Putnam
Global Natural
Resources
Fund*
ANNUAL REPORT
August 31, 1996
*Formerly Putnam Natural Resources Fund
[LOGO: BOSTON * LONDON * TOKYO]
Fund highlights
* "In addition to evaluating commodity prices, [Fund Manager Jeanne
Mockard] analyzes companies' fundamentals, business plans, and
technologies, looking for catalysts for improvement.... Mockard
has implemented this strategy skillfully."
-- Morningstar Mutual Funds, April 26, 1996
CONTENTS
4 Report from Putnam Management
8 Fund performance summary
13 Portfolio holdings
17 Financial statements
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
(copyright) Karsh, Ottawa
Dear Shareholder:
Given the far-reaching implications of natural resources on the world's
economies, from exploration and extraction through refining and
processing to manufacture and consumption, a fund that specializes in
this area of investment seems a perfect candidate for inclusion in a
unified family of Putnam international equity funds.
To position Putnam Natural Resources Fund within that grouping, Putnam
Management has proposed and your Trustees have approved a name change
and a slight modification of the fund's investment policy. As of August
12, 1996, the fund's name is now Putnam Global Natural Resources Fund.
Prior to the change in investment policy, the fund was required to limit
investment in foreign securities to 20% of its net assets. It has
dropped that limitation and added a policy requiring that at least 65%
of its assets be invested in at least three countries, one of which may
be the United States.
We are confident that the fund will continue to play a valued role in
your investment program.
Respectfully yours,
/S/George Putnam
George Putnam
Chairman of the Trustees
October 16, 1996
Report from the Fund Manager
Jeanne Mockard
As we monitored a number of changing industry sectors and reflected on a
year of solid performance, fiscal 1996 ended on a note of cautious
optimism for Putnam Global Natural Resources Fund. In the first half of
the year, your fund profited from rising oil and gas prices and
impressive returns from several chemical stocks. In the second half, we
made relatively few changes to the portfolio's composition and were
pleased with continued strength from chemical holdings and improvement
in the performance of paper stocks.
For the 12 months ended August 31, 1996, your fund's class A shares rose
by 14.95%, class B shares by 14.14%, and class M shares by 14.39%, all
at net asset value. The returns taking maximum sales charges into
account were 8.35%, 9.14%, and 10.40%, respectively. Please refer to
pages 8 - 10 for complete performance information.
* OIL INDUSTRY DELIVERS SOME UNCERTAINTY
In the oil and gas sector, in which weather frequently impacts stock
prices, the second half of fiscal '96 presented a sharp contrast to the
first. After one of the coldest, snowiest winters on record in the
Northeast -- which created a heavy demand for oil and gas -- spring and
summer brought relatively calm weather to most of the United States.
Like cold weather in the winter, extremely hot temperatures also
increase energy needs. Consequently, this year's relatively cool summer
resulted in lower demand and helped ease tight inventories. This weather
situation proved beneficial for the fund, since we had reduced oil
holdings when oil prices reached relatively high levels at the midpoint
of the fiscal year. Although prices subsequently dropped, a number of
other factors are creating a relatively volatile environment in the oil
sector, and thus our outlook remains cautious.
Just after the end of your fund's fiscal year, for example, the United
States launched a series of military attacks on Iraqi air defense sites.
As a result, the United Nations suspended an agreement reached earlier
in the year that had allowed Iraq to sell oil in limited quantities for
the first time since the Persian Gulf War. We suspected that the
agreement, when implemented, might result in short-term weakness in oil
prices. At the end of the fiscal year, the fund's oil holdings remained
in a relatively neutral position while we carefully monitored
developments in world oil markets.
* MERGER ACTIVITY EXPECTED IN NATURAL GAS SECTOR
The natural gas industry was similarly impacted by the supply/demand and
weather scenarios described above. Unlike oil, however, natural gas is
essentially a North American commodity because it is so difficult to
transport. While natural gas prices are not as heavily impacted by world
events, there are some domestic trends that could affect the industry
over the coming months.
Historically the relationship between natural gas and electric utility
companies has been a competitive one. However, as the deregulation of
electric utilities continues and both industries look for ways to become
more efficient, we expect an increase in mergers and acquisitions
between natural gas and electric companies. This is a positive trend, we
believe, since it should allow both industries to solidify their
strengths, become leaner, and reduce costs. However, it is important to
note that, depending on the specific merger, such events could dampen
the price of natural gas stocks over the short term. As with all
sectors, we will make strategic portfolio shifts in our natural gas
holdings whenever necessary.
One notable investment in the fund's natural gas sector was PanEnergy
Corp., which markets and transports natural gas by means of 35,000 miles
of pipelines. In a recent joint venture agreement, PanEnergy will now
market gas produced by Mobil Corp.'s North American gas operations, in
effect doubling PanEnergy's marketing capabilities. While PanEnergy
stock, along with others discussed in this report, was viewed favorably
at the end of the fiscal period, all portfolio holdings are subject to
review and adjustment in accordance with the fund's investment strategy
and may vary in the future.
[GRAPHIC HORIZONTAL BAR CHART OMITTED: TOP INDUSTRY SECTORS*]
Oil and gas 34.8%
Chemicals 14.7%
Paper and
forest products 8.6%
Oil services 7.5%
Metals and mining 7.0%
Footnote reads:
*Based on net assets on 8/31/96. Weightings will vary over time.
Also bringing strength to the fund's oil and gas holdings was Anadarko
Petroleum Corp., an independent natural gas and crude oil exploration
and production company. The company is considered to be very well
positioned, with multiple drilling projects in progress both
internationally and in the United States.
* STRONG RETURNS CONTINUE FROM CHEMICAL STOCKS
We reported in your fund's semiannual report that chemical company
holdings had lent significant strength to the fund's portfolio. The
performance potential of these holdings is based, in large part, on the
positive long-term fundamentals of the industry, which continued into
the second half of the fiscal year.
