Putnam
Value
Fund
SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK
10-31-99
[LOGO: BOSTON * LONDON * TOKYO]
The following report contains a list of your fund's portfolio holdings and
complete financial statements for the six months ended 10/31/99.
Additional details, including fund strategy, performance, and managers'
outlook, will be provided in the annual report, which will cover the 12
months ended 4/30/00.
A guide to the financial statements
These sections of the report constitute the fund's financial
statements.
The fund's portfolio lists 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 liabilities shows how the fund's net assets and
share price are determined. All investment and noninvestment 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 net assets allocated to
remarketed preferred shares.)
Statement of operations shows the fund's net investment gain or loss for
the reporting period. This is determined by adding up all the fund's
earnings -- from dividends and interest income -- and subtracting its
operating expenses. This statement also lists any net gain or loss the
fund realized on the sales of its holdings and -- for holdings that remain
in the portfolio -- any change in unrealized gains or losses over the
period.
Statement of changes in net assets shows how the fund's net assets were
affected 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 highlights provide 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 highlight table also
includes the current reporting period. For open-end funds, a separate
table is provided for each share class.
<TABLE>
<CAPTION>
The fund's portfolio
October 31, 1999 (Unaudited)
COMMON STOCKS (97.7%) (a)
NUMBER OF SHARES VALUE
<S> <C> <C>
Aerospace and Defense (1.5%)
- --------------------------------------------------------------------------------------------------------------------------
450 Boeing Co. $ 20,728
470 Raytheon Co. Class B 13,689
-------------
34,417
Airlines (1.2%)
- --------------------------------------------------------------------------------------------------------------------------
250 Delta Air Lines, Inc. 13,609
180 UAL Corp. (NON) 12,251
-------------
25,860
Alcoholic Beverages (0.8%)
- --------------------------------------------------------------------------------------------------------------------------
350 Seagram Co., Ltd. 17,281
Automotive (2.8%)
- --------------------------------------------------------------------------------------------------------------------------
500 Ford Motor Co. 27,438
300 General Motors Corp. 21,075
200 Lear Corp. (NON) 6,750
170 TRW, Inc. 7,289
-------------
62,552
Banks (10.7%)
- --------------------------------------------------------------------------------------------------------------------------
700 Bank of America Corp. 45,063
550 Bank One Corp. 20,659
600 BB&T Corp. 21,825
400 Comerica, Inc. 23,775
431 Fleet Boston Corp. 18,799
550 National City Corp. 16,225
440 PNC Bank Corp. 26,235
200 Summit Bancorp 6,925
500 Synovus Financial Corp. 10,719
700 U.S. Bancorp 25,944
600 Washington Mutual, Inc. 21,563
-------------
237,732
Basic Industrial Products (1.8%)
- --------------------------------------------------------------------------------------------------------------------------
460 Dover Corp. 19,579
300 Ingersoll-Rand Co. 15,675
100 W.W. Grainger 4,238
-------------
39,492
Building Products (0.3%)
- --------------------------------------------------------------------------------------------------------------------------
210 Armstrong World Industries, Inc. 7,849
Chemicals (3.5%)
- --------------------------------------------------------------------------------------------------------------------------
200 Dow Chemical Co. 23,650
180 du Pont (E.I.) de Nemours & Co., Ltd. 11,599
200 Eastman Chemical Co. 7,713
700 Engelhard Corp. 12,338
300 PPG Industries, Inc. 18,188
65 Union Carbide Corp. 3,965
-------------
77,453
Computer Services (0.5%)
- --------------------------------------------------------------------------------------------------------------------------
200 Electronic Data Systems Corp. 11,700
Computers (0.4%)
- --------------------------------------------------------------------------------------------------------------------------
