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Putnam
Capital
Appreciation
Fund
Semiannual
Report
November 30, 1993
For investors seeking
capital appreciation,
with current income
only an incidental
consideration
Contents
2 How your fund performed
3 From the Chairman
4 Report from Putnam Management
Semiannual Report
6 Report of independent accountants
7 Portfolio of investments owned
9 Financial statements
15 Fund performance supplement
A member
of the Putnam
Family of Funds
<PAGE>
How your fund performed
For period ended November 30, 1993
Fund S&P Consumer
Total return* NAV POP 500 Index Price Index
Life-of-fund
(since 8/5/93) 11.96% 5.52% 3.76% 0.97%
Share data NAV POP
August 5, 1993 $8.53 $9.05
(commencement of operations)
November 30, 1993 $9.55 $10.13
Total return at end of most recent calendar quarter
Period ended
December 31, 1993 NAV POP
Life-of-fund
(since 8/5/93) 21.76% 14.76%
* Performance data represent past results. Investment return and
principal value will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. The
fund has a voluntary expense limitation in effect. Had the
expense limitation not been in effect, performance might have
been lower.
<PAGE>
Terms you need to know
Total return is the change in value of an investment from the
beginning to the end of a period, assuming the reinvestment of
all distributions.
Net asset value (NAV) is the value of all your fund's assets,
minus any liabilities, divided by the number of outstanding
shares, not reflecting any sales charge.
Public offering price (POP) is the price of a mutual fund share
plus the fund's 5.75% maximum sales charge levied at the time of
purchase.
Please see the fund performance supplement on page 15 for
additional information about performance comparisons.
<PAGE>
From the
Chairman
Dear Shareholder:
It is my pleasure to welcome you as a shareholder in Putnam
Capital Appreciation Fund, one of Putnam's newest funds. The fund
is already well embarked on what we expect to be a long and
successful journey in the pursuit of capital appreciation for its
investors. It will undertake this endeavor primarily through
investments in the common stocks of companies, both large and
small, in a wide range of industries.
Putnam Management has selected Senior Vice President Gerald S.
Zukowski as the manager of your fund. As such, he will be the one
principally responsible for the day-to-day supervision of the
fund's portfolio. Gerry joined Putnam in 1989 after more than 15
years at The Boston Company. Besides his own considerable
experience in managing equity portfolios, he has at his disposal
Putnam's extensive equities research capabilities.
As you will read in the pages that follow, Gerry has already
positioned the fund's portfolio to take advantage of growth
opportunities wherever he finds them -- and where others are
neglecting to look. This includes companies in industries
currently out of favor and companies off the investment world's
beaten paths.
"The fund is small now, " he says, "but I want to run it in a way
that would also be appropriate when it becomes a large fund."
Nothing is ever a sure thing, of course, but this optimism bodes
well for the fund's future.
Respectfully yours,
//George Putnam's signature//
George Putnam
Chairman of the Trustees
January 19, 1994
<PAGE>
Report from
Putnam Management
Putnam Capital Appreciation Fund, just shy of four months old on
November 30, 1993, was able to deliver a positive total return
for its first reporting period -- an auspicious beginning for a
fund in a large and competitive universe.
Stock selection was key to this initial success. In a stock
market that was not particularly strong overall, we identified
pockets of strength and searched within them for the fund's
inaugural investments.
Seeking hidden growth potential This process is the
distinguishing characteristic of the fund's investment strategy.
We seek out undervalued common stocks of small- and
large-capitalization companies and invest in those we regard as
the most promising. Our rationale is that these stocks have
inherent or potential value beyond their current market price.
*Small-capitalization companies are those that are past their
startup phase and have an established track record. They have
survived their potentially unstable entrepreneurial years but are
still in the process of rapid growth. Companies in this category
often possess attractive potential for earnings growth and
long-term capital appreciation.
*Well-established large-capitalization companies are those we
believe offer near-term growth potential. Often this potential
springs from the introduction of new products, corporate
restructuring or a recovery in earnings.
Neglected industries In our view, one overlooked area right now
is retailing. We have made a relatively large commitment to
companies in this sector in the belief that as the economy and
employment rate improve, consumers will regain more of their lost
confidence and step up their buying.
