Pharmaceuticals
BankAmerica Corp.
Insurance and finance
Citigroup, Inc.
Insurance and finance
General Motors Corp.
Automotive
Chase Manhattan Corp.
Insurance and finance
GTE Corp.
Telecommunications
Mobil Corp.
Oil and gas
Bank One Corp.
Insurance and finance
CIGNA Corp.
Insurance and finance
American General Corp.
Insurance and finance
Footnote reads:
These holdings represent 24.3% of the fund's net assets as of 2/28/99.
Portfolio holdings will vary over time.
In February, Transamerica Corporation, an insurance company perhaps best
known for its pyramid-shaped headquarters that graces the San Francisco
skyline, was acquired by Dutch life insurance company AEGON. We began to
sell the fund's position as the stock price rose by roughly 25% in the
wake of the announcement. Also in February, United Technologies bought
fund holding Sundstrand, a smaller competitor in the aerospace components
industry. Sundstrand stock surged by more than 20% on the news and we sold
the position at a profit.
We believe that these two mergers indicate one way in which value stocks
can close the performance gap that has separated them from growth stocks
over the past few years. In both cases, the acquiring companies were
larger and had enjoyed stronger stock performance. By paying a premium for
their two acquisition targets, they bid up value stocks that previously
had lagged.
* SIGNS OF MORE FAVORABLE CONDITIONS FOR VALUE
The fund's returns in the semiannual period, we believe, prove the merits
of our investment process. While a similar rally in coming months is
unlikely, we nevertheless have reasons for continued optimism. As
mentioned above, merger activity is helping to restore more balance to the
market. Also it seems that with Brazil's currency devaluation in February
the last major emerging market has capitulated and the crisis has reached
its limits.
While the world economy is suffering a slowdown of historic proportions,
when recovery comes, it will boost demand for products in traditional
value sectors, such as the energy, utilities, and cyclical industries.
Meanwhile, the U.S. economy continues to perform well, and our investment
process continues to identify undervalued companies in a wide array of
industries. Over time, as these companies achieve positive changes, they
should attract demand from other investors and enjoy improved performance.
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 2/28/99, there is no guarantee the fund will
continue to hold these securities in the future.
Performance summary
This section provides information about your fund's performance, which
should always be considered in light of its investment strategy. Putnam
New Value Fund is designed for investors seeking long-term capital
appreciation through investments in undervalued common stocks.
TOTAL RETURN FOR PERIODS ENDED 2/28/99
Class A Class B Class M
(inception date) (1/3/95) (2/26/96) (2/26/96)
NAV POP NAV CDSC NAV POP
- ------------------------------------------------------------------------------
6 months 25.72% 18.51% 25.08% 20.08% 25.31% 20.95%
- ------------------------------------------------------------------------------
1 year 4.49 -1.51 3.61 -1.09 3.96 0.33
- ------------------------------------------------------------------------------
Life of fund 110.32 98.19 103.55 101.55 105.92 98.71
Annual average 19.62 17.92 18.68 18.40 19.01 17.99
- ------------------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 2/28/99
S&P 500 Consumer
Index price index
- ------------------------------------------------------------------------------
6 months 30.29% 0.80%
- ------------------------------------------------------------------------------
1 year 19.74 1.73
- ------------------------------------------------------------------------------
Life of fund 192.82 10.02
Annual average 29.46 2.32
- ------------------------------------------------------------------------------
Past performance is no assurance of future results. More recent returns
may be more or less than those shown. Returns for class A and class M
shares reflect the current maximum initial sales charges of 5.75% and
3.50% respectively. Class B share returns for the 1-year and life-of-fund
periods reflect the applicable contingent deferred sales charge (CDSC),
which is 5% in the first year, declines to 1% in the sixth year, and is
eliminated thereafter. Returns shown for class B and class M shares for
periods prior to their inception are derived from the historical
performance of class A shares, adjusted to reflect both the initial sales
charge or CDSC, if any, currently applicable to each class and in the case
of class B and class M shares, the higher operating expenses applicable to
such shares. All returns assume reinvestment of distributions at NAV.
Investment return and principal value will fluctuate so that an investor's
shares when redeemed may be worth more or less than their original cost.
