| UNITED STATES SECURITIES AND EXCHANGE COMMISSION | ||
| Washington, D.C. 20549 | ||
FORM N-CSR | ||
| CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES | ||
| Investment Company Act file number: | (811–07237) |
| Exact name of registrant as specified in charter: | Putnam Investment Funds |
| Address of principal executive offices: | 100 Federal Street, Boston, Massachusetts 02110 |
| Name and address of agent for service: | Robert T. Burns, Vice President 100 Federal Street Boston, Massachusetts 02110 |
| Copy to: | Bryan Chegwidden, Esq. Ropes & Gray LLP 1211 Avenue of the Americas New York, New York 10036 |
| Registrant's telephone number, including area code: | (617) 292–1000 |
| Date of fiscal year end: | July 31, 2019 |
| Date of reporting period: | August 1, 2018 — July 31, 2019 |
Item 1. Report to Stockholders: |
| The following is a copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Investment Company Act of 1940: | |||
Putnam
Growth Opportunities
Fund
Annual report
7|31|19
IMPORTANT NOTICE: Delivery of paper fund reports
In accordance with regulations adopted by the Securities and Exchange Commission, beginning on January 1, 2021, reports like this one will no longer be sent by mail unless you specifically request it. Instead, they will be on Putnam’s website, and you will be notified by mail whenever a new one is available, and provided with a website link to access the report.
If you wish to stop receiving paper reports sooner, or if you wish to continue to receive paper reports free of charge after January 1, 2021, please see the back cover or insert for instructions. If you invest through a bank or broker, your choice will apply to all funds held in your account. If you invest directly with Putnam, your choice will apply to all Putnam funds in your account.
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Message from the Trustees
September 6, 2019
Dear Fellow Shareholder:
If there is any lesson to be learned from constantly changing financial markets, it is the importance of positioning your investment portfolio for your long-term goals. We believe that one strategy is to diversify across different asset classes and investment approaches.
We also believe your mutual fund investment offers a number of advantages, including constant monitoring by experienced investment professionals who maintain a long-term perspective. Putnam’s portfolio managers and analysts take a research-intensive approach that includes risk management strategies designed to serve you through changing conditions.
Another key strategy, in our view, is seeking the counsel of a financial advisor. For over 80 years, Putnam has recognized the importance of professional investment advice. Your financial advisor can help in many ways, including defining and planning for goals such as retirement, evaluating the level of risk appropriate for you, and reviewing your investments on a regular basis and making adjustments as necessary.
As always, your fund’s Board of Trustees remains committed to protecting the interests of Putnam shareholders like you, and we thank you for investing with Putnam.
Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. Share price, principal value, and return will fluctuate, and you may have a gain or a loss when you sell your shares.Performance of class A shares assumes reinvestment of distributions and does not account for taxes. Fund returns in the bar chart do not reflect a sales charge of 5.75%; had they, returns would have been lower. See below and pages 7–9 for additional performance information. For a portion of the periods, the fund had expense limitations, without which returns would have been lower. To obtain the most recent month-end performance, visit putnam.com.
This comparison shows your fund’s performance in the context of broad market indexes for the 12 months ended 7/31/19. See above and pages 7–9 for additional fund performance information. Index descriptions can be found on pages 13–14.
| 2 Growth Opportunities Fund |
Richard has an M.B.A. from the Darden Graduate School of Business at the University of Virginia and a B.A. from the University of Michigan. He joined Putnam in 2009 and has been in the investment industry since 2004.
Gregory D. McCullough, CFA, is Assistant Portfolio Manager of the fund.
Richard, how was the environment for stock market investing during the reporting period?
U.S. stocks delivered solid returns overall, but the advance was not a smooth one. The period began in August 2018, when U.S. stocks were delivering gains and investors were generally unfazed by a number of political and economic uncertainties. Stocks had been benefiting from trends such as rising wages, low unemployment, positive investor sentiment, and tax relief for businesses as a result of the Tax Cuts and Jobs Act of 2017.
Over the next few months, however, conditions changed significantly. Volatility began to increase in October, when all three major U.S. stock indexes posted losses, including the S&P 500 Index, which recorded its worst monthly performance since 2011. In mid-October, for the second time in 2018, major stock market indexes experienced a correction — a drop of more than 10% from a recent high. The turbulence increased through the end of 2018, as investors became more concerned about issues that had been risks for a while. These included rising interest rates, slowing economies in China and Europe, and
| Growth Opportunities Fund 3 |
Allocations are shown as a percentage of the fund’s net assets as of 7/31/19. Cash and net other assets, if any, represent the market value weights of cash, derivatives, short-term securities, and other unclassified assets in the portfolio. Summary information may differ from the portfolio schedule included in the financial statements due to the inclusion of derivative securities, any interest accruals, the exclusion of as-of trades, if any, the use of different classifications of securities for presentation purposes, and rounding. Holdings and allocations may vary over time.
This table shows the fund’s top 10 holdings by percentage of the fund’s net assets as of 7/31/19. Short-term investments and derivatives, if any, are excluded. Holdings may vary over time.
| 4 Growth Opportunities Fund |
the escalating U.S.–China trade conflict. U.S. large-cap growth stocks, the focus of the fund, generally held up better than their small-cap growth counterparts, but they were still hurt by the market declines. After advancing more than 17% by the close of September, U.S. large-cap growth stocks lost nearly 16% in the final three months of 2018.
After the difficult end to 2018, stocks rebounded quite dramatically in the early months of 2019. The S&P 500 Index saw its strongest January performance in three decades. Stock performance was boosted in part by the U.S. Federal Reserve’s decision to hold interest rates steady. Positive corporate earnings and better-than-expected economic growth helped markets advance through April, when all three major indexes posted solid returns. Volatility returned for the final three months of the period as stocks were pressured by the escalating U.S.–China trade conflict, geopolitical concerns, and mounting fears over slowing global economic growth.
How did the fund perform in this environment?
I am pleased to report that the fund delivered a solid return of 14.39%, outperforming the 10.82% return of its benchmark, the Russell 1000 Growth Index, and the 9.81% average return for funds in its Lipper peer group, Large-Cap Growth Funds.
Could you provide some examples of stocks that helped the fund’s performance?
The top contributor to performance was our investment in Okta, an IT services company that specializes in cybersecurity, offering “cloud identity” management. Okta provides businesses with technology to verify the identity of employees, contractors, and customers, with the goal of preventing fraud or data breaches. Since its initial public offering in 2017, Okta’s stock has advanced significantly.
Another contributor to fund performance was Danaher, a health-care equipment and suppliescompany that specializes in products for testing and diagnosis. We maintain a positive view of the company’s organic growth rate and the potential for its solid recurring revenues to continue. Also, later in 2019, the company is expected to spin off its dental division, one area of the business that we viewed as a potential weakness.
Also among the performance highlights was our investment in American Tower, a company that rents space on towers and rooftop antennas to wireless carriers and broadcasters. This represents one of our pick-and-shovel ideas — companies that provide the underlying product or service that enables progress. In the case of American Tower, this progress involves technology, particularly helping companies make the transition from 4G LTE to 5G communications services. 5G stands for fifth-generation wireless technology, which is expected to bring more speed and responsiveness, as well as the ability to connect to more devices at once. We believe American Tower continues to offer strong growth potential as 5G grows beyond cell phones and broadband into areas such as health care, which will require even more equipment and tower space.
What are some holdings or strategies that detracted from performance for the period?
Our investment in Wynn Resorts, an owner and operator of casinos, was the biggest detractor from performance during the period. The stock struggled as investors grew concerned about a multiyear slowdown in the gaming industry in Macau, China, which represents a significant portion of Wynn’s business. By the close of the period, we had sold the fund’s stock position
| Growth Opportunities Fund 5 |
in Wynn Resorts. In April 2019, we invested in Wynn Resorts stock options.
Another detractor was Activision Blizzard, one of the world’s largest video game makers. The company has experienced declines — in users and sales — for a number of its key games.In addition, the company faced competitive headwinds from games such as Fortnite, which is free for users to download. By the close of the period, we had sold the fund’s position in this stock.
Fund performance was also dampened by our decision to hold smaller positions than the benchmark in two stocks that performed well: Starbucks, which was not held in the portfolio, and Apple, which was an underweight position relative to the benchmark.
As the fund begins a new fiscal year, what is your outlook?
I believe that we are starting to experience a bit of an economic slowdown in the United States. In our view, it could be the result of a host of factors, including short-term or unpredictable issues such as the global trade conflict, tariffs, inventory management, and even extreme weather conditions. We have also seen somesoftening in metrics we track, such as railroad and trucking volumes.
Macroeconomic issues do not typically guide our day-to-day portfolio decisions, and we remain focused on characteristics of individual companies with our bottom-up, fundamental research process. Also, we believe that many of the areas of the economy in which we invest will be able to grow through a slowdown without dislocation. Examples of where we focus our time and attention include cloud infrastructure, software, digital wallets, and e-commerce.
Thank you, Richard, for your time and insights today.
The views expressed in this report are exclusively those of Putnam Management and are subject to change. They are not meant as investment advice.
Please note that the holdings discussed in this report may not have been held by the fund for the entire period. Portfolio composition is subject to review in accordance with the fund’s investment strategy and may vary in the future. Current and future portfolio holdings are subject to risk. Statements in the Q&A concerning the fund’s performance or portfolio composition relative to those of the fund’s Lipper peer group may reference information produced by Lipper Inc. or through a third party.
This chart shows the fund’s largest allocation shifts, by percentage, over the past six months. Allocations are shown as a percentage of the fund’s net assets. Current period summary information may differ from the portfolio schedule included in the financial statements due to the inclusion of derivative securities, any interest accruals, the exclusion of as-of trades, if any, the use of different classifications of securities for presentation purposes, and rounding. Holdings and allocations may vary over time.
| 6 Growth Opportunities Fund |
Your fund’s performance
This section shows your fund’s performance, price, and distribution information for periods ended July 31, 2019, the end of its most recent fiscal year. In accordance with regulatory requirements for mutual funds, we also include performance information as of the most recent calendar quarter-end and expense information taken from the fund’s current prospectus. Performance should always be considered in light of a fund’s investment strategy. Data represent past performance. Past performance does not guarantee future results. More recent returns may be less or more than those shown. Investment return and principal value will fluctuate, and you may have a gain or a loss when you sell your shares. Performance information does not reflect any deduction for taxes a shareholder may owe on fund distributions or on the redemption of fund shares. For the most recent month-end performance, please visit the Individual Investors section at putnam.com or call Putnam at 1-800-225-1581. Class R, R5, R6, and Y shares are not available to all investors. See the Terms and definitions section in this report for definitions of the share classes offered by your fund.
Fund performanceTotal return for periods ended 7/31/19
| Annual | ||||||||
| average | Annual | Annual | Annual | |||||
| (life of fund) | 10 years | average | 5 years | average | 3 years | average | 1 year | |
| Class A(10/2/95) | ||||||||
| Before sales charge | 8.56% | 333.00% | 15.78% | 96.07% | 14.41% | 72.54% | 19.94% | 14.39% |
| After sales charge | 8.29 | 308.10 | 15.10 | 84.80 | 13.07 | 62.62 | 17.60 | 7.81 |
| Class B(8/1/97) | ||||||||
| Before CDSC | 8.27 | 307.68 | 15.09 | 88.83 | 13.56 | 68.68 | 19.04 | 13.54 |
| After CDSC | 8.27 | 307.68 | 15.09 | 86.83 | 13.32 | 65.68 | 18.33 | 8.54 |
| Class C(2/1/99) | ||||||||
| Before CDSC | 8.23 | 301.75 | 14.92 | 88.91 | 13.57 | 68.74 | 19.05 | 13.56 |
| After CDSC | 8.23 | 301.75 | 14.92 | 88.91 | 13.57 | 68.74 | 19.05 | 12.56 |
| Class M(8/1/97) | ||||||||
| Before sales charge | 8.00 | 312.07 | 15.21 | 91.24 | 13.85 | 70.01 | 19.35 | 13.85 |
| After sales charge | 7.84 | 297.64 | 14.80 | 84.55 | 13.04 | 64.06 | 17.94 | 9.87 |
| Class R(1/21/03) | ||||||||
| Net asset value | 8.29 | 322.37 | 15.50 | 93.68 | 14.13 | 71.28 | 19.65 | 14.10 |
| Class R5(7/2/12) | ||||||||
| Net asset value | 8.82 | 346.09 | 16.13 | 99.02 | 14.76 | 74.04 | 20.29 | 14.71 |
| Class R6(7/2/12) | ||||||||
| Net asset value | 8.86 | 349.31 | 16.21 | 99.99 | 14.87 | 74.66 | 20.43 | 14.83 |
| Class Y(7/1/99) | ||||||||
| Net asset value | 8.80 | 344.09 | 16.08 | 98.57 | 14.70 | 73.89 | 20.25 | 14.71 |
Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. After-sales-charge returns for class A and M shares reflect the deduction of the maximum 5.75% and 3.50% sales charge, respectively, levied at the time of purchase. Class B share returns after contingent deferred sales charge (CDSC) reflect the applicable CDSC, which is 5% in the first year, declining over time to 1% in the sixth year, and is eliminated thereafter. Class C share returns after CDSC reflect a 1% CDSC for the first year that is eliminated thereafter.Class R, R5, R6, and Y shares have no initial sales charge or CDSC. Performance for class B, C, M, R, and Y shares before their inception is derived from the historical performance of class A shares, adjusted for the applicable sales charge (or CDSC) and the higher operating expenses for such shares, except for class Y shares, for which 12b-1 fees are not applicable. Performance for class R5 and R6 shares prior to their inception is derived from the historical performance
| Growth Opportunities Fund 7 |
of class Y shares and has not been adjusted for the lower investor servicing fees applicable to class R5 and R6 shares; had it, returns would have been higher.
For a portion of the periods, the fund had expense limitations, without which returns would have been lower.
The fund has had performance fee adjustments that may have had a positive or negative impact on returns.
Class B share performance reflects conversion to class A shares after eight years.
Class C share performance reflects conversion to class A shares after 10 years.
Comparative index returnsFor periods ended 7/31/19
| Annual | ||||||||
| average | Annual | Annual | Annual | |||||
| (life of fund) | 10 years | average | 5 years | average | 3 years | average | 1 year | |
| Russell 1000 Growth Index | 9.01% | 331.42% | 15.74% | 94.67% | 14.25% | 60.71% | 17.13% | 10.82% |
| Lipper Large-Cap Growth | ||||||||
| Funds category average* | 8.78 | 286.69 | 14.41 | 84.47 | 12.97 | 58.00 | 16.42 | 9.81 |
Index and Lipper results should be compared with fund performance before sales charge, before CDSC, or at net asset value.
*Over the 1-year, 3-year, 5-year, 10-year, and life-of-fund periods ended 7/31/19, there were 641, 578, 523, 409, and 70 funds, respectively, in this Lipper category.
Past performance does not indicate future results. At the end of the same time period, a $10,000 investment in the fund’s class B and C shares would have been valued at $40,768 and $40,175, respectively, and no contingent deferred sales charges would apply. A $10,000 investment in the fund’s class M shares ($9,650 after sales charge) would have been valued at $39,764. A $10,000 investment in the fund’s class R, R5, R6, and Y shares would have been valued at $42,237, $44,609, $44,931, and $44,409, respectively.
| 8 Growth Opportunities Fund |
Fund price and distribution informationFor the 12-month period ended 7/31/19
| Distributions | Class A | Class B | Class C | Class M | Class R | Class R5 | Class R6 | Class Y | ||
| Number | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | ||
| Income | $0.001 | — | — | — | — | $0.042 | $0.133 | $0.090 | ||
| Capital gains | ||||||||||
| Long-term | ||||||||||
| gains | 2.376 | $2.376 | $2.376 | $2.376 | $2.376 | 2.376 | 2.376 | 2.376 | ||
| Short-term | ||||||||||
| gains | — | — | — | — | — | — | — | — | ||
| Total | $2.377 | $2.376 | $2.376 | $2.376 | $2.376 | $2.418 | $2.509 | $2.466 | ||
| Before | After | Net | Net | Before | After | Net | Net | Net | Net | |
| sales | sales | asset | asset | sales | sales | asset | asset | asset | asset | |
| Share value | charge | charge | value | value | charge | charge | value | value | value | value |
| 7/31/18 | $35.44 | $37.60 | $30.09 | $30.63 | $31.98 | $33.14 | $34.22 | $37.22 | $37.19 | $36.98 |
| 7/31/19 | 37.72 | 40.02 | 31.36 | 31.98 | 33.60 | 34.82 | 36.23 | 39.82 | 39.72 | 39.49 |
The classification of distributions, if any, is an estimate. Before-sales-charge share value and current dividend rate for class A and M shares, if applicable, do not take into account any sales charge levied at the time of purchase.After-sales-charge share value, current dividend rate, and current 30-day SEC yield, if applicable, are calculated assuming that the maximum sales charge (5.75% for class A shares and 3.50% for class M shares) was levied at the time of purchase. Final distribution information will appear on your year-end tax forms.