We also have made a serious commitment to real estate investment
trusts. REITs, as a group, offer obvious advantages to
income-oriented portfolios because of their attractive yields.
However, our rationale for acquiring those chosen for your
growth-oriented fund is that they are focused on areas where
strength already exists or is likely to develop. The strong
demographics indicating greater numbers of workers retiring, for
example, steered us toward real estate likely to benefit from
this trend.
Our search is not confined to U.S. shores. The fund may invest up
to 20% of its assets in foreign securities, and we have not
restricted our search to the popular markets of Europe and the
Pacific Rim. One interesting acquisition is Southern
Petrochemical, Ltd., an Indian company that has benefited from
rapid growth resulting largely from recent changes in New Delhi's
economic policies.
Outlook Investing in overlooked or out-of-favor stocks can entail
above-average risk. The process requires extensive research and
daily management. However, with a carefully selected, constantly
monitored and well-diversified portfolio, these risks can be
accompanied by above-average returns.
We remain cautiously optimistic about stock market prospects in
the months ahead. The U.S. stock market has gone nearly two years
without a significant correction. Therefore, it may need to take
a breather before making another major advance.
Although this new fund is still small, it enjoys full access to
Putnam's in-depth research facilities and long experience in the
management of domestic and foreign equities. As time goes on,
these resources should prove invaluable in helping us identify
the strongest potential investments and positioning the portfolio
to take full advantage of changing market conditions.
Top 10 holdings
(based on net assets as of 11/30/93)
Corrpro Cos., Inc.
Crown American Realty Corp.
Southern Petrochemical Ltd.
Gartner Group Inc.
General Electric Co.
Exide Corp.
Owens-Illinois Inc.
American Telephone & Telegraph Co.
Bankers Life Holding Corp.
Capital Cities/ABC, Inc.
Reflects 36.4% of the portfolio.
Holdings will vary in the future.
Top industry sectors*
Insurance and finance 11.6%
Retail 10.9%
Real estate 10.5%
Consumer services 8.8%
Chemicals 8.3%
*Based on net assets on 11/30/93.<PAGE>
Putnam
Capital
Appreciation
Fund
Semiannual
Report
For the Period ended November 30, 1993
Report of Independent Accountants
To the Trustees and Shareholders of
Putnam Capital Appreciation Fund
We have audited the accompanying statement of assets and
liabilities of Putnam Capital Appreciation Fund, including the
portfolio of investments owned, as of November 30, 1993, and the
related statement of operations, the statement of changes in net
assets, and the "Financial Highlights" for the period August 5,
1993 (commencement of operations) to November 30, 1993. These
financial statements and "Financial Highlights" are the
responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and "Financial
Highlights" based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements and "Financial Highlights" are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned as of November 30, 1993, by correspondence with
the custodian and brokers. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable
basis for our opinion.
In our opinion, the financial statements and "Financial
Highlights" referred to above present fairly, in all material
respects, the financial position of Putnam Capital Appreciation
Fund as of November 30, 1993, and the results of its operations,
the changes in its net assets, and the "Financial Highlights"
for the period August 5, 1993 (commencement of operations) to
November 30, 1993, in conformity with generally accepted
accounting principles.
