PUTNAM NATURAL RESOURCES FUND
SEMIANNUAL REPORT
FEBRUARY 28, 1995
[LOGO]
BOSTON * LONDON * TOKYO
<PAGE>
PERFORMANCE HIGHLIGHTS
Lipper Analytical Services ranked the fund's class A shares among
the top 10% of all natural resources funds tracked for the 12
months ended February 28, 1995, and among the top 25% of those
tracked for the five years ended February 28, 1995.*
"In the year [Fund Manager Jeanne] Mockard has been with the fund,
she had added value to returns while also mediating volatility
through a more diversified, value-oriented approach."(+)
- -- Morningstar Mutual Funds, March 3, 1995
Performance should always be considered in light of a fund's
investment strategy. Putnam Natural Resources Fund is designed for
investors seeking capital appreciation through investments in
energy and other natural resources industries.
SEMIANNUAL RESULTS AT A GLANCE
<TABLE><CAPTION>
<S> <C> <C> <C> <C>
CLASS A CLASS B
TOTAL RETURN NAV POP NAV POP
- ------------------------------------------------------------------
- --
(change in value during
period plus reinvested
distributions)
6 months ended 2/28/95 -0.50% -6.23% -0.84% -5.73%
- ------------------------------------------------------------------
- --
Share value NAV POP NAV
- ------------------------------------------------------------------
- --
8/31/94 $14.73 $15.63 $14.65
2/28/95 14.41 15.29 14.32
- ------------------------------------------------------------------
- --
CAPITAL
DISTRIBUTIONS NO. INCOME GAINS TOTAL
- ------------------------------------------------------------------
- --
Class A 1 $0.235 -- $0.235
Class B 1 0.198 -- 0.198
- ------------------------------------------------------------------
- --
<FN>
Performance data represent past results and will differ for each
share class. For performance over longer periods, see pages 8 and
9. POP for class A shares assumes 5.75% maximum sales charge. CDSC
for class B shares assumes 5% maximum contingent deferred sales
charge. Past performance is not indicative of future results.
*Lipper Analytical Services is an independent research firm whose
rankings vary over time and do not include the effects of sales
charges. For the periods ended 2/28/95, the fund's class A shares
were ranked 3 out of 29 funds for one year, 4 out of 18 funds for
five years, and 4 out of 7 funds for ten years. Class B shares,
which have been offered since 2/1/94, were ranked 4 out of 29
funds for the one-year period ended 2/28/95.
(+)Morningstar is an independent research firm that rates funds
relative to funds with similar objectives, based on risk-adjusted
medium- and long-term performance, as applicable, and adjusted for
sales charges. Past performance is no assurance of future results.
</TABLE>
<PAGE>
FROM THE CHAIRMAN
[PHOTO OF GEORGE PUTNAM]
(C) KARSH, OTTAWA
DEAR SHAREHOLDER:
FEW SECTORS OF THE STOCK MARKET ARE AS SENSITIVE TO THE ECONOMIC
CYCLE AS THE COMPANIES IN THE NATURAL RESOURCES INDUSTRIES. WHEN
BUSINESS IS GROWING, PRODUCERS NEED FUEL, RAW MATERIALS, AND
PACKAGING TO MANUFACTURE AND MARKET THEIR GOODS. WHEN THE ECONOMY
SLOWS, NATURAL RESOURCES SUPPLIERS ARE AMONG THE FIRST TO FEEL THE
PINCH.
WITH THE CURRENT ECONOMIC EXPANSION NOW IN ITS FIFTH YEAR, AND THE
IMPACT OF RISING INTEREST RATES NOW APPARENT, WE ANTICIPATE THAT
MANY OF THE COMPANIES IN WHICH PUTNAM NATURAL RESOURCES FUND
INVESTS MAY BEGIN TO EXPERIENCE SHRINKING DEMAND. BECAUSE THE
VARIOUS SECTORS WITHIN THE INDUSTRY DO NOT EXPAND AND CONTRACT
CONCURRENTLY, FUND MANAGER JEANNE MOCKARD CONTINUALLY ADJUSTS THE
PORTFOLIO TO TAKE ADVANTAGE OF THESE CHANGES, AND FREQUENTLY IN
ANTICIPATION OF THEM.
IN THE REPORT THAT FOLLOWS, JEANNE REVIEWS THE FUND'S PERFORMANCE
DURING THE FIRST HALF OF THE FISCAL YEAR, THE SIX MONTHS ENDED
FEBRUARY 28, 1995, AND LOOKS AT PROSPECTS FOR THE MONTHS AHEAD.
RESPECTFULLY YOURS,
[SIGNATURE]
GEORGE PUTNAM
CHAIRMAN OF THE TRUSTEES
APRIL 19, 1995
<PAGE>
REPORT FROM THE FUND MANAGER
JEANNE MOCKARD
Putnam Natural Resources Fund has endured rough seas over the past
two years, but performance for the six months ended February 28,
1995, demonstrates the potential for much smoother sailing ahead.
Your fund's performance over the semiannual period, though
slightly negative [-0.50% at net asset value (NAV) for class A
shares], reflects considerable improvement over the end of fiscal
1994. In fact, for the first two months of 1995, the fund's class
A shares were up 4.34% at NAV, signaling recovery at a more rapid
pace for both portfolio holdings and the markets in general. (The
fund also offers class B shares.)
STRATEGY: SHORT-TERM TRADES CONSISTENT WITH LONG-TERM PHILOSOPHY
At the start of the period, the fund held about 40% of its assets
in oil and gas stocks, with oil stocks in the majority. This
allocation reflected our expectation that, over the long term, the
oil industry would benefit from the maturing economic cycle in the
United States and the gradual economic recovery in Europe and the
rest of the world.
In January, however, we shifted the fund's allocation of gas and
oil stocks to favor natural gas. This move was intended to take
advantage of what we judged to be an attractive trading
opportunity. Gas prices, reacting to one of the warmest winters on
record, had declined, and we saw an opportunity to acquire gas
stocks at excellent valuations. Our long-term view of this sector
has always been positive. Though gas is difficult to transport and
generally serves a more local market than oil, it is clean and
safe, as well as abundant. For these reasons, gas has often been
the fuel of preference. However, we delayed increasing the fund's
gas holdings until declining prices made the stocks a good value.
We have also tended to favor gas companies whose business includes
oil-related products and enterprises. One recent addition to the
portfolio is Anadarko Petroleum, a natural gas and crude oil
company with an emphasis on expanding the
<PAGE>
long-term growth potential of natural gas. Last year, Anadarko
traded as high as $58 a share. However, the fund's holdings were
acquired at less than $38 per share and we have already seen the
stock move up somewhat.