One stock that we believe offers excellent long-term potential is that
of E.I. du Pont de Nemours, a research company whose products include
chemicals, polymers, fibers, and petroleum. Perhaps best known for its
brand-name Teflon and Lycra products, DuPont serves worldwide markets in
industries such as aerospace, agriculture, construction, and
transportation. In addition to the strength of its technology and
products, DuPont has also taken constructive steps to improve operating
income and efficiency.
* PAPER STOCKS SHOW IMPROVEMENT IN SECOND HALF
At the midpoint in the fiscal year, we began to build up the fund's
holdings in paper and forest-product stocks, taking advantage of their
low prices. Indeed, paper stocks did rebound during the latter half of
the fiscal year, although not as quickly as we had anticipated.
Many of the fund's paper holdings, which began to appreciate toward the
end of the fiscal year, are stocks of companies undergoing what we
believe are positive changes. Union Camp Corp., for example, produces
paper, building materials, and chemicals and has been focusing on cost
reduction and improving its marketing leadership. In April, Union Camp
announced that it would acquire Alling and Cory Co., a distributor of
paper and business products. Weyerhauser Company, a manufacturer of
forest products and another of your fund's holdings, has recently made
moves to improve earnings and cash flow, to reduce costs, and to
scrutinize its capital projects more carefully.
[GRAPHIC OMITTED: TOP 10 HOLDINGS (8/31/96)]
E.I. du Pont de Nemours & Co., Ltd.
Chemicals
Exxon Corp.
Oil and gas
Mobil Corp.
Oil and gas
Amoco Corp.
Oil and gas
Dow Chemical Co.
Chemicals
British Petroleum Co., PLC ADR (United Kingdom)
Oil and gas
Chevron, Inc.
Oil and gas
Schlumberger Ltd.
Oil services
Royal Dutch Petroleum Co. ADR (Netherlands)
Oil and gas
Eastman Chemical Co.
Chemicals
Footnote reads:
These holdings represent 33.0% of the fund's net assets. Holdings will
vary over time.
* CAUTIOUS OPTIMISM FOR THE MONTHS AHEAD
As the fund enters its new fiscal year, we continue to carefully monitor
changing natural resources sectors around the globe. We remain
optimistic about the long-term prospects for many of the fund's holdings
and look forward to an increase in demand for natural resources products
in developing countries.
The views expressed about the companies mentioned in this report are
exclusively those of Putnam Management and are not meant as investment
advice. Although the described holdings were viewed favorably as of
8/31/96, there is no guarantee the fund will continue to hold these
securities in the future. Funds investing in a single sector may be
subject to more volatility than funds investing in a diverse group of
sectors. International investing involves certain risks, including those
related to economic instability, unfavorable political developments, and
currency fluctuations, not present with domestic investments.
Performance summary
Performance should always be considered in light of a fund's investment
strategy. Putnam Global Natural Resources Fund is designed for investors
seeking capital appreciation through stocks of companies in the energy
and natural resources industries. Current income is only an incidental
consideration.
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 in the fund.
TOTAL RETURN FOR PERIODS ENDED 8/31/96
Class A Class B Class M
(inception date) 7/24/80 2/1/94 7/3/95
NAV POP NAV CDSC NAV POP
- -----------------------------------------------------------------------
1 year 14.95% 8.35% 14.14% 9.14% 14.39% 10.40%
- -----------------------------------------------------------------------
5 years 47.70 39.21 -- -- -- --
Annual average 8.11 6.84 -- -- -- --
- -----------------------------------------------------------------------
10 years 191.06 174.31 -- -- -- --
Annual average 11.28 10.62 -- -- -- --
- -----------------------------------------------------------------------
Life of class -- -- 24.88 21.88 17.91 13.75
Annual average -- -- 8.99 7.97 15.12 11.64
- -----------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 8/31/96
Lipper
Standard Natural
& Poor's Resources
500 Index Average
- -----------------------------------------------------------------------
1 year 18.70% 22.73%
- -----------------------------------------------------------------------
5 years 89.07 65.51
Annual average 13.59 10.39
- -----------------------------------------------------------------------
10 years 250.20 156.53
Annual average 13.35 9.64
- -----------------------------------------------------------------------
Life of class B 44.40 31.14
Annual average 15.30 10.81
- -----------------------------------------------------------------------
Life of class M 22.43 27.18
Annual average 18.88 22.81
- -----------------------------------------------------------------------
Performance data represent past results, do not reflect future
performance, and will differ for each share class. They do not take into
account any adjustment for taxes payable on reinvested distributions,
or, for class A shares, distribution fees prior to the implementation of
the class A distribution plan in 1990. Investment returns and net asset
value will fluctuate so that an investor's shares, when sold, may be
worth more or less than their original cost. POP assumes 5.75% maximum
sales charge for class A shares and 3.50% for class M. CDSC for class B
shares assumes the applicable sales charge, with the maximum being 5%.
PRICE AND DISTRIBUTION INFORMATION
12 months ended 8/31/96
Class A Class B Class M
- -----------------------------------------------------------------------
Distributions (number) 1 1 1
- -----------------------------------------------------------------------
Income $0.335 $0.262 $0.287
- -----------------------------------------------------------------------
Capital gains
- -----------------------------------------------------------------------
Long-term 0.041 0.041 0.041
- -----------------------------------------------------------------------
Short-term 0.050 0.050 0.050
- -----------------------------------------------------------------------
Total $0.426 $0.353 $0.378
- -----------------------------------------------------------------------
Share value: NAV POP NAV NAV POP
- -----------------------------------------------------------------------
8/31/95 $16.09 $17.07 $15.94 $16.07 $16.65
- -----------------------------------------------------------------------
8/31/96 18.03 19.13 17.81 17.97 18.62
- -----------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
Cumulative total return of a $10,000 investment since 8/31/86
Starting value (Insert ending Total)
$9,425 Fund's class A shares at POP $27,431
$10,000 Lipper Natural Resources Average $25,653
$10,000 S&P 500 Index $35,020
(plot points for 10-year total return mountain chart)
Lipper Natural
Date/year Fund at POP Resources Average S&P 500 Index
- --------- ----------- ----------------- -------------
8/31/86 9,425 10,000 10,000
8/31/87 13,654 15,690 13,464
8/31/88 12,061 12,256 11,043
8/31/89 15,877 15,608 15,373
8/31/90 17,419 17,234 14,585
8/31/91 18,573 16,929 18,522
8/31/92 19,524 16,524 19,992
8/31/93 23,779 20,151 23,029
8/31/94 21,480 19,587 24,298
8/31/95 23,863 21,227 29,503
8/31/96 27,431 25,653 35,020
Footnote reads:
Past performance is no assurance of future results. A $10,000 investment
in the fund's class B shares at inception on 2/1/94 would have been
valued at $12,495 on 8/31/96 ($12,195 with a redemption at the end of
the period). A $10,000 investment in the fund's class M shares at
inception on 7/3/95 would have been valued at $11,798 at net asset value
on 8/31/96 ($11,381 at public offering price).
