(logo)
Putnam
Capital
Growth and
Income
Fund
Semiannual
Report
November 30, 1993
For investors seeking
capital growth and
current income
primarily through
investments in common stocks
Contents
2 How your fund performed
3 From the Chairman
4 Report from Putnam Management
Semiannual Report
7 Report of independent accountants
8 Portfolio of investments owned
10 Financial statements
16 Fund performance supplement
17 Your Trustees
A member
of the Putnam
Family of Funds
<PAGE>
How your
fund performed
For the period ended November 30, 1993
Fund S&P Consumer
Total return* NAV POP 500 Index Price Index
Life-of-fund
(since 7/19/93) 7.39% 1.22% 4.27% 0.97%
Share data NAV POP
July 19, 1993 $8.52 $9.04
(commencement of operations)
November 30, 1993 $9.15 $9.71
Total return at end of most recent calendar quarter
Period ended Cumulative
December 31, 1993 NAV POP
Life-of-fund 10.52% 4.16%
(since 7/19/93)
*Performance data represents 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. An
expense limitation is currently in effect; without it, total
return would have been somwhat 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 16 for
additional information about performance comparisons.
<PAGE>
From the Chairman
Dear Shareholder:
The first semiannual period in the life of a fund can be one of
the most challenging times of its entire operating history --
particularly for a fund whose strategy emphasizes growth. As
experienced investors, most of us understand that generating
capital growth takes time. But nevertheless, we usually find
ourselves looking for the reassurance of immediate results.
I'm happy to report that after just four months of operations,
Fund Manager James Giblin has already demonstrated the
effectiveness of his investment strategy. Based on performance
at net asset value, Putnam Capital Growth and Income Fund
finished ahead of the market -- as represented by the Standard &
Poor's 500 Index -- for this fiscal period. Details are on the
facing page. While such a short period is hardly an appropriate
barometer for assessing the fund's long-term performance
potential, this is certainly an encouraging start.
The fund's portfolio is now fully invested in a carefully chosen
blend of equity securities, comprising four distinct yield
categories and a wide cariety of industry sectors. While the
results we've seen so far are derived primarily from holdings in
low-yielding stocks characterized by strong growth potential,
holdings in the other three categories also have the potential to
contribute, or even to drive the fund's overall performance. In
the Report from Putnam Management which follows, Jim explains the
advantages of this blended portfolio and the flexibilitiy we
expect it to provide for the fund over the long term.
I think you'll agree with me that this fund can appeal to many
"borderline" equity investors -- those whose financial goals
would be best served by a growth investment but who feel they
need the relative stability of a growth-and-income fund. Given
this strong beginning, I believe we can rely on Jim's expertise
to help the fund grow into a thriving new Putnam product.
Respectfully yours,
//George Putnam//
George Putnam
Chairman of the Trustees
January 19, 1994
<PAGE>
Report from
Putnam Management
Top 10 holdings
(based on net assets
as of 11/30/93)
Aetna Life & Casualty Co.
Comcast Corp. Class A
Boston Chicken Inc.
Chevron, Inc.
Royal Dutch Petroleum Co.
ADR
Conrail Inc.
Chemical Banking Corp.
Mobil Corp.
American Stores Co.
Chrysler Corp. Ser. A.
$4.625 dep. shs. cv. pfd.
Reflects 23.3% of the portfolio.
Holdings will vary in the future.
As of November 30, 1993, the end of Putnam Capital Growth and
Income Fund's first semiannual period, the Lipper growth-and-
income fund universe encompassed 314 funds. Additionally, assets
within the universe had grown nearly 18% year-to-date by
September 30, 1993. Given this demand, it's obvious that this
investment category offers considerable opportunities to
investors and fund companies alike. Opportunities, however,
generally go hand in hand with challenges, some of which are
unique to this category.