TAKING ADVANTAGE OF FAST-MOVING MARKETS IN RAILS, PAPER, AND
CHEMICALS
In December 1994, we increased the fund's allocation of railroad
stocks from about 5% to about 9% of the total portfolio. This move
paid off nicely when these stocks rallied in January and early
February. Shortly after the end of this semiannual period, we took
profits and returned the sector to 5% of assets.
Increased demand for all paper grades during the U.S. economic
expansion has affirmed the value of our decision to invest heavily
in paper stocks. The fund's holdings in Scott Paper, a leading
worldwide producer of tissues, paper towels, napkins, and other
paper and printing products, had gained 74% in value when we sold
these shares early this year. Chemical stocks also had a strong
run -- first up, then down, and back up again. Though the fund's
gains were not as dramatic as those in paper, we were able to take
substantial profits in this sector as well.
Precious metals, especially gold, are an important area of the
natural resources sector, but have not been significantly
represented in your fund's portfolio for some time. This
[BAR CHART]
TOP INDUSTRY SECTORS (2/28/95)
- ------------------------------------------------------------------
- --
Oil & gas 44.5%
Metals & mining 13.7%
Railroads 9.2%
Chemicals 7.7%
Forest products
(including paper) 5.9%
[FN]
Based on a percentage of net assets.
[/FN]
<PAGE>
conservative outlook has served the fund well throughout calendar
1994, since performance of precious metals stocks has not been
particularly strong. However, valuations in this sector are now
attracting our attention, and we may be increasing holdings over
the remainder of fiscal 1995.
A CYCLICAL FUND AND THE IMPACT OF RISING INTEREST RATES
Historically, interest-rate increases have not affected this fund
to the same extent that they do bond funds. However, if the
Federal Reserve Board succeeds in significantly slowing the
economy, Putnam Management expects cyclical stocks to lose ground,
especially those that have enjoyed substantial gains. The
defensive strategies we have already put in place are intended to
minimize the impact of such a change, should it occur. For
example, we correctly anticipated a slowdown in paper and chemical
stocks resulting from a rise in inventories and sold the fund's
most cyclically sensitive holdings in these sectors.
Your fund will always be cyclical in nature; in the main, it holds
shares of commodity-based companies whose prices fluctuate
according to changes in demand. However, in another defensive
move, we are shifting our emphasis away from companies whose value
is based solely on a single commodity. In the chemical sector, we
are targeting companies that buy chemicals for manufacturing
another product and thus benefit from lower commodity prices. In
the oil sector, holdings favor higher-yielding securities of
integrated companies like Exxon and Royal Dutch Petroleum, whose
stock prices reflect results in a variety of operations and
products. The fund's most recently acquired oil service stocks are
those of companies that have slashed costs and have the potential
to make a profit in a period of slower activity.
BASIC VALUE: AN OVERRIDING PRINCIPLE FOR ALL SECTORS AND CLIMATES
As the Republican majority has taken hold in Congress, the
political landscape has changed dramatically. The Congressional
approach to environmental issues is now
<PAGE>
TOP 10 HOLDINGS (2/28/95)
<TABLE>
<S> <C>
- ------------------------------------------------------------------
- --
ROYAL DUTCH PETROLEUM CO. ADR 3.2%
- ------------------------------------------------------------------
- --
EXXON CORP 2.7
- ------------------------------------------------------------------
- --
IMPERIAL OIL LTD. 2.4
- ------------------------------------------------------------------
- --
UNION PACIFIC CORP. 2.2
- ------------------------------------------------------------------
- --
CHEVRON CORP. 2.2
- ------------------------------------------------------------------
- --
ATLANTIC RICHFIELD CO. 2.2
- ------------------------------------------------------------------
- --
ILLINOIS CENTRAL CORP. 2.2
- ------------------------------------------------------------------
- --
ANADARKO PETROLEUM CORP. 2.2
- ------------------------------------------------------------------
- --
SCHLUMBERGER LTD. 2.1
- ------------------------------------------------------------------
- --
UNION CARBIDE CORP. 2.0
- ------------------------------------------------------------------
- --
<FN>
These holdings represent 23.4% of net assets. Portfolio holdings
will vary over time.
</TABLE>
expected to be less stringent, compared with the orientation that
has prevailed over the past few years. This could have a positive
effect on the sectors in which your fund invests.
The dollar's recent decline may prompt the Fed to resume its
program of interest-rate increases; a slower economy, possibly a
downturn, could result in lower commodity prices and a more
difficult investment environment.
These are but some of the many factors that can play a part in the
fund's investment strategy. Individual stocks, however, are chosen
in part for their consistency with Putnam's philosophy of basic
value. We look beyond the commodity component of a company in
order to assess its potential for the kind of successful change
that will result in outstanding capital appreciation. This basic
value philosophy has helped us build solid performance in a
variety of markets and we expect that it will continue to work in
your fund's favor.
[FN]
The views expressed here are exclusively those of Putnam
Management. They are not meant as investment advice. Although the
described holdings were viewed favorably as of February 28, 1995,
there is no guarantee the fund will continue to hold these
securities in the future.
[/FN]
<PAGE>
PERFORMANCE SUMMARY
This section provides, at a glance, information about your fund's
performance. Total return shows how the value of the fund's shares
changed over time, assuming you held the shares through the entire
period and reinvested all distributions back into the fund. We
show total return in two ways: on a cumulative long-term basis and
on average how the fund might have grown each year over varying
periods. For comparative purposes, we show how the fund performed
relative to appropriate indexes and benchmarks.