PRICE AND DISTRIBUTION INFORMATION
6 months ended 2/28/99
Class A Class B Class M
- ------------------------------------------------------------------------------
Distributions (number) 1 1 1
- ------------------------------------------------------------------------------
Income $0.131 $0.017 $0.047
- ------------------------------------------------------------------------------
Capital gains
- ------------------------------------------------------------------------------
Long-term 1.246 1.246 1.246
- ------------------------------------------------------------------------------
Short-term 0.070 0.070 0.070
- ------------------------------------------------------------------------------
Total $1.447 $1.333 $1.363
- ------------------------------------------------------------------------------
Share value: NAV POP NAV NAV POP
- ------------------------------------------------------------------------------
8/31/98 $12.01 $12.74 $11.87 $11.93 $12.36
- ------------------------------------------------------------------------------
2/28/99 13.60 14.43 13.47 13.54 14.03
- -------------------------------------------------------------------------------
TOTAL RETURN FOR PERIODS ENDED 3/31/99
(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
- ------------------------------------------------------------------------------
6 months 22.43% 15.42% 21.96% 16.96% 22.20% 17.94%
- ------------------------------------------------------------------------------
1 year 4.80 -1.25 4.00 -0.72 4.34 0.70
- ------------------------------------------------------------------------------
Life of fund 118.98 106.36 112.01 110.01 114.43 106.93
Annual average 20.31 18.63 19.39 19.12 19.71 18.71
- ------------------------------------------------------------------------------
Past performance is no assurance of future results. More recent returns
may be more or less than those shown. They do not take into account any
adjustment for taxes payable on reinvested distributions. Investment
returns and principal value will fluctuate so that an investor's shares
when sold may be worth more or less than their original cost. See first
page of performance section for method of performance calculation.
TERMS AND DEFINITIONS
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.
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.
Contingent deferred sales charge (CDSC) is a charge applied at the time of
the redemption of class B shares and assumes redemption at the end of the
period. Your fund's CDSC declines from a 5% maximum during the first year
to 1% during the sixth year. After the sixth year, the CDSC no longer
applies.
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.
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.
Consumer price index (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
<TABLE>
<CAPTION>
Portfolio of investments owned
February 28, 1999 (Unaudited)
COMMON STOCKS (99.4%) (a)
NUMBER OF SHARES VALUE
<S> <C> <C> <C>
Aerospace and Defense (1.1%)
- --------------------------------------------------------------------------------------------------------------------------
175,000 Raytheon Co. Class A $ 9,253,125
Automotive (5.3%)
- --------------------------------------------------------------------------------------------------------------------------
250,000 Ford Motor Co. 14,828,125
250,000 General Motors Corp. 20,640,625
200,000 Lear Corp. (NON) 7,062,500
--------------
42,531,250
Basic Industrial Products (1.0%)
- --------------------------------------------------------------------------------------------------------------------------
90,000 Deere (John) & Co. 2,941,875
525,000 New Holland N.V. (Netherlands) 5,217,188
--------------
8,159,063
Business Equipment and Services (5.8%)
- --------------------------------------------------------------------------------------------------------------------------
150,000 Avery Dennison Corp. 8,053,125
90,000 IBM Corp. 15,300,000
400,000 NCR Corp. (NON) 16,375,000
120,000 Xerox Corp. 6,622,500
--------------
46,350,625
Chemicals (2.3%)
- --------------------------------------------------------------------------------------------------------------------------
90,000 Dow Chemical Co. 8,853,750
185,000 du Pont (E.I.) de Nemours & Co., Ltd. 9,492,813
--------------
18,346,563
Communications (1.2%)
- --------------------------------------------------------------------------------------------------------------------------
175,000 MediaOne Group, Inc. (NON) 9,537,500
Computer Equipment (2.0%)
- --------------------------------------------------------------------------------------------------------------------------
278,900 Compaq Computer Corp. 9,831,225
220,000 Seagate Technology, Inc. (NON) 6,366,250
--------------
16,197,475
Computer Services and Software (0.8%)
- --------------------------------------------------------------------------------------------------------------------------
147,900 Computer Associates International, Inc. 6,211,800
Conglomerates (1.1%)
- --------------------------------------------------------------------------------------------------------------------------
375,000 Ogden Corp. 9,164,063
Consumer Non Durables (1.5%)
- --------------------------------------------------------------------------------------------------------------------------
300,000 Philip Morris Cos., Inc. 11,737,500
Electronics and Electrical Equipment (1.6%)
- --------------------------------------------------------------------------------------------------------------------------
140,000 Motorola, Inc. 9,835,000
75,000 Rockwell International Corp. 3,332,813