TOTAL RETURN FOR PERIODS ENDED 9/30/96
(most current calendar quarter)
Class A Class B Class M
(inception date) 7/24/80 2/1/94 7/3/95
NAV POP NAV CDSC NAV POP
- -----------------------------------------------------------------------
1 year 18.25% 11.43% 17.40% 12.40% 17.68% 13.54%
- -----------------------------------------------------------------------
5 years 54.96 46.02 -- -- -- --
Annual average 9.16 7.87 -- -- -- --
- -----------------------------------------------------------------------
10 years 208.66 190.98 -- -- -- --
Annual average 11.93 11.27 -- -- -- --
- -----------------------------------------------------------------------
Life of class -- -- 29.01 26.01 21.91 17.61
Annual average -- -- 10.05 9.08 17.18 13.86
- -----------------------------------------------------------------------
Performance data represent past results, do not reflect future
performance, and will differ for each share class. Investment returns
and net asset value will fluctuate so that an investor's shares, when
sold, may be worth more or less than their original cost.
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.
Class M shares have a lower initial sales charge and a higher 12b-1 fee
than class A shares and no sales charge on 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 and 3.50% for class M 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
Lipper Natural Resources Average* is composed of funds that invest more
than 65% of their equity holdings in the natural resources industries.
Standard & Poor's 500 Index* is an index of common stocks frequently
used as a general measure of stock market performance.
*The indexes assume reinvestment of all distributions and do not take
into account brokerage commissions or other costs. The fund's portfolio
contains securities that do not match those in the indexes and
performance of the fund will differ. It is not possible to invest
directly in an index.
Report of independent accountants
To the Trustees and Shareholders of
Putnam Global Natural Resources Fund
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments owned and the related statements
of operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Putnam Global Natural Resources Fund (the "fund") (formerly Putnam
Natural Resources Fund) at August 31, 1996, and the results of its
operations, the changes in its net assets and the financial highlights
for the periods indicated, in conformity with generally accepted
accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the fund's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with
generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of investments owned at August
31, 1996 by correspondence with the custodian, provide a reasonable
basis for the opinion expressed above.
Price Waterhouse LLP
Boston, Massachusetts
October 14, 1996
<TABLE>
<CAPTION>
Portfolio of investments owned
August 31, 1996
<S> <C> <C> <C>
COMMON STOCKS (97.4%) *
NUMBER OF SHARES VALUE
Aluminum (1.6%)
- ----------------------------------------------------------------------------------------------------------------------
40,000 Alumax, Inc. + $ 1,320,000
40,000 Aluminum Co. of America 2,485,000
------------
3,805,000
Chemicals (14.7%)
- ----------------------------------------------------------------------------------------------------------------------
106,000 Dow Chemical Co. 8,453,500
133,000 du Pont (E.I.) de Nemours & Co., Ltd. 10,922,625
84,000 Eastman Chemical Co. 4,693,500
30,000 Georgia Gulf Corp. 945,000
25,000 Olin Corp. 1,981,250
67,000 PPG Industries, Inc. 3,308,125
31,000 Rohm & Haas Co. 1,937,500
32,000 Union Carbide Corp. 1,384,000
52,000 Witco Chemical Corp. 1,573,000
------------
35,198,500
Conglomerates (2.1%)
- ----------------------------------------------------------------------------------------------------------------------
40,000 Minnesota Mining & Manufacturing Co. 2,750,000
45,000 Tenneco Inc. 2,238,750
------------
4,988,750
Construction (0.3%)
- ----------------------------------------------------------------------------------------------------------------------
14,000 Foster Wheeler Corp. 603,750
Consumer Products (1.1%)
- ----------------------------------------------------------------------------------------------------------------------
35,000 Kimberly-Clark Corp. 2,743,125
Containers (1.0%)
- ----------------------------------------------------------------------------------------------------------------------
47,200 Temple Inland, Inc. 2,330,500
Gas Pipelines (4.7%)
- ----------------------------------------------------------------------------------------------------------------------
82,000 Coastal Corp. 3,249,250
28,000 Columbia Gas System, Inc. 1,575,000
33,000 El Paso Natural Gas Co. 1,373,625
25,000 Enron Corp. 1,003,125
35,900 Noram Energy Corp. 525,038
85,400 PanEnergy Corp. 2,828,875
15,000 Williams Cos., Inc. 748,125
------------
11,303,038
Gas Utilities (1.6%)
- ----------------------------------------------------------------------------------------------------------------------
20,000 Consolidated Natural Gas Co. 1,087,500
55,000 Pacific Enterprises 1,643,125
30,000 Tejas Gas Corp. + 1,042,500
------------
3,773,125
Machinery (1.9%)