Fund performance as of most recent calendar quarterTotal return for periods ended 6/30/19
| Annual | ||||||||
| average | Annual | Annual | Annual | |||||
| (life of fund) | 10 years | average | 5 years | average | 3 years | average | 1 year | |
| Class A(10/2/95) | ||||||||
| Before sales charge | 8.51% | 358.25% | 16.44% | 89.13% | 13.59% | 78.97% | 21.41% | 15.79% |
| After sales charge | 8.24 | 331.90 | 15.75 | 78.25 | 12.26 | 68.68 | 19.04 | 9.13 |
| Class B(8/1/97) | ||||||||
| Before CDSC | 8.22 | 331.68 | 15.75 | 82.22 | 12.75 | 75.07 | 20.52 | 14.95 |
| After CDSC | 8.22 | 331.68 | 15.75 | 80.22 | 12.50 | 72.07 | 19.83 | 9.95 |
| Class C(2/1/99) | ||||||||
| Before CDSC | 8.18 | 325.35 | 15.58 | 82.21 | 12.75 | 75.00 | 20.51 | 14.95 |
| After CDSC | 8.18 | 325.35 | 15.58 | 82.21 | 12.75 | 75.00 | 20.51 | 13.95 |
| Class M(8/1/97) | ||||||||
| Before sales charge | 7.95 | 336.09 | 15.87 | 84.48 | 13.03 | 76.33 | 20.81 | 15.20 |
| After sales charge | 7.78 | 320.82 | 15.45 | 78.02 | 12.23 | 70.15 | 19.38 | 11.17 |
| Class R(1/21/03) | ||||||||
| Net asset value | 8.25 | 347.32 | 16.16 | 86.81 | 13.31 | 77.72 | 21.13 | 15.52 |
| Class R5(7/2/12) | ||||||||
| Net asset value | 8.78 | 372.38 | 16.80 | 92.01 | 13.94 | 80.63 | 21.78 | 16.12 |
| Class R6(7/2/12) | ||||||||
| Net asset value | 8.81 | 375.65 | 16.88 | 92.96 | 14.05 | 81.13 | 21.90 | 16.25 |
| Class Y(7/1/99) | ||||||||
| Net asset value | 8.75 | 370.20 | 16.74 | 91.53 | 13.88 | 80.40 | 21.73 | 16.10 |
See the discussion following the fund performance table on pages 7–8 for information about the calculation of fund performance.
| Growth Opportunities Fund 9 |
Your fund’s expenses
As a mutual fund investor, you pay ongoing expenses, such as management fees, distribution fees (12b-1 fees), and other expenses. Using the following information, you can estimate how these expenses affect your investment and compare them with the expenses of other funds. You may also pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund’s prospectus or talk to your financial representative.
Expense ratios
| Class A | Class B | Class C | Class M | Class R | Class R5 | Class R6 | Class Y | |
| Total annual operating | ||||||||
| expenses for the fiscal year | ||||||||
| ended 7/31/18 | 0.91% | 1.66% | 1.66% | 1.41% | 1.16% | 0.63% | 0.53% | 0.66% |
| Annualized expense ratio | ||||||||
| for the six-month period | ||||||||
| ended 7/31/19*† | 1.07% | 1.82% | 1.82% | 1.57% | 1.32% | 0.80% | 0.70% | 0.82% |
Fiscal-year expense information in this table is taken from the most recent prospectus, is subject to change, and may differ from that shown for the annualized expense ratio and in the financial highlights of this report.
Expenses are shown as a percentage of average net assets.
*Expense ratios for each class are for the fund’s most recent fiscal half year. As a result of this, ratios may differ from expense ratios based on one-year data in the financial highlights.
†Includes an increase of 0.07% from annualizing the performance fee adjustment for the six months ended 7/31/19.
Expenses per $1,000
The following table shows the expenses you would have paid on a $1,000 investment in each class of the fund from 2/1/19 to 7/31/19. It also shows how much a $1,000 investment would be worth at the close of the period, assumingactual returnsand expenses.
| Class A | Class B | Class C | Class M | Class R | Class R5 | Class R6 | Class Y | |
| Expenses paid per $1,000*† | $5.74 | $9.74 | $9.74 | $8.41 | $7.08 | $4.29 | $3.76 | $4.40 |
| Ending value (after expenses) | $1,163.50 | $1,158.90 | $1,159.50 | $1,160.60 | $1,162.00 | $1,165.00 | $1,165.80 | $1,165.20 |
*Expenses for each share class are calculated using the fund’s annualized expense ratio for each class, which represents the ongoing expenses as a percentage of average net assets for the six months ended 7/31/19. The expense ratio may differ for each share class.
†Expenses are calculated by multiplying the expense ratio by the average account value for the period; then multiplying the result by the number of days in the period; and then dividing that result by the number of days in the year.
| 10 Growth Opportunities Fund |
Estimate the expenses you paid
To estimate the ongoing expenses you paid for the six months ended 7/31/19, use the following calculation method. To find the value of your investment on 2/1/19, call Putnam at 1-800-225-1581.
Compare expenses using the SEC’s method
The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the following table shows your fund’s expenses based on a $1,000 investment, assuming ahypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total costs) of investing in the fund with those of other funds. All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.
| Class A | Class B | Class C | Class M | Class R | Class R5 | Class R6 | Class Y | |
| Expenses paid per $1,000*† | $5.36 | $9.10 | $9.10 | $7.85 | $6.61 | $4.01 | $3.51 | $4.11 |
| Ending value (after expenses) | $1,019.49 | $1,015.77 | $1,015.77 | $1,017.01 | $1,018.25 | $1,020.83 | $1,021.32 | $1,020.73 |
*Expenses for each share class are calculated using the fund’s annualized expense ratio for each class, which represents the ongoing expenses as a percentage of average net assets for the six months ended 7/31/19. The expense ratio may differ for each share class.
†Expenses are calculated by multiplying the expense ratio by the average account value for the six-month period; then multiplying the result by the number of days in the six-month period; and then dividing that result by the number of days in the year.
| Growth Opportunities Fund 11 |
Consider these risks before investing
Growth stocks may be more susceptible to earnings disappointments, and the market may not favor growth-style investing. The value of investments in the fund’s portfolio may fall or fail to rise over extended periods of time for a variety of reasons, including general economic, political, or financial market conditions; investor sentiment and market perceptions; government actions; geopolitical events or changes; and factors related to a specific issuer, geography, industry, or sector. These and other factors may lead to increased volatility and reduced liquidity in the fund’s portfolio holdings. From time to time, the fund may invest a significant portion of its assets in companies in one or more related industries or sectors, which would make the fund more vulnerable to adverse developments affecting those industries or sectors. You can lose money by investing in the fund.
| 12 Growth Opportunities Fund |
Terms and definitions
Important terms
Total returnshows 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.
Before sales charge, or net asset value, is the price, or value, of one share of a mutual fund, without a sales charge. Before-sales-charge figures fluctuate with market conditions, and are calculated by dividing the net assets of each class of shares by the number of outstanding shares in the class.
After sales chargeis the price of a mutual fund share plus the maximum sales charge levied at the time of purchase. After-sales-charge performance figures shown here assume the 5.75% maximum sales charge for class A shares and 3.50% for class M shares.
Contingent deferred sales charge (CDSC)is generally a charge applied at the time of the redemption of class B or C shares and assumes redemption at the end of the period. Your fund’s class B CDSC declines over time from a 5% maximum during the first year to 1% during the sixth year. After the sixth year, the CDSC no longer applies. The CDSC for class C shares is 1% for one year after purchase.
Share classes
Class A sharesare generally subject to an initial sales charge and no CDSC (except on certain redemptions of shares bought without an initial sales charge).
Class B sharesare closed to new investments and are only available by exchange from another Putnam fund or through dividend and/or capital gains reinvestment. They are not subject to an initial sales charge and may be subject to a CDSC.
Class C sharesare not subject to an initial sales charge and are subject to a CDSC only if the shares are redeemed during the first year.
Class M shareshave a lower initial sales charge and a higher 12b-1 fee than class A shares and no CDSC.
Class R sharesare not subject to an initial sales charge or CDSC and are only available to employer-sponsored retirement plans.
Class R5 sharesare not subject to an initial sales charge or CDSC and carry no 12b-1 fee. They are only available to employer-sponsored retirement plans.
Class R6 sharesare not subject to an initial sales charge or CDSC and carry no 12b-1 fee. They are generally only available to employer-sponsored retirement plans, corporate and institutional clients, and clients in other approved programs.
Class Y sharesare not subject to an initial sales charge or CDSC and carry no 12b-1 fee. They are generally only available to corporate and institutional clients and clients in other approved programs.
Comparative indexes
Bloomberg Barclays U.S. Aggregate Bond Indexis an unmanaged index of U.S. investment-grade fixed-income securities.
ICE BofAML (Intercontinental Exchange Bank of America Merrill Lynch) U.S. 3-Month Treasury Bill Indexis an unmanaged index that seeks to measure the performance of U.S. Treasury bills available in the marketplace.
Russell 1000 Growth Indexis an unmanaged index of those companies in the large-cap Russell 1000 Index chosen for their growth orientation.
S&P 500 Indexis an unmanaged index of common stock performance.
Indexes assume reinvestment of all distributions and do not account for fees. Securities and performance of a fund and an index will differ. You cannot invest directly in an index.
ICE Data Indices, LLC (“ICE BofAML”), used with permission. ICE BofAML permits use of the ICE BofAML
| Growth Opportunities Fund 13 |
indices and related data on an “as is” basis; makes no warranties regarding same; does not guarantee the suitability, quality, accuracy, timeliness, and/or completeness of the ICE BofAML indices or any data included in, related to, or derived therefrom; assumes no liability in connection with the use of the foregoing; and does not sponsor, endorse, or recommend Putnam Investments, or any of its products or services.
Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company.
Lipperis a third-party industry-ranking entity that ranks mutual funds. Its rankings do not reflect sales charges. Lipper rankings are based on total return at net asset value relative to other funds that have similar current investment styles or objectives as determined by Lipper. Lipper may change a fund’s category assignment at its discretion. Lipper category averages reflect performance trends for funds within a category.
Other information for shareholders
Proxy voting
Putnam is committed to managing our mutual funds in the best interests of our shareholders. The Putnam funds’ proxy voting guidelines and procedures, as well as information regarding how your fund voted proxies relating to portfolio securities during the 12-month period ended June 30, 2019, are available in the Individual Investors section of putnam.com and on the Securities and Exchange Commission (SEC) website, www.sec.gov. If you have questions about finding forms on the SEC’s website, you may call the SEC at 1-800-SEC-0330. You may also obtain the Putnam funds’ proxy voting guidelines and procedures at no charge by calling Putnam’s Shareholder Services at 1-800-225-1581.
Fund portfolio holdings
The fund will file a complete schedule of its portfolio holdings with the SEC for the first and third quarters of each fiscal year onForm N-PORT within 60 days of the end of such fiscal quarter. Shareholders may obtain the fund’s Form N-PORT on the SEC’s website at www.sec.gov.
Prior to its use of Form N-PORT, the fund filed its complete schedule of its portfolio holdings with the SEC on Form N-Q, which is available online at www.sec.gov.
Trustee and employee fund ownership
Putnam employees and members of the Board of Trustees place their faith, confidence, and, most importantly, investment dollars in Putnam mutual funds. As of July 31, 2019, Putnam employees had approximately $478,000,000 and the Trustees had approximately $72,000,000 invested in Putnam mutual funds. These amounts include investments by the Trustees’ and employees’ immediate family members as well as investments through retirement and deferred compensation plans.
| 14 Growth Opportunities Fund |
Important notice regarding Putnam’s privacy policy
In order to conduct business with our shareholders, we must obtain certain personal information such as account holders’ names, addresses, Social Security numbers, and dates of birth. Using this information, we are able to maintain accurate records of accounts and transactions.
It is our policy to protect the confidentiality of our shareholder information, whether or not a shareholder currently owns shares of our funds. In particular, it is our policy not to sell information about you or your accounts to outside marketing firms. We have safeguards in place designed to prevent unauthorized accessto our computer systems and procedures to protect personal information from unauthorized use.
Under certain circumstances, we must share account information with outside vendors who provide services to us, such as mailings and proxy solicitations. In these cases, the service providers enter into confidentiality agreements with us, and we provide only the information necessary to process transactions and perform other services related to your account. Finally, it is our policy to share account information with your financial representative, if you’ve listed one on your Putnam account.
| Growth Opportunities Fund 15 |
Trustee approval of management contract
General conclusions
The Board of Trustees of The Putnam Funds oversees the management of each fund and, as required by law, determines annually whether to approve the continuance of your fund’s management contract with Putnam Investment Management, LLC (“Putnam Management”) and the sub-management contract with respect to your fund between Putnam Management and its affiliate, Putnam Investments Limited (“PIL”). The Board, with the assistance of its Contract Committee, requests and evaluates all information it deems reasonably necessary under the circumstances in connection with its annual contract review. The Contract Committee consists solely of Trustees who are not “interested persons” (as this term is defined in the Investment Company Act of 1940, as amended (the “1940 Act”)) of The Putnam Funds (“Independent Trustees”).
At the outset of the review process, members of the Board’s independent staff and independent legal counsel discussed with representatives of Putnam Management the annual contract review materials furnished to the Contract Committee during the course of the previous year’s review, identifying possible changes in these materials that might be necessary or desirable for the coming year. Following these discussions and in consultation with the Contract Committee, the Independent Trustees’ independent legal counsel requested that Putnam Management and its affiliates furnish specified information, together with any additional information that Putnam Management considered relevant, to the Contract Committee. Over the course of several months ending in June 2019, the Contract Committee met on a number of occasions with representatives of Putnam Management, and separately in executive session, to consider the information that Putnam Management provided. Throughout this process, the Contract Committee was assisted by the members of the Board’s independent staff and by independent legal counsel for The Putnam Funds and the Independent Trustees.
In May 2019, the Contract Committee met in executive session to discuss and consider its recommendations with respect to the continuance of the contracts. At the Trustees’ June 2019 meeting, the Contract Committee met in executive session with the other Independent Trustees to review a summary of the key financial,performance and other data that the Contract Committee considered in the course of its review. The Contract Committee then presented its written report, which summarized the key factors that the Committee had considered and set forth its recommendations. The Contract Committee recommended, and the Independent Trustees approved, the continuance of your fund’s management and sub-management contracts, effective July 1, 2019. (Because PIL is an affiliate of Putnam Management and Putnam Management remains fully responsible for all services provided by PIL, the Trustees have not attempted to evaluate PIL as a separate entity, and all subsequent references to Putnam Management below should be deemed to include reference to PIL as necessary or appropriate in the context.)
The Independent Trustees’ approval was based on the following conclusions:
• That the fee schedule in effect for your fund represented reasonable compensation in light of the nature and quality of the services being provided to the fund, the fees paid by competitive funds, the costs incurred by Putnam Management in providing services to the fund, and the application of certain reductions and waivers noted below; and
• That the fee schedule in effect for your fund represented an appropriate sharing between fund shareholders and Putnam Management of such economies of scale as may exist in the management of the fund at current asset levels.
