Putnam
Equity
Fund 98
SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK
12-31-98
[LOGO: BOSTON * LONDON * TOKYO]
The following report contains a list of your fund's portfolio holdings and
complete financial statements since the fund completed its first
abbreviated fiscal year on 6/30/98. Additional details, including fund
strategy, performance, and managers' outlook, will be provided in the
annual report, which will cover the 12 months ended 6/30/99.
<TABLE>
<CAPTION>
Portfolio of investments owned
December 31, 1998 (Unaudited)
COMMON STOCKS (96.2%) (a)
NUMBER OF SHARES VALUE
<S> <C> <C>
Advertising (1.7%)
- --------------------------------------------------------------------------------------------------------------------------
6,050 Obie Media Corp. (NON) $ 99,825
Broadcasting (4.1%)
- --------------------------------------------------------------------------------------------------------------------------
2,000 Citadel Communications Corp. (NON) 51,750
8,000 Cumulus Media Inc. Class A (NON) 133,000
2,500 Pegasus Communications Corp. (NON) 62,656
--------------
247,406
Business Services (14.2%)
- --------------------------------------------------------------------------------------------------------------------------
5,000 Act Manufacturing, Inc. (NON) 71,563
8,000 American Bank Note Holographics, Inc. (NON) 140,000
5,000 CCC Information Services Group Inc. (NON) 86,250
6,400 Cunningham Graphics International, Inc. (NON) 97,600
1,800 Digital River, Inc. (NON) 63,900
4,000 DII Group Inc., (The) (NON) 92,000
3,400 Inspire Insurance Solutions, Inc. (NON) 62,475
6,200 JPM Co. (NON) 86,800
2,400 Market Facts, Inc. (NON) 62,400
2,200 ProBusiness Services, Inc. (NON) 100,100
--------------
863,088
Computer Equipment (2.1%)
- --------------------------------------------------------------------------------------------------------------------------
2,000 Apex PC Solutions, Inc. (NON) 57,750
10,000 Overland Data, Inc. (NON) 71,250
--------------
129,000
Computer Services (2.8%)
- --------------------------------------------------------------------------------------------------------------------------
2,000 Metro Information Services, Inc. (NON) 60,000
2,700 SPR Inc. (NON) 46,575
1,500 Superior Consultant Holdings Corp. (NON) 65,250
--------------
171,825
Computer Software (12.5%)
- --------------------------------------------------------------------------------------------------------------------------
3,100 Best Software, Inc. (NON) 73,625
2,500 BroadVision, Inc. (NON) 80,000
700 Concord Communications, Inc. (NON) 39,725
300 Concur Technologies, Inc. (NON) 9,150
900 Exchange Applications, Inc. (NON) 17,663
2,382 GeoTel Communications Corp. (NON) 88,730
2,000 New Era of Networks, Inc. (NON) 88,000
1,900 Peregrine Systems, Inc. (NON) 88,113
300 Pervasive Software Inc. (NON) 5,775
5,000 Spyglass, Inc. (NON) 110,000
7,500 Summit Design, Inc. (NON) 69,844
1,900 TSI International Software, Ltd. (NON) 90,963
--------------
761,588
Consumer Services (6.1%)
- --------------------------------------------------------------------------------------------------------------------------
11,500 Global Vacation Group, Inc. (NON) 99,188
4,310 Mesaba Holdings, Inc. 88,894
6,000 MovieFone, Inc. Class A (NON) 98,250
2,800 Travel Services International, Inc. (NON) 85,400
--------------
371,732
Education Services (2.6%)
- --------------------------------------------------------------------------------------------------------------------------
4,000 GP Strategies Corp. 60,000
4,462 Provant, Inc. (NON) 97,049
--------------
157,049
Electronic Components (7.7%)
- --------------------------------------------------------------------------------------------------------------------------
6,000 Helix Technology Corp. 78,000
1,500 Micrel, Inc. (NON) 82,500
15,000 Nanometrics, Inc. (NON) 117,188
2,100 Power Integrations, Inc. (NON) 52,631
2,000 Sipex Corp. (NON) 70,250
1,300 Veeco Instruments, Inc. (NON) 69,063
--------------
469,632
Food (1.2%)
- --------------------------------------------------------------------------------------------------------------------------
7,000 Balance Bar Co. (NON) 75,250
Health Care (4.7%)
- --------------------------------------------------------------------------------------------------------------------------