TOTAL RETURN FOR PERIODS ENDED 2/28/95
<TABLE><CAPTION>
<S> <C> <C> <C> <C> <C> <C>
STANDARD &
CLASS A CLASS B POOR'S 500
NAV POP NAV CDSC INDEX CPI
- ------------------------------------------------------------------
- -
6 months -0.50% -6.23% -0.84% -5.73% 3.96% 1.28%
- ------------------------------------------------------------------
- -
1 year 2.13 -3.77 1.30 -3.69 7.35 2.86
- ------------------------------------------------------------------
- -
5 years 27.47 20.17 -- -- 71.08 17.89
Annual average 4.97 3.74 -- -- 11.34 3.35
- ------------------------------------------------------------------
- -
10 years 132.34 118.89 -- -- 274.18 42.36
Annual average 8.80 8.15 -- -- 14.11 3.59
- ------------------------------------------------------------------
- -
Life of class B -- -- -1.71 -5.59 4.44 3.22
Annual average -- -- -1.59 -5.19 4.12 2.97
- ------------------------------------------------------------------
- -
</TABLE>
TOTAL RETURN FOR PERIODS ENDED 3/31/95
(most recent calendar quarter)
<TABLE><CAPTION>
<S> <C> <C> <C> <C>
CLASS A CLASS B
NAV POP NAV CDSC
- ------------------------------------------------------------------
- -
1 year 14.52% 7.96% 13.71% 8.71%
- ------------------------------------------------------------------
- -
5 years 31.29 23.72 -- --
Annual average 5.60 4.35 -- --
- ------------------------------------------------------------------
- -
10 years 133.85 120.39 -- --
Annual average 8.87 8.22 -- --
- ------------------------------------------------------------------
- -
Life of class B -- -- 2.47 -1.53
Annual average -- -- 2.11 -1.31
- ------------------------------------------------------------------
- -
<FN>
Fund performance data do not take into account any adjustment for
taxes payable on reinvested distributions or, for class A shares,
distribution fees prior to implementation of the class A
distribution plan in 1990. Effective 2/1/94, the fund began
offering class B shares. Performance data represent past results
and will differ for each share class. Investment returns and net
asset value will fluctuate so an investor's shares, when sold, may
be worth more or less than their original cost. Past performance
is no assurance of future results.
</TABLE>
<PAGE>
TERMS AND DEFINITIONS
CLASS A SHARES are generally subject to an initial sales charge.
CLASS B SHARES may be subject to a sales charge upon redemption.
NET ASSET VALUE (NAV) is the value of all your fund's assets,
minus any liabilities, divided by the number of outstanding
shares, not including any initial or contingent deferred sales
charge.
PUBLIC OFFERING PRICE (POP) is the price of a mutual fund share
plus the maximum sales charge levied at the time of purchase. POP
performance figures shown here assume the maximum 5.75% sales
charge for class A shares.
CONTINGENT DEFERRED SALES CHARGE (CDSC) is a charge applied at the
time of the redemption of class B shares and assumes redemption at
the end of the period. Your fund's CDSC declines from a 5% maximum
during the first year to 1% during the sixth year. After the sixth
year, the CDSC no longer applies.
COMPARATIVE BENCHMARKS
STANDARD & POOR'S(R) 500 INDEX is an unmanaged list of common
stocks that is frequently used as a general measure of stock
market performance. The index assumes reinvestment of all
distributions and does not take into account brokerage commissions
or other costs. The fund's portfolio contains securities that do
not match those in the index.
CONSUMER PRICE INDEX is a commonly used measure of inflation; it
does not represent an investment return.
<PAGE>
A PUTNAM PERSPECTIVE ON RISK AND REWARD
You've probably been told how important it is to understand the
relationship between an investment's potential rewards and its
accompanying risks. Given the cautionary nature of such
instructions, it may take most investors a while to realize that
risk has a positive side.
EVERY RISK SIGNALS A POTENTIAL REWARD. Selecting only those
investments that offer the greatest degree of security generally
leads to only modest rewards. Furthermore, even insured or
guaranteed investments may be subject to changes in their rates of
return or, in some cases, in their principal values. Experienced
investors know that no investment is truly risk free and are
therefore willing to take on some measure of risk in order to
increase their potential gains.
THE GREATER THE RISK, THE GREATER THE POTENTIAL REWARD. Accepting
an appropriate level of investment risk can give you a better
chance of outpacing inflation over time and seeking to maximize
your investment's return. How much risk? Your financial advisor's
feedback and your time horizon can make all the difference in
determining how much risk is compatible with your investment goals
and your peace of mind.
FITTING YOUR FUND SELECTION TO YOUR RISK TOLERANCE
How do you find the right balance between investment risks and
their potential rewards? It's helpful to understand the types of
risks that can apply to different types of investments, and to
look at your own portfolio with this perspective.
For short-term goals, your first priority may be managing market
risk. Longer-term investors may be more concerned with inflation
risk. And all income-oriented investors should consider interest-
rate, credit, and prepayment risks carefully. Within each of
Putnam's four investment categories, you can select funds with
differing levels of risk and reward potential to customize your
portfolio.
A RUNDOWN OF RISK TYPES
MARKET RISK Most important for stock funds, but relevant to all
funds, this is a measure of how sensitive a fundOs holdings are to
changes in general market conditions. Remember, though, that
securities that lose value quickly in market declines may also
show the strongest gains in more favorable environments.
INTEREST-RATE RISK Since bond prices fall as interest rates rise,
this type of risk is a particular concern for fixed-income
investors. However, interest-rate increases can also have a
substantial negative effect on the stock market.
INFLATION RISK If your investments cannot keep pace with
inflation, your money will begin to lose its purchasing power.
Stock investments are generally considered among the best ways of
addressing inflation risk over the long term.
CREDIT AND PREPAYMENT RISK Credit risk is the concern that the
securityOs issuer will not be able to meet its payment, while
prepayment risk involves the premature payoff of a loan, with a
resulting loss of interest income. Professional management and in-
depth research are invaluable in managing both these risks.
LIQUIDITY RISK Not all investments can be readily converted into
cash at their perceived market values. Liquidity risk can affect
the price of securities held in the fundOs portfolio and, thus,
the fundOs share prices.
This list covers only the most general types of risks; however,
each investment will also have its own specific risks. You will
find a more detailed discussion of these risk considerations in
each fundOs prospectus.
<PAGE>
PUTNAM FAMILY OF FUNDS
PUTNAM GROWTH FUNDS
Asia Pacific Growth Fund
Capital Appreciation Fund
Diversified Equity Trust
Europe Growth Fund
Global Growth Fund
Health Sciences Trust
Investors Fund
Natural Resources Fund*
New Opportunities Fund
OTC Emerging Growth Fund
Overseas Growth Fund
Vista Fund
Voyager Fund
PUTNAM GROWTH AND INCOME FUNDS
Convertible Income-Growth Trust
Dividend Growth Fund
Equity Income Fund
The George Putnam Fund of Boston
The Putnam Fund for Growth and Income
Managed Income Trust
Utilities Growth and Income Fund
PUTNAM INCOME FUNDS
Adjustable Rate U.S. Government Fund
American Government Income Fund
Balanced Government Fund
Corporate Asset Trust
Diversified Income Trust
Federal Income Trust
Global Government Income Trust
High Yield Advantage Fund
High Yield Trust
Income Fund
U.S. Government Income Trust
PUTNAM TAX-FREE INCOME FUNDS
Intermediate Tax Exempt Fund
Municipal Income Fund
Tax Exempt Income Fund
Tax-Free High Yield Fund
Tax-Free Insured Fund
STATE TAX-FREE INCOME FUNDS(+)
Arizona, California, Florida, Massachusetts, Michigan, Minnesota,
New Jersey, New York, Ohio and Pennsylvania
LIFESTAGE(SM) FUNDS
Putnam Asset Allocation Funds -- three investment portfolios that
spread your money across a variety of stocks, bonds, and money
market investments to help maximize your return and reduce your
risk.