These conclusions were based on a comprehensive consideration of all information provided to the Trustees and were not the result of any single factor. Some of the factors that figured particularly in the Trustees’ deliberations and how the Trustees considered these factors are described below, although individual Trustees may have evaluated the information presented differently, giving different weights to various factors. It is also important to recognize that the management arrangements for your fund and the other Putnam funds are the result of many years of review and discussion between the Independent Trustees and Putnam Management, that some aspects of the arrangements may receive greater scrutiny in some years than others, and that the Trustees’ conclusions may be based, in part, on their consideration of fee arrangements in previous
| 16 Growth Opportunities Fund |
years. For example, with some minor exceptions, the funds’ current fee arrangements under the management contracts were first implemented at the beginning of 2010 following extensive review by the Contract Committee and discussions with representatives of Putnam Management, as well as approval by shareholders.
Management fee schedules and total expenses
The Trustees reviewed the management fee schedules in effect for all Putnam funds, including fee levels and breakpoints. The Trustees also reviewed the total expenses of each Putnam fund, recognizing that in most cases management fees represented the major, but not the sole, determinant of total costs to fund shareholders. (Two funds have implemented so-called “all-in” management fees covering substantially all routine fund operating costs.)
In reviewing fees and expenses, the Trustees generally focus their attention on material changes in circumstances — for example, changes in assets under management, changes in a fund’s investment strategy, changes in Putnam Management’s operating costs or profitability, or changes in competitive practices in the mutual fund industry — that suggest that consideration of fee changes might be warranted. The Trustees concluded that the circumstances did not indicate that changes to the management fee structure for your fund would be appropriate at this time.
Under its management contract, your fund has the benefit of breakpoints in its management fee schedule that provide shareholders with economies of scale in the form of reduced fee rates as assets under management in the Putnam family of funds increase. The Trustees concluded that the fee schedule in effect for your fund represented an appropriate sharing of economies of scale between fund shareholders and Putnam Management.
In addition, your fund’s management contract provides that its management fees will be adjusted up or down depending upon whether your fund’s performance is better or worse than the performance of an appropriate index of securities prices specified in the management contract. (Your fund’s management fee may be further reduced. On October 24, 2016, Putnam Voyager Fund, a mutual fund managed by Putnam Management, was merged into your fund. Effective upon the closing of the merger, Putnam Managementcontractually agreed that the performance adjustment for your fund will be calculated based on the historical performance of whichever fund (your fund or Putnam Voyager Fund) has the relatively lower performance for the relevant period before the closing of the merger, rather than based solely on the performance of your fund.) In the course of reviewing investment performance, the Trustees examined the operation of your fund’s performance fees and concluded that these fees were operating effectively to align further Putnam Management’s economic interests with those of the fund’s shareholders.
As in the past, the Trustees also focused on the competitiveness of each fund’s total expense ratio. In order to support the effort to have fund expenses meet competitive standards, the Trustees and Putnam Management and the funds’ investor servicing agent, Putnam Investor Services, Inc. (“PSERV”), have implemented expense limitations that were in effect during your fund’s fiscal year ending in 2018. These expense limitations were: (i) a contractual expense limitation applicable to all open-end funds of 25 basis points on investor servicing fees and expenses and (ii) a contractual expense limitation applicable to specified open-end funds, including your fund, of 20 basis points on so-called “other expenses” (i.e., all expenses exclusive of management fees, distribution fees, investor servicing fees, investment-related expenses, interest, taxes, brokerage commissions, acquired fund fees and expenses and extraordinary expenses). These expense limitations attempt to maintain competitive expense levels for the funds. Most funds, including your fund, had sufficiently low expenses that these expense limitations were not operative during their fiscal years ending in 2018. Putnam Management and PSERV have agreed to maintain these expense limitations until at least November 30, 2020. The support of Putnam Management and PSERV for these expense limitation arrangements was an important factor in the Trustees’ decision to approve the continuance of your fund’s management and sub-management contracts.
The Trustees reviewed comparative fee and expense information for a custom group of competitive funds selected by Broadridge Financial Solutions, Inc. (“Broadridge”). This comparative information included your fund’s percentile ranking for effective management fees and total expenses (excluding any applicable 12b-1 fees), which provides a general indication of your fund’s relative standing. In the custom peer
| Growth Opportunities Fund 17 |
group, your fund ranked in the second quintile in effective management fees (determined for your fund and the other funds in the custom peer group based on fund asset size and the applicable contractual management fee schedule) and in the second quintile in total expenses (excluding any applicable 12b-1 fees) as of December 31, 2018. The first quintile represents the least expensive funds and the fifth quintile the most expensive funds. The fee and expense data reported by Broadridge as of December 31, 2018 reflected the most recent fiscal year-end data available in Broadridge’s database at that time.
In connection with their review of fund management fees and total expenses, the Trustees also reviewed the costs of the services provided and the profits realized by Putnam Management and its affiliates from their contractual relationships with the funds. This information included trends in revenues, expenses and profitability of Putnam Management and its affiliates relating to the investment management, investor servicing and distribution services provided to the funds. In this regard, the Trustees also reviewed an analysis of Putnam Management’s revenues, expenses and profitability, allocated on a fund-by-fund basis, with respect to the funds’ management, distribution, and investor servicing contracts. For each fund, the analysis presented information about revenues, expenses and profitability for each of the agreements separately and for the agreements taken together on a combined basis. The Trustees concluded that, at current asset levels, the fee schedules in place represented reasonable compensation for the services being provided and represented an appropriate sharing between fund shareholders and Putnam Management of such economies of scale as may exist in the management of the Putnam funds at that time.
The information examined by the Trustees in connection with their annual contract review for the Putnam funds included information regarding fees charged by Putnam Management and its affiliates to institutional clients, including defined benefit pension and profit-sharing plans and sub-advised mutual funds. This information included, in cases where an institutional product’s investment strategy corresponds with a fund’s strategy, comparisons of those fees with fees charged to the Putnam funds, as well as an assessment of the differences in the services provided to these different types of clients as compared to the services provided to the Putnam funds. The Trustees observed that the differences in fee ratesbetween these clients and the Putnam funds are by no means uniform when examined by individual asset sectors, suggesting that differences in the pricing of investment management services to these types of clients may reflect, among other things, historical competitive forces operating in separate markets. The Trustees considered the fact that in many cases fee rates across different asset classes are higher on average for mutual funds than for institutional clients, and the Trustees also considered the differences between the services that Putnam Management provides to the Putnam funds and those that it provides to its other clients. The Trustees did not rely on these comparisons to any significant extent in concluding that the management fees paid by your fund are reasonable.
Investment performance
The quality of the investment process provided by Putnam Management represented a major factor in the Trustees’ evaluation of the quality of services provided by Putnam Management under your fund’s management contract. The Trustees were assisted in their review of the Putnam funds’ investment process and performance by the work of the investment oversight committees of the Trustees and the full Board of Trustees, which meet on a regular basis with the funds’ portfolio teams and with the Chief Investment Officers and other senior members of Putnam Management’s Investment Division throughout the year. The Trustees concluded that Putnam Management generally provides a high-quality investment process — based on the experience and skills of the individuals assigned to the management of fund portfolios, the resources made available to them, and in general Putnam Management’s ability to attract and retain high-quality personnel — but also recognized that this does not guarantee favorable investment results for every fund in every time period.
The Trustees considered that, after a strong start to the year, 2018 was a mixed year for The Putnam Funds, with the Putnam open-end Funds’ performance, on an asset-weighted basis, ranking in the 54th percentile of their Lipper Inc. (“Lipper”) peers (excluding those Putnam funds that are evaluated based on their total returns versus selected investment benchmarks). The Trustees also noted that The Putnam Funds were ranked by the Barron’s/Lipper Fund Families survey as the 41st-best performing mutual fund complex out of 57 complexes for the one-year period ended
| 18 Growth Opportunities Fund |
December 31, 2018 and the 29th-best performing mutual fund complex out of 55 complexes for the five-year period ended December 31, 2018. The Trustees observed that The Putnam Funds’ performance over the longer-term continued to be strong, ranking 6th out of 49 mutual fund complexes in the survey over the ten-year period ended 2018. In addition, the Trustees noted that 22 of the funds were four- or five-star rated by Morningstar Inc. at the end of 2018. They also noted, however, the disappointing investment performance of some funds for periods ended December 31, 2018 and considered information provided by Putnam Management regarding the factors contributing to the underperformance and actions being taken to improve the performance of these particular funds. The Trustees indicated their intention to continue to monitor closely the performance of those funds, including the effectiveness of any efforts Putnam Management has undertaken to address underperformance and whether additional actions to address areas of underperformance are warranted.
For purposes of the Trustees’ evaluation of the Putnam Funds’ investment performance, the Trustees generally focus on a competitive industry ranking of each fund’s total net return over a one-year, three-year and five-year period. For a number of Putnam funds with relatively unique investment mandates for which Putnam Management informed the Trustees that meaningful competitive performance rankings are not considered to be available, the Trustees evaluated performance based on their total gross and net returns and comparisons of those returns with the returns of selected investment benchmarks. In the case of your fund, the Trustees considered that its class A share cumulative total return performance at net asset value was in the following quartiles of its Lipper peer group (Lipper Large-Cap Growth Funds) for the one-year, three-year and five-year periods ended December 31, 2018 (the first quartile representing the best-performing funds and the fourth quartile the worst-performing funds):
| One-year period | 1st |
| Three-year period | 1st |
| Five-year period | 1st |
For the three-year period ended December 31, 2018, your fund’s performance was in the top decile of its Lipper peer group. Over the one-year, three-year and five-year periods ended December 31, 2018, there were 674, 596 and 536 funds, respectively, inyour fund’s Lipper peer group. (When considering performance information, shareholders should be mindful that past performance is not a guarantee of future results.) The Trustees considered Putnam Management’s continued efforts to support fund performance through initiatives including structuring compensation for portfolio managers and research analysts to enhance accountability for fund performance, emphasizing accountability in the portfolio management process, and affirming its commitment to a fundamental-driven approach to investing. The Trustees noted further that Putnam Management had made selective hires in 2018 to strengthen its investment team.
Brokerage and soft-dollar allocations; investor servicing
The Trustees considered various potential benefits that Putnam Management may receive in connection with the services it provides under the management contract with your fund. These include benefits related to brokerage allocation and the use of soft dollars, whereby a portion of the commissions paid by a fund for brokerage may be used to acquire research services that are expected to be useful to Putnam Management in managing the assets of the fund and of other clients. Subject to policies established by the Trustees, soft dollars generated by these means are used predominantly to acquire brokerage and research services (including third-party research and market data) that enhance Putnam Management’s investment capabilities and supplement Putnam Management’s internal research efforts. However, the Trustees noted that a portion of available soft dollars continues to be used to pay fund expenses. The Trustees indicated their continued intent to monitor regulatory and industry developments in this area with the assistance of their Brokerage Committee. The Trustees also indicated their continued intent to monitor the allocation of the Putnam funds’ brokerage in order to ensure that the principle of seeking best price and execution remains paramount in the portfolio trading process.
Putnam Management may also receive benefits from payments that the funds make to Putnam Management’s affiliates for investor or distribution services. In conjunction with the annual review of your fund’s management and sub-management contracts, the Trustees reviewed your fund’s investor servicing agreement with PSERV and its distributor’s contracts and distribution plans with
| Growth Opportunities Fund 19 |
Putnam Retail Management Limited Partnership (“PRM”), both of which are affiliates of Putnam Management. The Trustees concluded that the fees payable by the funds to PSERV and PRM, as applicable, for such services are fair and reasonable in relation to the nature and quality of such services, the fees paid by competitive funds, andthe costs incurred by PSERV and PRM, as applicable, in providing such services. Furthermore, the Trustees were of the view that the services provided were required for the operation of the funds, and that they were of a quality at least equal to those provided by other providers.
| 20 Growth Opportunities Fund |
Audited financial statements
These sections of the report, as well as the accompanying Notes, preceded by the Report of Independent Registered Public Accounting Firm, constitute the fund’s audited financial statements.
The fund’s portfoliolists all the fund’s investments and their values as of the last day of the reporting period. Holdings are organized by asset type and industry sector, country, or state to show areas of concentration and diversification.
Statement of assets and liabilitiesshows how the fund’s net assets and share price are determined. All investment and non-investment assets are added together. Any unpaid expenses and other liabilities are subtracted from this total. The result is divided by the number of shares to determine the net asset value per share, which is calculated separately for each class of shares. (For funds with preferred shares, the amount subtracted from total assets includes the liquidation preference of preferred shares.)
Statement of operationsshows the fund’s net investment gain or loss. This is done by first adding up all the fund’s earnings — from dividends and interest income — and subtracting its operatingexpenses to determine net investment income (or loss). Then, any net gain or loss the fund realized on the sales of its holdings — as well as any unrealized gains or losses over the period — is added to or subtracted from the net investment result to determine the fund’s net gain or loss for the fiscal year.
Statement of changes in net assetsshows how the fund’s net assets were affected by the fund’s net investment gain or loss, by distributions to shareholders, and by changes in the number of the fund’s shares. It lists distributions and their sources (net investment income or realized capital gains) over the current reporting period and the most recent fiscal year-end. The distributions listed here may not match the sources listed in the Statement of operations because the distributions are determined on a tax basis and may be paid in a different period from the one in which they were earned.
Financial highlightsprovide an overview of the fund’s investment results, per-share distributions, expense ratios, net investment income ratios, and portfolio turnover in one summary table, reflecting the five most recent reporting periods. In a semiannual report, the highlights table also includes the current reporting period.
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Report of Independent Registered Public Accounting Firm
The Board of Trustees and Shareholders
Putnam Investment Funds:
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of Putnam Growth Opportunities Fund (the “fund”), a series of the Putnam Investment Funds, including the fund’s portfolio, as of July 31, 2019, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the related notes (collectively, the “financial statements”) and the financial highlights for each of the years in the five-year period then ended. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the fund as of July 31, 2019, and the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
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 are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. 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, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Such procedures included confirmation of securities owned as of July 31, 2019, by correspondence with the custodian, brokers and transfer agent or by other appropriate auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more Putnam investment companies since 1999.
