Prospectus Supplement
dated July 26, 1999 to: 53083 7/99
Putnam Small Cap Value Fund
Prospectus dated April 13, 1999
Effective July 26, 1999, the fund listed above will offer
class C shares. This document provides important
information about class C shares and supplements the
Prospectus of such Fund.
The section "Fees and Expenses" is supplemented as
follows:
FEES AND EXPENSES
This table summarizes the fees and expenses you may pay
if you buy and hold class C shares of a fund. You pay
shareholder fees directly. Annual fund operating expenses
are deducted from a fund's assets.
Shareholder Fees
(fees paid directly from your investment)
Maximum Sales Charge (Load)
Imposed On Purchases (as a
percentage of the offering price) NONE
Maximum Deferred Sales Charge 1.00%
(Load)(as a percentage of the
original purchase price or redemption
proceeds, whichever is lower)
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from fund assets)
TOTAL ANNUAL
MANAGEMENT DISTRIBUTION OTHER FUND OPERATING
FEES(12B-1) FEES EXPENSES EXPENSES
0.80% 1.00% 0.45% 2.25%+
+ Reflects estimated expenses for the fund's first full fiscal year.
EXAMPLES
This example translates the "total annual fund operating
expenses" shown in the preceding table into dollar
amounts. By doing this, you can more easily compare the
cost of investing in a fund to the cost of investing in
other mutual funds. The example makes certain
assumptions. It assumes that you invest $10,000 in a fund
for the time periods shown and, except as stated, redeem
all your shares at the end of those periods. It also
assumes a 5% return on your investment each year and that
the fund's operating expenses remain the same. The
example is hypothetical; your actual costs and returns
may be higher or lower.
1year
no redemption 1 year 3 years
$228 $328 $703
THE SECTION "HOW DO I BUY FUND SHARES?" IS REPLACED BY
THE FOLLOWING (EXCEPT FOR THE TABLES OF CLASS A INITIAL
SALES CHARGES AND CLASS A AND CLASS B DEFERRED SALES
CHARGES, WHICH REMAIN UNCHANGED):
HOW DO I BUY FUND SHARES?
You can open a fund account with as little as $500 and
make additional investments at any time with as little as
$50. Each fund sells its shares at the offering price,
which is the NAV plus any applicable sales charge. Your
financial advisor or Putnam Investor Services generally
must receive your completed buy order before the close of
regular trading on the New York Stock Exchange for your
shares to be bought at that day's offering price.
You can buy shares
*THROUGH A FINANCIAL ADVISOR Your advisor will be
responsible for furnishing all necessary documents to
Putnam Investor Services, and may charge you for his or
her services.
*THROUGH SYSTEMATIC INVESTING You can make regular
investments of $25 or more per month through automatic
deductions from your bank checking or savings account.
Application forms are available through your advisor or
Putnam Investor Services at 1-800-225-1581.
You may also complete an order form and write a check for
the amount you wish to invest, payable to the fund.
Return the check and completed form to Putnam Mutual
Funds.
The fund may periodically close to new purchases of
shares or refuse any order to buy shares if the fund
determines that doing so would be in the best interests
of the fund and its shareholders.
WHICH CLASS OF SHARES IS BEST FOR ME?
This prospectus offers you a choice of three classes of
fund shares: A, B and C. This allows you to choose among
different types of sales charges and different levels of
ongoing operating expenses, as illustrated in the "Fees
and expenses" section. The class of shares that is best
for you depends on a number of factors, including the
amount you plan to invest and how long you plan to hold
the shares. Here is a summary of the differences among
the classes of shares:
CLASS A SHARES
*Initial sales charge of up to 5.75%
*Lower sales charge for investments of $50,000 or more
*No deferred sales charge (except on certain redemptions
of shares bought without an initial sales charge)
*Lower annual expenses, and higher dividends, than class B
or C shares because of lower 12b-1 fee
CLASS B SHARES
*No initial sales charge; your entire investment goes to
work for you
*Deferred sales charge of up to 5% if you sell shares
within 6 years after you bought them
*Higher annual expenses, and lower dividends, than class A
or class M shares because of higher 12b-1 fee
*Convert automatically to class A shares after 8 years,
reducing the future 12b-1 fee (may convert sooner in some
cases)
*Orders for class B shares for more than $250,000 are
treated as orders for class A shares or refused
CLASS C SHARES
*No initial sales charge; your entire investment goes to
work for you
*Deferred sales charge of 1.00% if you sell your shares
within one year after you bought them
*Higher annual expenses, and lower dividends, than class A
shares because of higher 12b-1 fee
*No conversion to class A shares, so future 12b-1 does not
decrease
*Orders for $1,000,000 or more and orders which because of
a right of accumulation or statement of intention would
qualify for the purchase of class A shares without an
initial sales charge will be treated as orders for class
A or declined.
O You may be eligible for reductions and waivers of
sales charges. Sales charges may be reduced or waived
under certain circumstances and for certain groups.
Information about reductions and waivers of sales charges
is included in the SAI. You may consult your financial
advisor or Putnam Mutual Funds for assistance.
O DISTRIBUTION (12B-1) PLANS. The fund has adopted
distribution plans to pay for the marketing of fund
shares and for services provided to shareholders. The
plans provide for payments at annual rates (based on
average net assets) of up to 0.35% on class A shares and
1.00% on class B and class C shares. The Trustees
currently limit payments on class A shares to 0.25% of
average net assets. Because these fees are paid out of
the fund's assets on an ongoing basis, the higher fees
for class B and class C shares will increase the cost of
your investment over time and may cost you more than
paying the initial sales charge for class A shares.
Because class C shares, unlike class B shares, do not
convert to class A shares, class C shares may cost you
more over time than class B shares.