THE THREE PORTFOLIOS:
Putnam Asset Allocation: Balanced Portfolio
Putnam Asset Allocation: Conservative Portfolio
Putnam Asset Allocation: Growth Portfolio
MOST CONSERVATIVE INVESTMENTS(++)
PUTNAM MONEY MARKET FUNDS
Money Market Fund(SS)
California Tax Exempt Money Market Fund
New York Tax Exempt Money Market Fund
Tax Exempt Money Market Fund
CDS AND SAVINGS ACCOUNTS**
* Formerly Energy-Resources Trust
+ Not available in all states.
++ Relative to above.
(SS) Formerly Daily Dividend Trust
** Not offered by Putnam Investments. Certificates of deposit
offer a fixed rate of return and may be insured, up to
certain limits, by federal/state agencies. Savings accounts
may also be insured up to certain limits.
Please call your financial advisor or Putnam to obtain a
prospectus for any Putnam fund. It contains more complete
information, including charges and expenses. Read it carefully
before you invest or send money.
<PAGE>
PORTFOLIO OF INVESTMENTS OWNED
February 28, 1995 (Unaudited)
<TABLE><CAPTION>
<C> <S> <C>
COMMON STOCKS (91.8%)*
NUMBER OF SHARES VALUE
ALUMINUM (2.7%)
- ------------------------------------------------------------------
- --
64,000 Aluminum Co. of America$
2,496,000
24,000 Reynolds Metal Co.
1,200,000
---
---------
3,696,000
BASIC INDUSTRIAL PRODUCTS (0.4%)
- ------------------------------------------------------------------
- --
12,000 Parker-Hannifin Corp.
561,000
CHEMICALS (7.7%)
- ------------------------------------------------------------------
- --
19,000 Dow Chemical Co.
1,273,000
20,000 Eastman Chemical Co.
1,095,000
41,000 Grace (W.R.) & Co.
1,845,000
21,000 Rohm & Haas Co.
1,178,625
96,000 Union Carbide Corp.
2,748,000
42,000 Witco Chemical Corp.
1,202,250
19,000 du Pont (E.I.) de Nemours & Co., Ltd.
1,066,375
---
---------
10,408,250
COAL (0.7%)
- ------------------------------------------------------------------
- --
30,000 Pittston Minerals Group
622,500
33,000 Zeigler Coal Holding Co.
354,750
---
---------
977,250
COMBINED UTILITIES (1.0%)
- ------------------------------------------------------------------
- --
55,000 Pacific Enterprises
1,347,500
COMPUTERS (0.6%)
- ------------------------------------------------------------------
- --
11,000 IBM Corp.
827,750
CONGLOMERATES (1.5%)
- ------------------------------------------------------------------
- --
45,000 Tenneco, Inc.
2,047,500
CONSTRUCTION (0.5%)
- ------------------------------------------------------------------
- --
14,000 Foster Wheeler Corp.
458,500
21,000 Morrison Knudsen Corp.
162,750
---
---------
621,250
FARM EQUIPMENT (1.0%)
- ------------------------------------------------------------------
- --
18,000 Deere (John) & Co.
1,379,250
FINANCE (0.7%)
- ------------------------------------------------------------------
- --
15,000 Morgan (J.P.) & Co., Inc.
967,500
GAS PIPELINES (5.0%)
- ------------------------------------------------------------------
- --
33,000 El Paso Natural Gas Co.
1,014,750
30,000 Enron Corp.
990,000
85,400 Panhandle Eastern Corp.
1,921,500
82,000 Sonat, Inc.
2,378,000
16,100 Williams Cos., Inc.
462,875
---
---------
6,767,125
GAS UTILITIES (0.6%)
- ------------------------------------------------------------------
- --
20,000 Consolidated Natural Gas Co.
740,000
INSURANCE (0.5%)
- ------------------------------------------------------------------
- --
13,000 Aetna Life & Casualty Co.
698,750
MACHINERY (0.6%)
- ------------------------------------------------------------------
- --
29,000 Harnischfeger Industries, Inc.
808,375
METALS AND MINING (6.5%)
- ------------------------------------------------------------------
- --
37,000 Barrick Gold Corp.
804,750
40,000 Cyprus Amax Minerals Co.
1,080,000
50,000 Euro Nevada Mining Corp.
975,020
91,374 Freeport-McMoRan Copper & Gold Co., Inc.
Class A 1,918,865
55,000 Freeport-McMoRan, Inc.
990,000
90,000 INDRESCO, Inc.+
1,113,750
73,000 Placer Dome Inc.
1,487,375
45,000 Santa Fe Pacific Gold Corp.
489,375
---
---------
8,859,135
OIL SERVICES (6.5%)
- ------------------------------------------------------------------
- --
36,600 BJ Services Co.+
681,675
70,000 Baker Hughes Inc.
1,347,500
30,000 Coflexip Engineers ADR
757,500
62,000 Dresser Industries, Inc.
1,278,750
65,700 McDermott International, Inc.
1,839,600
50,000 Schlumberger Ltd.
2,843,750
---
---------
8,748,775
OIL AND GAS (36.9%)
- ------------------------------------------------------------------
- --
41,000 Amoco Corp.
2,429,250
67,000 Anadarko Petroleum Corp.
2,939,625
27,000 Atlantic Richfield Co.
2,959,875
26,828 British Petroleum Co., PLC ADR
2,052,412
58,000 Burlington Resources Inc.
2,233,000
63,000 Chevron Corp.
2,992,500
88,000 Diamond Shamrock Inc.
2,200,000
57,000 Exxon Corp.
3,648,000
96,900 Imperial Oil Ltd.
3,294,600
19,000 Kerr-McGee Corp.
957,125
63,000 Louisiana Land & Exploration Co.
2,181,375
70,000 Occidental Petroleum Corp.
1,391,250
50,000 Pennzoil Co.
2,368,750
81,000 Phillips Petroleum Co.
2,703,375
39,000 Royal Dutch Petroleum Co. ADR
4,372,875
32,651 Santa Fe Southern Pacific Corp.
693,834
40,000 Sun, Co. Inc.
1,165,000
32,000 Texaco Inc.