The growth/income balance Because growth-and-income funds are,
by nature, a blend of objectives, one of the first major hurdles
for any fledgling fund in this category is to define clearly its
own blend of investment goals. Will the primary focus be income,
growth, or a combination of the two? And how will the portfolio
composition reflect this orientation? In answering these
questions, each growth-and-income fund sets the guidelines by
which its performance will be measured -- and begins to establish
its own signature strategy.
Your fund is already well over this first hurdle. When you look
at the Putnam growth-and-income funds relative to the growth-and-
income universe, there is a general bias in favor of income.
This fund's strategy, however, is more weighted in favor of
growth. The result is that compared with other funds in its
competitive universe, it is truly a middle-of-the-road fund,
designed to provide greater upside potential than the market
while seeking to maintain the relative stability of net asset
value that leads so many conservative investors to choose growth-
and-income funds.
Consequently, we are building a portfolio on four types of
securities, each with distinctly different characteristics. In
keeping with the fund's current growth bias, virtually all
holdings are equity securities -- primarily common stocks with a
small component of convertible bonds and preferred stocks.
Unlike many other growth-and-income funds available today, we do
not plan to rely on fixed income investments to generate yield.
Instead, we are positioning the fund to provide a certain base
level of dividend income in order to cushion against price
changes in declining markets while enhancing overall performance
and enabling us to pursue additional growth opportunities. This
should give us the flexibility to reach a little further for
growth than the average growth-and-income fund, and the fund has,
in fact, already done so.
A four-part portfolio With dividend income a prerequisite of the
fund's overall strategy, our first portfolio component consists
of high-yielding stocks with limitied growth potential. This
generally means utility companies we currently hold were selected
chiefly for yield potential. The declining interest rate
environment of the past few years has been a very healthy one for
these stocks; while there can be no guarantee that such results
will continue, all seven of them (Northeast Utilities,Dominion,
Pacific Telesis, Sprint, Baltimore Gas, Soutern Co., and GTE)
have kept pace with the Standard & Poor's 500 Index for the last
decade.
Our second portfolio component is also yield oriented, but is
intended to provide greater growth potential than we would
generally expect from utilities. Most of these stocks are
energy-related and offer opportunities for earnings growth and/or
price appreciation because of their widespread restructuring and
cost containment programs. Chevron is a good example. In a
recent restructuring, this international oil producer and refiner
was able to reduce its operating cost while divesting itself of
underperforming assets. International expansion should enable
the company to weather any domestic production declines.
At this point, our selection strategy starts to favor growth
potential over yield. Our third portfolio sector consists of
stocks whose yield is relatively close to that of the S&P but
whose growth potential is noticeably higher. Some of these are
undervalued, out-of-favor or "comeback" stocks while others are
classic growth-and-income holdings. No one industry is favored,
but we do hold a number of consumer-oriented companies, including
J.C. Penney, Avon and General Mills.
The fourth component of our portfolio strategy is generally
expected to drive the fund's long-term total return performance,
although market conditions over the short term could easily favor
one or more of the other sectors. Companies in this sector are
true growth stocks with little or no yield, the type of stock you
do not ofton see in growth-and-income portfolios. We believe
that because of our portfolio structure and sturdy yield base, we
will be able to take advantage of opportunities available to few
other funds in this category, and in doing so, enhance
performance without increasing overall investment risk.
Technology is the common denominator for most companies in this
sector. We hold companies whose past success is near-legendary
and whose ongoing potential we believe in (Intel, for example).
Others are less well known, but may provide even greater long-
term rewards. Cisco Systems, a manufacturer of products that
connect and manage computer network communications, typifies the
sector. Although the company's stock does not pay dividends, its
earnings have grown each year since 1988, and its strong growth
rate projections for 1994 justify its inclusion in this portion
of the portfolio.