1,800 Alternative Living Services, Inc. (NON) 61,650
3,500 Brookdale Living Communities, Inc. (NON) 68,250
2,500 Province Healthcare Co. (NON) 89,688
2,500 SteriGenics International, Inc. (NON) 65,000
--------------
284,588
Machinery (1.2%)
- --------------------------------------------------------------------------------------------------------------------------
2,200 MotivePower Industries, Inc. 70,813
Medical Management Services (1.1%)
- --------------------------------------------------------------------------------------------------------------------------
2,200 Medical Manager Corp. (NON) 69,025
Medical Supplies and Devices (3.7%)
- --------------------------------------------------------------------------------------------------------------------------
1,800 ResMed Inc. (NON) 81,675
3,500 Theragenics Corp. (NON) 58,844
2,550 Xomed Surgical Products Inc. (NON) 81,600
--------------
222,119
Pharmaceuticals (3.3%)
- --------------------------------------------------------------------------------------------------------------------------
1,500 Coulter Pharmaceutical, Inc. (NON) 45,000
3,000 Priority Healthcare Corp. Class B (NON) 155,625
--------------
200,625
Pharmaceuticals and Biotechnology (0.6%)
- --------------------------------------------------------------------------------------------------------------------------
3,000 Fuisz Technologies Ltd. (NON) 38,625
Recreation (1.5%)
- --------------------------------------------------------------------------------------------------------------------------
6,000 Sunterra Corp. (NON) 90,000
Restaurants (0.8%)
- --------------------------------------------------------------------------------------------------------------------------
2,180 P.F. Chang's China Bistro, Inc. (NON) 49,595
Retail (4.6%)
- --------------------------------------------------------------------------------------------------------------------------
1,925 99 Cents Only Stores (NON) 94,566
5,500 DM Management Co. (NON) 104,500
3,234 Rent-Way, Inc. 78,627
--------------
277,693
Semiconductors (8.1%)
- --------------------------------------------------------------------------------------------------------------------------
8,000 Amkor Technology, Inc. (NON) 86,500
4,100 ATMI, Inc. 103,525
1,700 DuPont Photomasks, Inc. (NON) 72,144
3,100 NeoMagic Corp. (NON) 68,580
4,000 Photronics, Inc. (NON) 95,875
500 QLogic Corp. 65,438
--------------
492,062
Telecommunication Equipment (8.9%)
- --------------------------------------------------------------------------------------------------------------------------
5,000 ACT Networks, Inc. (NON) 61,250
4,000 Aware, Inc. (NON) 108,750
10,000 Computer Network Technology Corp. (NON) 125,000
300 Emulex Corp. (NON) 12,000
5,300 Fvc.com Inc. (NON) 83,475
1,700 Harmonic Lightwaves, Inc. (NON) 31,875
6,500 VideoServer, Inc. (NON) 119,438
--------------
541,788
Telecommunication Services (1.5%)
- --------------------------------------------------------------------------------------------------------------------------
6,000 Hyperion Telecommunications, Inc. Class A (NON) 90,750
Transportation (1.2%)
- --------------------------------------------------------------------------------------------------------------------------
3,000 Eagle USA Airfreight, Inc. (NON) 73,500
--------------
Total Common Stocks (cost $4,159,089) $ 5,847,578
SHORT-TERM INVESTMENTS (3.7%) (a) (cost $222,030)
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------
$222,000 Interest in $456,109,000 joint repurchase agreement
dated December 31, 1998 with Merrill Lynch,
Pierce, Fenner, Smith & Co, Inc. due January 4, 1999
with respect to various U.S. Treasury obligations --
maturity value of $222,118 for an effective yield
of 4.80% $ 222,030
- --------------------------------------------------------------------------------------------------------------------------
Total Investments (cost $4,381,119) (b) $ 6,069,608
- --------------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $6,075,471.
(b) The aggregate identified cost on a tax basis is $4,381,828, resulting in gross unrealized appreciation and
depreciation of $1,794,670 and $106,890, respectively, or net unrealized appreciation of $1,687,780.
