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SIGNATURE GORDON H. SILVER
TITLE VICE PRESIDENT
COOPERS & LYBRAND
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of
Putnam Capital Appreciation Fund
In planning and performing our audit of the financial
statements and financial highlights of Putnam Capital Appreciation
Fund for the period ended May 31, 1994, we considered its internal
control structure, including procedures for safeguarding
securities, in order to determine our auditing procedures for the
purpose of expressing our opinion on the financial statements and
financial highlights and to comply with the requirements of Form N-
SAR, not to provide assurance on the internal control structure.
The management of Putnam Capital Appreciation Fund is
responsible for establishing and maintaining an internal control
structure. In fulfilling this responsibility, estimates and
judgements by management are required to assess the expected
benefits and related costs of internal control structure policies
and procedures. Two of the objectives of an internal control
structure are to provide management with reasonable, but not
absolute, assurance that assets are safeguarded against loss from
unauthorized use or disposition and that transactions are executed
in accordance with management's authorization and recorded properly
to permit preparation of financial statements in conformity with
generally accepted accounting principles.
Because of inherent limitations in any internal control
structure, errors or irregularities may occur and not be detected.
Also, projection of any evaluation of the structure to future
periods is subject to the risk that it may become inadequate
because of changes in conditions or that the effectiveness of the
design and operation may deteriorate.
Our consideration of the internal control structure would not
necessarily disclose all matters in the internal control structure
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 operations of the
specific internal control structure elements does not reduce to a
relatively low level the risk that errors or irregularities in
amounts that would be material in relations to the financial
statements and financial highlights 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 the internal control structure, including
procedures for safeguarding securities, that we consider to be
material weaknesses, as defined above, as of May 31, 1994.
This report is intended solely for the information and use of
management of Putnam Capital Appreciation Fund and the Securities
and Exchange Commission.
/s/ Coopers &Lybrand
COOPERS & LYBRAND
Boston, Massachusetts
July 28, 1994