--------------
13,167,813
Entertainment (1.4%)
- --------------------------------------------------------------------------------------------------------------------------
125,000 Viacom, Inc. Class B (NON) 11,046,875
Food and Beverages (5.5%)
- --------------------------------------------------------------------------------------------------------------------------
325,000 ConAgra, Inc. 9,790,625
300,000 Nabisco Holdings Corp. Class A 13,312,500
400,000 Sara Lee Corp. 10,875,000
190,000 The Quaker Oats Co. 10,378,750
--------------
44,356,875
Hospital Management and Medical Services (0.9%)
- --------------------------------------------------------------------------------------------------------------------------
375,000 Tenet Healthcare Corp. (NON) 7,382,813
Insurance and Finance (25.7%)
- --------------------------------------------------------------------------------------------------------------------------
225,000 American General Corp. 16,481,250
325,000 Bank One Corp. 17,468,750
350,000 BankAmerica Corp. 22,859,375
400,000 Charter One Financial, Inc. 11,525,000
240,000 Chase Manhattan Corp. 19,110,000
215,000 CIGNA Corp. 16,877,500
383,750 Citigroup, Inc. 22,545,313
300,000 Lehman Brothers Holding, Inc. 15,900,000
175,000 Mercantile Bancorp., Inc. 7,984,375
80,000 Morgan (J.P.) & Co., Inc. 8,915,000
115,000 Morgan Stanley, Dean Witter, Discover and Co. 10,407,500
225,000 The Equitable Cos., Inc. 15,201,563
115,000 Transamerica Corp. 8,344,688
310,000 Washington Mutual, Inc. 12,400,000
--------------
206,020,314
Lodging (1.4%)
- --------------------------------------------------------------------------------------------------------------------------
350,000 Starwood Hotels & Resorts Worldwide, Inc. 10,850,000
Medical Supplies and Devices (1.5%)
- --------------------------------------------------------------------------------------------------------------------------
175,000 Baxter International, Inc. 12,315,625
Oil and Gas (9.4%)
- --------------------------------------------------------------------------------------------------------------------------
175,000 Atlantic Richfield Co. 9,559,375
150,001 BP Amoco PLC ADR (United Kingdom) 12,750,044
450,000 Conoco, Inc. (NON) 9,140,625
225,000 Halliburton Co. 6,356,250
210,000 Mobil Corp. 17,469,375
250,000 Sonat, Inc. 6,328,125
150,000 Texaco, Inc. 6,984,375
186,200 Williams Cos., Inc. 6,889,400
--------------
75,477,569
Packaging and Containers (0.9%)
- --------------------------------------------------------------------------------------------------------------------------
285,000 Owens-Illinois, Inc. (NON) 6,822,188
Paper and Forest Products (2.1%)
- --------------------------------------------------------------------------------------------------------------------------
275,000 Boise Cascade Corp. 8,542,188
450,000 Smurfit-Stone Container Corp. (NON) 8,128,125
--------------
16,670,313
Pharmaceuticals (4.4%)
- --------------------------------------------------------------------------------------------------------------------------
200,000 American Home Products Corp. 11,900,000
425,000 Pharmacia & Upjohn, Inc. 23,162,500
--------------
35,062,500
Photography (1.0%)
- --------------------------------------------------------------------------------------------------------------------------
125,000 Eastman Kodak Co. 8,273,438
Publishing (1.3%)
- --------------------------------------------------------------------------------------------------------------------------
185,000 Times Mirror Co. Class A 10,325,313
REIT's (Real Estate Investment Trust) (1.2%)
- --------------------------------------------------------------------------------------------------------------------------
235,000 Equity Residential Properties Trust 9,635,000
Retail (2.6%)
- --------------------------------------------------------------------------------------------------------------------------
700,000 K mart Corp. (NON) 12,250,000
250,000 Saks, Inc. (NON) 8,984,375
--------------
21,234,375
Specialty Consumer Products (1.1%)
- --------------------------------------------------------------------------------------------------------------------------
325,000 Mattel, Inc. 8,571,875
Telecommunications (6.5%)
- --------------------------------------------------------------------------------------------------------------------------
150,000 ALLTEL Corp. 8,981,250
175,000 American Telephone & Telegraph Co. 14,371,875
280,000 GTE Corp. 18,165,000
200,000 U S West, Inc. 10,662,500
--------------
52,180,625
Transportation (3.6%)
- --------------------------------------------------------------------------------------------------------------------------
300,000 Burlington Northern Santa Fe Corp. 9,937,500
175,000 UAL Corp. (NON) 10,456,250
175,000 Union Pacific Corp. 8,203,125
--------------
28,596,875
Utilities (5.2%)
- --------------------------------------------------------------------------------------------------------------------------
550,000 DPL, Inc. 9,796,875
350,000 Entergy Corp. 9,887,500
425,000 Potomac Electric Power Co. 10,359,375
131,200 Sempra Energy 2,755,200
100,000 Sprint Corp. 8,581,243
--------------
41,380,193
--------------
Total Common Stocks (cost $763,464,102) $ 796,859,543
SHORT-TERM INVESTMENTS (0.9%) (a) (cost $7,199,000)
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------
$7,199,000 Interest in $310,913,000 joint repurchase agreement
dated February 26, 1999 with Warburg Securities
due March 1, 1999 with respect to various U.S.
Treasury obligations -- maturity value of $7,201,844
for an effective yield of 4.74% $ 7,199,000