Coopers & Lybrand
Boston, Massachusetts
January 18, 1994
<PAGE>
Portfolio of
investments owned
November 30, 1993
Common Stocks (91.1%) (a)
Number of Shares Value
Retail (10.9%)
3,500 Levitz Furniture Inc. (b) $ 49,875
1,800 Limited Inc. 40,950
1,000 Penney (J.C.) Co. Inc. 53,375
1,100 Rite Aid Corp. 17,875
2,000 TJX Cos., Inc. (The) 55,500
1,300 Talbots, Inc. (b) 34,775
252,350
Real Estate (10.5%)
6,300 Crown American Realty Trust 102,375
500 Manufactured Home Communities, Inc. 19,938
2,000 McArthur/Glen Realty Corp. (b) 47,500
2,500 Mid Atlantic Realty Trust 25,000
2,000 Oasis Residential, Inc. (b) 47,250
242,063
Insurance and Finance (9.9%)
500 American Express Co. 15,688
700 American General Corp. 18,813
800 American Telephone & Telegraph
Capital Corp. 20,700
3,000 Bankers Life Holding Corp. 63,375
1,600 Bear Stearns Companies, Inc. 35,600
200 Federal National Mortgage Assoc. 15,100
200 General Re Corp. 21,975
3,000 SafeCard Services Inc. 37,125
228,376
Consumer Services (8.8%)
2,000 Back Bay Restaurant Group, Inc. 31,500
100 Capital Cities/ABC, Inc. 63,250
3,000 Gartner Group Inc. (b) 92,250
400 Harcourt General Inc. 16,300
203,300
Chemicals (8.3%)
1,500 Grace (W.R.) & Co. 58,500
2,000 OM Group, Inc. (b) 37,500
7,000 Southern Petrochemical Ltd. ADR (c) 96,250
192,250
Common Stocks
Number of Shares Value
Business Equipment and Services (8.1%)
1,400 Adaptec, Inc. (b) $ 46,373
800 General Electric Co. 78,600
4,400 Golden Systems, Inc. (b) 29,700
1,200 Mikohn Gaming Corp. (b) 17,700
186,611
Building and Construction (6.2%)
9,000 Corrpro Cos., Inc. (b) 142,875
1,700 UNC, Inc. 14,238
157,113
Utilities (4.5%)
1,200 American Telephone & Telegraph Co. 65,550
1,200 Sprint Corp. 39,300
104,850
Transportation (4.4%)
2,000 Landstar System, Inc. (b) 36,250
4,000 Maritime Investment Fund (b)(d) 40,000
1,200 Railtex, Inc. (b) 25,500
101,750
Automotive (4.2%)
1,600 A.P.S. Holding Corp. (b) 27,600
3,000 Exide Corp. (b) 70,125
97,725
Consumer Non-Durables (4.0%)
500 Premark International, Inc. 39,125
3,000 Seda Specialty Parking Corp. (b) 54,000
93,125
Oil and Gas (3.2%)
4,000 Coda Energy, Inc. (b) 23,000
2,000 Offshore Pipelines Inc. (b) 30,000
1,200 USX-Marathon Group 20,250
73,250
Basic Industrial Products (2.9%)
6,100 Owens-Illinois Inc. (b) 67,863
Consumer: Durable Goods( 2.4%)
3,000 Duracraft Corp. (b) 55,500
Metals and Mining (1.7%)
1,500 Minerals Technologies, Inc. 39,000
Common Stocks
Number of Shares Value
Food and Beverages (1.2%)
2,000 Interstate Bakeries Corp. $ 28,500
Total Common Stocks ($1,928,412) $2,109,388
Convertible Bonds (1.7%) (a) (cost $39,150)
Principal Amount Value
30,000 LTC Properties, Inc. cv.
deb. 9 3/4s, 2004 $ 38,850
Total Investments
(cost $1,967,562) (e) $2,148,238
<PAGE>
Notes
(a) Percentages indicated are based on total net
assets of $2,314,430,which correspond to a net asset
value per share of $9.55.
(b) Non-income-producing security.
(c) Security whose value is determined or
significantly influenced by trading on exchanges not in
the United States or Canada.
ADR after the name of a foreign holding stands for
American Depository Receipt, representing foreign
securities on deposit with a domestic custodian bank.
(d) Securities exempt from registration under Rule
144A of the Securities Act of 1933. These securities
may be resold in transactions exempt from registration,
normally to qualified instituional buyers. At November
30, 1993, these securities were valued at $40,000 or
1.7% of net assets.
(e) The aggregate identified cost on a tax basis is
$1,967,562, resulting in gross unrealized appreciation
and depreciation of $233,881 and $53,205, respectively,
or net unrealized appreciation of $180,676.