2,040,000
20,000 Total Corp. ADS
555,000
125,000 USX-Marathon Group Inc.
2,031,250
300,000 Ulster Petroleum Ltd.+
916,620
100,000 Ultramar Corp.
2,575,000
35,000 Union Texas Petroleum Hldgs., Inc.
673,750
20,000 Unocal Corp.
567,500
---
---------
49,941,966
PAPER/FOREST PRODUCTS(5.9%)
- ------------------------------------------------------------------
- --
13,000 International Paper Co.
992,875
10,000 Kimberly-Clark Corp.
520,000
52,000 Potlatch Corp.
2,242,500
13,000 Temple Inland, Inc.
635,375
18,000 Union Camp Corp.
927,000
45,000 Weyerhaeuser Co.
1,833,750
14,000 Willamette Industries, Inc.
752,500
---
---------
7,904,000
PHOTOGRAPHY (0.9%)
- ------------------------------------------------------------------
- --
23,000 Eastman Kodak Co.
1,173,000
RAILROADS (7.8%)
- ------------------------------------------------------------------
- --
10,000 CSX Corp.
777,500
30,000 Chicago & North Western Holdings Corp.+
750,000
14,000 Conrail Inc.
773,500
87,000 Illinois Central Corp.
2,947,124
20,000 Norfolk Southern Corp.
1,322,500
55,000 Southern Pacific Rail Corp.+
983,125
58,000 Union Pacific Corp.
3,030,500
---
---------
10,584,249
STEEL (3.8%)
- ------------------------------------------------------------------
- --
21,000 Carpenter Technology Corp.
1,139,250
35,000 Inland Steel Industries, Inc.+
1,006,250
20,000 Nucor Corp.
1,122,500
31,000 USX-U.S. Steel Group
1,030,750
117,000 Weirton Steel Corp.+
892,125
- ------------------------------------------------------------------
--
5,190,875
- ------------------------------------------------------------------
--
TOTAL COMMON STOCKS (cost $123,111,219)
$124,249,500
- ------------------------------------------------------------------
- --
</TABLE>
<PAGE>
CONVERTIBLE PREFERRED STOCKS (2.7%)*
NUMBER OF SHARES VALUE
<TABLE><CAPTION>
<C> <S> <C>
OIL AND GAS (0.6%)
- ------------------------------------------------------------------
- --
36,364 Atlantic Ritchfield Co. $2.23 cv. pfd.
$890,918
OILS (0.7%)
- ------------------------------------------------------------------
--
17,000 Ashland, Inc. $3.125 cv. pfd.
913,750
RAILROADS (1.4%)
- ------------------------------------------------------------------
--
30,000 Burlington Northern, Inc.
Ser. A, $3.125, cum. cv. pfd. $ 1,860,000
- ------------------------------------------------------------------
--
TOTAL CONVERTIBLE PREFERRED STOCKS
(cost $3,557,265) $3,664,668
- ------------------------------------------------------------------
- --
</TABLE>
CONVERTIBLE BONDS AND NOTES (1.2%)*
PRINCIPAL AMOUNT VALUE
- ------------------------------------------------------------------
- --
<TABLE><CAPTION>
<C> <S> <C>
OIL AND GAS (0.7%)
- ------------------------------------------------------------------
- --
$1,000,000 Pogo Producing Co. sub.
notes 5 1/2s, 2004 $983,750
TOBACCO (0.5%)
- ------------------------------------------------------------------
--
1,000,000 Standard Commercial Corp.
cv. sub. deb. 7 1/4s, 2007 701,250
- ------------------------------------------------------------------
--
TOTAL CONVERTIBLE BONDS AND NOTES
(cost $1,626,375) $1,685,000
- ------------------------------------------------------------------
- --
EUROBONDS (0.6%)* (cost $800,000)
PRINCIPAL AMOUNT VALUE
- ------------------------------------------------------------------
- --
$800,000 APACHE CORP. 144A CV. SUB. DEB. 6S, 2002
$832,000
- ------------------------------------------------------------------
- --
SHORT-TERM INVESTMENTS (3.4%)* (cost $4,530,000)
PRINCIPAL AMOUNT VALUE
- ------------------------------------------------------------------
- --
$4,530,000 Federal Home Loan Mortgage Corp.
5.95s, March 1, 1995 $ 4,530,000
- ------------------------------------------------------------------
--
TOTAL INVESTMENTS
(cost $133,624,859)*** $134,961,168
- ------------------------------------------------------------------
- --
<FN>
* Percentages indicated are based on net assets of $135,365,376
which correspond to a net asset value per share of class A and
class B shareholders of $14.41 and 14.32, respectively.
+ Non-income-producing security.
*** The aggregate identified cost on a tax cost basis is
$133,837,163 resulting in gross unrealized appreciation and
depreciation of $7,805,783 and $6,681,778 respectively, or net
unrealized appreciation of $1,124,005.
ADR or ADS after the name of a foreign holding stands for
American Depository Receipt or American Depository Shares,
respectively, representing ownership of foreign securities on
deposit with a domestic custodian bank.
144A after the name of a security represents those 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 institutional buyers.
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
February 28, 1995 (Unaudited)
</TABLE>
<TABLE><CAPTION>
<S> <C>
ASSETS
- ------------------------------------------------------------------
- --
Investments in securities, at value
(identified cost $133,624,859) (Note 1) $134,961,168
- ------------------------------------------------------------------
- --
Cash 1,137
- ------------------------------------------------------------------
- --
Dividends, interest and other receivables 698,910
- ------------------------------------------------------------------
- --
Receivable for shares of the fund sold 282,104
- ------------------------------------------------------------------
- --
TOTAL ASSETS $135,943,319
- ------------------------------------------------------------------
- --
LIABILITIES
- ------------------------------------------------------------------
- --
Payable for shares of the fund repurchased $ 211,883
- ------------------------------------------------------------------
- --
Payable for compensation of Manager (Note 2) 227,664
- ------------------------------------------------------------------
- --
Payable for investor servicing and
custodian fees (Note 2) 42,991
- ------------------------------------------------------------------
- --
Payable for compensation of Trustees (Note 2) 328
- ------------------------------------------------------------------
- --
Payable for administrative services (Note 2) 1,312
- ------------------------------------------------------------------
- --
Payable for distribution fees (Note 2) 58,726
- ------------------------------------------------------------------
- --
Other accrued expenses 35,039
- ------------------------------------------------------------------
- --
TOTAL LIABILITIES 577,943
- ------------------------------------------------------------------
- --
NET ASSETS $135,365,376
- ------------------------------------------------------------------
- --
REPRESENTED BY
- ------------------------------------------------------------------
- --
Paid-in capital (Note 4) $137,183,580
- ------------------------------------------------------------------
- --
Undistributed net investment income 560,852
- ------------------------------------------------------------------
- --
Accumulated net realized loss on
investment transactions (3,715,365)
- ------------------------------------------------------------------
- --
Net unrealized appreciation of investments 1,336,309
- ------------------------------------------------------------------
- --
TOTAL -- REPRESENTING NET ASSETS APPLICABLE
TO CAPITAL SHARES OUTSTANDING 135,365,376
- ------------------------------------------------------------------
- --
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE
- ------------------------------------------------------------------
- --
Net asset value and redemption price per
class A share ($119,941,165 divided by 8,324,208 shares) $14.41
- ------------------------------------------------------------------
- --
Offering price per share (100/94.25 of $14.41)* $15.29
- ------------------------------------------------------------------
- --
Net asset value and offering price per class B share
($15,424,211 divided by 1,076,898)** $14.32
- ------------------------------------------------------------------
- --
<FN>
* 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.
