Putnam
Value
Fund
SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK
10-31-98
[LOGO: BOSTON * LONDON * TOKYO]
The following report contains a list of your fund's portfolio holdings and
complete financial statements since the fund's inception on 5/4/98.
Additional details, including fund strategy, performance, and managers'
outlook, will be provided in the annual report, which will cover the 12
months ended 4/30/99.
<TABLE>
<CAPTION>
Portfolio of investments owned
October 31, 1998 (Unaudited)
COMMON STOCKS (96.1%) (a)
NUMBER OF SHARES VALUE
<S> <C> <C>
Aerospace and Defense (0.9%)
- --------------------------------------------------------------------------------------------------------------------------
300 Raytheon Co. Class B $ 17,419
Airlines (1.5%)
- --------------------------------------------------------------------------------------------------------------------------
150 Delta Air Lines, Inc. 15,834
200 UAL Corp. (NON) 12,988
--------------
28,822
Automotive (2.4%)
- --------------------------------------------------------------------------------------------------------------------------
500 Ford Motor Co. 27,125
280 General Motors Corp. 17,658
--------------
44,783
Banks (9.0%)
- --------------------------------------------------------------------------------------------------------------------------
617 Bank One Corp. 30,156
350 BankBoston Corp. 12,884
300 Chase Manhattan Corp. 17,044
250 First Union Corp. 14,500
400 Mercantile Bancorpation, Inc. 18,275
350 PNC Bank Corp. 17,500
200 Summit Bancorp 7,588
500 Synovus Financial Corp. 11,594
588 Charter One Financial, Inc. 16,133
450 Washington Mutual, Inc. 16,847
20 Wells Fargo & Co. 7,400
--------------
169,921
Building Products (0.6%)
- --------------------------------------------------------------------------------------------------------------------------
400 Masco Corp. 11,275
Chemicals (2.6%)
- --------------------------------------------------------------------------------------------------------------------------
100 Dow Chemical Co. 9,363
400 du Pont (E.I.) de Nemours & Co., Ltd. 23,000
300 Eastman Chemical Co. 17,625
--------------
49,988
Computer Equipment (2.1%)
- --------------------------------------------------------------------------------------------------------------------------
700 Compaq Computer Corp. 22,138
300 Sun Microsystems, Inc. (NON) 17,475
--------------
39,613
Computers (2.0%)
- --------------------------------------------------------------------------------------------------------------------------
250 IBM Corp. 37,109
Conglomerates (1.3%)
- --------------------------------------------------------------------------------------------------------------------------
300 Minnesota Mining & Manufacturing Co. 24,000
Consumer Products (0.8%)
- --------------------------------------------------------------------------------------------------------------------------
300 Kimberly-Clark Corp. 14,475
Containers (1.3%)
- --------------------------------------------------------------------------------------------------------------------------
500 Owens-Illinois, Inc. (NON) 15,281
200 Temple Inland, Inc. 9,713
--------------
24,994
Electric Utilities (6.9%)
- --------------------------------------------------------------------------------------------------------------------------
500 Ameren Corp. 19,969
350 Duke Energy Corp. 22,641
200 Edison International 5,304
700 Entergy Corp. 20,125
800 OGE Energy Corp. 21,250
800 P P & L Resources, Inc. 21,700
700 Potomac Electric Power Co. 18,331
--------------
129,320
Electronics and Electrical Equipment (2.4%)
- --------------------------------------------------------------------------------------------------------------------------
150 Eaton Corp. 10,153
300 Emerson Electric Co. 19,800
300 Motorola, Inc. 15,600
--------------
45,553
Farm Equipment (0.8%)
- --------------------------------------------------------------------------------------------------------------------------
450 Deere (John) & Co. 15,919
Financial Services (12.2%)
- --------------------------------------------------------------------------------------------------------------------------
900 BankAmerica Corp. 51,721
900 Citigroup, Inc. 42,356
300 Fannie Mae 21,244
450 Household International, Inc. 16,453
500 KeyCorp 15,156
400 Lehman Brothers Holding, Inc. 15,175
180 Morgan (J.P.) & Co., Inc. 16,965
380 Morgan Stanley, Dean Witter, Discover and Co. 24,605
700 Norwest Corp. 26,031
--------------
229,706
Food and Beverages (5.4%)
- --------------------------------------------------------------------------------------------------------------------------
400 Anheuser-Busch Cos., Inc. 23,775
410 PepsiCo, Inc. 13,838
600 ConAgra, Inc. 18,263
225 Heinz (H.J.) Co. 13,078
300 Nabisco Holdings Corp. Class A 11,325
350 Wendy's International, Inc. 7,721
600 Whitman Corp. 12,863
--------------
100,863
Health Care Services (1.3%)