<PAGE>
<TABLE>
<CAPTION>
Statement of
assets and liabilities
November 30, 1993
<S> <C> <C>
Assets
Investments in securities, at value
(identified cost $1,967,562) (Note 1) $2,148,238
Cash 8,920
Dividends and interest receivable 3,087
Receivable for shares of the Fund sold 482
Receivable for securities sold 151,773
Unamortized organization expenses (Note 1) 15,982
Receivable from Manager (Note 3) 8,979
Total assets 2,337,461
Liabilities
Payable for compensation of Trustees (Note 3) $ 66
Payable for investor servicing and custodian fees (Note 3) 627
Payable for organization expense (Note 1) 17,091
Other accrued expenses 5,247
Total liabilities 23,031
Net assets $2,314,430
Represented by
Paid-in capital (Notes 2 and 5) $2,067,700
Undistributed net investment income 8,276
Accumulated net realized gain on investment 57,778
Net unrealized appreciation of investments 180,676
Total -- Representing net assets applicable to
capital shares outstanding $2,314,430
Computation of net asset value and offering price
<PAGE>
Net asset value and redemption price per share
($2,314,430 divided by 242,314 shares) $9.55
Offering price per share (100/94.25 of $9.55)* $10.13
*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.
/TABLE
<PAGE>
<TABLE>
<CAPTION>
Statement of
operations
For the period August 5, 1993 (commencement
of operations) to November 30, 1993*
<S> <C> <C>
Investment income
Dividends $ 6,889
Interest 8,299
Total investment income 15,188
Expenses:
Compensation of Manager (Note 3) $4,604
Investor servicing and custodian fees
(Note 3) 1,400
Compensation of Trustees (Note 3) 66
Reports to shareholders 66
Auditing 6,343
Legal 7,145
Postage44
Administrative services (Note 3) 11
Amortization of organization
expenses (Note 1) 1,109
Other expenses 20
Fees waived by Manager (Note 3) (13,583)
Total expenses 7,225
Net investment income 7,963
Net realized gain on investments
(Notes 1 and 4) 57,778
Net unrealized appreciation of investments
during the period 180,676
Net gain on investments 238,454
Net increase in net assets resulting
from operations $246,417
*See Note 2.
/TABLE
<PAGE>
Statement of
changes in net assets
For the period August 5, 1993
(commencement of operations) to
November 30, 1993
Increase in net assets
Operations:
Net investment income $ 7,963
Net realized gain on investments 57,778
Net unrealized appreciation
of investments 180,676
Net increase in net assets
resulting from operations 246,417
Increase from capital share transactions
(Note 5)
67,700
Total increase in net assets 314,117
Net assets
Beginning of period 2,000,313
End of period (including undistributed
net investment income of $8,276) $2,314,430
*See Note 2
<PAGE>
Financial Highlights
(For a share outstanding throughout the period)
For the period
August 5, 1993
(commencement
of operations) to
November 30, 1993*
Net Asset Value, Beginning of Period $8.53
Investment Operations
Net Investment Income .03(a)(b)
Net Realized and Unrealized Gain on Investments .99
Total from Investment operations 1.02
Total Distributions --
Net Asset Value, End of Period $9.55
Total Investment Return at Net Asset Value (%)(c) 37.38(d)
Net Asset Value, End of Period (in thousands) $2,134
Ratio of Expenses to Average Net Assets(%) 1.03(a)(b)(d)
Ratio of Net Investment Income to
Average Net Assets(%) 1.14(a)(b)(d)
Portfolio Turnover(%) 28.49(e)
* See Note 2
(a) Per share net investment income for the period ended
November 30, 1993 has been determined on the basis of the
weighted average number of shares outstanding during the period.
(b) Reflects a voluntary expense limitation during the period.
As a result of these limitations, expenses of the Fund for the
period ended November 30, 1993 reflect a reduction of $0.05 per
share. See Note 3.
(c) Total investment return assumes dividend reinvestment and
does not reflect the effect of sales charges.
(d) Annualized.
(e) Not annualized
<PAGE>
Notes to
financial statements
November 30, 1993
Note 1 Significant accounting policies
The Fund is registered under the Investment Company Act of 1940,
as amended, as a diversified open-end management investment
company. The Fund seeks capital appreciation by investing
primarily in common stocks that offer 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 policies are in conformity with
generally accepted accounting principles.
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, except that certain U.S. government
obligations are stated at the mean between the bid and asked
prices. 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 value
following procedures approved by the Trustees. Foreign securities
quoted in foreign currencies are translated into U.S. dollars at
the current exchange rate.
B) Repurchase Agreements The Fund, 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.
The Fund's Manager 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.