** Redemption price per share is equal to net asset value less
any applicable contingent deferred sales charge.
<PAGE>
STATEMENT OF OPERATIONS
Six months ended February 28, 1995 (Unaudited)
</TABLE>
<TABLE>
<S> <C>
INVESTMENT INCOME:
- ------------------------------------------------------------------
- --
Dividends (net of foreign tax of $11,160) $ 1,934,693
- ------------------------------------------------------------------
- --
Interest 63,528
- ------------------------------------------------------------------
- --
TOTAL INVESTMENT INCOME 1,998,221
- ------------------------------------------------------------------
- --
EXPENSES:
- ------------------------------------------------------------------
- --
Compensation of Manager (Note 2) $ 470,269
- ------------------------------------------------------------------
- --
Investor servicing and custodian fees (Note 2) 45,055
- ------------------------------------------------------------------
- --
Compensation of Trustees (Note 2) 6,451
- ------------------------------------------------------------------
- --
Reports to shareholders 38,766
- ------------------------------------------------------------------
- --
Auditing 13,505
- ------------------------------------------------------------------
- --
Legal 5,344
- ------------------------------------------------------------------
- --
Postage 12,430
- ------------------------------------------------------------------
- --
Administrative services (Note 2) 3,692
- ------------------------------------------------------------------
- --
Distribution fees (Note 2)
- ------------------------------------------------------------------
- --
Class A 126,481
- ------------------------------------------------------------------
- --
Class B 65,896
- ------------------------------------------------------------------
- --
Other expenses 10,003
- ------------------------------------------------------------------
- --
TOTAL EXPENSES 797,892
- ------------------------------------------------------------------
- --
NET INVESTMENT INCOME 1,200,329
- ------------------------------------------------------------------
- --
Net realized gain on investments (Notes 1 and 3) 1,836,130
- ------------------------------------------------------------------
- --
Net unrealized depreciation of investments
during the year (4,204,732)
- ------------------------------------------------------------------
- --
NET LOSS ON INVESTMENTS (2,368,602)
- ------------------------------------------------------------------
- --
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS $(1,168,273)
- ------------------------------------------------------------------
- --
</TABLE>
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE><CAPTION>
<S> <C> <C>
SIX MONTHS
ENDED YEAR ENDED
FEBRUARY 28 AUGUST 31
------------ ----------
1995* 1994
- ------------------------------------------------------------------
- --
INCREASE (DECREASE) IN NET ASSETS
- ------------------------------------------------------------------
- --
Operations:
- ------------------------------------------------------------------
- --
Net investment income $ 1,200,329 $ 1,566,736
- ------------------------------------------------------------------
- --
Net realized gain (loss)
on investments 1,836,130 (2,295,993)
- ------------------------------------------------------------------
- --
Net unrealized depreciation
of investments (4,204,732) (11,413,778)
- ------------------------------------------------------------------
- --
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS (1,168,273)(12,143,035)
- ------------------------------------------------------------------
- --
Distributions to shareholders from:
- ------------------------------------------------------------------
- --
Net investment income:
- ------------------------------------------------------------------
- --
Class A (1,974,101) (1,197,888)
- ------------------------------------------------------------------
- --
Class B (195,433) --
- ------------------------------------------------------------------
- --
Net realized gain on
investments -- Class A -- (18,784,262)
- ------------------------------------------------------------------
- --
In excess of net realized gain on investments
- ------------------------------------------------------------------
- --
Class A -- (3,255,502)
- ------------------------------------------------------------------
- --
Increase (decrease) from capital
share transactions (Note 4) (990,214) 41,489,102
- ------------------------------------------------------------------
- --
INCREASE (DECREASE) IN NET ASSETS (4,328,021) 6,108,415
- ------------------------------------------------------------------
- --
NET ASSETS
- ------------------------------------------------------------------
- --
Beginning of period 139,693,397 133,584,982
- ------------------------------------------------------------------
- --
END OF PERIOD (including undistributed
net investment income of $560,852 and
$1,530,057, respectively) $135,365,376 $139,693,397
- ------------------------------------------------------------------
- --
<FN>
* Unaudited
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
<TABLE><CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FEBRUARY 1,
1994
SIX MONTHS (COMMENCEMENT SIX MONTHS
ENDED OF OPERATIONS) ENDED
FEBRUARY 28 TO AUGUST 31 FEBRUARY 28
- ---------------------------------------------------------------------------
- --
1995** 1994* 1995** 1994 1993 1992
- ---------------------------------------------------------------------------
- --
CLASS B CLASS A
- ---------------------------------------------------------------------------
- --
NET ASSET VALUE,
BEGINNING OF
PERIOD $14.65 $14.78 $14.73 $20.51 $17.57 $17.74
- ---------------------------------------------------------------------------
- --
INVESTMENT
OPERATIONS
Net investment
income .06 .13 .14 .19 .23 .35
Net realized
and unrealized
(loss) on
investments (.19) (.26) (.22) (2.37) 3.41 .44
- ---------------------------------------------------------------------------
- --
TOTAL FROM
INVESTMENT
OPERATIONS (.13) (.13) (.08) (2.18) 3.64 .79
- ---------------------------------------------------------------------------
- --
LESS DISTRIBUTIONS FROM:
Net investment
income (.20) -- (.24) (.19) (.18) (.39)
Net realized
gain on
investments -- -- -- (2.91) (.52) (.57)
- ---------------------------------------------------------------------------
- --
In excess of
net realized
gain on
investments -- -- -- (.50) -- --
- ---------------------------------------------------------------------------
- --
TOTAL
DISTRIBUTIONS (.20) -- (.24) (3.60) (.70) (.96)
- ---------------------------------------------------------------------------
- --
NET ASSET
VALUE, END
OF PERIOD $14.32 $14.65 $14.41 $14.73 $20.51 $17.57
- ---------------------------------------------------------------------------
- -
TOTAL INVESTMENT
RETURN AT
NET ASSET
VALUE (%)(b)(.84)(c) (.88)(c) (.50)(c) (9.67) 21.79 5.12
- ---------------------------------------------------------------------------
- -
NET ASSETS,
END OF
PERIOD (in
thousands) $15,424 $10,244 $119,941 $129,449 $133,585 $109,705
- ---------------------------------------------------------------------------