Both stock and sector selection are key While we will regularly
place specific industry bets and weight the portfolio more or
less than the market in a given industry as a result, the key to
this fund's success will be how we blend individual stock
selections with weighting across the four portfolio components
just discussed. In each sector, we look for companies in which
we have a high degree of confidence that earnings will meet or
exceed expectations and where we see a growth rate that appears
sustainable for at least two years. We also look for the kind of
quality that is likely to appeal to institutional investors,
since increased demand from them is likely to significantly
increase the price of the stock.
In some respects, the portfolio we've created is a microcosm of
the S&P 500, which we consider the benchmark for measuring
growth-and-income investments. Although securities in the
portfolio do not match those in the index, the S&P's eclectic mix
of growth stocks, income-producing stocks, and the thousands in
between is exactly what the fund strives to be -- a growth-
oriented investment with a solid income-generating base. We've
already shown our ability to keep pace with the index over the
short term and, while these results cannot be taken as a measure
of future performance, we will work to maintain this achievement
through the remainder of this fiscal year and beyond.
<PAGE>
(pie chart)
Portfolio components (based on net assets as of 11/30/93)
Cash and short-term investments .......................10%
Stocks with average yields/average growth potential ...32%
High-yielding stocks/limited growth potential..........16%
Stocks with above-average yields/
moderate growth potential............................22%
Low-yielding stocks/highest growth potential...........21%
This chart represents Putnam Management's assessment of the
portfolio's makeup as of 11/30/93. There is no assurance that
individual investments will continue to be viewed the same way in
the future. Investors should keep in mind that, in general, the
greater a security's potential return, the greater its
volatility.
<PAGE>
Putnam
Capital
Growth and
Income
Fund
Semiannual
Report
For the Period ended November 30, 1993
Report of Independent Accountants
To the Trustees and Shareholders of
Putnam Capital Growth and Income Fund
We have audited the accompanying statement of assets and
liabilities of Putnam Capital Growth and Income 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 July 19,
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 Growth and
Income Fund as of November 30, 1993, the results of its
operations, the changes in its net assets, and the "Financial
Highlights" for the period July 19, 1993 (commencement of
operations) to November 30, 1993, in conformity with generally
accepted accounting priniciples.
Coopers & Lybrand
Boston, Massachusetts
January 6, 1994
<PAGE>
Portfolio of
investments owned
November 30, 1993
Common Stocks (89.1%)(a)
Number of Shares Value
Insurance and Finance (15.8%)
1,000 Aetna Life & Caualty Co. $ 61,120
500 Beneficial Corp. 36,875
1,200 Chemical Banking Corp. 46,200
1,000 Citicorp (b) 35,500
900 Dean Witter Discover & Co. 34,200
600 First Fidelity Bancorp 25,125
700 Lincoln National Corp. 30,450
800 NWNL Companies, Inc. 23,800
399 Primerica Corp. 15,960
600 Transamerica Corp. 33,525
342,755
Consumer Services (11.2%)
400 Block (H.&R.), Inc. 15,350
1,500 Boston Chicken, Inc. (b) 56,063
100 CBS Inc. 30,825
1,700 Comcast Corp. Class A 57,800
700 GTE Corp. 25,988
400 Harcourt General Inc. 16,300
1,400 Mirage Resorts, Inc. 30,800
200 QVC Network, Inc. (b) 9,300