- ----------------------------------------------------------------------------------------------------------------------
18,300 Caterpillar, Inc. 1,260,413
84,000 Deere (John) & Co. 3,339,000
------------
4,599,413
Metals and Mining (7.0%)
- ----------------------------------------------------------------------------------------------------------------------
40,000 Cyprus Amax Minerals Co. 850,000
43,000 Euro Nevada Mining Corp. 1,068,321
141,374 Freeport-McMoRan Copper & Gold Co., Inc. Class A 3,976,144
27,000 Newmont Gold Co. 1,454,625
26,000 Phelps Dodge Corp. 1,573,000
133,000 Placer Dome Inc. 3,192,000
60,000 RMI Titanium Co. + 1,222,500
175,000 Santa Fe Pacific Gold Corp. 2,275,000
46,000 Titanium Metals Corp. + 1,098,250
------------
16,709,840
Oil and Gas (34.8%)
- ----------------------------------------------------------------------------------------------------------------------
133,000 Amoco Corp. 9,177,000
67,000 Anadarko Petroleum Corp. 3,534,250
36,000 Atlantic Richfield Co. 4,203,000
58,088 British Petroleum Co., PLC ADR (United Kingdom) 6,839,862
58,000 Burlington Resources Inc. 2,472,250
113,300 Chevron Corp. 6,670,538
130,000 Exxon Corp. 10,578,750
19,000 Kerr-McGee Corp. 1,090,125
78,000 Louisiana Land & Exploration Co. 4,436,250
83,000 Mobil Corp. 9,358,250
189,000 Occidental Petroleum Corp. 4,394,250
75,000 Pennzoil Co. 4,003,125
81,000 Phillips Petroleum Co. 3,280,500
39,000 Royal Dutch Petroleum Co. ADR (Netherlands) 5,825,625
19,000 Texaco Inc. 1,686,250
71,000 Total Corp. ADR (France) 2,635,875
20,000 Unocal Corp. 685,000
125,000 USX-Marathon Group Inc. 2,609,375
------------
83,480,275
Oil and Gas Exploration and Production (3.1%)
- ----------------------------------------------------------------------------------------------------------------------
75,000 Barret Resources Corp. + 2,484,375
60,000 Mitchell Energy and Development Corp. Class B 1,110,000
260,000 Petro-Canada 1,755,000
150,000 Ulster Petroleums Ltd. + 937,157
40,000 Union Pacific Resources Group Inc. 1,090,000
------------
7,376,532
Oil Services (7.5%)
- ----------------------------------------------------------------------------------------------------------------------
70,000 Baker Hughes Inc. 2,117,500
36,600 BJ Services Co. + 1,377,075
62,000 Dresser Industries, Inc. 1,798,000
65,700 McDermott International, Inc. 1,363,275
78,000 Schlumberger Ltd. 6,581,250
40,000 Smith International Inc. + 1,390,000
115,000 Weatherford Enterra, Inc. + 3,306,250
------------
17,933,350
Paper and Forest Products (8.6%)
- ----------------------------------------------------------------------------------------------------------------------
42,600 Boise Cascade Corp. 1,437,750
70,000 Fort Howard Corp. + 1,653,750
22,000 Georgia Pacific Corp. 1,636,250
66,700 International Paper Co. 2,668,000
81,300 Mead Corp. 4,654,425
64,100 Union Camp Corp. 3,108,850
94,200 Weyerhaeuser Co. 4,203,675
20,000 Willamette Industries, Inc. 1,235,000
------------
20,597,700
Railroads (5.1%)
- ----------------------------------------------------------------------------------------------------------------------
37,433 Burlington Northern Santa Fe Corp. 2,994,640
100,000 Canadian National Railway Co. (Canada) 1,912,500
43,500 Conrail, Inc. 2,963,438
32,000 Norfolk Southern Corp. 2,668,000
24,000 Union Pacific Corp. 1,749,000
------------
12,287,578
Refining and Marketing (0.3%)
- ----------------------------------------------------------------------------------------------------------------------
32,733 Sun, Co. Inc. 773,317
Steel (2.0%)
- ----------------------------------------------------------------------------------------------------------------------
70,000 Birmingham Steel Corp. 1,093,750
50,000 Carpenter Technology Corp. 1,687,500
20,000 Nucor Corp. 935,000
31,000 USX-U.S. Steel Group 852,500
117,000 Weirton Steel Corp. + 336,375
------------
4,905,125
------------
Total Common Stocks (cost $211,249,339) $ 233,408,918
CONVERTIBLE PREFERRED STOCKS (1.7%) *
NUMBER OF SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------
46,000 Amax Gold, Inc. Ser. B, $3.75, cv. pfd. $ 2,409,250
13,000 Ashland, Inc. $3.125, cv. pfd. 783,250
36,364 Atlantic Richfield Co. $2.228, cv. pfd. 831,827
------------
Total Convertible Preferred Stocks (cost $4,718,186) $ 4,024,327
SHORT-TERM INVESTMENTS (0.9%) * (cost $2,260,657)
PRINCIPAL AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------------
$2,260,000 Interest in $445,006,000 joint repurchase agreement dated August 30, 1996 with
Morgan (J.P.) & Co., Inc. due September 3, 1996 with respect to various U.S.
Treasury obligations - maturity value of $ 2,261,313 for an effective yield of 5.23%. $ 2,260,657
- ----------------------------------------------------------------------------------------------------------------------
Total Investments (cost $218,228,182) *** $ 239,693,902
- ----------------------------------------------------------------------------------------------------------------------
* Percentages indicated are based on net assets of $239,694,330.
+ Non-income-producing security.
*** The aggregate identified cost on a tax basis is $218,324,541, resulting in gross unrealized appreciation and
depreciation of $29,313,102 and $7,943,741, respectively, or net unrealized appreciation of $21,369,361.