(NON) Non-income-producing security.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
December 31, 1998 (Unaudited)
<S> <C>
Assets
- -----------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $4,381,119) (Note 1) $6,069,608
- -----------------------------------------------------------------------------------------------
Cash 847
- -----------------------------------------------------------------------------------------------
Dividends, interest and other receivables 5,902
- -----------------------------------------------------------------------------------------------
Receivable for securities sold 51,519
- -----------------------------------------------------------------------------------------------
Total assets 6,127,876
Liabilities
- -----------------------------------------------------------------------------------------------
Payable for securities purchased 17,229
- -----------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 23,771
- -----------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 411
- -----------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 557
- -----------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 10
- -----------------------------------------------------------------------------------------------
Other accrued expenses 10,427
- -----------------------------------------------------------------------------------------------
Total liabilities 52,405
- -----------------------------------------------------------------------------------------------
Net assets $6,075,471
Represented by
- -----------------------------------------------------------------------------------------------
Paid-in capital (Notes 1, 4 and 5) $5,095,759
- -----------------------------------------------------------------------------------------------
Accumulated net investment loss (Note 1) (21,672)
- -----------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (Note 1) (687,105)
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 1,688,489
- -----------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $6,075,471
Computation of net asset value and offering price
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per share
($6,075,471 divided by 539,571 shares) $11.26
- -----------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $11.26)* $11.95
- -----------------------------------------------------------------------------------------------
* On single retail sales of less than $50,000. On sales of $50,000 or more and on group
sales the offering price is reduced.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
Six months ended December 31, 1998 (Unaudited)
<S> <C>
Investment income:
- -----------------------------------------------------------------------------------------------
Interest $ 2,331
- -----------------------------------------------------------------------------------------------
Dividends 1,168
- -----------------------------------------------------------------------------------------------
Total investment income 3,499
Expenses:
- -----------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 22,861
- -----------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 4,560
- -----------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 1,432
- -----------------------------------------------------------------------------------------------
Administrative services (Note 2) 23
- -----------------------------------------------------------------------------------------------
Reports to shareholders 1,815
- -----------------------------------------------------------------------------------------------
Registration fees 133
- -----------------------------------------------------------------------------------------------
Auditing 8,318
- -----------------------------------------------------------------------------------------------
Legal 1,112
- -----------------------------------------------------------------------------------------------
Postage 74
- -----------------------------------------------------------------------------------------------
Fees waived by Manager (Note 2) (10,597)
- -----------------------------------------------------------------------------------------------
Total expenses 29,731
- -----------------------------------------------------------------------------------------------
Expense reduction (Note 2) (4,560)
- -----------------------------------------------------------------------------------------------
Net expenses 25,171
- -----------------------------------------------------------------------------------------------
Net investment loss (21,672)
- -----------------------------------------------------------------------------------------------
Net realized loss on investments (Notes 1 and 3) (684,776)
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments during the period 1,172,305
- -----------------------------------------------------------------------------------------------
Net gain on investments 487,529
- -----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 465,857
- -----------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
For the period
Dec. 31, 1997
(commencement
Six months ended of operations)
December 31 to June 30
-------------------------------
1998* 1998
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
Increase in net assets
- ---------------------------------------------------------------------------------------------------------------
Operations:
- ---------------------------------------------------------------------------------------------------------------
Net investment loss $ (21,672) $ (13,253)
- ---------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments (684,776) 66,738
- ---------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 1,172,305 516,184
- ---------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 465,857 569,669
- ---------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ---------------------------------------------------------------------------------------------------------------
From net realized gains on investments (55,814) --
- ---------------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 460,272 3,135,487
- ---------------------------------------------------------------------------------------------------------------
Total increase in net assets 870,315 3,705,156
Net assets
- ---------------------------------------------------------------------------------------------------------------
Beginning of period (Note 5) 5,205,156 1,500,000
- ---------------------------------------------------------------------------------------------------------------
End of period (including accumulated net investment
loss of $21,672 and $-, respectively) $6,075,471 $5,205,156
- ---------------------------------------------------------------------------------------------------------------
* Unaudited
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share December 31 Dec. 31, 1997+
operating performance (Unaudited) to June 30
- ------------------------------------------------------------------------------------------------------------------------------------
1998 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value,
beginning of period $10.52 $8.50
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment loss (a) (.04) (.04)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments .89 2.06
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations .85 2.02
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (0.11) --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $11.26 $10.52
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%) (b) 8.14* 23.77*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $6,075 $5,205
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c)(d) .65* .65*
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%)(d) (.48)* (.37)*
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 83.49* 85.45*
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized
(a) Per share net investment loss 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 $0.02 and $0.06 per share, respectively,
for the periods ended December 31, 1998 and June 30, 1998. (Note 2)
</TABLE>
Notes to financial statements
December 31, 1998 (Unaudited)
Note 1
Significant accounting policies
Putnam Equity Fund 98 (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 by investing
primarily in the equity securities of small, rapidly growing companies
that Putnam Investment Management, Inc. ("Putnam Management"), the fund's
Manager, a wholly-owned subsidiary of Putnam Investments, Inc. believes
have the potential for capital 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). Interest income is recorded on the accrual basis.
Dividend income is recorded on the ex-dividend date.
E) Line of credit The fund has entered into a committed line of credit
with certain banks. This line of credit agreement includes restrictions
that the fund maintain an asset coverage ratio of at least 300% and
borrowings must not exceed prospectus limitations.
For the six months ended December 31, 1998, the fund had no borrowings
against the line of credit.
F) Federal taxes It is the policy of the fund to distribute all of its
taxable income within the prescribed time and otherwise comply with the
provisions of the Internal Revenue Code applicable to regulated investment
companies. It is also the intention of the fund to distribute an amount
sufficient to avoid imposition of any excise tax under Section 4982 of the
Internal Revenue Code of 1986, as amended. Therefore, no provision has
been made for federal taxes on income, capital gains or unrealized
appreciation on securities held nor for excise tax on income and capital
gains.