- -
Ratio of
expenses to
average net
assets (%) .90(c) 1.11(c) .56(c) 1.24 1.18 1.61
- ---------------------------------------------------------------------------
- -
Ratio of net
investment
income (loss)
to average
net assets (%).59(c) .90(c) .92(c) 1.24 1.25 2.13
- ---------------------------------------------------------------------------
- -
Portfolio
turnover (%)22.73(c) 189.83(c) 22.73(c) 189.83 170.54 28.33
- ---------------------------------------------------------------------------
- -
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE><CAPTION>
<C> <C> <C> <C> <C> <C> <C>
NINE
MONTHS
ENDED
- ---------------------------------------------------------------------------
- -
YEAR ENDED AUGUST 31 AUGUST 31
- ---------------------------------------------------------------------------
- -
1991 1990 1989 1988 1987 1986 1985
- ---------------------------------------------------------------------------
- -
$17.94 $17.06 $13.25 $15.55 $11.14 $11.98 $10.61
- ---------------------------------------------------------------------------
- -
.46 .49 .45 .37(a) .44(a) .18 .17(a)
.59 1.13 3.70 (2.22) 4.44 (.75) 1.55
- ---------------------------------------------------------------------------
- -
1.05 1.62 4.15 (1.85) 4.88 (.57) 1.72
- ---------------------------------------------------------------------------
- -
(.52) (.54) (.34) (.41) (.42) (.27) (.35)
(.73) (.20) -- (.04) (.05) -- --
- ---------------------------------------------------------------------------
- -
-- -- -- -- -- -- --
- ---------------------------------------------------------------------------
- -
(1.25) (.74) (.34) (.45) (.47) (.27) (.35)
- ---------------------------------------------------------------------------
- -
$17.74 $17.94 $17.06 $13.25 $15.55 $11.14 $11.98
- ---------------------------------------------------------------------------
- -
6.62 9.72 31.64 (11.67) 44.87 (4.81) 16.70(c)
- ---------------------------------------------------------------------------
- -
$125,607 $137,669 $116,042 $107,932 $146,755 $34,860 $33,995
- ---------------------------------------------------------------------------
- -
1.53 1.50 1.40 1.47(a) 1.42(a) 1.771.25(a)(c)
- ---------------------------------------------------------------------------
- -
2.65 2.82 2.93 2.73(a) 3.46(a) 1.571.28(a)(c)
- ---------------------------------------------------------------------------
- -
38.03 48.19 60.29 86.04 179.58 216.22 129.59(c)
- ---------------------------------------------------------------------------
- -
<FN>
** Unaudited.
* Per share net investment income has been determined on the basis of the
weighted average number of shares outstanding during the period.
(a)Reflects expense limitations applicable during these periods. As a
result of such limitations, expenses of the fund for the years ended
August 31, 1988 and 1987, the period ended August 31, 1985 reflect per
share reductions of $.01, $.03 and $.03, respectively.
(b)Total investment return assumes dividend reinvestment and does not
reflect the effect of sales charges.
(c)Not annualized.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
February 28, 1995 (Unaudited)
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 continues to seek capital appreciation by
investing primarily in the common stocks of companies in the
energy and natural resources industries, but may also invest a
portion of its assets in other industries and in fixed-income
securities.
The fund offers both class A and class B shares. Class A shares
are sold with a maximum front-end sales charge of 5.75%. Class B
do not pay a front-end sales charge, but pay a higher ongoing
distribution fee than class A shares, and may be subject to a
contingent deferred sales charge, if those shares are redeemed
within six years of purchase. In addition, the Trustees declare
separate dividends on each class of shares. Expenses of the fund
are borne pro-rata by the shareholders of both classes of shares,
except that each class bears expenses unique to that class
(including the distribution fees applicable to such class). Each
class votes only with respect to its own distribution plan or
other matters on which a class vote is required by law or
determined by the Trustees. Shares of each class would receive
their pro-rata share of the net assets of the fund, if the fund
were liquidated.
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 last reported bid
and asked prices. Market quotations are not considered to be
readily available for some convertible securities; such
investments are stated at fair value on the basis of valuations
furnished by a pricing service approved by the Trustees, which
determines valuations for normal, institutional-size trading units
of such securities using methods based on market transactions for
comparable securities and various relationships between securities
which are generally recognized by institutional traders. 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. Foreign securities quoted in foreign currencies
are translated into U.S. dollars at the current exchange rate.
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 of other registered investment companies managed by
Putnam Investment Management, Inc. (Putnam Management), the fund's
investment manager, a wholly-owned subsidiary of Putnam
Investments, Inc. and certain other accounts. These balances may
be invested in one or more repurchase agreements and/or short-term
money market instruments.
C REPURCHASE AGREEMENTS The fund, or any joint trading account,
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 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.
The amount and character of income and gains to be distributed are
determined in accordance with income tax regulations which may
differ from generally accepted accounting principles
NOTE 2
MANAGEMENT FEE, ADMINISTRATIVE SERVICES, AND OTHER TRANSACTIONS
Compensation of Putnam Management, the fund's Manager, 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: 0.70% of the first
$500 million of average net assets, 0.60% of the next $500
million, 0.55% of the next $500 million and 0.50% of any amount
over $1.5 billion, subject, under current law, to reduction in any
year to the extent that expenses (exclusive of distribution fees,
brokerage, interest, taxes and credits allowed by PFTC) 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.
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.
Trustees of the fund receive an annual Trustee's fee of $870 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.
Investor servicing and custodian fees reported in the Statement of
operations for the six months ended February 28, 1995, have been
reduced by credits allowed by PFTC.
The fund has adopted distribution plans (the "Plans") with respect
to its class A shares and class B shares pursuant to Rule 12B-1
under the Investment Company Act of 1940. The purpose of the Plans
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 of the fund. The
Trustees have approved payment by the fund at an annual rate of
.25% and 1.00% of the average net assets attributable to class A
and class B shares, respectively.