Boston, Massachusetts
September 6, 2019
| 22 Growth Opportunities Fund |
The fund’s portfolio7/31/19
| COMMON STOCKS (98.6%)* | Shares | Value |
| Aerospace and defense (3.8%) | ||
| Boeing Co. (The) | 227,100 | $77,481,978 |
| Northrop Grumman Corp. | 230,600 | 79,688,442 |
| TransDigm Group, Inc. † | 138,100 | 67,039,264 |
| 224,209,684 | ||
| Biotechnology (0.6%) | ||
| Vertex Pharmaceuticals, Inc. † | 229,300 | 38,205,966 |
| 38,205,966 | ||
| Capital markets (1.4%) | ||
| Intercontinental Exchange, Inc. | 960,900 | 84,424,674 |
| 84,424,674 | ||
| Chemicals (3.1%) | ||
| Linde PLC | 435,000 | 83,206,800 |
| Sherwin-Williams Co. (The) | 191,735 | 98,367,724 |
| 181,574,524 | ||
| Commercial services and supplies (1.4%) | ||
| New Bigfoot Other Assets GmbH (acquired 8/2/13, cost $194) (Private) | ||
| (Germany) †∆∆F | 146 | 121 |
| New Middle East Other Assets GmbH (acquired 8/2/13, cost $78) (Private) | ||
| (Germany) †∆∆ F | 59 | 49 |
| Waste Connections, Inc. | 906,502 | 82,237,861 |
| 82,238,031 | ||
| Entertainment (3.4%) | ||
| Live Nation Entertainment, Inc. † | 1,393,296 | 100,400,910 |
| Netflix, Inc. † | 304,606 | 98,384,692 |
| 198,785,602 | ||
| Equity real estate investment trusts (REITs) (2.3%) | ||
| American Tower Corp. | 638,100 | 135,034,722 |
| 135,034,722 | ||
| Food and staples retail (1.0%) | ||
| Walmart, Inc. | 510,700 | 56,371,066 |
| 56,371,066 | ||
| Food products (1.3%) | ||
| McCormick & Co., Inc. (non-voting shares) | 489,500 | 77,605,330 |
| 77,605,330 | ||
| Health-care equipment and supplies (5.1%) | ||
| Danaher Corp. | 937,033 | 131,653,137 |
| ICU Medical, Inc. † | 119,695 | 30,455,196 |
| IDEXX Laboratories, Inc. † | 355,078 | 100,149,750 |
| Intuitive Surgical, Inc. † | 65,800 | 34,183,758 |
| 296,441,841 | ||
| Health-care providers and services (2.7%) | ||
| UnitedHealth Group, Inc. | 625,300 | 155,705,953 |
| 155,705,953 | ||
| Hotels, restaurants, and leisure (0.9%) | ||
| Planet Fitness, Inc. Class A † | 640,500 | 50,381,730 |
| 50,381,730 |
| Growth Opportunities Fund 23 |
| COMMON STOCKS (98.6%)*cont. | Shares | Value |
| Household durables (—%) | ||
| HC Brillant Services GmbH (acquired 8/2/13, cost $194) (Private) | ||
| (Germany) †∆∆ F | 292 | $242 |
| 242 | ||
| Industrial conglomerates (2.5%) | ||
| Honeywell International, Inc. | 479,413 | 82,679,566 |
| Roper Technologies, Inc. | 171,298 | 62,292,518 |
| 144,972,084 | ||
| Insurance (1.0%) | ||
| AIA Group, Ltd. (Hong Kong) | 5,667,250 | 57,768,025 |
| 57,768,025 | ||
| Interactive media and services (7.8%) | ||
| Alphabet, Inc. Class C † | 261,300 | 317,918,484 |
| Facebook, Inc. Class A † | 549,703 | 106,768,814 |
| Pinterest, Inc. Class A †S | 1,123,331 | 32,565,366 |
| 457,252,664 | ||
| Internet and direct marketing retail (7.9%) | ||
| Amazon.com, Inc. † | 196,950 | 367,662,321 |
| Booking Holdings, Inc. † | 51,200 | 96,594,432 |
| Global Fashion Group SA (acquired 8/2/13, cost $9,654,255) (Private) | ||
| (Luxembourg) †∆∆ F | 42,727 | 172,830 |
| 464,429,583 | ||
| IT Services (12.6%) | ||
| Fidelity National Information Services, Inc. | 828,303 | 110,371,394 |
| Mastercard, Inc. Class A | 586,900 | 159,795,263 |
| Okta, Inc. † | 270,560 | 35,397,365 |
| PayPal Holdings, Inc. † | 1,695,500 | 187,183,200 |
| Visa, Inc. Class A | 1,365,600 | 243,076,800 |
| 735,824,022 | ||
| Life sciences tools and services (3.9%) | ||
| IQVIA Holdings, Inc. † | 459,200 | 73,090,864 |
| Lonza Group AG (Switzerland) | 195,485 | 66,873,661 |
| Mettler-Toledo International, Inc. † | 70,579 | 53,410,658 |
| Thermo Fisher Scientific, Inc. | 128,500 | 35,681,880 |
| 229,057,063 | ||
| Media (1.7%) | ||
| Charter Communications, Inc. Class A † | 264,316 | 101,862,100 |
| 101,862,100 | ||
| Pharmaceuticals (0.9%) | ||
| Merck & Co., Inc. | 605,100 | 50,217,249 |
| 50,217,249 | ||
| Professional services (2.1%) | ||
| CoStar Group, Inc. † | 195,814 | 120,503,936 |
| 120,503,936 | ||
| Road and rail (1.6%) | ||
| Union Pacific Corp. | 528,271 | 95,062,366 |
| 95,062,366 | ||
| Semiconductors and semiconductor equipment (1.6%) | ||
| Texas Instruments, Inc. | 750,000 | 93,757,500 |
| 93,757,500 |
| 24 Growth Opportunities Fund |
| COMMON STOCKS (98.6%)*cont. | Shares | Value |
| Software (17.6%) | ||
| Adobe, Inc. † | 366,536 | $109,542,949 |
| Dassault Systemes SA (France) | 374,796 | 56,737,655 |
| DocuSign, Inc. † | 864,271 | 44,700,096 |
| Microsoft Corp. | 3,939,700 | 536,862,916 |
| RealPage, Inc. † | 805,352 | 50,318,393 |
| Salesforce.com, Inc. † | 920,629 | 142,237,181 |
| ServiceNow, Inc. † | 314,500 | 87,239,155 |
| 1,027,638,345 | ||
| Specialty retail (2.4%) | ||
| Home Depot, Inc. (The) | 648,311 | 138,537,578 |
| 138,537,578 | ||
| Technology hardware, storage, and peripherals (5.0%) | ||
| Apple, Inc. | 1,371,001 | 292,078,053 |
| 292,078,053 | ||
| Textiles, apparel, and luxury goods (2.8%) | ||
| lululemon athletica, Inc. (Canada) † | 329,000 | 62,868,610 |
| NIKE, Inc. Class B | 1,209,051 | 104,014,658 |
| 166,883,268 | ||
| Thrifts and mortgage finance (0.2%) | ||
| Oportun Financial Corp. (acquired 2/6/15 and 6/23/15, cost $13,480,762) | ||
| (Private) †∆∆ F | 4,732,907 | 10,745,000 |
| 10,745,000 | ||
| Total common stocks (cost $3,708,825,668) | $5,767,568,201 | |
| CONVERTIBLE PREFERRED STOCKS (0.3%)* | Shares | Value |
| Uber Technologies, Inc. Ser. E, 8.00% cv. pfd. (acquired 2/18/15, cost | ||
| $18,129,746) (Private) †∆∆ F | 536,108 | $20,332,432 |
| Total convertible preferred stocks (cost $18,129,746) | $20,332,432 | |
| PURCHASED OPTIONS | Expiration | |||
| OUTSTANDING (—%)* | date/strike | Notional | Contract | |
| Counterparty | price | amount | amount | Value |
| Citibank, N.A. | ||||
| Wynn Resorts, Ltd. (Call) | Aug-19/$160.00 | $233,535,872 | $1,795,463 | $78,828 |
| Wynn Resorts, Ltd. (Call) | Aug-19/160.00 | 333,622,656 | 2,564,947 | 63,480 |
| Total purchased options outstanding (cost $18,211,124) | $142,308 | |||
| Expiration | Strike | |||
| WARRANTS (—%)*† | date | price | Warrants | Value |
| Neuralstem, Inc. Ser. K, (acquired 1/3/14 and | ||||
| 4/20/17, cost $—) ∆∆ | 1/9/22 | $42.00 | 6,349 | $— |
| Total warrants (cost $—) | $— |
| Growth Opportunities Fund 25 |
| Principal amount/ | |||
| SHORT-TERM INVESTMENTS (1.9%)* | shares | Value | |
| Putnam Cash Collateral Pool, LLC 2.49% d | Shares | 29,571,165 | $29,571,165 |
| Putnam Short Term Investment Fund 2.48% L | Shares | 83,190,622 | 83,190,622 |
| State Street Institutional U.S. Government Money Market Fund, | |||
| Premier Class 2.26% P | Shares | 280,000 | 280,000 |
| U.S. Treasury Bills 2.453%, 8/1/19 | $913,000 | 913,000 | |
| Total short-term investments (cost $113,954,787) | $113,954,787 | ||
| TOTAL INVESTMENTS | |||
| Total investments (cost $3,859,121,325) | $5,901,997,728 | ||
Notes to the fund’s portfolio
Unless noted otherwise, the notes to the fund’s portfolio are for the close of the fund’s reporting period, which ran from August 1, 2018 through July 31, 2019 (the reporting period). Within the following notes to the portfolio, references to “Putnam Management” represent Putnam Investment Management, LLC, the fund’s manager, an indirect wholly-owned subsidiary of Putnam Investments, LLC and references to “ASC 820” represent Accounting Standards Codification 820Fair Value Measurements and Disclosures.
*Percentages indicated are based on net assets of $5,849,501,637.
†This security is non-income-producing.
∆∆This security is restricted with regard to public resale. The total fair value of this security and any other restricted securities (excluding 144A securities), if any, held at the close of the reporting period was $31,250,674, or 0.5% of net assets.
dAffiliated company. See Notes 1 and 5 to the financial statements regarding securities lending. The rate quoted in the security description is the annualized 7-day yield of the fund at the close of the reporting period.
FThis security is valued by Putnam Management at fair value following procedures approved by the Trustees. Securities are classified as Level 3 for ASC 820 based on the securities’ valuation inputs. At the close of the reporting period, fair value pricing was also used for certain foreign securities in the portfolio (Note 1).
LAffiliated company (Note 5). The rate quoted in the security description is the annualized 7-day yield of the fund at the close of the reporting period.
PThis security was pledged, or purchased with cash that was pledged, to the fund for collateral on certain derivative contracts. The rate quoted in the security description is the annualized 7-day yield of the fund at the close of the reporting period.
SSecurity on loan, in part or in entirety, at the close of the reporting period (Note 1).
Unless otherwise noted, the rates quoted in Short-term investments security descriptions represent the weighted average yield to maturity.
The dates shown on debt obligations are the original maturity dates.
| WRITTEN OPTIONS OUTSTANDING at 7/31/19 (premiums $12,573,371) | ||||
| Expiration | Notional | Contract | ||
| Counterparty | date/strike price | amount | amount | Value |
| Citibank, N.A. | ||||
| Wynn Resorts, Ltd. (Call) | Aug-19/$165.00 | $233,535,872 | $1,795,463 | $27,340 |
| Wynn Resorts, Ltd. (Call) | Aug-19/165.00 | 333,622,656 | 2,564,947 | 19,111 |
| Total | $46,451 | |||
| 26 Growth Opportunities Fund |
ASC 820 establishes a three-level hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of the fund’s investments. The three levels are defined as follows:
Level 1: Valuations based on quoted prices for identical securities in active markets.
Level 2: Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
Level 3: Valuations based on inputs that are unobservable and significant to the fair value measurement.
The following is a summary of the inputs used to value the fund’s net assets as of the close of the reporting period:
| Valuation inputs | |||||
| Investments in securities: | Level 1 | Level 2 | Level 3 | ||
| Common stocks*: | |||||
| Communication services | $757,900,366 | $— | $— | ||
| Consumer discretionary | 820,059,329 | — | 173,072 | ||
| Consumer staples | 133,976,396 | — | — | ||
| Financials | 84,424,674 | 57,768,025 | 10,745,000 | ||
| Health care | 702,754,411 | 66,873,661 | — | ||
| Industrials | 666,985,931 | — | 170 | ||
| Information technology | 2,092,560,265 | 56,737,655 | — | ||
| Materials | 181,574,524 | — | — | ||
| Real estate | 135,034,722 | — | — | ||
| Total common stocks | 5,575,270,618 | 181,379,341 | 10,918,242 | ||
| Convertible preferred stocks | — | — | 20,332,432 | ||
| Purchased options outstanding | — | 142,308 | — | ||
| Warrants | — | — | — | ||
| Short-term investments | 83,470,622 | 30,484,165 | — | ||
| Totals by level | $5,658,741,240 | $212,005,814 | $31,250,674 | ||
| Valuation inputs | |||||
| Other financial instruments: | Level 1 | Level 2 | Level 3 | ||
| Written options outstanding | $— | $(46,451) | $— | ||
| Totals by level | $— | $(46,451) | $— | ||
*Common stock classifications are presented at the sector level, which may differ from the fund’s portfolio presentation.
At the start and close of the reporting period, Level 3 investments in securities represented less than 1% of the fund’s net assets and were not considered a significant portion of the fund’s portfolio.
The accompanying notes are an integral part of these financial statements.
| Growth Opportunities Fund 27 |
Statement of assets and liabilities7/31/19
| ASSETS | |
| Investment in securities, at value, including $29,308,310 of securities on loan (Notes 1 and 8): | |
| Unaffiliated issuers (identified cost $3,746,359,538) | $5,789,235,941 |
| Affiliated issuers (identified cost $112,761,787) (Notes 1 and 5) | 112,761,787 |
| Foreign currency (cost $28) (Note 1) | 28 |
| Dividends, interest and other receivables | 2,064,564 |
| Foreign tax reclaim | 176,037 |
| Receivable for shares of the fund sold | 6,034,181 |
| Receivable for investments sold | 16,653,250 |
| Prepaid assets | 72,012 |
| Total assets | 5,926,997,800 |
| LIABILITIES | |
| Payable for investments purchased | 35,613,257 |
| Payable for shares of the fund repurchased | 3,924,339 |
| Payable for compensation of Manager (Note 2) | 3,078,816 |
| Payable for custodian fees (Note 2) | 39,754 |
| Payable for investor servicing fees (Note 2) | 1,496,764 |
| Payable for Trustee compensation and expenses (Note 2) | 1,713,635 |
| Payable for administrative services (Note 2) | 20,717 |
| Payable for distribution fees (Note 2) | 1,200,705 |
| Written options outstanding, at value (premiums $12,573,371) (Note 1) | 46,451 |
| Collateral on securities loaned, at value (Note 1) | 29,571,165 |
| Collateral on certain derivative contracts, at value (Notes 1 and 8) | 280,000 |
| Other accrued expenses | 510,560 |
| Total liabilities | 77,496,163 |
| Net assets | $5,849,501,637 |
| REPRESENTED BY | |
| Paid-in capital (Unlimited shares authorized) (Notes 1 and 4) | $3,578,964,676 |
| Total distributable earnings (Note 1) | 2,270,536,961 |
| Total — Representing net assets applicable to capital shares outstanding | $5,849,501,637 |
(Continued on next page)
| 28 Growth Opportunities Fund |
Statement of assets and liabilitiescont.
| COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE | |
| Net asset value and redemption price per class A share | |
| ($4,586,741,721 divided by 121,587,960 shares) | $37.72 |
| Offering price per class A share(100/94.25 of $37.72)* | $40.02 |
| Net asset value and offering price per class B share($60,485,999 divided by 1,928,482 shares)** | $31.36 |
| Net asset value and offering price per class C share($153,943,341 divided by 4,814,474 shares)** | $31.98 |
| Net asset value and redemption price per class M share | |
| ($38,858,342 divided by 1,156,659 shares) | $33.60 |
| Offering price per class M share(100/96.50 of $33.60)* | $34.82 |
| Net asset value, offering price and redemption price per class R share | |
| ($11,933,121 divided by 329,357 shares) | $36.23 |
| Net asset value, offering price and redemption price per class R5 share | |
| ($1,588,388 divided by 39,889 shares) | $39.82 |
| Net asset value, offering price and redemption price per class R6 share | |
| ($279,329,306 divided by 7,033,205 shares) | $39.72 |
| Net asset value, offering price and redemption price per class Y share | |
| ($716,621,419 divided by 18,148,896 shares) | $39.49 |
*On single retail sales of less than $50,000. On sales of $50,000 or more 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.
| Growth Opportunities Fund 29 |
Statement of operationsYear ended 7/31/19
| INVESTMENT INCOME | |
| Dividends (net of foreign tax of $119,203) | $43,210,339 |
| Interest (including interest income of $2,695,984 from investments in affiliated issuers) (Note 5) | 2,803,937 |
| Securities lending (net of expenses) (Notes 1 and 5) | 193,674 |
| Total investment income | 46,207,950 |
| EXPENSES | |
| Compensation of Manager (Note 2) | 30,311,163 |
| Investor servicing fees (Note 2) | 8,947,829 |
| Custodian fees (Note 2) | 50,714 |
| Trustee compensation and expenses (Note 2) | 233,147 |
| Distribution fees (Note 2) | 12,916,580 |
| Administrative services (Note 2) | 156,031 |
| Other | 1,279,262 |
| Total expenses | 53,894,726 |
| Expense reduction (Note 2) | (140,518) |
| Net expenses | 53,754,208 |
| Net investment loss | (7,546,258) |
| REALIZED AND UNREALIZED GAIN (LOSS) | |
| Net realized gain (loss) on: | |
| Securities from unaffiliated issuers (Notes 1 and 3) | 225,597,127 |
| Foreign currency transactions (Note 1) | (26,924) |
| Forward currency contracts (Note 1) | 1,595,039 |
| Futures contracts (Note 1) | 5,079,022 |
| Written options (Note 1) | 2,301,713 |
| Total net realized gain | 234,545,977 |
| Change in net unrealized appreciation (depreciation) on: | |
| Securities from unaffiliated issuers | 494,230,380 |
| Assets and liabilities in foreign currencies | (6,254) |
| Forward currency contracts | (873,817) |
| Futures contracts | (45,131) |
| Written options | 11,083,375 |
| Total change in net unrealized appreciation | 504,388,553 |
| Net gain on investments | 738,934,530 |
| Net increase in net assets resulting from operations | $731,388,272 |
The accompanying notes are an integral part of these financial statements.
