Putnam Multi-Cap Value Fund - Putnam Investments

Interview withyour fund’sportfolio managerJames A. Polk, CFAJim, U.S. stocks had a stellar six months forthe period ended October 31, 2013. Whatcontributed to their strong performance?I think the biggest contributing factor hasbeen the Federal Reserve Board’s quantitativeeasing [QE] regime. Over the pastseveral months, the Fed has been pumping$85 billion a month into bond purchasesdesigned to stimulate the U.S. economy bykeeping interest rates low. Thus supported bythe Fed, investors flocked to the stock market,pushing several key indexes to then-recordhighs during the period.In June, when Fed Chairman Ben Bernankesignaled the central bank’s intention to beginwinding down its bond purchases later in theyear, the market’s momentum quickly slowed.This was only a temporary hiccup, however,as the Fed later clarified its intentions tobegin tapering only if warranted by growingeconomic activity and a declining unemploymentrate. And with U.S. economic growthstill less than robust, the Fed later made itclear there would be no QE tapering, at leastfor the moment.Stocks also sputtered a bit in late September,as investors worried about the likelihood ofa federal government shutdown due to apolitical impasse over a budget agreement.But again, the market came roaring backwhen a temporary solution to this issue wasreached in mid-October.Broad market index and fund performancePutnam Multi-Cap Value Fund(class A shares before sales charge)18.01%U.S. stocks (S&P 500 Index)11.15%Fund’s benchmark (Russell 3000 Value Index)10.58%Cash(BofA Merrill Lynch U.S. 3-Month Treasury Bill Index)0.03%U.S. bonds (Barclays U.S. Aggregate Bond Index)–1.97%This comparison shows your fund’s performance in the context of broad market indexes for thesix months ended 10/31/13. See pages 4 and 11–13 for additional fund performance information.Index descriptions can be found on page 15.Multi-Cap Value Fund 5