- --------------------------------------------------------------------------------------------------------------------------
800 Columbia/HCA Healthcare Corp. 16,800
700 HEALTHSOUTH Corp. (NON) 8,488
--------------
25,288
Insurance and Finance (5.3%)
- --------------------------------------------------------------------------------------------------------------------------
360 Allstate Corp. 15,503
400 American General Corp. 27,400
300 CIGNA Corp. 21,881
335 Hartford Financial Services Group 17,797
400 Reliastar Financial Corp. 17,525
--------------
100,106
Leisure (0.7%)
- --------------------------------------------------------------------------------------------------------------------------
400 Hasbro, Inc. 14,025
Medical Supplies and Devices (1.0%)
- --------------------------------------------------------------------------------------------------------------------------
300 Baxter International, Inc. 17,981
Office Equipment (1.0%)
- --------------------------------------------------------------------------------------------------------------------------
200 Xerox Corp. 19,375
Oil and Gas (10.5%)
- --------------------------------------------------------------------------------------------------------------------------
300 Amoco Corp. 16,838
250 Atlantic Richfield Co. 17,219
352 British Petroleum PLC ADR (United Kingdom) 31,130
300 Chevron, Inc. 24,450
200 Conoco, Inc. (NON) 4,975
300 Enron Corp. 15,825
600 Exxon Corp. 42,750
350 Kerr-McGee Corp. 13,956
400 Mobil Corp. 30,275
--------------
197,418
Paper (1.2%)
- --------------------------------------------------------------------------------------------------------------------------
500 Weyerhaeuser Co. 23,406
Pharmaceuticals and Biotechnology (1.5%)
- --------------------------------------------------------------------------------------------------------------------------
260 Bristol-Myers Squibb Co. 28,746
Photography (1.0%)
- --------------------------------------------------------------------------------------------------------------------------
250 Eastman Kodak Co. 19,375
Publishing (0.5%)
- --------------------------------------------------------------------------------------------------------------------------
100 McGraw-Hill, Inc. 8,994
Railroads (1.2%)
- --------------------------------------------------------------------------------------------------------------------------
720 Burlington Northern Santa Fe Corp. 22,230
REIT's (Real Estate Investment Trust) (1.9%)
- --------------------------------------------------------------------------------------------------------------------------
500 Equity Residential Properties Trust (R) 21,000
500 Starwood Lodging Trust 14,156
--------------
35,156
Retail (2.8%)
- --------------------------------------------------------------------------------------------------------------------------
250 Albertsons, Inc. 13,891
300 May Department Stores Co. 18,300
450 Sears, Roebuck & Co. 20,222
--------------
52,413
Semiconductors (1.4%)
- --------------------------------------------------------------------------------------------------------------------------
400 Texas Instruments, Inc. 25,575
Telephone Services (8.2%)
- --------------------------------------------------------------------------------------------------------------------------
430 American Telephone & Telegraph Co. 26,767
800 Ameritech Corp. 43,150
300 Bell Atlantic Corp. 15,937
700 GTE Corp. 41,080
600 SBC Communications, Inc. 27,787
--------------
154,721
Tobacco (1.4%)
- --------------------------------------------------------------------------------------------------------------------------
500 Philip Morris Cos., Inc. 25,562
Transportation (0.3%)
- --------------------------------------------------------------------------------------------------------------------------
100 FDX Corp. (NON) 5,255
Trucking (0.8%)
- --------------------------------------------------------------------------------------------------------------------------
600 Ryder System, Inc. 14,775
Utilities (1.9%)
- --------------------------------------------------------------------------------------------------------------------------
600 Sempra Energy 15,600
100 Texas Utilities 4,388
450 Western Resources, Inc. 15,750
--------------
35,738
--------------
Total Common Stocks (cost $1,914,623) $ 1,809,899
SHORT-TERM INVESTMENTS (4.0%) (a) (cost $75,022)
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------
$ 75,000 Interest in $468,338,000 joint tri-party repurchase
agreement dated October 30, 1998 with Warburg
Securities due November 2, 1998 with respect to
various U.S. Treasury obligations -- maturity value
of $75,034 for an effective yield of 5.38% $ 75,022
- --------------------------------------------------------------------------------------------------------------------------
Total Investments (cost $1,989,645) (b) $ 1,884,921
- --------------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $1,884,344.