ADR after the name of a foreign holding stands for American Depository Receipt, representing ownership of foreign
security on deposit with a domestic custodian bank.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
August 31, 1996
<S> <C>
Assets
- --------------------------------------------------------------------------------------------------------------------
Investments in securities, at value (identified cost $218,228,182) (Note 1) $239,693,902
- --------------------------------------------------------------------------------------------------------------------
Cash 578
- --------------------------------------------------------------------------------------------------------------------
Dividends receivable 962,662
- --------------------------------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 1,129,919
- --------------------------------------------------------------------------------------------------------------------
Total assets 241,787,061
Liabilities
- --------------------------------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 1,449,950
- --------------------------------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 411,707
- --------------------------------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 32,645
- --------------------------------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 342
- --------------------------------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 1,383
- --------------------------------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 130,620
- --------------------------------------------------------------------------------------------------------------------
Other accrued expenses 66,084
- --------------------------------------------------------------------------------------------------------------------
Total liabilities 2,092,731
- --------------------------------------------------------------------------------------------------------------------
Net assets $239,694,330
Represented by
- --------------------------------------------------------------------------------------------------------------------
Paid-in-capital (Notes 1 and 4) $204,515,377
- --------------------------------------------------------------------------------------------------------------------
Undistributed net investment income (Note 1) 953,056
- --------------------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments (Note 1) 12,760,177
- --------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 21,465,720
- --------------------------------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to capital shares outstanding $239,694,330
Computation of net asset value and offering price
- --------------------------------------------------------------------------------------------------------------------
Net asset value and redemption price per class A shares ($170,677,789 divided by 9,467,694 shares) $18.03
- --------------------------------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $18.03) * $19.13
- --------------------------------------------------------------------------------------------------------------------
Net asset value and offering price per class B shares ($66,375,290 divided by 3,727,867 shares) ** $17.81
- --------------------------------------------------------------------------------------------------------------------
Net asset value and redemption price per class M shares ($2,641,251 divided by 146,958 shares) $17.97
- --------------------------------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $17.97) * $18.62
- --------------------------------------------------------------------------------------------------------------------
* 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.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
Year ended August 31, 1996
<S> <C>
Investment Income:
Dividends (net of foreign tax of $91,683) $5,329,446
- ---------------------------------------------------------------------------------------------
Interest 434,233
- ---------------------------------------------------------------------------------------------
Total investment income 5,763,679
Expenses:
- ---------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 1,428,147
- ---------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 419,303
- ---------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 14,323
- ---------------------------------------------------------------------------------------------
Administrative services (Note 2) 8,486
- ---------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 389,082
- ---------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 471,192
- ---------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 9,351
- ---------------------------------------------------------------------------------------------
Reports to shareholders 47,223
- ---------------------------------------------------------------------------------------------
Registration fees 26,600
- ---------------------------------------------------------------------------------------------
Auditing 27,125
- ---------------------------------------------------------------------------------------------
Legal 8,115
- ---------------------------------------------------------------------------------------------
Postage 94,734
- ---------------------------------------------------------------------------------------------
Other 13,904
- ---------------------------------------------------------------------------------------------
Total expenses 2,957,585
- ---------------------------------------------------------------------------------------------
Expense reduction (Note 2) (130,892)
- ---------------------------------------------------------------------------------------------
Net expenses 2,826,693
- ---------------------------------------------------------------------------------------------
Net investment income 2,936,986
- ---------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 13,903,973
- ---------------------------------------------------------------------------------------------
Net unrealized appreciation on investments during the year 8,598,159
- ---------------------------------------------------------------------------------------------
Net gain on investments 22,502,132
- ---------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $25,439,118
- ---------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
Year ended August 31,
------------------------------------
1996 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
Increase in net assets
- -------------------------------------------------------------------------------------------------------------------
Operations:
- -------------------------------------------------------------------------------------------------------------------
Net investment income $ 2,936,986 $2,613,107
- -------------------------------------------------------------------------------------------------------------------
Net realized gain on investments 13,903,973 5,165,887
- -------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 8,598,159 7,326,520
- -------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 25,439,118 15,105,514
- -------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- -------------------------------------------------------------------------------------------------------------------
From net investment income
Class A (2,905,176) (1,974,126)
- -------------------------------------------------------------------------------------------------------------------
Class B (559,144) (195,630)
- -------------------------------------------------------------------------------------------------------------------
Class M (11,830) --
- -------------------------------------------------------------------------------------------------------------------
From net realized gain on investments
Class A (789,766) --
- -------------------------------------------------------------------------------------------------------------------
Class B (194,224) --
- -------------------------------------------------------------------------------------------------------------------
Class M (3,751) --
- -------------------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 53,426,929 12,663,019
- -------------------------------------------------------------------------------------------------------------------
Total increase in net assets 74,402,156 25,598,777
- -------------------------------------------------------------------------------------------------------------------
Net assets
- -------------------------------------------------------------------------------------------------------------------
Beginning of year 165,292,174 139,693,397
- -------------------------------------------------------------------------------------------------------------------
End of year (including undistributed net investment income of
$953,056 and $1,641,770, respectively) $239,694,330 $165,292,174
- -------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
July 3, 1995
Year (commencement
ended of operations) to
August 31 August 31 Year ended August 31
---------------------------------------------------
1996 1995 1996
---------------------------------------------------
Class M Class B
---------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $16.07 $15.59 $15.94
- ---------------------------------------------------------------------------------------------------------------------------
Investment operations
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income .19* .03 .15*
- ---------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 2.09 .45 2.07
- ---------------------------------------------------------------------------------------------------------------------------
Total from investment operations 2.28 .48 2.22
- ---------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ---------------------------------------------------------------------------------------------------------------------------
From net investment income (.29) -- (.26)
- ---------------------------------------------------------------------------------------------------------------------------
From net realized on investments (.09) -- (.09)
- ---------------------------------------------------------------------------------------------------------------------------
In excess of net realized gain on investments -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