100 IBM Corp. 9,838
Conglomerates (0.7%)
- --------------------------------------------------------------------------------------------------------------------------
240 United Technologies Corp. 14,520
Consumer Durable (0.6%)
- --------------------------------------------------------------------------------------------------------------------------
200 Whirlpool Corp. 13,938
Consumer Products (1.5%)
- --------------------------------------------------------------------------------------------------------------------------
430 Fortune Brands, Inc. 15,238
300 Kimberly-Clark Corp. 18,938
-------------
34,176
Consumer Services (0.5%)
- --------------------------------------------------------------------------------------------------------------------------
1,100 Service Corp. International 10,519
Containers (0.6%)
- --------------------------------------------------------------------------------------------------------------------------
570 Owens-Illinois, Inc. (NON) 13,644
Electric Utilities (6.7%)
- --------------------------------------------------------------------------------------------------------------------------
500 Ameren Corp. 18,906
400 CiNergy Corp. 11,300
700 DPL, Inc. 14,175
100 DQE, Inc. 3,994
590 Duke Energy Corp. 33,335
700 Entergy Corp. 20,956
200 Florida Progress Corp. 9,163
800 OGE Energy Corp. 18,150
465 Texas Utilities Co. 18,019
-------------
147,998
Electronics and Electrical Equipment (2.3%)
- --------------------------------------------------------------------------------------------------------------------------
340 Emerson Electric Co. 20,421
140 Hewlett-Packard Co. 10,369
200 Motorola, Inc. 19,488
-------------
50,278
Entertainment (0.6%)
- --------------------------------------------------------------------------------------------------------------------------
500 Disney (Walt) Productions, Inc. (NON) 13,188
Environmental Control (0.7%)
- --------------------------------------------------------------------------------------------------------------------------
800 Waste Management, Inc. 14,700
Financial Services (7.9%)
- --------------------------------------------------------------------------------------------------------------------------
250 Bear Stearns Companies, Inc. (The) 10,656
700 Charter One Financial, Inc. 17,194
900 Citigroup, Inc. 48,713
550 Fannie Mae 38,913
300 Household International, Inc. 13,388
300 MBNA Corp. 8,288
50 Morgan (J.P.) & Co., Inc. 6,544
200 Paine Webber Group Inc. 8,150
500 Wells Fargo Co. 23,938
-------------
175,784
Food and Beverages (4.0%)
- --------------------------------------------------------------------------------------------------------------------------
700 Nabisco Group Holdings Corp. 8,969
900 Pepsi Bottling Group, Inc. (The) 16,369
500 PepsiCo, Inc. 17,344
950 Sara Lee Corp. 25,709
550 SYSCO Corp. 21,141
-------------
89,532
Insurance (5.0%)
- --------------------------------------------------------------------------------------------------------------------------
500 Allstate Corp. 14,375
200 American General Corp. 14,838
300 AON Corp. 10,650
200 CIGNA Corp. 14,950
400 Hartford Financial Services Group 20,725
100 Jefferson-Pilot Corp. 7,506
500 Torchmark Corp. 15,594
400 UnumProvident Corp. 13,175
-------------
111,813
Leisure (0.7%)
- --------------------------------------------------------------------------------------------------------------------------
700 Hasbro, Inc. 14,438
Lodging (1.0%)
- --------------------------------------------------------------------------------------------------------------------------
240 Marriott International, Inc. Class A 8,085
600 Starwood Hotels & Resorts Worldwide, Inc. 13,763
-------------
21,848
Machinery (0.7%)
- --------------------------------------------------------------------------------------------------------------------------
270 Caterpillar, Inc. 14,918
Medical Supplies and Devices (0.3%)
- --------------------------------------------------------------------------------------------------------------------------
100 Baxter International, Inc. 6,488
Metals and Mining (2.0%)
- --------------------------------------------------------------------------------------------------------------------------
250 Alcoa Inc. 15,188
300 Minnesota Mining & Manufacturing Co. 28,519