(b) The aggregate identified cost on a tax basis is $1,989,645 resulting in gross unrealized appreciation and
depreciation of $91,887 and $196,611, respectively, or net unrealized depreciation of $104,724.
(NON) Non-income-producing security.
(R) Real Estate Investment Trust.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
October 31, 1998 (Unaudited)
<S> <C>
Assets
- -----------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $1,989,645 (Note 1) $ 1,884,921
- -----------------------------------------------------------------------------------------------
Cash 413
- -----------------------------------------------------------------------------------------------
Dividends and interest receivable 1,399
- -----------------------------------------------------------------------------------------------
Receivable for securities sold 53,891
- -----------------------------------------------------------------------------------------------
Receivable from manager (Note 2) 2,635
- -----------------------------------------------------------------------------------------------
Total assets 1,943,259
Liabilities
- -----------------------------------------------------------------------------------------------
Payable for securities purchased 48,475
- -----------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 340
- -----------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 20
- -----------------------------------------------------------------------------------------------
Other accrued expenses 10,080
- -----------------------------------------------------------------------------------------------
Total liabilities 58,915
- -----------------------------------------------------------------------------------------------
Net assets $1,884,344
Represented by
- -----------------------------------------------------------------------------------------------
Paid-in capital (Notes 1, 4 and 5) $ 2,023,074
- -----------------------------------------------------------------------------------------------
Undistributed net investment income (Note 1) 13,041
- -----------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (Note 1) (47,047)
- -----------------------------------------------------------------------------------------------
Net unrealized depreciation of investments (104,724)
- -----------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $1,884,344
Computation of net asset value and offering price
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($1,884,344 divided by 238,104 shares) $7.91
- -----------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $7.91)* $8.39
- -----------------------------------------------------------------------------------------------
* On single retail sales of less than $50,000 or more and on group sales the offering
price is reduced.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
For the period May 4, 1998 (commencement of operations)
to October 31, 1998 (Unaudited)
<S> <C>
Investment income:
- -----------------------------------------------------------------------------------------------
Dividends (net of foreign tax of $39) $ 21,110
- -----------------------------------------------------------------------------------------------
Expenses:
- -----------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 6,521
- -----------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 1,797
- -----------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 746
- -----------------------------------------------------------------------------------------------
Administrative services (Note 2) 23
- -----------------------------------------------------------------------------------------------
Reports to shareholders 2,160
- -----------------------------------------------------------------------------------------------
Registration fees 605
- -----------------------------------------------------------------------------------------------
Auditing 6,012
- -----------------------------------------------------------------------------------------------
Legal 2,295
- -----------------------------------------------------------------------------------------------
Other 3
- -----------------------------------------------------------------------------------------------
Fees waived and reimbursed by manager (Note 2) (10,847)
- -----------------------------------------------------------------------------------------------
Total expenses 9,315
- -----------------------------------------------------------------------------------------------
Expense reduction (Note 2) (1,246)
- -----------------------------------------------------------------------------------------------
Net expenses 8,069
- -----------------------------------------------------------------------------------------------
Net investment income 13,041
- -----------------------------------------------------------------------------------------------
Net realized loss on investments (Notes 1 and 3) (47,047)
- -----------------------------------------------------------------------------------------------
Net unrealized depreciation of investments during the period (104,724)
- -----------------------------------------------------------------------------------------------
Net loss on investments (151,771)