- --------------------------------------------------------------------------------------------------------------------------
Total Investments (cost $770,663,102) (b) $ 804,058,543
- --------------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $801,489,941.
(b) The aggregate identified cost on a tax basis is $772,256,878, resulting in gross unrealized appreciation and
depreciation of $96,206,647 and $64,404,982, respectively, or net unrealized appreciation of $31,801,665.
(NON) Non-income-producing security.
ADR after the name of a foreign holding stands for American Depository Receipts representing ownership of
foreign securities on deposit with a domestic custodian bank.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
February 28, 1999 (Unaudited)
<S> <C>
Assets
- -----------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $770,663,102) (Note 1) $804,058,543
- -----------------------------------------------------------------------------------------------
Cash 593
- -----------------------------------------------------------------------------------------------
Dividends and other receivables 1,537,875
- -----------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 556,324
- -----------------------------------------------------------------------------------------------
Receivable for securities sold 7,727,577
- -----------------------------------------------------------------------------------------------
Unamortized organization expenses (Note 1) 2,313
- -----------------------------------------------------------------------------------------------
Total assets 813,883,225
Liabilities
- -----------------------------------------------------------------------------------------------
Payable for securities purchased 8,182,574
- -----------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 2,115,097
- -----------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 1,361,678
- -----------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 129,376
- -----------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 21,592
- -----------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 1,747
- -----------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 509,391
- -----------------------------------------------------------------------------------------------
Payable for organization expenses (Note 1) 6,425
- -----------------------------------------------------------------------------------------------
Other accrued expenses 65,404
- -----------------------------------------------------------------------------------------------
Total liabilities 12,393,284
- -----------------------------------------------------------------------------------------------
Net assets $801,489,941
Represented by
- -----------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $742,294,788
- -----------------------------------------------------------------------------------------------
Undistributed net investment income (Note 1) 1,001,928
- -----------------------------------------------------------------------------------------------
Accumulated net realized gain on investments (Note 1) 24,797,784
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 33,395,441
- -----------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to capital shares outstanding $801,489,941
Computation of net asset value and offering price
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($378,854,859 divided by 27,865,643 shares) $13.60
- -----------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $13.60)* $14.43
- -----------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($384,607,285 divided by 28,548,187 shares)** $13.47
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($38,027,797 divided by 2,809,159 shares) $13.54
- -----------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $13.54)* $14.03
- -----------------------------------------------------------------------------------------------
* 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
Six months ended February 28, 1999 (Unaudited)
<S> <C>
Investment income:
- -----------------------------------------------------------------------------------------------
Dividends (net of foreign tax $17,016) $ 8,191,909
- -----------------------------------------------------------------------------------------------
Interest 169,291
- -----------------------------------------------------------------------------------------------
Total investment income 8,361,200
Expenses:
- -----------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 2,682,920
- -----------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 462,108
- -----------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 14,578
- -----------------------------------------------------------------------------------------------
Administrative services (Note 2) 5,253
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 477,743
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 1,954,813
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 145,675
- -----------------------------------------------------------------------------------------------
Amortization of organization expenses (Note 1) 630
- -----------------------------------------------------------------------------------------------
Reports to shareholders 11,386
- -----------------------------------------------------------------------------------------------
Registration fees 493
- -----------------------------------------------------------------------------------------------
Auditing 20,033
- -----------------------------------------------------------------------------------------------