-------------
43,707
Office Equipment (0.4%)
- --------------------------------------------------------------------------------------------------------------------------
350 Xerox Corp. 9,800
Oil and Gas (12.0%)
- --------------------------------------------------------------------------------------------------------------------------
350 Baker Hughes, Inc. 9,778
300 Chevron, Inc. 27,394
700 Conoco, Inc. 19,206
292 Conoco, Inc. Class B 7,921
300 Consolidated Natural Gas Co. 19,200
350 El Paso Energy Corp. 14,350
600 Exxon Corp. 44,438
250 Halliburton Co. 9,422
400 Mobil Corp. 38,600
585 Royal Dutch Petroleum Co. Plc ADR (Netherlands) 35,063
600 Tosco Corp. 15,188
800 Union Pacific Resources Group Inc. 11,600
360 Williams Cos., Inc. 13,500
-------------
265,660
Paper and Forest Products (3.0%)
- --------------------------------------------------------------------------------------------------------------------------
460 Champion International Corp. 26,594
300 Mead Corp. 10,800
500 Weyerhaeuser Co. 29,844
-------------
67,238
Pharmaceuticals and Biotechnology (4.6%)
- --------------------------------------------------------------------------------------------------------------------------
800 Abbott Laboratories 32,300
400 American Home Products Corp. 20,900
400 Merck & Co., Inc. 31,825
470 Monsanto Co. 18,095
-------------
103,120
Publishing (1.1%)
- --------------------------------------------------------------------------------------------------------------------------
400 McGraw-Hill, Inc. 23,850
Railroads (1.4%)
- --------------------------------------------------------------------------------------------------------------------------
742 Burlington Northern Santa Fe Corp. 23,651
200 CSX Corp. 8,200
-------------
31,851
REITs (Real Estate Investment Trust) (1.4%)
- --------------------------------------------------------------------------------------------------------------------------
430 Equity Office Properties Trust 9,514
500 Equity Residential Properties Trust 20,906
-------------
30,420
Retail (1.4%)
- --------------------------------------------------------------------------------------------------------------------------
200 Albertsons, Inc. 7,263
460 Federated Department Stores, Inc. (NON) 19,636
600 Rite Aid Corp. 5,250
-------------
32,149
Telecommunications (1.4%)
- --------------------------------------------------------------------------------------------------------------------------
370 ALLTEL Corp. 30,803
Telephone Services (9.9%)
- --------------------------------------------------------------------------------------------------------------------------
1,200 American Telephone & Telegraph Co. 56,100
600 Bell Atlantic Corp. 38,947
500 BellSouth Corp. 22,500
465 GTE Corp. 34,875
1,324 SBC Communications, Inc. 67,431
-------------
219,853
Textiles (0.5%)
- --------------------------------------------------------------------------------------------------------------------------
700 Shaw Industries, Inc. 10,806
Transportation (0.6%)
- --------------------------------------------------------------------------------------------------------------------------
300 FDX Corp. (NON) 12,919
Utilities (0.7%)
- --------------------------------------------------------------------------------------------------------------------------
800 Sempra Energy 16,350
-------------
Total Common Stocks (cost $2,113,879) $ 2,170,482
SHORT-TERM INVESTMENTS (3.1%) (a)(cost $68,000)
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------
$68,000 Interest in $462,305,000 joint repurchase agreement
dated October 29, 1999 with S.B.C. Warburg Inc.
due November 1, 1999 with respect to various
U.S. Treasury obligations -- maturity value of
$68,030 for an effective yield of 5.22%. $ 68,000
- --------------------------------------------------------------------------------------------------------------------------
Total Investments (cost $2,181,879) (b) $2,238,482
- --------------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $2,221,066.
(b) The aggregate identified cost on a tax basis is $2,186,839 ,resulting in gross unrealized appreciation and
depreciation of $219,017 and $167,374, respectively, or net unrealized appreciation of $51.643.
(NON) Non-income-producing security.