- -----------------------------------------------------------------------------------------------
Net decrease in net assets resulting from operations $(138,730)
- -----------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
For the period
May 4, 1998
(commencement
of operations) to
October 31, 1998*
- ---------------------------------------------------------------------------------------------------------------
<S> <C>
Decrease in net assets
- ---------------------------------------------------------------------------------------------------------------
Operations:
- ---------------------------------------------------------------------------------------------------------------
Net investment income $ 13,041
- ---------------------------------------------------------------------------------------------------------------
Net realized loss on investments (47,047)
- ---------------------------------------------------------------------------------------------------------------
Net unrealized depreciation of investments (104,724)
- ---------------------------------------------------------------------------------------------------------------
Net decrease in net assets resulting from operations (138,730)
- ---------------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 23,074
- ---------------------------------------------------------------------------------------------------------------
Total decrease in net assets (115,656)
Net assets
- ---------------------------------------------------------------------------------------------------------------
Beginning of period $2,000,000
- ---------------------------------------------------------------------------------------------------------------
End of period (including undistributed
net investment income $13,041) $1,884,344
- ---------------------------------------------------------------------------------------------------------------
* Unaudited
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
- ------------------------------------------------------------------------------------------------------------------------------------
For the period
May 4, 1998+
Per-share to October 31
operating performance (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Net asset value,
beginning of period $8.50
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (a)(d) .05
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
loss on investments (.64)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations (.59)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $7.91
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(b) (6.94)*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $1,884
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c)(d) .50*
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)(d) .69*
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 54.18*
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Per share net investment income has been determined on the basis of the weighted average
number of shares outstanding during the period.
(b) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(c) Includes amounts paid through expense offset arrangements (Note 2).
(d) Reflects an expense limitation in effect during the period. As a result of such limitation,
expenses for the fund reflect a reduction of $0.05 per share. (See Note 1).
</TABLE>
Notes to financial statements
October 31, 1998 (Unaudited)
Note 1
Significant accounting policies
Putnam Value Fund (the "fund") is a series of Putnam Fund Trust (the
"trust") which is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company. The
objective of the fund is to seek capital appreciation, and as a secondary
objective, current income by investing primarily in common stocks of U.S.
companies that Putnam Investment Management, Inc. ("Putnam Management"),
the fund's manager, a wholly-owned subsidiary of Putnam Investments, Inc.
believes are undervalued in relation to underlying asset values or
earnings potential and have the potential of long-term appreciation.
The following is a summary of significant accounting policies consistently
followed by the fund in the preparation of its financial statements. The
preparation of financial statements is in conformity with generally
accepted accounting principles and requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities. Actual results could differ from those estimates.
A) Security valuation Investments for which market quotations are readily
available are stated at market value, which is determined using the last
reported sale price, or, if no sales are reported -- as in the case of
some securities traded over-the-counter -- the last reported bid price.
Short-term investments having remaining maturities of 60 days or less are
stated at amortized cost, which approximates market value and other
investments are stated at fair market value following procedures approved
by the Trustees.
B) Joint trading account Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the fund may transfer uninvested cash
balances into a joint trading account along with the cash of other
registered investment companies and certain other accounts managed by
Putnam Management. These balances may be invested in one or more
repurchase agreements and/or short-term money market instruments.