| 30 Growth Opportunities Fund |
Statement of changes in net assets
| INCREASE IN NET ASSETS | Year ended 7/31/19 | Year ended 7/31/18 |
| Operations | ||
| Net investment loss | $(7,546,258) | $(1,082,375) |
| Net realized gain on investments | ||
| and foreign currency transactions | 234,545,977 | 613,445,546 |
| Change in net unrealized appreciation of investments | ||
| and assets and liabilities in foreign currencies | 504,388,553 | 421,356,500 |
| Net increase in net assets resulting from operations | 731,388,272 | 1,033,719,671 |
| Distributions to shareholders (Note 1): | ||
| From ordinary income | ||
| Net investment income | ||
| Class A | (115,982) | (9,450,208) |
| Class R | — | (6,100) |
| Class R5 | (1,574) | (7,133) |
| Class R6 | (639,038) | (678,477) |
| Class Y | (1,428,624) | (2,155,215) |
| From net realized long-term gain on investments | ||
| Class A | (275,572,737) | (60,481,331) |
| Class B | (5,395,987) | (1,457,913) |
| Class C | (11,302,727) | (2,867,800) |
| Class M | (2,531,148) | (566,455) |
| Class R | (773,600) | (208,224) |
| Class R5 | (89,022) | (39,695) |
| Class R6 | (11,416,205) | (1,772,349) |
| Class Y | (37,715,674) | (6,983,989) |
| Increase (decrease) from capital share transactions (Note 4) | 343,724,446 | (49,006,730) |
| Total increase in net assets | 728,130,400 | 898,038,052 |
| NET ASSETS | ||
| Beginning of year | 5,121,371,237 | 4,223,333,185 |
| End of year(Note 1) | $5,849,501,637 | $5,121,371,237 |
The accompanying notes are an integral part of these financial statements.
| Growth Opportunities Fund 31 |
Financial highlights(For a common share outstanding throughout the period)
| INVESTMENT OPERATIONS | LESS DISTRIBUTIONS | RATIOS AND SUPPLEMENTAL DATA | |||||||||||
| Ratio of net | |||||||||||||
| Net asset | Net realized | From | Ratio | investment | |||||||||
| value, | and unrealized | Total from | net | From | Net asset | Total return | Net assets, | of expenses | income (loss) | Portfolio | |||
| beginning | Net investment | gain (loss) | investment | investment | net realized gain | Total | value, end | at net asset | end of period | to average | to average | turnover | |
| Period ended | of period | income (loss)a | on investments | operations | income | on investments | distributions | of period | value (%)b | (in thousands) | net assets (%)c | net assets (%) | (%) |
| Class A | |||||||||||||
| July 31, 2019 | $35.44 | (.05) | 4.71 | 4.66 | —d | (2.38) | (2.38) | $37.72 | 14.39 | $4,586,742 | 1.03 | (.15) | 40 |
| July 31, 2018 | 28.92 | (.01) | 7.12 | 7.11 | (.08) | (.51) | (.59) | 35.44 | 24.91 | 4,146,380 | .91 | (.02) | 73 |
| July 31, 2017 | 23.95 | .14e | 4.83 | 4.97 | —d | — | —d | 28.92 | 20.76 | 3,504,855 | .93 | .52e | 70 |
| July 31, 2016 | 25.11 | .02 | .13 | .15 | (.06) | (1.25) | (1.31) | 23.95 | .72 | 433,488 | 1.08f | .07f | 65 |
| July 31, 2015 | 25.68 | —d | 3.15 | 3.15 | (.13) | (3.59) | (3.72) | 25.11 | 12.82 | 469,652 | 1.09 | .02 | 68 |
| Class B | |||||||||||||
| July 31, 2019 | $30.09 | (.26) | 3.91 | 3.65 | — | (2.38) | (2.38) | $31.36 | 13.54 | $60,486 | 1.78 | (.89) | 40 |
| July 31, 2018 | 24.75 | (.21) | 6.06 | 5.85 | — | (.51) | (.51) | 30.09 | 23.95 | 74,078 | 1.66 | (.76) | 73 |
| July 31, 2017 | 20.65 | (.05)e | 4.15 | 4.10 | — | — | — | 24.75 | 19.85 | 76,969 | 1.68 | (.22)e | 70 |
| July 31, 2016 | 21.93 | (.14) | .11 | (.03) | — | (1.25) | (1.25) | 20.65 | (.02) | 18,341 | 1.83f | (.68)f | 65 |
| July 31, 2015 | 22.90 | (.16) | 2.78 | 2.62 | — | (3.59) | (3.59) | 21.93 | 11.97 | 20,482 | 1.84 | (.73) | 68 |
| Class C | |||||||||||||
| July 31, 2019 | $30.63 | (.27) | 4.00 | 3.73 | — | (2.38) | (2.38) | $31.98 | 13.56 | $153,943 | 1.78 | (.90) | 40 |
| July 31, 2018 | 25.18 | (.21) | 6.17 | 5.96 | — | (.51) | (.51) | 30.63 | 23.98 | 137,534 | 1.66 | (.76) | 73 |
| July 31, 2017 | 21.01 | (.06)e | 4.23 | 4.17 | — | — | — | 25.18 | 19.85 | 144,159 | 1.68 | (.24)e | 70 |
| July 31, 2016 | 22.29 | (.14) | .11 | (.03) | — | (1.25) | (1.25) | 21.01 | (.01) | 33,055 | 1.83f | (.68)f | 65 |
| July 31, 2015 | 23.22 | (.17) | 2.83 | 2.66 | — | (3.59) | (3.59) | 22.29 | 11.97 | 31,265 | 1.84 | (.74) | 68 |
| Class M | |||||||||||||
| July 31, 2019 | $31.98 | (.20) | 4.20 | 4.00 | — | (2.38) | (2.38) | $33.60 | 13.85 | $38,858 | 1.53 | (.65) | 40 |
| July 31, 2018 | 26.21 | (.15) | 6.43 | 6.28 | — | (.51) | (.51) | 31.98 | 24.26 | 34,725 | 1.41 | (.52) | 73 |
| July 31, 2017 | 21.81 | —d,e | 4.40 | 4.40 | — | — | — | 26.21 | 20.17 | 28,148 | 1.43 | —e,g | 70 |
| July 31, 2016 | 23.04 | (.09) | .11 | .02 | — | (1.25) | (1.25) | 21.81 | .21 | 5,800 | 1.58f | (.43)f | 65 |
| July 31, 2015 | 23.86 | (.11) | 2.90 | 2.79 | (.02) | (3.59) | (3.61) | 23.04 | 12.25 | 5,991 | 1.59 | (.48) | 68 |
| Class R | |||||||||||||
| July 31, 2019 | $34.22 | (.13) | 4.52 | 4.39 | — | (2.38) | (2.38) | $36.23 | 14.10 | $11,933 | 1.28 | (.39) | 40 |
| July 31, 2018 | 27.95 | (.08) | 6.88 | 6.80 | (.02) | (.51) | (.53) | 34.22 | 24.60 | 13,833 | 1.16 | (.27) | 73 |
| July 31, 2017 | 23.20 | .06e | 4.69 | 4.75 | — | — | — | 27.95 | 20.47 | 11,467 | 1.18 | .24e | 70 |
| July 31, 2016 | 24.38 | (.04) | .12 | .08 | (.01) | (1.25) | (1.26) | 23.20 | .47 | 2,928 | 1.33f | (.18)f | 65 |
| July 31, 2015 | 25.08 | (.06) | 3.07 | 3.01 | (.12) | (3.59) | (3.71) | 24.38 | 12.55 | 4,174 | 1.34 | (.23) | 68 |
| Class R5 | |||||||||||||
| July 31, 2019 | $37.22 | .06 | 4.96 | 5.02 | (.04) | (2.38) | (2.42) | $39.82 | 14.71 | $1,588 | .76 | .15 | 40 |
| July 31, 2018 | 30.27 | .09 | 7.46 | 7.55 | (.09) | (.51) | (.60) | 37.22 | 25.27 | 2,712 | .63 | .27 | 73 |
| July 31, 2017 | 24.99 | .20e | 5.08 | 5.28 | — | — | — | 30.27 | 21.13 | 2,389 | .63 | .78e | 70 |
| July 31, 2016 | 26.13 | .09 | .15 | .24 | (.13) | (1.25) | (1.38) | 24.99 | 1.06 | 9,912 | .77f | .38f | 65 |
| July 31, 2015 | 26.60 | .08 | 3.26 | 3.34 | (.22) | (3.59) | (3.81) | 26.13 | 13.15 | 10,542 | .79 | .32 | 68 |
See notes to financial highlights at the end of this section.
The accompanying notes are an integral part of these financial statements.
| 32 Growth Opportunities Fund | Growth Opportunities Fund 33 |
Financial highlightscont.
| INVESTMENT OPERATIONS | LESS DISTRIBUTIONS | RATIOS AND SUPPLEMENTAL DATA | |||||||||||
| Ratio of net | |||||||||||||
| Net asset | Net realized | From | Ratio | investment | |||||||||
| value, | and unrealized | Total from | net | From | Net asset | Total return | Net assets, | of expenses | income (loss) | Portfolio | |||
| beginning | Net investment | gain (loss) | investment | investment | net realized gain | Total | value, end | at net asset | end of period | to average | to average | turnover | |
| Period ended | of period | income (loss)a | on investments | operations | income | on investments | distributions | of period | value (%)b | (in thousands) | net assets (%)c | net assets (%) | (%) |
| Class R6 | |||||||||||||
| July 31, 2019 | $37.19 | .08 | 4.96 | 5.04 | (.13) | (2.38) | (2.51) | $39.72 | 14.83 | $279,329 | .66 | .21 | 40 |
| July 31, 2018 | 30.31 | .12 | 7.47 | 7.59 | (.20) | (.51) | (.71) | 37.19 | 25.40 | 150,112 | .53 | .35 | 73 |
| July 31, 2017 | 25.01 | .23e | 5.09 | 5.32 | (.02) | — | (.02) | 30.31 | 21.30 | 95,571 | .53 | .86e | 70 |
| July 31, 2016 | 26.17 | .11 | .14 | .25 | (.16) | (1.25) | (1.41) | 25.01 | 1.09 | 33,780 | .67f | .47f | 65 |
| July 31, 2015 | 26.62 | .11 | 3.26 | 3.37 | (.23) | (3.59) | (3.82) | 26.17 | 13.26 | 25,983 | .69 | .40 | 68 |
| Class Y | |||||||||||||
| July 31, 2019 | $36.98 | .03 | 4.95 | 4.98 | (.09) | (2.38) | (2.47) | $39.49 | 14.71 | $716,621 | .78 | .09 | 40 |
| July 31, 2018 | 30.16 | .08 | 7.41 | 7.49 | (.16) | (.51) | (.67) | 36.98 | 25.18 | 561,997 | .66 | .22 | 73 |
| July 31, 2017 | 24.91 | .19e | 5.07 | 5.26 | (.01) | — | (.01) | 30.16 | 21.10 | 359,777 | .68 | .71e | 70 |
| July 31, 2016 | 26.07 | .07 | .15 | .22 | (.13) | (1.25) | (1.38) | 24.91 | .97 | 116,717 | .83f | .31f | 65 |
| July 31, 2015 | 26.54 | .07 | 3.25 | 3.32 | (.20) | (3.59) | (3.79) | 26.07 | 13.09 | 91,881 | .84 | .25 | 68 |
aPer share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding during the period.
bTotal return assumes dividend reinvestment and does not reflect the effect of sales charges.
cIncludes amounts paid through expense offset and/or brokerage/service arrangements, if any (Note 2). Also excludes acquired fund fees and expenses, if any.
dAmount represents less than $0.01 per share.
eReflects a dividend received by the fund from a single issuer which amounted to the following amounts:
| Per share | Percentage of average net assets | |
| Class A | $0.09 | 0.35% |
| Class B | 0.08 | 0.36 |
| Class C | 0.08 | 0.34 |
| Class M | 0.08 | 0.34 |
| Class R | 0.08 | 0.32 |
| Class R5 | 0.10 | 0.39 |
| Class R6 | 0.08 | 0.30 |
| Class Y | 0.08 | 0.30 |
fReflects a voluntary waiver of certain fund expenses in effect during the period. As a result of such waiver, the expenses of each class reflect a reduction of less than 0.01% as a percentage of average net assets.
gAmount represents less than 0.01% of average net assets.
The accompanying notes are an integral part of these financial statements.
| 34 Growth Opportunities Fund | Growth Opportunities Fund 35 |
Notes to financial statements7/31/19
Within the following Notes to financial statements, references to “State Street” represent State Street Bank and Trust Company, references to “the SEC” represent the Securities and Exchange Commission, references to “Putnam Management” represent Putnam Investment Management, LLC, the fund’s manager, an indirect wholly-owned subsidiary of Putnam Investments, LLC and references to “OTC”, if any, represent over-the-counter. Unless otherwise noted, the “reporting period” represents the period from August 1, 2018 through July 31, 2019.
Putnam Growth Opportunities Fund (the fund) is a diversified series of Putnam Investment Funds (the Trust), a Massachusetts business trust registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The goal of the fund is to seek capital appreciation. The fund invests mainly in common stocks of large U.S. companies, with a focus on growth stocks. Growth stocks are issued by companies whose earnings are expected to grow faster than those of similar firms, and whose business growth and other characteristics may lead to an increase in stock price. Putnam Management may consider, among other factors, a company’s valuation, financial strength, growth potential, competitive position in its industry, projected future earnings, cash flows and dividends when deciding whether to buy or sell investments.
The fund offers class A, class B, class C, class M, class R, class R5, class R6 and class Y shares. Purchases of class B shares are closed to new and existing investors except by exchange from class B shares of another Putnam fund or through dividend and/or capital gains reinvestment. Class A and class M shares are sold with a maximum front-end sales charge of 5.75% and 3.50%, respectively. Class A shares generally are not subject to a contingent deferred sales charge, and class M, class R, class R5, class R6 and class Y shares are not subject to a contingent deferred sales charge. Class B shares, which convert to class A shares after approximately eight years, are not subject to a front-end sales charge and are subject to a contingent deferred sales charge if those shares are redeemed within six years of purchase. Class C shares are subject to a one-year 1.00% contingent deferred sales charge and generally convert to class A shares after approximately ten years. Class R shares, which are not available to all investors, are sold at net asset value. The expenses for class A, class B, class C, class M and class R shares may differ based on the distribution fee of each class, which is identified in Note 2. Class R5, class R6 and class Y shares, which are sold at net asset value, are generally subject to the same expenses as class A, class B, class C, class M and class R shares, but do not bear a distribution fee, and in the case of class R5 and class R6 shares, bear a lower investor servicing fee, which is identified in Note 2. Class R5, class R6 and class Y shares are not available to all investors.
In the normal course of business, the fund enters into contracts that may include agreements to indemnify another party under given circumstances. The fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be, but have not yet been, made against the fund. However, the fund’s management team expects the risk of material loss to be remote.
The fund has entered into contractual arrangements with an investment adviser, administrator, distributor, shareholder servicing agent and custodian, who each provide services to the fund. Unless expressly stated otherwise, shareholders are not parties to, or intended beneficiaries of these contractual arrangements, and these contractual arrangements are not intended to create any shareholder right to enforce them against the service providers or to seek any remedy under them against the service providers, either directly or on behalf of the fund.
Under the fund’s Amended and Restated Agreement and Declaration of Trust, any claims asserted against or on behalf of the Putnam Funds, including claims against Trustees and Officers, must be brought in state and federal courts located within the Commonwealth of Massachusetts.