242,426
Utilities (8.7%)
1,400 Baltimore Gas & Electric Co. 35,350
900 Dominion Resources, Inc. 39,825
1,300 Northeast Utilities 30,388
700 Pacific Telesis Group 39,725
1,000 Southern Co. 43,250
188,538
Oil and Gas (7.5%)
600 Apache Corp. 13,125
600 Chevron Corp. 52,125
600 Mobil Corp. 45,750
500 Royal Dutch Petroleum Co. ADR (c) 50,500
161,500
Common Stocks
Number of Shares Value
Health Care (7.0%)
1,200 Abbott Laboratories $ 35,100
700 American Home Products Corp. 43,837
500 Pfizer, Inc. 33,250
400 United Healthcare Corp. 28,950
300 Value Health, Inc. (b) 10,163
151,300
Retail (5.2%)
1,100 American Stores Co. 45,513
800 Penney (J.C.) Co. Inc. 42,700
600 Walgreen Co. 24,450
112,663
Electronics and Electrical Equipment (5.1%)
100 DSC Communications Corp. (b) 5,413
700 Intel Corp. 43,050
900 Kurzweil Applied Intelligence Inc. (b) 17,325
200 Motorola, Inc. 18,750
400 Texas Instruments, Inc. 25,700
110,238
Basic Industrial Products (4.3%)
600 Applied Materials, Inc. (b) 21,150
500 Caterpillar, Inc. 42,625
400 Deere & Co. 28,350
92,125
Business Equipment and Services (3.9%)
400 Cisco Systems, Inc. (b) 22,500
700 First Financial Management Corp. 38,325
300 Microsoft Corp. (b) 24,000
84,825
Food and Beverages (3.4%)
900 CPC International Inc. 42,188
500 General Mills, Inc. 30,375
72,563
Chemicals (2.8%)
600 du Pont (E.I.) de Nemours & Co., Ltd. 28,575
600 Rohm & Haas Co. 32,625
61,200
Common Stocks
Number of Shares Value
Transportation (2.3%)
800 Conrail Inc. $ 49,900
Conglomerates (2.0%)
700 United Technologies Corp. 43,313
Consumer: Durable Goods (1.9%)
700 Whirlpool Corp. 41,563
Building and Construction (1.8%)
700 Armstrong World Industries, Inc. 32,113
200 Masco Corp. 6,800
38,913
Consumer Non-Durables (1.6%)
700 Avon Products, Inc. 34,913
Telecommunications (2.8%)
1,400 MCI Communications Corp. 34,125
800 Sprint Corp. 26,200
60,325
Real Estate (1.5%)
1,700 Avalon Properties, Inc. 33,150
Forest Products (0.3%)
100 Georgia-Pacific Corp. 7,350
Total Common Stocks (cost $1,861,403) $1,929,560<PAGE>
Convertible Preferred Stocks (4.0%) (a)
Number of shares Value
300 Chrysler Corp. Ser. A, $4.625
dep. shs. cv. pfd. (d) $ 44,550
400 Ford Motor Co. Ser. A, $4.20,
cv. pfd. 41,000
Total Convertible Preferred Stocks (cost $73,421) $ 85,550
Short Term Investments (9.8%) (a) (cost $212,019)
Principal Amount Value
$ 212,000 Interest in $174,522,000 joint
repurchase agreement dated
November 30, 1993 with Prudential
Securities Inc. due December 1, 1993
with respect to various U.S.
Treasury obligations -- maturity
value of $212,019 for an effective
yield of 3.20% $ 212,019
Total Investments
(cost $2,146,843) (e) $2,227,129
Notes
(a) Percentages indicated are based on total net assets of
$2,165,234,which correspond to a net asset value per share of
$9.15.
(b) Non-income-producing security.
(c) A security whose value is determined or significantly
influenced by trading or exchanges not in the Unitied States or
Canada. ADR after the name of the foreign holding stands for
American Depository Receipt, representing ownership of foreign
securities on deposit with a domestic custodian bank.
(d) A security exempt from registration under Rule 144A of the
Securities Act of 1933. This security may be resold in
transactions exempt from registration, normally to qualified
instituional buyers. At November 30, 1993, this security was
valued at $44,550 or 2.1% of net assets.
(e) The aggregate identified cost on a tax basis is $2,147,194,
resulting in gross unrealized appreciation and depreciation of
$137,081 and $57,146, respectively, or net unrealized
appreciation of $79,935.