G) Distributions to shareholders Distributions to shareholders from net
investment income are recorded by the fund on the ex-dividend date.
Capital gain distributions, if any, are recorded on the ex-dividend date
and paid at least annually. The amount and character of income and gains
to be distributed are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles.
Reclassifications are made to the fund's capital accounts to reflect
income and gains available for distribution (or available capital loss
carryovers) under income tax regulations.
H) Expenses of the trust Expenses directly charged or attributable to any
fund will be paid from the assets of that fund. Generally, expenses of the
trust will be allocated among and charged to the assets of each fund on a
basis that the Trustees deem fair and equitable, which may be based on the
relative assets of each fund or the nature of the services performed and
relative applicability to each fund.
Note 2
Management fee, administrative
services and other transactions
Compensation of Putnam Management, for management and investment advisory
services is paid quarterly based on the average net assets of the fund.
Such fee is based on the following annual rates: 1.00% of the first $500
million of the fund's average net asset value; 0.90% of the next $500
million; 0.85% of the next $500 million; 0.80% of the next $5 billion;
0.775% of the next $5 billion; 0.755% of the next $5 billion; 0.74% of the
next $5 billion; and 0.73% thereafter.
Putnam Management has agreed to limit its compensation (and, to the extent
necessary, bear other expenses) through July 31, 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 1.30% 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.
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 six months ended December 31, 1998, fund expenses were reduced by
$4,560 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 has
been allocated to the fund, and an additional fee for each Trustee's
meeting attended. Trustees who are not interested persons of Putnam
Management and who serve on committees of the Trustees receive additional
fees for attendance at certain committee meetings.
The fund has adopted a Trustee Fee Deferral Plan (the "Deferral Plan")
which allows the Trustees to defer the receipt of all or a portion of
Trustees Fees payable on or after July 1, 1995. The deferred fees remain
in the fund and are invested in certain Putnam funds until distribution in
accordance with the Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension
plan (the "Pension Plan") covering all Trustees of the fund who have
served as Trustee for at least five years. Benefits under the Pension Plan
are equal to 50% of the Trustee's average total retainer and meeting fees
for the three years preceding retirement. Pension expense for the fund is
included in Compensation of Trustees in the Statement of operations.
Accrued pension liability is included in Payable for compensation of
Trustees in the Statement of assets and liabilities.
The fund has adopted a distribution plan (the "Plan") 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 payment by
the fund to Putnam Mutual Funds Corp. at an annual rate of up to 0.35% of
the fund's average net assets. The fund is not currently making any
payments pursuant to the Plan.
For the six months ended December 31, 1998, Putnam Mutual Funds Corp.,
acting as underwriter received no net commissions from the sale of shares
of the fund. A deferred sales charge of up to 1% is assessed on certain
redemptions of shares. For the six months ended December 31, 1998, Putnam
Mutual Funds Corp., acting as underwriter received no monies on
redemptions.
Note 3
Purchase and sales of securities
During the six months ended December 31, 1998, purchases and sales of
investment securities other than short-term investments aggregated
$4,146,850 and $3,740,842, 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 December 31, 1998, there was an unlimited number of shares of
beneficial interest authorized. Transactions in capital shares were as
follows:
For the six months ended
December 31, 1998
- -----------------------------------------------------------------------------
Class A Shares Amount
- -----------------------------------------------------------------------------
Shares sold 152,823 $ 1,442,466
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 5,481 55,814
- -----------------------------------------------------------------------------
158,304 1,498,280
Shares
repurchased (113,354) (1,038,008)
- -----------------------------------------------------------------------------
Net increase 44,950 $ 460,272
- -----------------------------------------------------------------------------
For the period
December 31, 1997
(commencement
of operations)
to June 30, 1998
- -----------------------------------------------------------------------------
Class A Shares Amount
- -----------------------------------------------------------------------------
Shares sold 342,911 $3,398,434
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- -----------------------------------------------------------------------------
342,911 3,398,434
Shares
repurchased (24,761) (262,947)
- -----------------------------------------------------------------------------
Net increase 318,150 $3,135,487
- -----------------------------------------------------------------------------
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 December 31, 1997, the fund
had no operations other than those related to organizational matters,
including the initial capital contribution of $1,500,000, and the issuance
of 176,471 shares to Putnam Mutual Funds Corp., a wholly-owned subsidiary
of Putnam Investments, Inc. on December 30, 1997.
At December 31, 1998, Putnam Investments, Inc. owned 275,982 shares of the
fund (51.1% of shares outstanding) valued at $3,107,557.
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
Richard Frucci
Vice President and Fund Manager
Roland Gillis
Vice President and Fund Manager
John R. Verani
Vice President
Richard A. Monaghan
Vice President
Beverly Marcus
Clerk and Assistant Treasurer
This report is for the information of shareholders of Putnam Equity Fund
98. 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.