C) Repurchase agreements The fund, or any joint trading account, through
its custodian, receives delivery of the underlying securities, the market
value of which at the time of purchase is required to be in an amount at
least equal to the resale price, including accrued interest. Collateral
for certain tri-party repurchase agreements is held at the counterparty's
custodian in a segregated account for the benefit of the fund and the
counterparty. Putnam Management is responsible for determining that the
value of these underlying securities is at all times at least equal to the
resale price, including accrued interest.
D) Security transactions and related investment income Security
transactions are accounted for on the trade date (date the order to buy or
sell is executed). Dividend income is recorded on the ex-dividend date.
E) Federal taxes It is the policy of the fund to distribute all of its
taxable income within the prescribed time and otherwise comply with the
provisions of the Internal Revenue Code applicable to regulated investment
companies. It is also the intention of the fund to distribute an amount
sufficient to avoid imposition of any excise tax under Section 4982 of the
Internal Revenue Code of 1986. Therefore, no provision has been made for
federal taxes on income, capital gains or unrealized appreciation on
securities held and for excise tax on income and capital gains.
F) Distributions to shareholders Distributions to shareholders from net
investment income are recorded by the fund on the ex-dividend date.
Capital gain distributions, if any, are recorded on the ex-dividend date
and paid at least annually. The amount and character of income and gains
to be distributed are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles.
Reclassifications are made to the fund's capital accounts to reflect
income and gains available for distribution (or available capital loss
carryovers) under income tax regulations.
G) Expenses of the trust Expenses directly charged or attributable to any
fund will be paid from the assets of that fund. Generally, expenses of the
trust will be allocated among and charged to the assets of each fund on a
basis that the Trustees deem fair and equitable, which may be based on the
relative assets of each fund or the nature of the services performed and
relative applicability to each fund.
Note 2
Management fee, administrative
services, and other transactions
Compensation of Putnam Management for management and investment advisory
services is paid quarterly based on the average net assets of the fund for
the quarter. Such fee is based on the following annual rates: 0.80% of the
first $500 million of the fund's average net assets; 0.70% of the next
$500 million; 0.65% of the next $500 million; 0.60% of the next $5
billion; 0.575% of the next $5 billion; 0.555% of the next $5 billion;
0.54% of the next $5 billion; and 0.53% thereafter.
Putnam Management has agreed to limit its compensation (and, to the extent
necessary, bear other expenses) through April 30, 1999, to the extent that
expenses of the fund (exclusive of brokerage commissions, interest, taxes,
extraordinary expense, credits from Putnam Fiduciary Trust Company (PFTC),
a subsidiary of Putnam Investments, Inc. and payments under the Trust's
distribution plan) would exceed an annual rate of 1.00% of the fund's
average net assets.
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.
The fund reimburses Putnam Management for the compensation and related
expenses of certain officers of the fund and their staff who provide
administrative services to the fund. The aggregate amount of all such
reimbursements is determined annually by the Trustees.
Custodial functions for the fund's assets are provided by PFTC. Investor
servicing agent functions are provided by Putnam Investor Services, a
division of PFTC.
For the period ended October 31, 1998, fund expenses were reduced by
$1,246 under expense offset arrangements with PFTC. Investor servicing and
custodian fees reported in the Statement of operations exclude these
credits. The fund could have invested a portion of the assets utilized in
connection with the expense offset arrangements in an income producing
asset if it had not entered into such arrangements.
Each Trustee of the fund receives an annual Trustee fee, of which $100 as
been allocated to the fund, and an additional fee for each Trustee's
meeting attended. Trustees who are not interested persons of Putnam
Management and who serve on committees of the Trustees receive additional
fees for attendance at certain committee meetings.
The fund has adopted a Trustee Fee Deferral Plan (the "Deferral Plan")
which allows the Trustees to defer the receipt of all or a portion of
Trustees Fees payable on or after July 1, 1995. The deferred fees remain
in the fund and are invested in certain Putnam funds until distribution in
accordance with the Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension
plan (the "Pension Plan") covering all Trustees of the fund who have
served as Trustee for at least five years. Benefits under the Pension Plan
are equal to 50% of the Trustee's average total retainer and meeting fees
for the three years preceding retirement. Pension expense for the fund is
included in Compensation of trustees in the Statement of operations.