Note 1: Significant accounting policies
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 accounting principles generally accepted in the United States of America and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and the reported amounts of increases and decreases in net assets from operations. Actual results could differ from those estimates. Subsequent events after the Statement of assets and liabilities date through the date that the financial statements were issued have been evaluated in the preparation of the financial statements.
Investment income, realized and unrealized gains and losses and expenses of the fund are borne pro-rata based on the relative net assets of each class to the total net assets of the fund, except that each class bears expenses unique to that class (including the distribution fees applicable to such classes). 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
| 36 Growth Opportunities Fund |
by the Trustees. If the fund were liquidated, shares of each class would receive their pro-rata share of the net assets of the fund. In addition, the Trustees declare separate dividends on each class of shares.
Security valuationPortfolio securities and other investments are valued using policies and procedures adopted by the Board of Trustees. The Trustees have formed a Pricing Committee to oversee the implementation of these procedures and have delegated responsibility for valuing the fund’s assets in accordance with these procedures to Putnam Management. Putnam Management has established an internal Valuation Committee that is responsible for making fair value determinations, evaluating the effectiveness of the pricing policies of the fund and reporting to the Pricing Committee.
Investments for which market quotations are readily available are valued at the last reported sales price on their principal exchange, or official closing price for certain markets, and are classified as Level 1 securities under Accounting Standards Codification 820Fair Value Measurements and Disclosures(ASC 820). If no sales are reported, as in the case of some securities that are traded OTC, a security is valued at its last reported bid price and is generally categorized as a Level 2 security.
Investments in open-end investment companies (excluding exchange-traded funds), if any, which can be classified as Level 1 or Level 2 securities, are valued based on their net asset value. The net asset value of such investment companies equals the total value of their assets less their liabilities and divided by the number of their outstanding shares.
Market quotations are not considered to be readily available for certain debt obligations (including short-term investments with remaining maturities of 60 days or less) and other investments; such investments are valued on the basis of valuations furnished by an independent pricing service approved by the Trustees or dealers selected by Putnam Management. Such services or dealers determine valuations for normal institutional-size trading units of such securities using methods based on market transactions for comparable securities and various relationships, generally recognized by institutional traders, between securities (which consider such factors as security prices, yields, maturities and ratings). These securities will generally be categorized as Level 2.
Many securities markets and exchanges outside the U.S. close prior to the scheduled close of the New York Stock Exchange and therefore the closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the scheduled close of the New York Stock Exchange. Accordingly, on certain days, the fund will fair value certain foreign equity securities taking into account multiple factors including movements in the U.S. securities markets, currency valuations and comparisons to the valuation of American Depository Receipts, exchange-traded funds and futures contracts. The foreign equity securities, which would generally be classified as Level 1 securities, will be transferred to Level 2 of the fair value hierarchy when they are valued at fair value. The number of days on which fair value prices will be used will depend on market activity and it is possible that fair value prices will be used by the fund to a significant extent. At the close of the reporting period, fair value pricing was used for certain foreign securities in the portfolio. Securities quoted in foreign currencies, if any, are translated into U.S. dollars at the current exchange rate.
To the extent a pricing service or dealer is unable to value a security or provides a valuation that Putnam Management does not believe accurately reflects the security’s fair value, the security will be valued at fair value by Putnam Management in accordance with policies and procedures approved by the Trustees. Certain investments, including certain restricted and illiquid securities and derivatives, are also valued at fair value following procedures approved by the Trustees. These valuations consider such factors as significant market or specific security events such as interest rate or credit quality changes, various relationships with other securities, discount rates, U.S. Treasury, U.S. swap and credit yields, index levels, convexity exposures, recovery rates, sales and other multiples and resale restrictions. These securities are classified as Level 2 or as Level 3 depending on the priority of the significant inputs.
To assess the continuing appropriateness of fair valuations, the Valuation Committee reviews and affirms the reasonableness of such valuations on a regular basis after considering all relevant information that is reasonably available. Such valuations and procedures are reviewed periodically by the Trustees. The fair value of securities is generally determined as the amount that the fund could reasonably expect to realize from an orderly disposition of such securities over a reasonable period of time. By its nature, a fair value price is a good faith estimate of the value of a security in a current sale and does not reflect an actual market price, which may be different by a material amount.
Security transactions and related investment incomeSecurity transactions are recorded on the trade date (the date the order to buy or sell is executed). Gains or losses on securities sold are determined on the identified cost basis.
| Growth Opportunities Fund 37 |
Interest income, net of any applicable withholding taxes and including amortization and accretion of premiums and discounts on debt securities, is recorded on the accrual basis. Dividend income, net of any applicable withholding taxes, is recognized on the ex-dividend date except that certain dividends from foreign securities, if any, are recognized as soon as the fund is informed of the ex-dividend date. Non-cash dividends, if any, are recorded at the fair value of the securities received. Dividends representing a return of capital or capital gains, if any, are reflected as a reduction of cost and/or as a realized gain.
Foreign currency translationThe accounting records of the fund are maintained in U.S. dollars. The fair value of foreign securities, currency holdings, and other assets and liabilities is 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 earned 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 gains and losses are included with the net realized and unrealized gain or loss on investments. Net realized gains and losses on foreign currency transactions represent net realized exchange gains or losses on disposition of foreign currencies, currency gains and losses realized between the trade and settlement dates on securities transactions 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 appreciation and depreciation of assets and liabilities in foreign currencies arise from changes in the value of assets and liabilities other than investments at the period end, resulting from changes in the exchange rate.
Options contractsThe fund uses options contracts to gain exposure to securities.
The potential risk to the fund is that the change in value of options contracts may not correspond to the change in value of the hedged instruments. In addition, losses may arise from changes in the value of the underlying instruments if there is an illiquid secondary market for the contracts, if interest or exchange rates move unexpectedly or if the counterparty to the contract is unable to perform. Realized gains and losses on purchased options are included in realized gains and losses on investment securities. If a written call option is exercised, the premium originally received is recorded as an addition to sales proceeds. If a written put option is exercised, the premium originally received is recorded as a reduction to the cost of investments.
Exchange-traded options are valued at the last sale price or, if no sales are reported, the last bid price for purchased options and the last ask price for written options. OTC traded options are valued using prices supplied by dealers.
Options on swaps are similar to options on securities except that the premium paid or received is to buy or grant the right to enter into a previously agreed upon interest rate or credit default contract. Forward premium swap option contracts include premiums that have extended settlement dates. The delayed settlement of the premiums is factored into the daily valuation of the option contracts. In the case of interest rate cap and floor contracts, in return for a premium, ongoing payments between two parties are based on interest rates exceeding a specified rate, in the case of a cap contract, or falling below a specified rate in the case of a floor contract.
Written option contracts outstanding at period end, if any, are listed after the fund’s portfolio.
Futures contractsThe fund uses futures contracts to equitize cash.
The potential risk to the fund is that the change in value of futures contracts may not correspond to the change in value of the hedged instruments. In addition, losses may arise from changes in the value of the underlying instruments, if there is an illiquid secondary market for the contracts, if interest or exchange rates move unexpectedly or if the counterparty to the contract is unable to perform. With futures, there is minimal counterparty credit risk to the fund since futures are exchange traded and the exchange’s clearinghouse, as counterparty to all exchange traded futures, guarantees the futures against default. Risks may exceed amounts recognized on the Statement of assets and liabilities. When the contract is closed, the fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.
Futures contracts are valued at the quoted daily settlement prices established by the exchange on which they trade. The fund and the broker agree to exchange an amount of cash equal to the daily fluctuation in the value of the futures contract. Such receipts or payments are known as “variation margin.”
Futures contracts outstanding at period end, if any, are listed after the fund’s portfolio.
Forward currency contractsThe fund buys and sells forward currency contracts, which are agreements between two parties to buy and sell currencies at a set price on a future date. These contracts are used to hedge foreign exchange risk.
| 38 Growth Opportunities Fund |
The U.S. dollar value of forward currency contracts is determined using current forward currency exchange rates supplied by a quotation service. The fair value of the contract will fluctuate with changes in currency exchange rates. The contract is marked to market daily and the change in fair value is recorded as an unrealized gain or loss. The fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed when the contract matures or by delivery of the currency. The fund could be exposed to risk if the value of the currency changes unfavorably, if the counterparties to the contracts are unable to meet the terms of their contracts or if the fund is unable to enter into a closing position. Risks may exceed amounts recognized on the Statement of assets and liabilities.
Forward currency contracts outstanding at period end, if any, are listed after the fund’s portfolio.
Master agreementsThe fund is a party to ISDA (International Swaps and Derivatives Association, Inc.) Master Agreements (Master Agreements) with certain counterparties that govern OTC derivative and foreign exchange contracts entered into from time to time. The Master Agreements may contain provisions regarding, among other things, the parties’ general obligations, representations, agreements, collateral requirements, events of default and early termination. With respect to certain counterparties, in accordance with the terms of the Master Agreements, collateral posted to the fund is held in a segregated account by the fund’s custodian and, with respect to those amounts which can be sold or repledged, is presented in the fund’s portfolio.
Collateral pledged by the fund is segregated by the fund’s custodian and identified in the fund’s portfolio. Collateral can be in the form of cash or debt securities issued by the U.S. Government or related agencies or other securities as agreed to by the fund and the applicable counterparty. Collateral requirements are determined based on the fund’s net position with each counterparty.
Termination events applicable to the fund may occur upon a decline in the fund’s net assets below a specified threshold over a certain period of time. Termination events applicable to counterparties may occur upon a decline in the counterparty’s long-term and short-term credit ratings below a specified level. In each case, upon occurrence, the other party may elect to terminate early and cause settlement of all derivative and foreign exchange contracts outstanding, including the payment of any losses and costs resulting from such early termination, as reasonably determined by the terminating party. Any decision by one or more of the fund’s counterparties to elect early termination could impact the fund’s future derivative activity.
At the close of the reporting period, the fund did not have a net liability position on open derivative contracts subject to the Master Agreements.
Securities lendingThe fund may lend securities, through its agent, to qualified borrowers in order to earn additional income. The loans are collateralized by cash in an amount at least equal to the fair value of the securities loaned. The fair value of securities loaned is determined daily and any additional required collateral is allocated to the fund on the next business day. The remaining maturities of the securities lending transactions are considered overnight and continuous. The risk of borrower default will be borne by the fund’s agent; the fund will bear the risk of loss with respect to the investment of the cash collateral. Income from securities lending, net of expenses, is included in investment income on the Statement of operations. Cash collateral is invested in Putnam Cash Collateral Pool, LLC, a limited liability company managed by an affiliate of Putnam Management. Investments in Putnam Cash Collateral Pool, LLC are valued at its closing net asset value each business day. There are no management fees charged to Putnam Cash Collateral Pool, LLC. At the close of the reporting period, the fund received cash collateral of $29,571,165 and the value of securities loaned amounted to $29,308,310.
Interfund lendingThe fund, along with other Putnam funds, may participate in an interfund lending program pursuant to an exemptive order issued by the SEC. This program allows the fund to borrow from or lend to other Putnam funds that permit such transactions. Interfund lending transactions are subject to each fund’s investment policies and borrowing and lending limits. Interest earned or paid on the interfund lending transaction will be based on the average of certain current market rates. During the reporting period, the fund did not utilize the program.
Lines of creditThe fund participates, along with other Putnam funds, in a $317.5 million unsecured committed line of credit and a $235.5 million unsecured uncommitted line of credit, both provided by State Street. Borrowings may be made for temporary or emergency purposes, including the funding of shareholder redemption requests and trade settlements. Interest is charged to the fund based on the fund’s borrowing at a rate equal to 1.25% plus the higher of (1) the Federal Funds rate and (2) the overnight LIBOR for the committed line of credit and the Federal Funds rate plus 1.30% for the uncommitted line of credit. A closing fee equal to 0.04% of the committed line of credit and 0.04% of the uncommitted line of credit has been paid by the participating funds. In addition, a commitment fee of 0.21% per annum on any unutilized portion of the committed line of credit is
| Growth Opportunities Fund 39 |
allocated to the participating funds based on their relative net assets and paid quarterly. During the reporting period, the fund had no borrowings against these arrangements.
Federal taxesIt is the policy of the fund to distribute all of its taxable income within the prescribed time period and otherwise comply with the provisions of the Internal Revenue Code of 1986, as amended (the 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 Code.
The fund is subject to the provisions of Accounting Standards Codification 740Income Taxes(ASC 740). ASC 740 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The fund did not have a liability to record for any unrecognized tax benefits in the accompanying financial statements. 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. Each of the fund’s federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service.
The fund may also be subject to taxes imposed by governments of countries in which it invests. Such taxes are generally based on either income or gains earned or repatriated. The fund accrues and applies such taxes to net investment income, net realized gains and net unrealized gains as income and/or capital gains are earned. In some cases, the fund may be entitled to reclaim all or a portion of such taxes, and such reclaim amounts, if any, are reflected as an asset on the fund’s books. In many cases, however, the fund may not receive such amounts for an extended period of time, depending on the country of investment.
Pursuant to federal income tax regulations applicable to regulated investment companies, the fund has elected to defer $7,385,866 to its fiscal year ending July 31, 2020 of late year ordinary losses ((i) ordinary losses recognized between January 1, 2019 and July 31, 2019, and (ii) specified ordinary and currency losses recognized between November 1, 2018 and July 31, 2019).
Distributions to shareholdersDistributions to shareholders from net investment income are recorded by the fund on the ex-dividend date. Distributions from capital gains, 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. These differences include temporary and/or permanent differences from losses on wash sale transactions, from foreign currency gains and losses and from late year loss deferrals. 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. At the close of the reporting period, the fund reclassified $1,568,115 to decrease accumulated net investment loss and $1,568,115 to decrease accumulated net realized gain.
Tax cost of investments includes adjustments to net unrealized appreciation (depreciation) which may not necessarily be final tax cost basis adjustments, but closely approximate the tax basis unrealized gains and losses that may be realized and distributed to shareholders. The tax basis components of distributable earnings and the federal tax cost as of the close of the reporting period were as follows:
| Unrealized appreciation | $2,094,745,684 |
| Unrealized depreciation | (45,974,808) |
| Net unrealized appreciation | 2,048,770,876 |
| Undistributed long-term gain | 229,153,843 |
| Late year ordinary loss deferral | (7,385,866) |
| Cost for federal income tax purposes | $3,853,180,401 |
For the fiscal year ended July 31, 2018, the fund had undistributed net investment income of $777,495.
Expenses of the TrustExpenses 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.
Note 2: Management fee, administrative services and other transactions
The fund pays Putnam Management a management fee (base fee) (based on the fund’s average net assets and computed and paid monthly) at annual rates that may vary based on the average of the aggregate net assets of all open-end mutual funds sponsored by Putnam Management (excluding net assets of funds that are invested in,
| 40 Growth Opportunities Fund |
or that are invested in by, other Putnam funds to the extent necessary to avoid “double counting” of those assets).Such annual rates may vary as follows:
| 0.710% | of the first $5 billion, | 0.510% | of the next $50 billion, | |
| 0.660% | of the next $5 billion, | 0.490% | of the next $50 billion, | |
| 0.610% | of the next $10 billion, | 0.480% | of the next $100 billion and | |
| 0.560% | of the next $10 billion, | 0.475% | of any excess thereafter. |
In addition, the monthly management fee consists of the monthly base fee plus or minus a performance adjustment for the month. The performance adjustment is determined based on performance over the thirty-six month period then ended. Each month, the performance adjustment is calculated by multiplying the performance adjustment rate and the fund’s average net assets over the performance period and dividing the result by twelve. The resulting dollar amount is added to, or subtracted from the base fee for that month. The performance adjustment rate is equal to 0.03 multiplied by the difference between the fund’s annualized performance (measured by the fund’s class A shares) and the annualized performance of the Russell 1000 Growth Index each measured over the performance period. On October 24, 2016, Putnam Voyager Fund, a mutual fund managed by Putnam Management, was merged into the fund. Effective upon the closing of the merger, Putnam Management contractually agreed that the performance adjustment for the fund will be calculated based on the historical performance of whichever fund (the fund or Putnam Voyager Fund) has the relatively lower performance for the relevant period before the closing of the merger, rather than based solely on the performance of the fund. The maximum annualized performance adjustment rate is +/- 0.12%. The monthly base fee is determined based on the fund’s average net assets for the month, while the performance adjustment is determined based on the fund’s average net assets over the thirty-six month performance period. This means it is possible that, if the fund underperforms significantly over the performance period, and the fund’s assets have declined significantly over that period, the negative performance adjustment may exceed the base fee. In this event, Putnam Management would make a payment to the fund.