C) 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 and dividend income is recorded on the ex-dividend
date, except that certain dividends from foreign securities are
recorded as soon as the Fund is informed of the ex-dividend date.
Foreign currency-denominated receivables and payables are
"market-to-market" daily using the current exchange rate. The
fluctuation between the original exchange rate and the current
exchange rate is recorded daily as unrealized gain or loss. Upon
receipt or payment, the Fund realizes a gain or loss amounting to
the difference between the original value and the ending value of
the receivable or payable. Foreign currency gains and losses
related to interest and dividends receivable are reported as part
of dividend income.
D) Federal income taxes It is the policy of the Fund to
distribute all of its 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
of securities held and excise tax on income and capital gains.
E) Distributions to shareholders Distributions to shareholders
are recorded by the Fund on the ex-dividend date.
F) Unamortized organization expenses Expenses incurred by the
Fund in connection with its organization, its registration with
the Securities and Exchange Commission and with various states
and the initial public offering of its shares aggregated $17,091.
These expenses are being amortized by the Fund on a straight-line
basis over a five-year period.
Note 2 Initial capitalization and offering of shares
The Fund was established as a Massachusetts business trust under
the laws of Massachusetts on May 4, 1993.
During the period May 4, 1993, to August 4, 1993, the Fund had no
operations other than those related to organizational matters,
including the initial capital contribution of $100,000 and the
issuance of 11,765 shares to Putnam Mutual Funds Corp., a
wholly-owned subsidiary of Putnam Investments, Inc. on June 14,
1993. Putnam Mutual Funds Corp. made a subsequent capital
contribution of $1,900,000 and was issued 222,743 shares on
August 3, 1993. During the period June 14, 1993 to August 4,
1993, invested initial capital resulted in interest income of
$313. Regular investment operations commenced on August 5, 1993.
At November 30, 1993, Putnam Investments Inc. owned 234,508
shares outstanding of the Fund, valued at $2,239,531.
<PAGE>
Note 3 Management fee, administrative services, and other
transactions
Compensation of Putnam Investment Management, Inc., the Fund's
Manager, a wholly-owned subsidiary of The Putnam Investments,
Inc., 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: 0.65%
of the first $500 million of average net assets, 0.55% of the
next $500 million, 0.5% of the next $500 million, and 0.45% of
any amount over $1.5 billion, subject to reduction in any year to
the extent that expenses (exclusive of distribution fees,
brokerage, interest and taxes) of the Fund exceed 2.5% of the
first $30 million of average net assets, 2.0% of the next $70
million and 1.5% of any amount over $100 million and by the
amount of certain brokerage commissions and fees (less expenses)
received by affiliates of the Manager on the Fund's portfolio
transactions.
Until July 31, 1994 the Manager has voluntarily agreed to reduce
its compensation and, if necessary, absorb other Fund expenses
to the extent that expenses of the Fund exceed an annual rate of
1.0% of the Fund's average net assets. The Fund's expenses
subject to this limitation are exclusive of brokerage, interest,
taxes, insurance, amortization of deferred organization expenses
and extraordinary expenses, if any, and expenses incurred under
the Fund's distribution plan described below. This limitation was
accomplished by a reduction of the compensation payable under the
management contract to the Manager. As a result of the voluntary
limitation, expenses for the period ended November 30, 1993 were
reduced by $13,583.
The Fund also reimburses the Manager 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. For the period ended November 30, 1993, the Fund paid
$11 for these services.
Trustees of the Fund receive an annual Trustee's fee of $50 and
an additional fee for each Trustees' meeting attended. Trustees
who are not interested persons of the Manager and who serve on
committees of the Trustees receive additional fees for attendance
at certain committee meetings.
Custodial functions for the Fund's assets are being provided by
Putnam Fiduciary Trust Company (PFTC), a subsidiary of Putnam
Investments, Inc. Investor servicing agent functions are provided
by Putnam Investor Services, a division of PFTC. Fees paid for
these investor servicing and custodial functions for the period
ended November 30, 1993 amounted to $1,400.
Investor servicing and custodian fees reported in the Statement
of operations for the period ended November 30, 1993 have been
reduced by credits allowed by PFTC.