Total distributions (.38) -- (.35)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $17.97 $16.07 $17.81
- ---------------------------------------------------------------------------------------------------------------------------
Total investment return at net asset value (%)(a) 14.39 3.08(b) 14.14
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $2,641 $46 $66,375
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (%)(c) 1.85 .28(b) 2.04
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets(%) 1.07 .44(b) .85
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 47.71 42.75 47.71
- ---------------------------------------------------------------------------------------------------------------------------
Average commission rate paid (d) $.0547 -- $.0547
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Financial highlights (continued)
(For a share outstanding throughout the period)
February 1, 1994
(commencement
of operations) to
Year ended August 31 August 31
---------------------------------------------------
1995 1994 1996
---------------------------------------------------
Class B
---------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $14.65 $14.78 $16.09
- ---------------------------------------------------------------------------------------------------------------------------
Investment operations
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income .16 .13* .28*
- ---------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 1.33 (.26) 2.09
- ---------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.49 (.13) 2.37
- ---------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ---------------------------------------------------------------------------------------------------------------------------
From net investment income (.20) -- (.34)
- ---------------------------------------------------------------------------------------------------------------------------
From net realized on investments -- -- (.09)
- ---------------------------------------------------------------------------------------------------------------------------
In excess of net realized gain on investments -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
Total distributions (.20) -- (.43)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $15.94 $14.65 $18.03
- ---------------------------------------------------------------------------------------------------------------------------
Total investment return at net asset value (%)(a) 10.38 (.88)(b) 14.95
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $29,916 $10,244 $170,678
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (%)(c) 1.87 1.11(b) 1.27
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets (%) 1.20 .90(b) 1.62
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 42.75 189.83 47.71
- ---------------------------------------------------------------------------------------------------------------------------
Average commission rate paid (d) -- -- $.0547
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Financial highlights (continued)
(For a share outstanding throughout the period)
Year ended August 31
---------------------------------------------------
1995 1994 1993
---------------------------------------------------
Class A
---------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $14.73 $20.51 $17.57
- ---------------------------------------------------------------------------------------------------------------------------
Investment operations
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income .29 .19 .23
- ---------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 1.31 (2.37) 3.41
- ---------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.60 (2.18) 3.64
- ---------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ---------------------------------------------------------------------------------------------------------------------------
From net investment income (.24) (.19) (.18)
- ---------------------------------------------------------------------------------------------------------------------------
From net realized on investments -- (2.91) (.52)
- ---------------------------------------------------------------------------------------------------------------------------
In excess of net realized gain on investments -- (.50) --
- ---------------------------------------------------------------------------------------------------------------------------
Total distributions (.24) (3.60) (.70)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $16.09 $14.73 $20.51
- ---------------------------------------------------------------------------------------------------------------------------
Total investment return at net asset value (%)(a) 11.10 (9.67) 21.79
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $135,330 $129,449 $133,585
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (%)(c) 1.13 1.24 1.18
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets (%) 1.89 1.24 1.25
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 42.75 189.83 170.54
- ---------------------------------------------------------------------------------------------------------------------------
Average commission rate paid (d) -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Financial Highlights (continued)
(For a share outstanding throughout the period)
-----------------
1992
-----------------
-----------------
<S> <C>
Net asset value, beginning of period $17.74
- ---------------------------------------------------------------------------------
Investment operations
- ---------------------------------------------------------------------------------
Net investment income .35
- ---------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments .44
- ---------------------------------------------------------------------------------
Total from investment operations .79
- ---------------------------------------------------------------------------------
Distributions to shareholders:
- ---------------------------------------------------------------------------------
From net investment income (.39)
- ---------------------------------------------------------------------------------
From net realized on investments (.57)
- ---------------------------------------------------------------------------------
In excess of net realized gain on investments --
- ---------------------------------------------------------------------------------
Total distributions (.96)
- ---------------------------------------------------------------------------------
Net asset value, end of period $17.57
- ---------------------------------------------------------------------------------
Total investment return at net asset value (%)(a) 5.12
- ---------------------------------------------------------------------------------
Net assets, end of period (in thousands) $109,705
- ---------------------------------------------------------------------------------
Ratio of expenses to average net assets (%)(c) 1.61
- ---------------------------------------------------------------------------------
Ratio of net investment income to average net assets (%) 2.13
- ---------------------------------------------------------------------------------
Portfolio turnover (%) 28.33
- ---------------------------------------------------------------------------------
Average commission rate paid (d) --
- ---------------------------------------------------------------------------------
* Per share net investment income has been determined on the basis of the weighted
average number of shares outstanding during the period.
(a) Total investment return assumes dividend reinvestment and does not reflect the
effect of sales charges.
(b) Not annualized.
(c) The ratio of expenses to average net assets for the period ended August 31, 1996
includes amounts paid through expense offset arrangements. Prior period ratios
exclude these amounts. (See Note 2)
(d) Average commission rate paid is required for fiscal periods beginning on or after
September 1, 1995.
</TABLE>
Notes to financial statements
August 31, 1996
Note 1
Significant accounting policies
This fund is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-ended management investment company. The
fund continues to seek capital appreciation by investing primarily in
the common stocks of companies in the energy and natural resource
industries, but may also invest a portion of its assets in other
industries and in fixed-income securities.
The fund offers class A, class B and class M shares. Class A shares are
sold with a maximum front-end sales charge of 5.75%. Class B shares,
which convert to class A shares after approximately eight years, do not
pay a front-end sales charge, but pay a higher ongoing distribution fee
than class A shares, and are subject to a contingent deferred sales
charge, if those shares are redeemed within six years of purchase. Class
M shares are sold with a maximum front-end sales charge of 3.50% and pay
an ongoing distribution fee that is lower than class B shares and higher
than class A shares.
Expenses of the fund are borne pro-rata by the holders of each class of
shares, except that each class bears expenses unique to that class
(including the distribution fees applicable to such class). Each class
votes as a class 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. In addition, the
Trustees declare separate dividends on each class of shares.
The following is a summary of significant accounting policies
consistently followed by the fund in the preparation of its financial
statements. The preparation of financial statements is in conformity
with generally accepted accounting principles and requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities. Actual results could differ from those
estimates.
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. Securities quoted in foreign currencies are translated into U.S.
dollars at the current exchange rate. 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.
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 and certain other accounts 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, 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.
Putnam Management 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. 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
taxable 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 on securities held and for excise tax on income and capital
gains.