Accrued pension liability is included in Payable for compensation of
Trustees in the Statement of assets and liabilities.
The fund has adopted a distribution plan (the "Plan") with respect to its
class A shares pursuant to Rule 12b-1 under the Investment Company Act of
1940. The purpose of the Plan is to compensate Putnam Mutual Funds Corp.,
a wholly-owned subsidiary of Putnam Investments, Inc., for services
provided and expenses incurred by it in distributing shares of the fund.
The Plan provides for payments by the fund to Putnam Mutual Funds Corp. at
an annual rate up to 0.35% of the average net assets attributable to class
A shares. The fund is not currently making any payments pursuant to the
Plan.
For the period ended October 31, 1998, Putnam Mutual Funds Corp., acting
as underwriter received no net commissions from the sale of class A
shares. A deferred sales charge of up to 1% is assessed on certain
redemptions of class A shares. For the period ended October 31, 1998,
Putnam Mutual Funds Corp., acting as underwriter received no monies on
class A redemptions.
Note 3
Purchases and sales of securities
During the period ended October 31, 1998, purchases and sales of
investment securities other than short-term investments aggregated
$2,797,807 and $835,551, respectively. There were no purchases and sales
of U.S. government obligations. In determining the net gain or loss on
securities sold, the cost of securities has been determined on the
identified cost basis.
Note 4
Capital shares
At October 31, 1998, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
For the period
May 4, 1998
(commencement of
operations) to
October 31, 1998
- -----------------------------------------------------------------------------
Class A Shares Amount
- -----------------------------------------------------------------------------
Shares sold 2,815 $23,115
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- -----------------------------------------------------------------------------
2,815 23,115
Shares
repurchased (5) (41)
- -----------------------------------------------------------------------------
Net increase 2,810 $23,074
- -----------------------------------------------------------------------------
Note 5
Initial capitalization
and offering of shares
The fund was established as a Massachusetts business trust on January 22,
1996. During the period January 22, 1996 to May 4, 1998, the fund had no
operations other than those related to organizational matters, including
the initial capital contribution of $2,000,000 and the issuance of 235,294
shares to Putnam Mutual Funds Corp., a wholly-owned subsidiary of Putnam
Investments, Inc. on May 1, 1998.
At October 31, 1998, Putnam Investments, Inc. owned 235,294 shares of the
fund (98.80% of class A shares outstanding), valued at $1,861,176.
Fund information
INVESTMENT MANAGER
Putnam Investment
Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
TRUSTEES
George Putnam, Chairman
William F. Pounds, Vice Chairman
John A. Hill, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John H. Mullin III
Robert E. Patterson
Donald S. Perkins
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
John D. Hughes
Senior Vice President and Treasurer
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Ian C. Ferguson
Vice President
Brett C. Browchuk
Vice President
Thomas V. Reilly
Vice President
Anthony I. Kreisel
Vice President
Edward P. Bousa
Vice President and Fund Manager
John R. Verani
Vice President
Beverly Marcus
Clerk and Assistant Treasurer
This report is for the information of shareholders of Putnam Value Fund.
It may also be used as sales literature when preceded or accompanied by
the current prospectus, which gives details of sales charges, investment
objectives, and operating policies of the fund, and the most recent copy
of Putnam's Quarterly Performance Summary. For more information or to
request a prospectus, call toll free: 1-800-225-1581. You can also learn
more at Putnam Investments' website: http://www.putnaminv.com.
Shares of mutual funds are not deposits or obligations of, or guaranteed
or endorsed by, any financial institution; are not insured by the Federal
Deposit Insurance Corporation (FDIC), the Federal Reserve Board, or any
other agency; and involve risk, including the possible loss of the
principal amount invested.
47871 12/98