Legal 2,745
- -----------------------------------------------------------------------------------------------
Postage 67,814
- -----------------------------------------------------------------------------------------------
Other 79,784
- -----------------------------------------------------------------------------------------------
Total expenses 5,925,975
- -----------------------------------------------------------------------------------------------
Expense reduction (Note 2) (83,433)
- -----------------------------------------------------------------------------------------------
Net expenses 5,842,542
- -----------------------------------------------------------------------------------------------
Net investment income 2,518,658
- -----------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 26,494,615
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments during the period 152,549,617
- -----------------------------------------------------------------------------------------------
Net gain on investments 179,044,232
- -----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $181,562,890
- -----------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
Six months ended Year ended
February 28 August 31
1999* 1998
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets
- ---------------------------------------------------------------------------------------------------------------
Operations:
- ---------------------------------------------------------------------------------------------------------------
Net investment income $ 2,518,658 $ 5,004,268
- ---------------------------------------------------------------------------------------------------------------
Net realized gain on investments 26,494,615 85,553,702
- ---------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation)
of investments 152,549,617 (199,816,929)
- ---------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations 181,562,890 (109,258,959)
- ---------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ---------------------------------------------------------------------------------------------------------------
From net investment income
Class A (3,503,910) (3,916,326)
- ---------------------------------------------------------------------------------------------------------------
Class B (478,436) (1,238,499)
- ---------------------------------------------------------------------------------------------------------------
Class M (129,575) (230,636)
- ---------------------------------------------------------------------------------------------------------------
From net realized gain on investments
Class A (35,199,845) (23,434,277)
- ---------------------------------------------------------------------------------------------------------------
Class B (37,036,615) (22,788,386)
- ---------------------------------------------------------------------------------------------------------------
Class M (3,628,113) (2,571,946)
- ---------------------------------------------------------------------------------------------------------------
Increase (decrease) from capital share transactions (Note 4) (42,348,332) 22,900,880
- ---------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 59,238,064 (140,538,149)
Net assets
- ---------------------------------------------------------------------------------------------------------------
Beginning of period 742,251,877 882,790,026
- ---------------------------------------------------------------------------------------------------------------
End of period (including undistributed net investment
income of $1,001,928 and $2,595,191, respectively) $801,489,941 $742,251,877
- ---------------------------------------------------------------------------------------------------------------
* Unaudited
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS A
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share February 28 January 3, 1995+
operating performance (Unaudited) Year ended August 31 to August 31
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $12.01 $14.63 $11.57 $10.53 $8.50
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income .07(c) .13(c) .19(c)(d) .18(d) .15(d)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss)
on investments 2.97 (1.89) 3.10 1.82 1.88
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 3.04 (1.76) 3.29 2.00 2.03
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.13) (.12) (.09) (.26) --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (1.32) (.74) (.14) (.70) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (1.45) (.86) (.23) (.96) --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $13.60 $12.01 $14.63 $11.57 $10.53
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 25.72* (12.83) 28.79 20.29 23.88*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $378,855 $350,430 $429,246 $97,718 $2,473
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .53* 1.16 1.22(d) 1.24(d) .51*(d)
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) .50* .89 1.40(d) 2.45(d) 1.67*(d)
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 35.84* 135.56 65.38 33.57 51.07*
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total 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, and thereafter
includes amounts paid through expense offset and brokerage service arrangements. Prior period
ratios exclude these amounts (Note 2).
(c) Per share net investment income has been determined on the basis of the weighted average
number of shares outstanding during the period.