Although a distribution plan has been adopted under Rule 12b-1 of
the Investment Company Act of 1940, the Fund is not currently
making any payments pursuant to the plan. For the period ended
November 30, 1993, the Fund paid no monies in distribution fees.
During the period ended November 30, 1993, Putnam Mutual Funds
Corp., a wholly owned subsidiary of Putnam Investments, Inc.
acting as an underwriter, received no net commissions from the
sale of shares of the Fund.
A deferred sales charge of up to 1.00% is assessed on certain
redemptions of shares purchased as part of an investment of $1
million or more. For the period ended November 30, 1993, Putnam
Mutual Funds Corp., acting as underwriter, received no monies on
such redemptions.
Note 4 Purchases and sales of securities
During the period ended November 30, 1993, purchases and sales of
investment securities other than U.S. government obligations and
short-term investments aggregated $2,365,171 and $455,387,
respectively. There were no purchases or sales of U.S. Government
obligations during the year. In determining the net gain or loss
on securities sold, the cost of securities has been determined on
the identified cost basis.
<PAGE>
<TABLE>
<CAPTION>
Note 5 Capital shares
At November 30, 1993, there was an unlimited number of shares of beneficial interest
authorized. Transactions in capital shares were as follows:
For the period
August 5, 1993
(commencement
of operations) to
November 30
1993
<S> <C> <C>
Shares Amount
Shares sold 8,633 $75,199
Shares issued in connection
with reinvestment of distributions -- --
8,633 75,199
Shares repurchased (827) (7,499)
Net increase 7,806 $67,700
</TABLE>
<PAGE>
Fund performance supplement
Putnam Capital Appreciation Fund is managed for capital
appreciation, with current income only an incidental
consideration. The Standard & Poor's 500(R) Index is an
unmanaged list of large-capitalization common stocks and assumes
reinvestment of all distributions. The index does not take into
account brokerage commissions or other costs. The fund's
portfolio contains securities that do not match those in the
index. The Consumer Price Index is a commonly used measure of
inflation; it does not represent an investment return.
Fund performance data do not take into account any adjustment for
taxes that may have been payable.
The fund performance supplement has been prepared by Putnam
Management to provide additional information about the fund and
the indexes used for performance comparisons. The information is
not part of the portfolio of investments owned or the financial
statements.
<PAGE>
Putnam
Capital
Appreciation
Fund
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
Investor servicing agent
Putnam Investor Services
Mailing address:P.O. Box 41203
Providence, RI 02940-1203
1-800-225-1581
Custodian
Putnam Fiduciary
Trust Company
Legal counsel
Ropes & Gray
Independent accountants
Coopers & Lybrand
(DALBAR LOGO)
Putnam Investor Services has received the DALBAR awardeach year
sincethe award's 1990 inception.
In more than 10,000 tests
of 38 shareholder
service components, Putnam outperformed
the industry standard
in every category.
79-10016<PAGE>
Officers
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Peter Carman
Vice President
Gerald Zukowski
Vice President and Fund Manager
William N. Shiebler
Vice President
Francis J. Mullin
Vice President
John R. Verani
Vice President
John D. Hughes
Vice President and Treasurer
Paul O'Neil
Vice President
Beverly Marcus
Clerk and Assistant Treasurer
Trustees
George Putnam, Chairman
William F. Pounds, Vice Chairman
Hans H. Estin, John A. Hill,
Elizabeth T. Kennan, Lawrence J. Lasser,
Robert E. Patterson, Donald S. Perkins
George Putnam, III, A.J.C. Smith
W. Nicholas Thorndike
This report is for the information of shareholders of Putnam
Capital Appreciation 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.
APPENDIX TO FORM N-30D FILINGS TO DESCRIBE DIFFERENCES BETWEEN
PRINTED AND EDGAR-FILED TEXTS:
(1) Rule lines for tables are omitted.
(2) Boldface and italic typefaces are displayed in normal type.
(3) Headers (e.g, the name of the fund) and footers (e.g., page
numbers and "The accompanying notes are an integral part of these
financial statements") are omitted.
(4) Because the printed page breaks are not reflected, certain
tabular and columnar headings and symbols are displayed
differently in this filing.
(5) Bullet points and similar graphic signals are omitted.
(6) Page numbering is different.
