2
September 11, 2000
To the Board of Trustees of Putnam OTC & Emerging Growth
Fund:
In planning and performing our audits of the financial
statements of Putnam OTC & Emerging Growth Fund for the year
ended July 31, 2000, we considered its internal control,
including control activities for safeguarding securities, in
order to determine our auditing procedures for the purpose of
expressing our opinion on the financial statements and to
comply with the requirements of Form N-SAR, not to provide
assurance on internal control.
The management of Putnam OTC & Emerging Growth Fund is
responsible for establishing and maintaining internal
control. In fulfilling this responsibility, estimates and
judgments by management are required to assess the expected
benefits and related costs of controls. Generally, controls
that are relevant to an audit pertain to the entity's
objective of preparing financial statements for external
purposes that are fairly presented in conformity with
generally accepted accounting principles. Those controls
include the safeguarding of assets against unauthorized
acquisition, use or disposition.
Because of inherent limitations in internal control, errors
or fraud may occur and not be detected. Also, projection of
any evaluation of internal control to future periods is
subject to the risk that controls may become inadequate
because of changes in conditions or that the effectiveness of
their design and operation may deteriorate.
Our consideration of internal control would not necessarily
disclose all matters in internal control that might be
material weaknesses under standards established by the
American Institute of Certified Public Accountants. A
material weakness is a condition in which the design or
operation of one or more of the internal control components
does not reduce to a relatively low level the risk that
misstatements caused by error or fraud in amounts that would
be material in relation to the financial statements being
audited may occur and not be detected within a timely period
by employees in the normal course of performing their
assigned functions. However, we noted no matters involving
internal control and its operation, including controls for
safeguarding securities, that we consider to be material
weaknesses as defined above as of September 11, 2000.
This report is intended solely for the information and use of
the management and the Board of Trustees, and the Securities
and Exchange Commission and is not intended to be and should
not be used by anyone other than these specified parties.