(d) Reflects an expense limitation during the period. As a 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 per class A shares and
$0.02 per class B and M shares respectively. Expenses for the year ended August 31, 1997 reflect a
reduction of less than a $0.01 per class A, B, and M shares, respectively.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS B
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share February 28 Feb. 26, 1996+
operating performance (Unaudited) Year ended August 31 to August 31
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $11.87 $14.49 $11.52 $10.86
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income .02(c) .02 .09(d) .10(d)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss)
on investments 2.92 (1.86) 3.08 .56
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 2.94 (1.84) 3.17 .66
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.02) (.04) (.06) --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (1.32) (.74) (.14) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (1.34) (.78) (.20) --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $13.47 $11.87 $14.49 $11.52
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 25.08* (13.48) 27.79 6.08*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $384,607 $355,743 $406,783 $94,370
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .91* 1.91 1.97(d) 1.04*(d)
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) .12* .14 .65(d) .88*(d)
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 35.84* 135.56 65.38 33.57
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total 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, and thereafter
includes amounts paid through expense offset and brokerage service arrangements. Prior period
ratios exclude these amounts (Note 2).
(c) Per share net investment income has been determined on the basis of the weighted average
number of shares outstanding during the period.
(d) Reflects an expense limitation during the period. As a 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 per class A shares and
$0.02 per class B and M shares respectively. Expenses for the year ended August 31, 1997 reflect a
reduction of less than a $0.01 per class A, B, and M shares, respectively.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS M
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share February 28 Feb. 26,1996+
operating performance (Unaudited) Year ended August 31 to August 31
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $11.93 $14.55 $11.54 $10.86
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income .03(c) .06 .12(d) .11(d)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss)
on investments 2.95 (1.87) 3.10 .57
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 2.98 (1.81) 3.22 .68
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.05) (.07) (.07) --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (1.32) (.74) (.14) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (1.37) (.81) (.21) --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $13.54 $11.93 $14.55 $11.54
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 25.31* (13.25) 28.19 6.26*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $38,028 $36,079 $46,761 $11,852
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .78* 1.66 1.72(d) .91*(d)
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) .25* .39 .91(d) 1.05*(d)
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 35.84* 135.56 65.38 33.57
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total 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, and thereafter
includes amounts paid through expense offset and brokerage service arrangements. Prior period
ratios exclude these amounts (Note 2).
(c) Per share net investment income has been determined on the basis of the weighted average
number of shares outstanding during the period.
(d) Reflects an expense limitation during the period. As a 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 per class A shares and
$0.02 per class B and M shares respectively. Expenses for the year ended August 31, 1997 reflect a
reduction of less than a $0.01 per class A, B, and M shares, respectively.
</TABLE>
Notes to financial statements
February 28, 1999 (Unaudited)
Note 1
Significant accounting policies
Putnam New Value Fund (the "fund") is one in 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 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. Collateral
for certain tri-party repurchase agreements is held at the counterparty's
custodian in a segregated account for the benefit of the fund and the
counterparty. 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) Line of credit The fund has entered into a committed line of credit
with certain banks. This line of credit agreement includes restrictions
that the fund maintain an asset coverage ratio of at least 300% and
borrowings must not exceed prospectus limitations. For the six months
ended February 28, 1999, the fund had no borrowings against the line of
credit.
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, as amended. Therefore, no provision has
been made for federal taxes on income, capital gains or unrealized
appreciation on securities held nor 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 at least 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.
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.
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,
0.43% thereafter.
The fund reimburses Putnam Management an allocated amount 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.
Custodial functions for the fund's assets are provided by Putnam Fiduciary
Trust Company (PFTC), a subsidiary of Putnam Investments, Inc. Investor
servicing agent functions are provided by Putnam Investor Services, a
division of PFTC.
For the six months ended February 28, 1999, fund expenses were reduced by
$83,433 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.
Each Trustee of the fund receives an annual Trustee fee, of which $1,030
has been allocated to the fund, 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 has adopted a Trustee Fee Deferral Plan (the "Deferral 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 Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension
plan (the "Pension Plan") covering all Trustees of the fund who have
served as Trustee for at least five years. Benefits under the Pension Plan
are equal to 50% of the Trustee's average total retainer and meeting fees
for the three years preceding retirement. Pension expense for the fund is
included in Compensation of Trustees in the Statement of operations.
Accrued pension liability is included in Payable for compensation of
Trustees in the Statement of assets and liabilities.