Because the performance adjustment is based on the fund’s performance relative to its applicable benchmark index, and not its absolute performance, the performance adjustment could increase Putnam Management’s fee even if the fund’s shares lose value during the performance period provided that the fund outperformed its benchmark index, and could decrease Putnam Management’s fee even if the fund’s shares increase in value during the performance period provided that the fund underperformed its benchmark index.
For the reporting period, the management fee represented an effective rate (excluding the impact of any expense waiver in effect) of 0.575% of the fund’s average net assets, which included an effective base fee of 0.550% and an increase of 0.025% ($1,308,056) based on performance.
Putnam Management has contractually agreed, through November 30, 2020, to waive fees and/or reimburse the fund’s expenses to the extent necessary to limit the cumulative expenses of the fund, exclusive of brokerage, interest, taxes, investment-related expenses, extraordinary expenses, acquired fund fees and expenses and payments under the fund’s investor servicing contract, investment management contract and distribution plans, on a fiscal year-to-date basis to an annual rate of 0.20% of the fund’s average net assets over such fiscal year-to-date period. During the reporting period, the fund’s expenses were not reduced as a result of this limit.
Putnam Investments Limited (PIL), an affiliate of Putnam Management, is authorized by the Trustees to manage a separate portion of the assets of the fund as determined by Putnam Management from time to time. PIL did not manage any portion of the assets of the fund during the reporting period. If Putnam Management were to engage the services of PIL, Putnam Management would pay a quarterly sub-management fee to PIL for its services at an annual rate of 0.35% of the average net assets of the portion of the fund managed by PIL.
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 State Street. Custody fees are based on the fund’s asset level, the number of its security holdings and transaction volumes.
Putnam Investor Services, Inc., an affiliate of Putnam Management, provides investor servicing agent functions to the fund. Putnam Investor Services, Inc. received fees for investor servicing for class A, class B, class C, class M, class R and class Y shares that included (1) a per account fee for each direct and underlying non-defined contribution account (retail account) of the fund; (2) a specified rate of the fund’s assets attributable to defined
| Growth Opportunities Fund 41 |
contribution plan accounts; and (3) a specified rate based on the average net assets in retail accounts. Putnam Investor Services, Inc. has agreed that the aggregate investor servicing fees for each fund’s retail and defined contribution accounts for these share classes will not exceed an annual rate of 0.25% of the fund’s average assets attributable to such accounts.
Class R5 shares paid a monthly fee based on the average net assets of class R5 shares at an annual rate of 0.15%.
Class R6 shares paid a monthly fee based on the average net assets of class R6 shares at an annual rate of 0.05%.
During the reporting period, the expenses for each class of shares related to investor servicing fees were as follows:
| Class A | $7,328,193 | Class R5 | 2,813 | |
| Class B | 113,598 | Class R6 | 99,772 | |
| Class C | 254,267 | Class Y | 1,066,886 | |
| Class M | 61,866 | Total | $8,947,829 | |
| Class R | 20,434 |
The fund has entered into expense offset arrangements with Putnam Investor Services, Inc. and State Street whereby Putnam Investor Services, Inc.’s and State Street’s fees are reduced by credits allowed on cash balances. The fund also reduced expenses through brokerage/service arrangements. For the reporting period, the fund’s expenses were reduced by $59,723 under the expense offset arrangements and by $80,795 under the brokerage/service arrangements.
Each Independent Trustee of the fund receives an annual Trustee fee, of which $4,019, as a quarterly retainer, has been allocated to the fund, and an additional fee for each Trustees meeting attended. Trustees also are reimbursed for expenses they incur relating to their services as Trustees.
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 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 a Trustee for at least five years and were first elected prior to 2004. Benefits under the Pension Plan are equal to 50% of the Trustee’s average annual attendance and retainer fees for the three years ended December 31, 2005. The retirement benefit is payable during a Trustee’s lifetime, beginning the year following retirement, for the number of years of service through December 31, 2006. Pension expense for the fund is included in Trustee compensation and expenses in the Statement of operations. Accrued pension liability is included in Payable for Trustee compensation and expenses in the Statement of assets and liabilities. The Trustees have terminated the Pension Plan with respect to any Trustee first elected after 2003.
The fund has adopted distribution plans (the Plans) with respect to the following share classes pursuant to Rule 12b–1 under the Investment Company Act of 1940. The purpose of the Plans is to compensate Putnam Retail Management Limited Partnership, an indirect wholly-owned subsidiary of Putnam Investments, LLC, for services provided and expenses incurred in distributing shares of the fund. The Plans provide payments by the fund to Putnam Retail Management Limited Partnership at an annual rate of up to the following amounts (Maximum %) of the average net assets attributable to each class. The Trustees have approved payment by the fund at the following annual rate (Approved %) of the average net assets attributable to each class. During the reporting period, the class-specific expenses related to distribution fees were as follows:
| Maximum % | Approved % | Amount | |
| Class A | 0.35% | 0.25% | $10,488,676 |
| Class B | 1.00% | 1.00% | 649,451 |
| Class C | 1.00% | 1.00% | 1,454,326 |
| Class M | 1.00% | 0.75% | 265,516 |
| Class R | 1.00% | 0.50% | 58,611 |
| Total | $12,916,580 |
| 42 Growth Opportunities Fund |
For the reporting period, Putnam Retail Management Limited Partnership, acting as underwriter, received net commissions of $391,943 and $3,318 from the sale of class A and class M shares, respectively, and received $18,463 and $1,947 in contingent deferred sales charges from redemptions of class B and class C shares, respectively.
A deferred sales charge of up to 1.00% is assessed on certain redemptions of class A shares. For the reporting period, Putnam Retail Management Limited Partnership, acting as underwriter, received $830 on class A redemptions.
Note 3: Purchases and sales of securities
During the reporting period, the cost of purchases and the proceeds from sales, excluding short-term investments, were as follows:
| Cost of purchases | Proceeds from sales | |
| Investments in securities (Long-term) | $2,081,985,273 | $2,057,237,077 |
| U.S. government securities (Long-term) | — | — |
| Total | $2,081,985,273 | $2,057,237,077 |
The fund may purchase or sell investments from or to other Putnam funds in the ordinary course of business, which can reduce the fund’s transaction costs, at prices determined in accordance with SEC requirements and policies approved by the Trustees. During the reporting period, purchases or sales of long-term securities from or to other Putnam funds, if any, did not represent more than 5% of the fund’s total cost of purchases and/or total proceeds from sales.
Note 4: Capital shares
At the close of the reporting period, there were an unlimited number of shares of beneficial interest authorized. Transactions, including, if applicable, direct exchanges pursuant to share conversions, in capital shares were as follows:
| YEAR ENDED 7/31/19 | YEAR ENDED 7/31/18 | |||
| Class A | Shares | Amount | Shares | Amount |
| Shares sold | 8,774,298 | $304,217,845 | 6,669,026 | $215,788,773 |
| Shares issued in connection with | ||||
| reinvestment of distributions | 8,196,935 | 260,662,720 | 2,148,385 | 66,019,866 |
| 16,971,233 | 564,880,565 | 8,817,411 | 281,808,639 | |
| Shares repurchased | (12,377,701) | (427,845,364) | (13,005,231) | (418,479,310) |
| Net increase (decrease) | 4,593,532 | $137,035,201 | (4,187,820) | $(136,670,671) |
| YEAR ENDED 7/31/19 | YEAR ENDED 7/31/18 | |||
| Class B | Shares | Amount | Shares | Amount |
| Shares sold | 133,513 | $3,765,716 | 119,697 | $3,324,782 |
| Shares issued in connection with | ||||
| reinvestment of distributions | 192,014 | 5,101,643 | 52,425 | 1,374,592 |
| 325,527 | 8,867,359 | 172,122 | 4,699,374 | |
| Shares repurchased | (858,536) | (24,716,553) | (820,380) | (22,435,623) |
| Net decrease | (533,009) | $(15,849,194) | (648,258) | $(17,736,249) |
| Growth Opportunities Fund 43 |
| YEAR ENDED 7/31/19 | YEAR ENDED 7/31/18 | |||
| Class C | Shares | Amount | Shares | Amount |
| Shares sold | 1,494,683 | $43,999,217 | 1,012,852 | $28,523,701 |
| Shares issued in connection with | ||||
| reinvestment of distributions | 368,756 | 9,989,512 | 94,722 | 2,528,141 |
| 1,863,439 | 53,988,729 | 1,107,574 | 31,051,842 | |
| Shares repurchased | (1,538,795) | (45,484,191) | (2,341,780) | (64,973,740) |
| Net increase (decrease) | 324,644 | $8,504,538 | (1,234,206) | $(33,921,898) |
| YEAR ENDED 7/31/19 | YEAR ENDED 7/31/18 | |||
| Class M | Shares | Amount | Shares | Amount |
| Shares sold | 101,827 | $2,977,986 | 116,044 | $3,227,259 |
| Shares issued in connection with | ||||
| reinvestment of distributions | 87,876 | 2,496,774 | 19,980 | 556,057 |
| 189,703 | 5,474,760 | 136,024 | 3,783,316 | |
| Shares repurchased | (118,779) | (3,669,123) | (124,251) | (3,581,727) |
| Net increase | 70,924 | $1,805,637 | 11,773 | $201,589 |
| YEAR ENDED 7/31/19 | YEAR ENDED 7/31/18 | |||
| Class R | Shares | Amount | Shares | Amount |
| Shares sold | 75,238 | $2,422,939 | 95,473 | $2,988,885 |
| Shares issued in connection with | ||||
| reinvestment of distributions | 21,824 | 667,611 | 6,098 | 181,228 |
| 97,062 | 3,090,550 | 101,571 | 3,170,113 | |
| Shares repurchased | (171,983) | (5,805,630) | (107,530) | (3,360,916) |
| Net decrease | (74,921) | $(2,715,080) | (5,959) | $(190,803) |
| YEAR ENDED 7/31/19 | YEAR ENDED 7/31/18 | |||
| Class R5 | Shares | Amount | Shares | Amount |
| Shares sold | 4,776 | $176,248 | 8,413 | $281,235 |
| Shares issued in connection with | ||||
| reinvestment of distributions | 2,704 | 90,596 | 1,453 | 46,828 |
| 7,480 | 266,844 | 9,866 | 328,063 | |
| Shares repurchased | (40,454) | (1,478,824) | (15,901) | (531,877) |
| Net decrease | (32,974) | $(1,211,980) | (6,035) | $(203,814) |
| YEAR ENDED 7/31/19 | YEAR ENDED 7/31/18 | |||
| Class R6 | Shares | Amount | Shares | Amount |
| Shares sold | 4,187,366 | $154,660,619 | 1,464,906 | $49,753,163 |
| Shares issued in connection with | ||||
| reinvestment of distributions | 360,319 | 12,034,650 | 76,184 | 2,450,826 |
| 4,547,685 | 166,695,269 | 1,541,090 | 52,203,989 | |
| Shares repurchased | (1,551,338) | (57,212,667) | (657,234) | (22,387,582) |
| Net increase | 2,996,347 | $109,482,602 | 883,856 | $29,816,407 |
| 44 Growth Opportunities Fund |
| YEAR ENDED 7/31/19 | YEAR ENDED 7/31/18 | |||
| Class Y | Shares | Amount | Shares | Amount |
| Shares sold | 6,317,700 | $229,562,367 | 6,617,662 | $221,089,386 |
| Shares issued in connection with | ||||
| reinvestment of distributions | 1,014,159 | 33,700,515 | 234,774 | 7,517,475 |
| 7,331,859 | 263,262,882 | 6,852,436 | 228,606,861 | |
| Shares repurchased | (4,378,540) | (156,590,160) | (3,587,187) | (118,908,152) |
| Net increase | 2,953,319 | $106,672,722 | 3,265,249 | $109,698,709 |
Note 5: Affiliated transactions
Transactions during the reporting period with any company which is under common ownership or control were as follows:
| Shares | |||||
| outstanding | |||||
| and fair | |||||
| Fair value as | Purchase | Sale | Investment | value as | |
| Name of affiliate | of 7/31/18 | cost | proceeds | income | of 7/31/19 |
| Short-term investments | |||||
| Putnam Cash Collateral | |||||
| Pool, LLC* | $145,577,315 | $509,002,458 | $625,008,608 | $1,209,503 | $29,571,165 |
| Putnam Short Term | |||||
| Investment Fund** | 72,518,767 | 889,003,338 | 878,331,483 | 2,695,984 | 83,190,622 |
| Total Short-term | |||||
| investments | $218,096,082 | $1,398,005,796 | $1,503,340,091 | $3,905,487 | $112,761,787 |
*No management fees are charged to Putnam Cash Collateral Pool, LLC (Note 1). Investment income shown is included in securities lending income on the Statement of operations. There were no realized or unrealized gains or losses during the period.
**Management fees charged to Putnam Short Term Investment Fund have been waived by Putnam Management.There were no realized or unrealized gains or losses during the period.
Note 6: Market, credit and other risks
In the normal course of business, the fund trades financial instruments and enters into financial transactions where risk of potential loss exists due to changes in the market (market risk) or failure of the contracting party to the transaction to perform (credit risk). The fund may be exposed to additional credit risk that an institution or other entity with which the fund has unsettled or open transactions will default. Investments in foreign securities involve certain risks, including those related to economic instability, unfavorable political developments, and currency fluctuations.
Note 7: Summary of derivative activity
The volume of activity for the reporting period for any derivative type that was held during the period is listed below and was based on an average of the holdings at the end of each fiscal quarter:
| Purchased equity option contracts (contract amount) | $2,000,000 |
| Written equity option contracts (contract amount) | $2,000,000 |
| Forward currency contracts (contract amount) | $53,100,000 |
| Futures contracts (number of contracts) | 400 |
| Warrants (number of warrants) | 6,349 |
| Growth Opportunities Fund 45 |
The following is a summary of the fair value of derivative instruments as of the close of the reporting period:
| Fair value of derivative instruments as of the close of the reporting period | ||||
| ASSET DERIVATIVES | LIABILITY DERIVATIVES | |||
| Derivatives not | ||||
| accounted for as | Statement of | Statement of | ||
| hedging instruments | assets and | assets and | ||
| under ASC 815 | liabilities location | Fair value | liabilities location | Fair value |
| Equity contracts | Investments | $142,308 | Payables | $46,451 |
| Total | $142,308 | $46,451 | ||
The following is a summary of realized and change in unrealized gains or losses of derivative instruments in the Statement of operations for the reporting period (Note 1):
| Amount of realized gain or (loss) on derivatives recognized in net gain or (loss) on investments | ||||
| Derivatives not | ||||
| accounted for as | Forward | |||
| hedging instruments | currency | |||
| under ASC 815 | Options | Futures | contracts | Total |
| Foreign exchange | ||||
| contracts | $— | $— | $1,595,039 | $1,595,039 |
| Equity contracts | (2,716,847) | 5,079,022 | — | $2,362,175 |
| Total | $(2,716,847) | $5,079,022 | $1,595,039 | $3,957,214 |
| Change in unrealized appreciation or (depreciation) on derivatives recognized in net gain or (loss) | ||||
| on investments | ||||
| Derivatives not | ||||
| accounted for as | Forward | |||
| hedging instruments | currency | |||
| under ASC 815 | Options | Futures | contracts | Total |
| Foreign exchange | ||||
| contracts | $— | $— | $(873,817) | $(873,817) |
| Equity contracts | (3,925,097) | (45,131) | — | $(3,970,228) |
| Total | $(3,925,097) | $(45,131) | $(873,817) | $(4,844,045) |
| 46 Growth Opportunities Fund |
Note 8: Offsetting of financial and derivative assets and liabilities
The following table summarizes any derivatives, repurchase agreements and reverse repurchase agreements, at the end of the reporting period, that are subject to an enforceable master netting agreement or similar agreement. For securities lending transactions or borrowing transactions associated with securities sold short, if any, see Note 1. For financial reporting purposes, the fund does not offset financial assets and financial liabilities that are subject to the master netting agreements in the Statement of assets and liabilities.
| Citibank, N. A. | Total | |
| Assets: | ||
| Purchased options**# | $142,308 | $142,308 |
| Total Assets | $142,308 | $142,308 |
| Liabilities: | ||
| Written options# | $46,451 | $46,451 |
| Total Liabilities | $46,451 | $46,451 |
| Total Financial and Derivative Net Assets | $95,857 | $95,857 |
| Total collateral received (pledged)†## | $95,857 | |
| Net amount | $— | |
| Controlled collateral received (including TBA commitments)** | $280,000 | $280,000 |
| Uncontrolled collateral received | $— | $— |
| Collateral (pledged) (including TBA commitments)** | $— | $— |
**Included with Investments in securities on the Statement of assets and liabilities.
†Additional collateral may be required from certain brokers based on individual agreements.