<PAGE>
<TABLE>
<CAPTION>
Statement of
assets and liabilities
November 30, 1993
<S> <C> <C>
Assets
Investments in securities, at value
(identified cost $2,146,843) (Note 1) $2,227,129
Cash 880
Dividends receivable 6,928
Receivable for securities sold 56,779
Unamortized organization expenses (Note 1) 15,805
Receivable from Manager (Note 3) 8,288
Total assets 2,315,809
Liabilities
Payable for securities purchased $127,262
Payable for compensation of Trustees (Note 3) 61
Payable for investor servicing and custodian fees (Note 3) 915
Payable for organization expense (Note 1) 17,091
Other accrued expenses 5,246
Total liabilities 150,575
Net assets $2,165,234
Represented by
Paid-in capital (Notes 2 and 5) $2,016,364
Undistributed net investment income 17,277
Accumulated net realized gain on investment 51,307
Net unrealized appreciation of investments 80,286
Total -- Representing net assets applicable to
capital shares outstanding $2,165,234
<PAGE>
Computation of net asset value and offering price
Net asset value and redemption price per share ($2,165,234 divided by
236,660 shares) $9.15
Offering price per share (100/94.25 of $9.15)* $9.71
*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 July 19, 1993 (commencement
of operations) to November 30, 1993*
<S> <C> <C>
Investment income
Dividends (net of foreign tax of $154) $21,499
Interest 2,933
Total investment income 24,432
Expenses:
Compensation of Manager (Note 3) $5,208
Investor servicing and custodian fees
(Note 3) 687
Compensation of Trustees (Note 3) 62
Reports to shareholders 62
Auditing 6,343
Legal 7,148
Postage40
Administrative services (Note 3) 16
Amortization of organization
expenses (Note 1) 1,286
Other expenses 20
Fees waived and other expenses
absorbed by Manager (Note 3) (13,495)
Total expenses 7,377
Net investment income 17,055
Net realized gain on investments
(Notes 1 and 4) 51,307
Net unrealized appreciation of investments
during the period 80,286
Net gain on investments 131,593
Net increase in net assets resulting
from operations $148,648
*See Note 2
/TABLE
<PAGE>
Statement of
changes in net assets
For the period July 19, 1993
(commencement of operations)to
November 30, 1993*
Increase in net assets
Operations:
Net investment income $17,055
Net realized gain on investments 51,307
Net unrealized appreciation
of investments 80,286
Net increase in net assets
resulting from operations 148,648
Increase from capital share transactions
(Note 5) 16,364
Total increase in net assets 165,012
Net assets
Beginning of period 2,000,222
End of period (including undistributed
net investment income of $17,277) $2,165,234
*See Note 2
<PAGE>
Financial Highlights
(For a share outstanding throughout the period)
For the period
July 19, 1993
(commencement
of operations) to
November 30, 1993
Net Asset Value, Beginning of Period $8.52
Investment Operations:
Net Investment Income .07(a)(b)
Net Realized and Unrealized
Gain on Investments .56
Total from Investment Activities .63
Net Asset Value, End of Period $9.15
Total Investment Return at Net Asset Value (%) (c) 19.97(d)
Net Asset Value, End of Period (in thousands) $2,165
Ratio of Expenses to Average Net Assets (%) 0.95(b)(d)
Ratio of Net Investment Income to Average Net Assets (%) 2.19(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 waiver of the management fee for the period July
19, 1993 to November 30, 1993. As a result of such waiver,
expenses of the Fund for the period ended November 30, 1993
reflect a reduction of approximately $0.06 per share. See Note 3.
(c) Total investment return 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 growth and current income by
investing primarily in common stocks that offer potential for
capital growth, current income or both.
The following is a summary of significant accounting policies
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, and other investments 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 and certain other accounts of other registered
investment companies managed by Putnam Investment Management
Inc., (Putnam Management) the Fund's Manager, a wholly-owned
subsidiary of Putnam Investments, Inc. These balances may be
invested in one or more repurchase agreements and/or short-term
money market instruments.
C) 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.
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 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.
E) 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.