ADR after the name of a foreign holding stands for American Depositary Receipts representing ownership of foreign
securities on deposit with a domestic custodian bank.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
October 31, 1999 (Unaudited)
<S> <C>
Assets
- -----------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $2,181,879) (Note 1) $2,238,482
- -----------------------------------------------------------------------------------------------
Cash 16
- -----------------------------------------------------------------------------------------------
Dividends and interest receivable 2,914
- -----------------------------------------------------------------------------------------------
Receivable for securities sold 7,642
- -----------------------------------------------------------------------------------------------
Receivable from Manager (Note 2) 11,095
- -----------------------------------------------------------------------------------------------
Total assets 2,260,149
Liabilities
- -----------------------------------------------------------------------------------------------
Payable for securities purchased 22,284
- -----------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 176
- -----------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 476
- -----------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 3
- -----------------------------------------------------------------------------------------------
Other accrued expenses 16,144
- -----------------------------------------------------------------------------------------------
Total liabilities 39,083
- -----------------------------------------------------------------------------------------------
Net assets $2,221,066
Represented by
- -----------------------------------------------------------------------------------------------
Paid-in capital (Notes 1, 4 and 5) $2,129,443
- -----------------------------------------------------------------------------------------------
Undistributed net investment income (Note 1) 18,369
- -----------------------------------------------------------------------------------------------
Accumulated net realized gain on investments (Note 1) 16,651
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 56,603
- -----------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $2,221,066
Computation of net asset value and offering price
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per share
($2,221,066 divided by 249,893 shares) $8.89
- -----------------------------------------------------------------------------------------------
Offering price per share (100/94.25 of $8.89)* $9.43
- -----------------------------------------------------------------------------------------------
* 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 October 31, 1999 (Unaudited)
<S> <C>
Investment income:
- -----------------------------------------------------------------------------------------------
Dividends $ 24,148
- -----------------------------------------------------------------------------------------------
Interest 481
- -----------------------------------------------------------------------------------------------
Total investment income $ 24,629
Expenses:
- -----------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 8,019
- -----------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 1,863
- -----------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 1,190
- -----------------------------------------------------------------------------------------------
Administrative services (Note 2) 20
- -----------------------------------------------------------------------------------------------
Reports to shareholders 2,502
- -----------------------------------------------------------------------------------------------
Auditing 16,640
- -----------------------------------------------------------------------------------------------
Legal 1,616
- -----------------------------------------------------------------------------------------------
Postage 8
- -----------------------------------------------------------------------------------------------
Other 7
- -----------------------------------------------------------------------------------------------
Fees waived and reimbursed by manager (Note 2) (20,410)
- -----------------------------------------------------------------------------------------------
Total expenses 11,455
- -----------------------------------------------------------------------------------------------
Expense reduction (Note 2) (1,378)
- -----------------------------------------------------------------------------------------------
Net expenses 10,077
- -----------------------------------------------------------------------------------------------
Net investment income 14,552
- -----------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 23,679
- -----------------------------------------------------------------------------------------------
Net unrealized depreciation of investments during the period (182,752)
- -----------------------------------------------------------------------------------------------
Net loss on investments (159,073)
- -----------------------------------------------------------------------------------------------
Net decrease in net assets resulting from operations $(144,521)
- -----------------------------------------------------------------------------------------------
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
Six months (commencement
ended of operations)
October 31 to April 30
1999* 1999
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets
- ---------------------------------------------------------------------------------------------------------------
Operations:
- ---------------------------------------------------------------------------------------------------------------
Net investment income $ 14,552 $ 28,818
- ---------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments 23,679 (7,028)
- ---------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments (182,752) 239,355
- ---------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations (144,521) 261,145
- ---------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income -- (25,001)
- ---------------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 8,008 121,435
- ---------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (136,513) 357,579
Net assets
- ---------------------------------------------------------------------------------------------------------------
Beginning of period (Note 5) $2,357,579 $2,000,000
- ---------------------------------------------------------------------------------------------------------------
End of period (including undistributed net investment
income of $18,369 and $3,817, respectively) $2,221,066 $2,357,579
- ---------------------------------------------------------------------------------------------------------------
* 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 October 31 May 4, 1998+
operating performance (Unaudited) to April 30
- -------------------------------------------------------------------------------------------------------------------------------
1999 1999
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value,
beginning of period $9.47 $8.50
- -------------------------------------------------------------------------------------------------------------------------------
Investment operations
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (a)(d) .06 .12
- -------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments (.64) .96
- -------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations (.58) 1.08
- -------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- -------------------------------------------------------------------------------------------------------------------------------
From net
investment income -- (.11)
- -------------------------------------------------------------------------------------------------------------------------------
Total distributions -- (.11)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $8.89 $9.47
- -------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- -------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) (6.12)* 12.84*
- -------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $2,221 $2,358
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c)(d) .50* .99*
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)(d) .64* 1.46*
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 51.60* 117.02*
- -------------------------------------------------------------------------------------------------------------------------------
+ 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 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 $0.08 and $0.09 per share for the periods ended October 31, 1999 and April 30, 1999, respectively. (Note 1)
</TABLE>
Notes to financial statements
October 31, 1999 (Unaudited)
Note 1
Significant accounting policies
Putnam Value Fund (the "fund") is a series of Putnam Funds 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 compared to
their true worth.