F) Distributions to shareholders Distributions to shareholders from net
investment income are recorded by the fund on the ex-dividend date.
Capital gain distributions, if any, are recorded on the ex-dividend date
and paid annually. 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. These
differences include treatment of market discount, non-taxable dividends
and losses on wash sale transactions. Reclassifications are made to the
fund's capital accounts to reflect income and gains available for
distribution (or available capital loss carryovers) under income tax
regulations. For the year ended August 31, 1996, the fund reclassified
$149,550 to decrease undistributed net investment income and $80,003 to
decrease paid-in-capital, with an increase to accumulated net realized
gains on investments of $229,553. The calculation of net investment
income per share in the financial highlights table excludes these
adjustments.
Note 2
Management fee, administrative services and other transactions
Compensation of Putnam Management, for management and investment
advisory services is paid quarterly based on the average net assets of
the fund. 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 by the
amount of certain brokerage commissions and fees (less expenses)
received by affiliates of Putnam Management on the fund's portfolio
transactions.
The fund reimburses Putnam Management 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.
Custodial functions for the fund's assets are provided by Putnam
Fiduciary Trust Company (PFTC), a wholly-owned subsidiary of Putnam
Investments, Inc. Investor servicing agent functions are provided by
Putnam Investor Services, a division of PFTC.
For the year ended August 31, 1996, fund expenses were reduced by
$130,892 under expense offset arrangements with PFTC. Investor servicing
and custodian fees reported in the Statement of operations exclude these
credits. The fund could have invested a portion of the assets utilized
in connection with the expense offset arrangements in an income
producing asset if it had not entered into such arrangements.
Trustees of the fund receive an annual Trustees fee of $900 and an
additional fee for each Trustee's meeting attended. Trustees who are not
interested persons of Putnam Management and who serve on committees of
the Trustees receive additional fees for attendance at certain committee
meetings.
The fund adopted a Trustee Fee Deferral Plan (the "Plan") which allows
the Trustees to defer the receipt of all or a portion of Trustees Fees
payable on or after July 1, 1995. The deferred fees remain in the fund
and are invested in certain Putnam funds until distribution in
accordance with the Plan.
The fund has adopted distribution plans (the "Plans") with respect to
its class A, class B and class M 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 Plans provide for payments by
the fund to Putnam Mutual Funds Corp. at an annual rate up to 0.35%,
1.00% and 1.00% of the average net assets attributable to class A, class
B and class M shares, respectively. The Trustees have approved payment
by the fund at an annual rate of 0.25%, 1.00% and 0.75% of the average
net assets attributable to class A, class B and class M shares,
respectively.
For the year ended August 31, 1996, Putnam Mutual Funds Corp., acting as
underwriter received net commissions of $124,133 and $8,382 from the
sale of class A and class M shares, respectively and $63,691 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. For the year ended August 31, 1996, Putnam Mutual Funds
Corp., acting as underwriter received $1,067 on class A redemptions.
Note 3
Purchase and sales of securities
During the year ended August 31, purchases and sales of investment
securities other than short-term investments aggregated $149,440,264 and
$93,373,931, respectively. There were no purchases and 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 4
Capital shares
At August 31, 1996, there was an unlimited number of shares of
beneficial interest authorized. Transactions in capital shares were as
follows:
Year ended August 31
1996
- ----------------------------------------------------
Class A Shares Amount
- ----------------------------------------------------
Shares sold 11,202,058 $196,442,808
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 196,998 3,248,494
- ----------------------------------------------------
11,399,056 199,691,302
Shares
repurchased (10,341,511) (181,209,527)
- ----------------------------------------------------
Net increase 1,057,545 $ 18,481,775
- ----------------------------------------------------
Year ended August 31
1995
- ----------------------------------------------------
Class A Shares Amount
- ----------------------------------------------------
Shares sold 4,798,056 $71,673,351
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 122,251 1,684,613
- ----------------------------------------------------
4,920,307 73,357,964
Shares
repurchased (5,298,324) (78,546,991)
- ----------------------------------------------------
Net decrease (378,017) $(5,189,027)
- ----------------------------------------------------
Year ended August 31
1996
- ----------------------------------------------------
Class B Shares Amount
- ----------------------------------------------------
Shares sold 6,522,110 $113,561,023
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 39,356 644,251
- ----------------------------------------------------
6,561,466 114,205,274
Shares
repurchased (4,709,889) (81,820,138)
- ----------------------------------------------------
Net increase 1,851,577 $ 32,385,136
- ----------------------------------------------------
Year ended August 31
1995
- ----------------------------------------------------
Class B Shares Amount
- ----------------------------------------------------
Shares sold 1,929,084 $28,984,624
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 11,905 163,219
- ----------------------------------------------------
1,940,989 29,147,843
Shares
repurchased (763,872) (11,341,889)
- ----------------------------------------------------
Net increase 1,177,117 $17,805,954
- ----------------------------------------------------
Year ended August 31
1996
- ----------------------------------------------------
Class M Shares Amount
- ----------------------------------------------------
Shares sold 242,106 $4,266,444
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 735 12,120
- ----------------------------------------------------
242,841 4,278,564
Shares
repurchased (98,755) (1,718,546)
- ----------------------------------------------------
Net increase 144,086 $2,560,018
- ----------------------------------------------------
July 3, 1995
(commencement of
operations) to
August 31, 1995
- ----------------------------------------------------
Class M Shares Amount
- ----------------------------------------------------
Shares sold 2,872 $46,092
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- ----------------------------------------------------
2,872 46,092
Shares
repurchased -- --
- ----------------------------------------------------
Net increase 2,872 $46,092
- ----------------------------------------------------
Federal tax information
(Unaudited)
Pursuant to Section 852 of the Internal Revenue Code, the fund hereby
designates $0.041 per share (or if different, the amount necessary to
offset net capital gain earned by the Fund) for all classes of shares as
capital gain dividends for its taxable year ended August 31, 1996.
The fund has designated 84.27% of the distributions from net investment
income as qualifying for the dividends received deduction for
corporations.