F) Distributions to shareholders Distributions to shareholders
are recorded by the Fund on the ex-dividend date.
G) 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 5, 1993.
During the period May 5, 1993, to July 16, 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 10,
1993. On July 15, 1993 Putnam Mutual Funds Corp. made a
subsequent capital contribution of $1,900,000 and was issued
223,005 shares. During the period June 10, 1993 to July 16, 1993,
invested initial capital resulted in interest income of $222.
Regular investment operations commenced on July 19, 1993.
At November 30, 1993, Putnam Investments, Inc. owned 234,770
shares outstanding of the Fund, valued at $2,148,145.
Note 3 Management fee, administrative services, and other
transactions
Compensation of Putnam Investment Management, Inc., the Fund's
Manager, a wholly-owned subsidiary of 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, 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 May 31, 1994 the Manager voluntarily agreed to reduce its
compensation to the extent that expenses of the Fund exceed 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 $13,495.
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
$16 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 provided by Putnam
Fiduciary Trust Company (PFTC), a subsidiary of Putnam
Investments, Inc. Investor servicing agent functions were
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 $687.
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.
Pursuant to the Fund's underwriting agreement and to a
distribution plan adopted under Rule 12b-1 of the Investment
Company Act of 1940, although the Fund is not currently making
any payments pursuant to the plan. 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, a quarterly distribution
fee at the annual rate of up to .35% of the average net asset
value of shares of the Fund attributable to qualifying investment
dealers of record for Fund shareholders. For the period ended
November 30, 1993, the Fund paid no monies in distribution fees.
<PAGE>
Note 3 Management fee, administrative services, and other
transactions (continued)
During the period ended November 30, 1993, Putnam Mutual Funds
Corp., 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 year ended November 30, 1993, Putnam
Mutual Funds Corp., acting as underwriter, received no monies on
redemptions.
Note 4 Purchases and sales of securities
During the period ended November 30, 1993, purchases and sales of
investment securities other than short-term investments
aggregated $2,414,238 and $530,721, respectively. There were no
purchases or 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 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
July 19, 1993
(commencement
of operations) to
November 30
1993
Shares Amount
Shares sold 2,983 $26,177
Shares issued in connection
with reinvestment of
distributions -- --
2,983 26,177
Shares repurchased (1,093) (9,813)
Net increase 1,890 $16,364
<PAGE>
Fund performance supplement
Putnam Capital Growth and Income Fund is managed for capital
growth and current income primarily through investments in common
stocks chosen for strong growth and/or income potential. Standard
& Poor's 500 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>
Your
Trustees
George Putnam
Chairman
Chairman and President,
The Putnam Funds
William F. Pounds
Vice Chairman
Professor of Management,
Alfred P. Sloan
School of Management,
Massachusetts Institute of Technology
Hans H. Estin
Vice Chairman, North American
Management Corporation
John A. Hill
Principal and
Managing Director,
First Reserve Corp.
Elizabeth T. Kennan
President,
Mount Holyoke College
Lawrence J. Lasser
President and
Chief Executive Officer,
Putnam Investments, Inc.
Robert E. Patterson
Executive Vice President,
Cabot Partners
Limited Partnership
Donald S. Perkins
Director of various
corporations
George Putnam, III
President, New Generation
Research, Inc.
A.J.C. Smith
Chairman of the Board
and Chief Executive Officer,
Marsh & McLennan
Companies, Inc.
W. Nicholas Thorndike
Director of various corporations<PAGE>
Putnam
Capital Growth and
Income 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 award
each year since
the award's 1990 inception.
In more than 10,000 tests
of 38 shareholder
service components, Putnam outperformed
the industry standard
in every category.
73-10012<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
James Giblin
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
Beverly Marcus
Clerk and Assistant Treasurer
This report is for the information of shareholders of Putnam
Capital Growth and Income 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.
<PAGE>
APPENDIX TO FORM N30D 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.