#Covered by master netting agreement (Note 1).
##Any over-collateralization of total financial and derivative net assets is not shown. Collateral may include amounts related to unsettled agreements.
| Growth Opportunities Fund 47 |
Federal tax information (Unaudited)
Pursuant to §852 of the Internal Revenue Code, as amended, the fund hereby designates $255,607,301 as a capital gain dividend with respect to the taxable year ended July 31, 2019, or, if subsequently determined to be different, the net capital gain of such year.
The fund designated 100% of ordinary income distributions as qualifying for the dividends received deduction for corporations.
For the reporting period, the fund hereby designates 100%, or the maximum amount allowable, of its taxable ordinary income distributions as qualified dividends taxed at the individual net capital gain rates.
For the reporting period, pursuant to §871(k) of the Internal Revenue Code, the fund hereby designates $293,511 of distributions paid as qualifying to be taxed as interest-related dividends, and no monies to be taxed as short-term capital gain dividends for nonresident alien shareholders.
The Form 1099 that will be mailed to you in January 2020 will show the tax status of all distributions paid to your account in calendar 2019.
| 48 Growth Opportunities Fund |
| Growth Opportunities Fund 49 |
*Mr. Reynolds is an “interested person” (as defined in the Investment Company Act of 1940) of the fund and Putnam Investments. He is President and Chief Executive Officer of Putnam Investments, as well as the President of your fund and each of the other Putnam funds.
The address of each Trustee is 100 Federal Street, Boston, MA 02110.
As of July 31, 2019, there were 91 Putnam funds. All Trustees serve as Trustees of all Putnam funds.
Each Trustee serves for an indefinite term, until his or her resignation, retirement at age 75, removal, or death.
| 50 Growth Opportunities Fund |
Officers
In addition to Robert L. Reynolds, the other officers of the fund are shown below:
| Robert T. Burns(Born 1961) | Richard T. Kircher(Born 1962) |
| Vice President and Chief Legal Officer | Vice President and BSA Compliance Officer |
| Since 2011 | Since 2019 |
| General Counsel, Putnam Investments, | Assistant Director, Operational Compliance, Putnam |
| Putnam Management, and Putnam Retail Management | Investments and Putnam Retail Management |
| James F. Clark(Born 1974) | Susan G. Malloy(Born 1957) |
| Vice President and Chief Compliance Officer | Vice President and Assistant Treasurer |
| Since 2016 | Since 2007 |
| Chief Compliance Officer and Chief Risk Officer, | Head of Accounting and Middle Office Services, |
| Putnam Investments and Chief Compliance Officer, | Putnam Investments and Putnam Management |
| Putnam Management | |
| Denere P. Poulack(Born 1968) | |
| Nancy E. Florek(Born 1957) | Assistant Vice President, Assistant Clerk, |
| Vice President, Director of Proxy Voting and Corporate | and Assistant Treasurer |
| Governance, Assistant Clerk, and Assistant Treasurer | Since 2004 |
| Since 2000 | |
| Janet C. Smith(Born 1965) | |
| Michael J. Higgins(Born 1976) | Vice President, Principal Financial Officer, Principal |
| Vice President, Treasurer, and Clerk | Accounting Officer, and Assistant Treasurer |
| Since 2010 | Since 2007 |
| Head of Fund Administration Services, | |
| Jonathan S. Horwitz(Born 1955) | Putnam Investments and Putnam Management |
| Executive Vice President, Principal Executive Officer, | |
| and Compliance Liaison | Mark C. Trenchard(Born 1962) |
| Since 2004 | Vice President |
| Since 2002 | |
| Director of Operational Compliance, Putnam | |
| Investments and Putnam Retail Management | |
The principal occupations of the officers for the past five years have been with the employers as shown above, although in some cases they have held different positions with such employers. The address of each officer is 100 Federal Street, Boston, MA 02110.
| Growth Opportunities Fund 51 |
Services for shareholders
Investor services
Systematic investment planTell us how much you wish to invest regularly — weekly, semimonthly, or monthly — and the amount you choose will be transferred automatically from your checking or savings account. There’s no additional fee for this service, and you can suspend it at any time. This plan may be a great way to save for college expenses or to plan for your retirement.
Please note that regular investing does not guarantee a profit or protect against loss in a declining market. Before arranging a systematic investment plan, consider your financial ability to continue making purchases in periods when prices are low.
Systematic exchangeYou can make regular transfers from one Putnam fund to another Putnam fund. There are no additional fees for this service, and you can cancel or change your options at any time.
Dividends PLUSYou can choose to have the dividend distributions from one of your Putnam funds automatically reinvested in another Putnam fund at no additional charge.
Free exchange privilegeYou can exchange money between Putnam funds free of charge, as long as they are the same class of shares. A signature guarantee is required if you are exchanging more than $500,000. The fund reserves the right to revise or terminate the exchange privilege.
Reinstatement privilegeIf you’ve sold Putnam shares or received a check for a dividend or capital gain, you may reinvest the proceeds with Putnam within 90 days of thetransaction and they will be reinvested at the fund’s current net asset value — with no sales charge. However, reinstatement of class B shares may have special tax consequences. Ask your financial or tax representative for details.
Check-writing serviceYou have ready access to many Putnam accounts. It’s as simple as writing a check, and there are no special fees or service charges. For more information about the check-writing service, call Putnam or visit our website.
Dollar cost averagingWhen you’re investing for long-term goals, it’s time, not timing, that counts. Investing on a systematic basis is a better strategy than trying to figure out when the markets will go up or down. This means investing the same amount of money regularly over a long period. This method of investing is called dollar cost averaging. When a fund’s share price declines, your investment dollars buy more shares at lower prices. When it increases, they buy fewer shares. Over time, you will pay a lower average price per share.
For more information
Visit the Individual Investors section at putnam.comA secure section of our website contains complete information on your account, including balances and transactions, updated daily. You may also conduct transactions, such as exchanges, additional investments, and address changes. Log on today to get your password.
Call us toll free at 1-800-225-1581Ask a helpful Putnam representative or your financial advisor for details about any of these or other services, or see your prospectus.
| 52 Growth Opportunities Fund |
Fund information
Founded over 80 years ago, Putnam Investments was built around the concept that a balance between risk and reward is the hallmark of a well-rounded financial program. We manage funds across income, value, blend, growth, sustainable, asset allocation, absolute return, and global sector categories.
| Investment Manager | Trustees | Michael J. Higgins |
| Putnam Investment | Kenneth R. Leibler,Chair | Vice President, Treasurer, |
| Management, LLC | Liaquat Ahamed | and Clerk |
| 100 Federal Street | Ravi Akhoury | |
| Boston, MA 02110 | Barbara M. Baumann | Jonathan S. Horwitz |
| Katinka Domotorffy | Executive Vice President, | |
| Investment Sub-Advisor | Catharine Bond Hill | Principal Executive Officer, |
| Putnam Investments Limited | Paul L. Joskow | and Compliance Liaison |
| 16 St James’s Street | Robert E. Patterson | |
| London, England SW1A 1ER | George Putnam, III | Richard T. Kircher |
| Robert L. Reynolds | Vice President and BSA | |
| Marketing Services | Manoj P. Singh | Compliance Officer |
| Putnam Retail Management | ||
| 100 Federal Street | Officers | Susan G. Malloy |
| Boston, MA 02110 | Robert L. Reynolds | Vice President and |
| President | Assistant Treasurer | |
| Custodian | ||
| State Street Bank | Robert T. Burns | Denere P. Poulack |
| and Trust Company | Vice President and | Assistant Vice President, Assistant |
| Chief Legal Officer | Clerk, and Assistant Treasurer | |
| Legal Counsel | ||
| Ropes & Gray LLP | James F. Clark | Janet C. Smith |
| Vice President, Chief Compliance | Vice President, | |
| Independent Registered Public | Officer, and Chief Risk Officer | Principal Financial Officer, |
| Accounting Firm | Principal Accounting Officer, | |
| KPMG LLP | Nancy E. Florek | and Assistant Treasurer |
| Vice President, Director of | ||
| Proxy Voting and Corporate | Mark C. Trenchard | |
| Governance, Assistant Clerk, | Vice President | |
| and Assistant Treasurer |
This report is for the information of shareholders of Putnam Growth Opportunities Fund. It may also be used as sales literature when preceded or accompanied by the current prospectus, the most recent copy of Putnam’s Quarterly Performance Summary, and Putnam’s Quarterly Ranking Summary. For more recent performance, please visit putnam.com. Investors should carefully consider the investment objectives, risks, charges, and expenses of a fund, which are described in its prospectus. For this and other information or to request a prospectus or summary prospectus, call 1-800-225-1581 toll free. Please read the prospectus carefully before investing. The fund’s Statement of Additional Information contains additional information about the fund’s Trustees and is available without charge upon request by calling 1-800-225-1581.
| Item 2. Code of Ethics: |
| (a) The fund's principal executive, financial and accounting officers are employees of Putnam Investment Management, LLC, the Fund's investment manager. As such they are subject to a comprehensive Code of Ethics adopted and administered by Putnam Investments which is designed to protect the interests of the firm and its clients. The Fund has adopted a Code of Ethics which incorporates the Code of Ethics of Putnam Investments with respect to all of its officers and Trustees who are employees of Putnam Investment Management, LLC. For this reason, the Fund has not adopted a separate code of ethics governing its principal executive, financial and accounting officers. |
| (c) In February 2018, the Code of Ethics of Putnam Investments was amended. The key changes to the Code of Ethics are as follows: (i) Prohibition of investing in public coin offerings or token offerings, (ii) Removal of monetary fines as available sanctions for violations of the Code of Ethics, and (iii) Expanded definition of “Immediate Family Member”. |
| Item 3. Audit Committee Financial Expert: |
| The Funds' Audit, Compliance and Distributions Committee is comprised solely of Trustees who are “independent” (as such term has been defined by the Securities and Exchange Commission (“SEC”) in regulations implementing Section 407 of the Sarbanes-Oxley Act (the “Regulations”)). The Trustees believe that each of the members of the Audit, Compliance and Distributions Committee also possess a combination of knowledge and experience with respect to financial accounting matters, as well as other attributes, that qualify them for service on the Committee. In addition, the Trustees have determined that each of Mr. Patterson, Ms. Baumann and Mr. Singh qualifies as an “audit committee financial expert” (as such term has been defined by the Regulations) based on their review of his or her pertinent experience and education. The SEC has stated, and the funds' amended and restated agreement and Declaration of Trust provides, that the designation or identification of a person as an audit committee financial expert pursuant to this Item 3 of Form N-CSR does not impose on such person any duties, obligations or liability that are greater than the duties, obligations and liability imposed on such person as a member of the Audit, Compliance and Distribution Committee and the Board of Trustees in the absence of such designation or identification. |
| Item 4. Principal Accountant Fees and Services: |
| The following table presents fees billed in each of the last two fiscal years for services rendered to the fund by the fund's independent auditor: |
| Fiscal year ended | Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees | |
| July 31, 2019 | $54,888 | $ — | $4,910 | $ — | |
| July 31, 2018 | $52,852 | $ — | $4,813 | $ — | |
| For the fiscal years ended July 31, 2019 and July 31, 2018, the fund's independent auditor billed aggregate non-audit fees in the amounts of $4,910 and $4,813 respectively, to the fund, Putnam Management and any entity controlling, controlled by or under common control with Putnam Management that provides ongoing services to the fund. |
| Audit Fees represent fees billed for the fund's last two fiscal years relating to the audit and review of the financial statements included in annual reports and registration statements, and other services that are normally provided in connection with statutory and regulatory filings or engagements. |
| Audit-Related Fees represent fees billed in the fund's last two fiscal years for services traditionally performed by the fund's auditor, including accounting consultation for proposed transactions or concerning financial accounting and reporting standards and other audit or attest services not required by statute or regulation. |
| Tax Fees represent fees billed in the fund's last two fiscal years for tax compliance, tax planning and tax advice services. Tax planning and tax advice services include assistance with tax audits, employee benefit plans and requests for rulings or technical advice from taxing authorities. |
| Pre-Approval Policies of the Audit, Compliance and Distributions Committee. The Audit, Compliance and Distributions Committee of the Putnam funds has determined that, as a matter of policy, all work performed for the funds by the funds' independent auditors will be pre-approved by the Committee itself and thus will generally not be subject to pre-approval procedures. |
| The Audit, Compliance and Distributions Committee also has adopted a policy to pre-approve the engagement by Putnam Management and certain of its affiliates of the funds' independent auditors, even in circumstances where pre-approval is not required by applicable law. Any such requests by Putnam Management or certain of its affiliates are typically submitted in writing to the Committee and explain, among other things, the nature of the proposed engagement, the estimated fees, and why this work should be performed by that particular audit firm as opposed to another one. In reviewing such requests, the Committee considers, among other things, whether the provision of such services by the audit firm are compatible with the independence of the audit firm. |
| The following table presents fees billed by the fund's independent auditor for services required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2–01 of Regulation S-X. |
| Fiscal year ended | Audit-Related Fees | Tax Fees | All Other Fees | Total Non-Audit Fees | |
| July 31, 2019 | $ — | $ — | $ — | $ — | |
| July 31, 2018 | $ — | $ — | $ — | $ — | |
| Item 5. Audit Committee of Listed Registrants |
| Not applicable |
Item 6. Schedule of Investments: |
| The registrant's schedule of investments in unaffiliated issuers is included in the report to shareholders in Item 1 above. |
| Item 7. Disclosure of Proxy Voting Policies and Procedures For Closed-End Management Investment Companies: |
| Not applicable |
Item 8. Portfolio Managers of Closed-End Investment Companies |
| Not Applicable |
Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers: |
| Not applicable |
Item 10. Submission of Matters to a Vote of Security Holders: |
| Not applicable |
Item 11. Controls and Procedures: |
| (a) The registrant's principal executive officer and principal financial officer have concluded, based on their evaluation of the effectiveness of the design and operation of the registrant's disclosure controls and procedures as of a date within 180 days of the filing date of this report, that the design and operation of such procedures are generally effective to provide reasonable assurance that information required to be disclosed by the registrant in this report is recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms. |
| (b) Changes in internal control over financial reporting: Not applicable |
Item 12. Disclosures of Securities Lending Activities for Closed-End Management Investment Companies: |
| Not Applicable |
Item 13. Exhibits: |
| (a)(1) The Code of Ethics of The Putnam Funds, which incorporates the Code of Ethics of Putnam Investments, is filed herewith. |
| (a)(2) Separate certifications for the principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940, as amended, are filed herewith. |
| (b) The certifications required by Rule 30a-2(b) under the Investment Company Act of 1940, as amended, are filed herewith. |
| SIGNATURES |
| Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. |
| Putnam Investment Funds |
| By (Signature and Title): |
| /s/ Janet C. Smith Janet C. Smith Principal Accounting Officer |
| Date: September 26, 2019 |
| Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. |
| By (Signature and Title): |
| /s/ Jonathan S. Horwitz Jonathan S. Horwitz Principal Executive Officer |
| Date: September 26, 2019 |
| By (Signature and Title): |
| /s/ Janet C. Smith Janet C. Smith Principal Financial Officer |
| Date: September 26, 2019 |