For the six months ended February 28, 1995, Putnam Mutual Funds
Corp., acting as underwriter, received net commissions of $21,572
from the sale of class A shares and $5,852 in contingent deferred
sales charges from redemptions of class B shares. A deferred sales
charge of up to 1% is assessed on certain redemptions of class A
shares purchased as part of an investment of $1 million or more.
For the six months ended February 28, 1995, Putnam Mutual Funds
Corp., acting as underwriter received commissions of $1,695 on
such redemptions.
NOTE 3
PURCHASES AND SALES OF SECURITIES
During the six months ended February 28, 1995, purchases and sales
of investment securities other than U.S. government obligations
and short-term investments aggregated $30,145,937 and $29,864,621,
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.
NOTE 4
CAPITAL SHARES
At February 28, 1995, there was an unlimited number of shares of
beneficial interest authorized divided into two classes, class A
and class B capital stock. Transactions in capital shares were as
follows:
<TABLE><CAPTION>
<S> <C> <C>
SIX MONTHS ENDED FEBRUARY 28
- ------------------------------------------------------------------
- --
1995
- ------------------------------------------------------------------
- --
CLASS A SHARES AMOUNT
- ------------------------------------------------------------------
- --
Shares sold 2,055,075 $ 29,468,216
Shares issued in connection with
reinvestment of distributions 122,248 1,684,574
2,177,323 31,152,790
- ------------------------------------------------------------------
- --
Shares repurchased (2,641,281) (37,596,690)
- ------------------------------------------------------------------
- --
NET DECREASE (463,958) $ (6,443,900)
- ------------------------------------------------------------------
- --
YEAR ENDED AUGUST 31
- ------------------------------------------------------------------
- --
1994
- ------------------------------------------------------------------
- --
CLASS A SHARES AMOUNT
- ------------------------------------------------------------------
- --
Shares sold 5,945,322 $ 90,135,849
Shares issued in connection with
reinvestment of distributions 1,449,982 20,229,142
7,395,304 110,364,991
- ------------------------------------------------------------------
- --
Shares repurchased (5,118,928) (78,718,058)
- ------------------------------------------------------------------
- --
NET INCREASE 2,276,376 $ 31,646,933
- ------------------------------------------------------------------
- --
SIX MONTHS ENDED FEBRUARY 28
- ------------------------------------------------------------------
- --
1995
- ------------------------------------------------------------------
- --
CLASS B SHARES AMOUNT
- ------------------------------------------------------------------
- --
Shares sold 658,584 $ 9,331,339
Shares issued in connection with
reinvestment of distributions 11,890 163,022
- ------------------------------------------------------------------
- --
670,474 9,494,361
- ------------------------------------------------------------------
- --
Shares redeemed (292,749) (4,040,675)
- ------------------------------------------------------------------
- --
NET INCREASE 377,725 $ 5,453,686
- ------------------------------------------------------------------
- --
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 1, 1994
(COMMENCEMENT
OF OPERATIONS) TO
AUGUST 31
- ------------------------------------------------------------------
- --
1994
- ------------------------------------------------------------------
- --
CLASS B SHARES AMOUNT
- ------------------------------------------------------------------
- --
Shares sold 787,844 $11,091,198
Shares issued in connection with
reinvestment of distributions (88,671) (1,249,029)
- ------------------------------------------------------------------
- --
699,173 9,842,169
- ------------------------------------------------------------------
- --
Shares redeemed -- --
- ------------------------------------------------------------------
- --
NET INCREASE 699,173 $ 9,842,169
- ------------------------------------------------------------------
- --
</TABLE>
<PAGE>
OUR COMMITMENT TO QUALITY SERVICE
CHOOSE AWARD-WINNING SERVICE.
Putnam Investor Services has won the DALBAR Quality Tested Service
Seal for the past five years, through 1994. DALBAR, an independent
research firm, ran more than 12,000 tests of 38 shareholder
service components. In every category, Putnam outperformed the
industry standard.
HELP YOUR INVESTMENT GROW.
Set up a systematic program for investing with as little as $25 a
month from a Putnam fund or from your checking or savings
account.*
SWITCH FUNDS EASILY.
You can move money from one account to another with the same class
of shares without a service charge. (This privilege is subject to
change or termination.)
ACCESS YOUR MONEY QUICKLY.
You can get checks sent regularly or redeem shares any business
day at the then-current net asset value, which may be more or less
than their original cost.
For details about any of these or other services, contact your
financial advisor or call the toll-free number shown below and
speak with a helpful Putnam representative.
To make an additional investment in this or any other Putnam fund,
contact your financial advisor or call our toll-free number: 1-800-
225-1581.
[FN]
* Regular investing, of course, does not guarantee a profit or
protect against a loss in a declining market. Investors should
consider their ability to continue purchasing shares during
periods of low price levels.
[/FN]
<PAGE>
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
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
TRUSTEES
George Putnam, Chairman
William F. Pounds, Vice Chairman
Jameson Adkins Baxter
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
Eli Shapiro
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
John R. Verani
Vice President
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Peter Carman
Vice President
Brett C. Browchuk
Vice President
Thomas V. Reilly
Vice President
Jeanne L. Mockard
Vice President and Fund Manager
William N. Shiebler
Vice President
Paul M. O'Neil
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
Natural Resources 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, and the most recent copy of the
Putnam Quarterly Performance Summary. For more information or to
request a prospectus, call toll free 1-800-225-1581.
Shares of mutual funds are not deposits or obligations of, or
guaranteed or endorsed by, any financial institution, are not
insured by the Federal Deposit Insurance Corporation (FDIC), the
Federal Reserve Board or any other agency, and involve risk,
including the possible loss of principal amount invested.
<PAGE>
PUTNAM INVESTMENTS
THE PUTNAM FUNDS
One Post Office Square
Boston, Massachusetts 02109
Bulk Rate
U.S. Postage
PAID
Putnam
Investments
018-17509
<PAGE>
APPENDIX TO FORM N-30D FILINGS TO DESCRIBE DIFFERENCES BETWEEN
PRINTED AND EDGAR-FILED TEXTS.
(1) Rule lines for tables are omitted.
(2) Italic typefaces is displayed in normal type.
(3) Boldface type is displayed in capital letters.
(4) Headers (e.g. the names of the fund) and footers (e.g. page
numbers and OThe accompanying notes are an integral part of
these financial statementsO) are omitted.
(5) Because the printed page breaks are not reflected, certain
tabular and columnar headings and symbols are displayed
differently in this filing.
(6) Bullet points and similar graphic symbols are omitted.
(7) Page numbering is different.