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 of
the financial statements and the reported amounts of increases and decreases
in net assets from operations during the reporting period. 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 on its principal exchange, 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. Other investments, including restricted securities are stated at fair
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). Gains or losses on securities sold are determined on the identified
cost basis.
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 October 31, 1999, the
fund had no borrowings against the line of credit.
F) Federal taxes It is the policy of the fund to distribute all of its taxable
income within the prescribed time and otherwise comply with the provisions of
the Internal Revenue Code applicable to regulated investment companies. It is
also the intention of the fund to distribute an amount sufficient to avoid
imposition of any excise tax under Section 4982 of the Internal Revenue Code
of 1986, as amended. Therefore, no provision has been made for federal taxes
on income, capital gains or unrealized appreciation on securities held nor for
excise tax on income and capital gains. At April 30, 1999, the fund had a
capital loss carryover of approximately $2,000 available to offset future net
capital gain, if any, which will expire on April 30, 2007.
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. For the
six months ended October 31, 1999, the fund required no such
reclassifications.
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; 0.70% of the first $500 million of
the fund's average net assets, 0.60% of the next $500 million, 0.55% of the
next $500 million, 0.50% of the next $5 billion, 0.475% of the next $5 billion,
0.455% of the next $5 billion, 0.44% of the next $5 billion, and 0.43%
thereafter.
Putnam Management has agreed to limit its compensation (and, to the extent
necessary, bear other expenses) through August 30, 2000, to the extent that
expenses of the fund (exclusive of brokerage commissions, interest, taxes,
deferred organizational and 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.
Custodial functions for the fund's assets are provided by PFTC, a subsidiary
of Putnam Investments, Inc. Investor servicing agent functions are provided by
Putnam Investor Services, a division of PFTC.
For the six months ended October 31, 1999, fund expenses were reduced by $1,378
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 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. 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 October 31, 1999, Putnam Mutual Funds Corp., acting as
underwriter received no net commissions from the sale of shares. A deferred
sales charge of up to 1% is assessed on certain redemptions of shares. For the
six months ended October 31, 1999, Putnam Mutual Funds Corp., acting as
underwriter received no monies on redemptions.
Note 3
Purchases and sales of securities
During the six months ended October 31, 1999, purchases and sales of investment
securities other than short-term investments aggregated $1,110,827 and
$1,101,216, respectively. There were no purchases and sales of U.S. government
obligations.
Note 4
Capital shares
At October 31, 1999, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Six months ended October 31, 1999
- -----------------------------------------------------------------------------
Class A Shares Amount
- -----------------------------------------------------------------------------
Shares sold 1,277 $11,768
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- -----------------------------------------------------------------------------
1,277 11,768
Shares repurchased (413) (3,760)
- -----------------------------------------------------------------------------
Net increase 864 $ 8,008
- -----------------------------------------------------------------------------
For the period May 4, 1998
(commencement of operations) to
April 30, 1999
- -----------------------------------------------------------------------------
Class A Shares Amount
- -----------------------------------------------------------------------------
Shares sold 10,687 $ 96,474
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 3,053 25,001
- -----------------------------------------------------------------------------
13,740 121,475
Shares repurchased (5) (40)
- -----------------------------------------------------------------------------
Net increase 13,735 $121,435
- -----------------------------------------------------------------------------
Note 5
Initial capitalization and
offering of shares
The trust 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. on May 4, 1998.
At October 31, 1999, Putnam Investments, Inc. owned 238,311 shares of the fund
(95.4% of class A shares outstanding), valued at $2,118,585.
Fund information
WEB SITE
www.putnaminv.com
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
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
Richard A. Monaghan
Vice President
John R. Verani
Vice President
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' Web site: 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.
21G/56813 12/99