The Form 1099 you receive in January 1997 will show the tax status of
all distributions paid to your account in calendar 1996.
Results of July 31, 1996 shareholder meeting
(Unaudited)
An annual meeting of shareholders of the fund was held on
July 31, 1996. At the meeting, each of the nominees for Trustees was
elected, as follows:
Votes
Votes for withheld
---------- -------
Jameson Adkins Baxter 7,274,051 188,377
Hans H. Estin 7,281,774 180,654
John A. Hill 7,283,010 179,418
R.J. Jackson 7,280,458 181,970
Elizabeth T. Kennan 7,270,330 192,098
Lawrence J. Lasser 7,263,431 198,997
Robert E. Patterson 7,279,781 182,647
Donald S. Perkins 7,277,391 185,037
William F. Pounds 7,264,639 197,789
George Putnam 7,282,385 180,043
George Putnam, III 7,280,026 182,402
E. Shapiro 7,261,764 200,664
A.J.C. Smith 7,265,230 197,198
W. Nicholas Thorndike 7,276,668 185,760
A proposal to ratify Price Waterhouse LLP as auditors for the fund was
approved as follows: 7,067,257 votes for, and 92,791 votes against, with
302,380 abstentions and broker non-votes.
A proposal to amend the fund's fundamental investment restriction with
respect to diversification of investments was approved as follows:
6,251,909 votes for, and 678,096 votes against, with 532,432 abstentions
and broker non-votes.
A proposal to amend the fund's fundamental investment restriction with
respect to investments in the securities of a single issuer was approved
as follows: 6,069,974 votes for, and 834,864 votes against, with 557,590
abstentions and broker non-votes.
A proposal to amend the fund's fundamental investment restriction with
respect to making loans through purchases of debt obligations,
repurchase agreements and securities loans was approved as follows:
5,604,871 votes for, and 1,017,406 votes against, with 840,151
abstentions and broker non-votes.
A proposal to amend the fund's fundamental investment restriction with
respect to investments in real estate was approved as follows: 6,003,054
votes for, and 651,613 votes against, with 807,761 abstentions and
broker non-votes.
A proposal to amend the fund's fundamental investment restriction with
respect to investments in commodities or commodity contracts was
approved as follows: 5,545,113 votes for, and 1,108,099 votes against,
with 809,216 abstentions and broker non-votes.
A proposal to amend the fund's fundamental investment restriction with
respect to concentration of its assets was approved as follows:
6,248,145 votes for, and 426,416 votes against, with 787,867 abstentions
and broker non-votes.
A proposal to amend the fund's fundamental investment restriction with
respect to underwriting was approved as follows: 5,808,112 votes for,
and 789,088 votes against, with 865,228 abstentions and broker non-
votes.
A proposal to eliminate the fund's fundamental investment restriction
with respect to investments in issuers that have been in operation for
less than three years was approved as follows: 6,083,451 votes for, and
576,146 votes against, with 802,831 abstentions and broker non-votes.
A proposal to eliminate the fund's fundamental investment restriction
with respect to investments in securities of issuers in which management
of the fund or Putnam Investment Management, Inc. owns securities was
approved as follows: 5,996,976 votes for, and 657,252 votes against,
with 808,200 abstentions and broker non-votes.
A proposal to eliminate the fund's fundamental investment restriction
with respect to margin transactions was approved as follows: 5,551,043
votes for, and 1,105,914 votes against, with 805,471 abstentions and
broker non-votes.
A proposal to eliminate the fund's fundamental investment restriction
with respect to short sales was approved as follows: 5,632,803 votes
for, and 1,018,226 votes against, with 811,399 abstentions and broker
non-votes.
A proposal to eliminate the fund's fundamental investment restriction
with respect to option transactions was approved as follows: 5,621,968
votes for, and 1,038,744 votes against, with 877,766 abstentions and
broker non-votes.
A proposal to eliminate the fund's fundamental investment restriction
which limits the fund's ability to pledge assets was approved as
follows: 5,453,055 votes for, and 1,131,607 votes against, with 801,716
abstentions and broker non-votes.
A proposal to eliminate the fund's fundamental investment restriction
with respect to investments in restricted securities was approved as
follows: 5,614,034 votes for, and 997,065 votes against, with 851,329
abstentions and broker non-votes.
A proposal to eliminate the fund's fundamental investment restriction
with respect to investments in warrants was approved as follows:
6,075,269 votes for, and 568,604 votes against, with 818,555 abstentions
and broker non-votes.
A proposal to eliminate the fund's fundamental investment restriction
with respect to investments in certain oil, gas and mineral interests
was approved as follows: 6,234,167 votes for, and 452,085 votes against,
with 776,176 abstentions and broker non-votes.
A proposal to eliminate the fund's fundamental investment restriction
with respect to investments in other investment companies was approved
as follows: 6,076,126 votes for, and 586,145 votes against, with 800,157
abstentions and broker non-votes.
A proposal to eliminate the fund's fundamental investment restriction
with respect to participating in trading accounts was approved as
follows: 5,650,901 votes for, and 966,797 votes against, with 844,730
abstentions and broker non-votes. All tabulations are rounded to nearest
whole number.
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
INDEPENDENT ACCOUNTANT
Price Waterhouse LLP
TRUSTEES
George Putnam, Chairman
William F. Pounds, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
John A. Hill
Ronald J. Jackson
Elizabeth T. Kennan
Lawrence J. Lasser
Robert E. Patterson
Donald S. Perkins
George Putnam, III
Eli Shapiro
A.J.C. Smith
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
John D. Hughes
Senior Vice President and Treasurer
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
John R. Verani
Vice President
Paul M. O'Neil
Vice President
Beverly Marcus
Clerk and Assistant Treasurer
This report is for the information of shareholders of Putnam Global
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 Putnam's 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.
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
- -------------------
Bulk Rate
U.S. Postage
PAID
Putnam
Investments
- -------------------
27670-018/501/2AD 10/96