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 to 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 six months ended February 28, 1999, Putnam Mutual Funds Corp.,
acting as underwriter received net commissions of $68,281 and $3,707 from
the sale of class A and class M shares, respectively and $490,305 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 six months ended February 28, 1999, Putnam Mutual
Funds Corp., acting as underwriter received $8,748 on class A redemptions.
Note 3
Purchases and sales of securities
During the six months ended February 28, 1999, purchases and sales of
investment securities other than short-term investments aggregated
$297,677,470 and $417,694,940, 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 February 28, 1999, there was an unlimited number of shares of
beneficial interest authorized. Transactions in capital shares were as
follows:
Six months ended
February 28, 1999
- -----------------------------------------------------------------------------
Class A Shares Amount
- -----------------------------------------------------------------------------
Shares sold 2,396,155 $ 32,439,482
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 2,817,290 36,991,059
- -----------------------------------------------------------------------------
5,213,445 69,430,541
Shares
repurchased (6,518,115) (88,614,133)
- -----------------------------------------------------------------------------
Net decrease (1,304,670) $(19,183,592)
- -----------------------------------------------------------------------------
Year ended
August 31, 1998
- -----------------------------------------------------------------------------
Class A Shares Amount
- -----------------------------------------------------------------------------
Shares sold 11,098,806 $163,135,468
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 1,885,194 26,185,334
- -----------------------------------------------------------------------------
12,984,000 189,320,802
Shares
repurchased (13,151,572) (192,472,747)
- -----------------------------------------------------------------------------
Net decrease (167,572) $ (3,151,945)
- -----------------------------------------------------------------------------
Six months ended
February 28, 1999
- -----------------------------------------------------------------------------
Class B Shares Amount
- -----------------------------------------------------------------------------
Shares sold 2,549,557 $ 34,120,325
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 2,652,656 34,590,607
- -----------------------------------------------------------------------------
5,202,213 68,710,932
Shares
repurchased (6,627,513) (88,856,563)
- -----------------------------------------------------------------------------
Net decrease (1,425,300) $(20,145,631)
- -----------------------------------------------------------------------------
Year ended
August 31, 1998
- -----------------------------------------------------------------------------
Class B Shares Amount
- -----------------------------------------------------------------------------
Shares sold 8,960,345 $130,890,784
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 1,588,207 21,917,261
- -----------------------------------------------------------------------------
10,548,552 152,808,045
Shares
repurchased (8,645,016) (124,152,465)
- -----------------------------------------------------------------------------
Net increase 1,903,536 $ 28,655,580
- -----------------------------------------------------------------------------
Six months ended
February 28, 1999
- -----------------------------------------------------------------------------
Class M Shares Amount
- -----------------------------------------------------------------------------
Shares sold 175,098 $ 2,359,454
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 278,091 3,640,208
- -----------------------------------------------------------------------------
453,189 5,999,662
Shares
repurchased (668,972) (9,018,771)
- -----------------------------------------------------------------------------
Net decrease (215,783) $(3,019,109)
- -----------------------------------------------------------------------------
Year ended
August 31, 1998
- -----------------------------------------------------------------------------
Class M Shares Amount
- -----------------------------------------------------------------------------
Shares sold 935,359 $13,742,531
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 196,683 2,720,124
- -----------------------------------------------------------------------------
1,132,042 16,462,655
Shares
repurchased (1,321,863) (19,065,410)
- -----------------------------------------------------------------------------
Net decrease (189,821) $(2,602,755)
- -----------------------------------------------------------------------------
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
TRUSTEES
George Putnam, Chairman
William F. Pounds, Vice Chairman
John A. Hill, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John H. Mullin III
Robert E. Patterson
Donald S. Perkins
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
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
Ian C. Ferguson
Vice President
Brett C. Browchuk
Vice President
Thomas V. Reilly
Vice President
Anthony I. Kreisel
Vice President
David L. King
Vice President and Fund Manager
Richard A. Monaghan
Vice President
John R. Verani
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.
You can also learn more at Putnam Investments' website:
http://www.putnaminv.com.
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 the
principal amount invested.
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
www.putnaminv.com
- ---------------------
BULK RATE
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
- ---------------------
SA025-51063 -- 274/2BF/2BG 4/99
