Putnam
Global Natural
Resources
Fund
SEMIANNUAL REPORT
February 28, 1998
[LOGO: BOSTON * LONDON * TOKYO]
Fund highlights
* "Low oil and gold prices and the predicted infrastructure-related
resource requirements of emerging economies over the coming decade,
especially in China, offer compelling opportunities within the natural
resources sector."
-- Jeanne L. Mockard, manager
Putnam Global Natural Resources Fund
CONTENTS
4 Report from Putnam Management
9 Fund performance summary
12 Portfolio holdings
16 Financial statements
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
[copyright] Karsh, Ottawa
Dear Shareholder:
Based on the worldwide emphasis on expanding and modernizing plant, equipment,
and infrastructure, the potential global demand for natural resources has
rarely been higher. Thus it would be logical to conclude that the somewhat
disappointing performance of the natural resources sector during the first
half of fiscal 1998 was linked to such transitory events as the Asian currency
crisis and ensuing market turmoil and does not reflect the sector's true
potential.
In large measure, that was indeed the case, concludes Putnam Global Natural
Resources Fund Manager Jeanne Mockard in the following report. Other negatives
included the persistently stagnant Japanese economy and a wait-and-see
approach to capital spending on the part of U.S. and European businesses.
Jeanne believes, however, that this situation should prove to be relatively
short lived and that economic growth over the next decade, especially in
developing economies, should create unprecedented demand for the products and
services provided by the companies in which your fund invests.
Respectfully yours,
/S/GEORGE PUTNAM
George Putnam
Chairman of the Trustees
April 15, 1998
Report from the Fund Manager
Jeanne L. Mockard
Over the six months ended February 28, 1998, Putnam Global Natural Resources
Fund's strategy was shaped by the premise that as developing nations continue
to industrialize their economies and modernize their infrastructures, the
demand for natural resources will continue to grow. The companies in which
your fund invests base their earnings on activities that create a need for
energy, chemicals, minerals, metals, and other natural resources. Continuing
global initiatives in telecommunications, road and bridge building, and
housing and commercial construction are ensuring that the fund's focus is
securely based in economic reality.
Despite the potential offered by these opportunities, however, performance
over the first half of fiscal 1998 has declined slightly. We attribute this to
the regional turmoil in Asia, a stagnant Japanese economy, and relatively
buoyant but increasingly nervous economies in Europe and the United States as
these economies wait to determine the spillover effect from Asia's downturn.
For the semiannual period, your fund's class A shares returned - 0.57% at net
asset value and - 6.28% at public offering price. For complete performance
results, please refer to the summary that begins on page 9.
* GLOBAL EMPHASIS PROVIDES ADDED DIVERSIFICATION
The fund's portfolio remains heavily invested in shares of multinational
companies with a global reach. Many of these companies, such as Mobil, Du
Pont, and Exxon, are household names. Others, including Coastal Corp., a gas
pipeline company, and Barrick Gold Corporation may be less well known but are
leading-edge, specialized companies with dominant positions and significant
competitive advantages in their respective product areas. Despite the
temporary derailing of Asia's economic growth, these companies, because of the
global nature of their activities, have produced generally solid returns.
While these holdings, along with others discussed in this report, were viewed
favorably at the end of the fiscal period, all are subject to review and
adjustment in accordance with the fund's investment strategy and may vary in
the future.
Your fund has historically favored stocks of multinational companies because
we've found that when a company's business is spread over different countries
or regions, an economic downturn in one area can be balanced, or smoothed, by
strong earnings performance in others. At times, a local economic downturn can
actually lead to increased profitability for the company as local production
costs decline while accrued product demand remains strong in many other
countries. We saw this happen to some degree with the recent downturn in Asian
economies. As oil production costs declined, demand continued to be strong,
leading to larger profits. Continued implementation of corporate cost-cutting
measures, in part a reaction to lower profit margins, has also helped to keep
the multinationals healthy.
* OIL POSITION INCREASED TO TAKE ADVANTAGE OF BUYING OPPORTUNITIES
Since the beginning of the current fiscal year, it's fair to say that
everything that could go wrong in the oil market probably did. But this is not
necessarily dire news for the fund, since the recent developments have created
opportunities that we are working to exploit. Last November, OPEC raised the
oil production quota by 10%, the increase in supply contributing to a drop in
prices. Iraq was also permitted to sell more oil on the world market, causing
an additional falloff in the price per barrel. Finally, warmer-than-usual
winter weather has led to lighter demand. As a result, oil prices during the
period reached a four-year low and were expected to head slightly lower still
before beginning to rebound. We therefore have been adding to the fund's
weighting in oil and gas, increasing it to an overweighting in oil of about 3%
relative to the fund's benchmark index.
[GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY SECTORS]
TOP INDUSTRY SECTORS*
Oil and gas 30.4%
Oil services 13.9%
Metals and mining 10.0%
Chemicals 9.5%
Gas pipelines 7.4%
Footnote reads:
*Based on net assets as of 2/28/98. Holdings will vary over time.
We expect oil prices to begin rising in the medium term, and we believe our
recent oil and gas sector share purchases should benefit the fund as a result.
History tells us that should the cost per barrel fall below desirable levels,
OPEC will take steps to reduce supply in order to drive prices back up. With
the per-barrel price conceivably headed for a 10-year low, OPEC may be close
to acting. In addition, while oil extraction technology has been advancing,
oil exploration has not been keeping pace, increasing the depletion rate. The
latter has adverse implications for future supply as well as accompanying
positive implications for a price turnaround and rising share prices.
With the exception of the smaller Coastal Corp., the fund's oil and gas
holdings remained in large U.S. and European multinationals. These include
Schlumberger, Atlantic Richfield, Mobil, Amoco, Exxon, and Royal Dutch
Petroleum. These are the companies that we believe have the global reach and
the market power to navigate their way successfully through a low-price
environment and to take quick advantage, should prices begin to rise again.
* CHEMICAL HOLDINGS TRIMMED; PAPER EMPHASIS UP
With a number of new chemical plants scheduled to come online during the
coming year, we reduced the fund's holdings in this industry group, primarily
by eliminating holdings in Dow Chemical. We retained holdings in Du Pont,
however, based on the company's solid fundamentals, aggressive cost cutting,
and proven ability to retain a competitive edge by continually bringing
innovative products to market.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
TOP 10 HOLDINGS
Schlumberger, Ltd.
Oil services
Atlantic Richfield Co.
Oil and gas
Mobil Corp.
Oil and gas
Amoco Corp.
Oil and gas
E.I. du Pont de Nemours & Co., Ltd.
Chemicals
Royal Dutch Petroleum Co.
Oil and gas
Exxon Corp.
Oil and gas
Barrick Gold Corp.
Mining and metals
PPG Industries, Inc.
Chemicals
Baker Hughes, Inc.
Oil services
Footnote reads:
These holdings represent 30.2% of the fund's net assets as of 2/28/98.
Portfolio holdings will vary over time.
Last year we took advantage of the fund's ability to shift in and out of
different natural resources industries as the need arose by increasing the
fund's investment in paper and forest products. Prices of paper, pulp, and
packaging products have remained firm. We continued to invest in this sector
during this period, maintaining a slightly overweight position in paper
stocks.
* METALS AND MINING OFFER RENEWED POTENTIAL
We increased the fund's holdings in metals and mining stocks, primarily in the
gold sector, in response to opportunities. Gold had a disastrous year in 1997
with some gold funds having to close their doors. As this report was being
written, gold prices were at or near historic lows. However, just as OPEC
intervenes to keep oil prices from collapsing, many central banks support gold
prices, acting independently to protect the value of their own gold and
gold-backed assets. For this reason, we do not believe that gold will go much
lower than it already has, and we have accordingly increased the fund's gold
holdings from last year's 8% of net assets to 10% at the close of the period.
Based on sound fundamentals and its performance over the course of a difficult
year, we remain invested in Barrick Gold Corporation.
* STRONG LONG-TERM OUTLOOK
With oil at or near historic price lows, we believe the fund is well
positioned to benefit from recovery in this sector. Furthermore, despite the
current economic difficulties in Asia, economic growth in the region over the
next decade should create unprecedented demand for all the natural resources
required for infrastructure development. We will continue to monitor global
natural resources usage in order to detect appropriate, diversified investment
opportunities and will continue to take advantage of the stocks of
multinational resource-related companies.
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 2/28/98, 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
This section provides information about your fund's performance, which
should always be considered in light of its 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.
TOTAL RETURN FOR PERIODS ENDED 2/28/98
Class A Class B Class M
(inception date) (7/24/80) (2/1/94) (7/3/95)
NAV POP NAV CDSC NAV POP
- ------------------------------------------------------------------------------
6 months -0.57 -6.28% -0.92% -5.53% -0.83% -4.31%
- ------------------------------------------------------------------------------
1 year 15.63 8.99 14.79 9.79 15.02 10.98
- ------------------------------------------------------------------------------
5 years 83.02 72.53 76.34 74.34 78.44 72.24
Annual average 12.85 11.53 12.01 11.76 12.28 11.49
- ------------------------------------------------------------------------------
10 years 204.14 186.66 180.63 180.63 187.54 177.46
Annual average 11.77 11.11 10.87 10.87 11.14 10.74
- ------------------------------------------------------------------------------
Life of fund 255.71 235.21 205.69 205.69 219.55 208.46
Annual average 7.48 7.11 6.55 6.55 6.82 6.61
- ------------------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 2/28/98
Standard Lipper Natural
& Poor's Resources
500 Index Average
- ------------------------------------------------------------------------------
6 months 17.62% -10.26%
- ------------------------------------------------------------------------------
1 year 35.01 0.92
- ------------------------------------------------------------------------------
5 years 166.86 82.23
Annual average 21.69 12.30
- ------------------------------------------------------------------------------
10 years 422.46 166.78
Annual average 17.98 9.70
- ------------------------------------------------------------------------------
Life of fund 1506.40 611.20
Annual average 17.11 11.80
- ------------------------------------------------------------------------------
Returns for class A and class M shares reflect the current maximum initial
sales charges of 5.75% and 3.50%, respectively. Class B share returns for
the 1-, 5-, and 10-year (where available) and life-of-fund periods reflect
the applicable contingent deferred sales charge (CDSC), which is 5% in the
first year, declines to 1% in the sixth year, and is eliminated
thereafter. Returns shown for class B and class M shares for periods prior
to their inception are derived from the historical performance of class A
shares, adjusted to reflect both the initial sales charge or CDSC, if any,
currently applicable to each class and, in the case of class B and class M
shares, the higher operating expenses applicable to such shares. All
returns assume reinvestment of distributions at NAV and represent past
performance; they do not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares when redeemed
may be worth more or less than their original cost.
PRICE AND DISTRIBUTION INFORMATION
6 months ended 2/28/98
Class A Class B Class M
- ------------------------------------------------------------------------------
Distributions (number) 1 1 1
- ------------------------------------------------------------------------------
Income $0.208 $0.072 $0.137
- ------------------------------------------------------------------------------
Capital gains
- ------------------------------------------------------------------------------
Long term 1.114 1.114 1.114
- ------------------------------------------------------------------------------
Short term 0.253 0.253 0.253
- ------------------------------------------------------------------------------
Total $1.575 $1.439 $1.504
- ------------------------------------------------------------------------------
Share value: NAV POP NAV NAV POP
- ------------------------------------------------------------------------------
8/31/97 $22.13 $23.48 $21.77 $21.99 $22.79
- ------------------------------------------------------------------------------
2/28/98 20.35 21.59 20.06 20.23 20.96
- ------------------------------------------------------------------------------
TOTAL RETURN FOR PERIODS ENDED 3/31/98
(most recent 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
- ------------------------------------------------------------------------------
6 months -1.45% -7.14% -1.84% -6.40% -1.72% -5.15%
- ------------------------------------------------------------------------------
1 year 21.29 14.30 20.39 15.39 20.69 16.44
- ------------------------------------------------------------------------------
5 years 80.40 70.01 73.78 71.78 76.01 69.87
Annual average 12.52 11.20 11.69 11.43 11.97 11.18
- ------------------------------------------------------------------------------
10 years 212.47 194.61 188.31 188.31 195.61 185.22
Annual average 12.07 11.41 11.17 11.17 11.45 11.05
- ------------------------------------------------------------------------------
Life of fund 272.14 250.69 219.56 219.56 234.24 222.64
Annual average 7.72 7.35 6.79 6.79 7.06 6.85
- ------------------------------------------------------------------------------
All returns assume reinvestment of distributions at NAV and represent past
performance; they do not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares when redeemed
may be worth more or less than their original cost. See first page of
performance section for performance calculation method.
TERMS AND DEFINITIONS
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.
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.
*Securities indexes assume reinvestment of all distributions and interest
payments and do not take in account brokerage fees or taxes. Securities in
the fund do not match those in the indexes and performance of the fund
will differ. It is not possible to invest directly in an index.
Portfolio of investments owned
February 28, 1998 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (97.9%) *
NUMBER OF SHARES VALUE
Aluminum (2.4%)
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
40,000 Alumax, Inc. + $ 1,482,500
74,000 Aluminum Co. of America 5,429,750
35,000 Reynolds Metal Co. 2,180,938
--------------
9,093,188
Chemicals (9.5%)
- ------------------------------------------------------------------------------------------------------------
195,500 du Pont (E.I.) de Nemours & Co., Ltd. 11,986,594
69,000 Eastman Chemical Co. 4,519,500
30,000 Georgia Gulf Corp. 988,125
36,014 Lyondell Petrochemical Co. 981,382
50,000 Olin Corp. 2,290,625
124,000 PPG Industries, Inc. 8,036,750
31,000 Rohm & Haas Co. 3,160,063
32,000 Union Carbide Corp. 1,486,000
48,000 Witco Chemical Corp. 1,911,000
--------------
35,360,039
Conglomerates (0.7%)
- ------------------------------------------------------------------------------------------------------------
30,000 Minnesota Mining & Manufacturing Co. 2,559,375
Consumer Products (0.3%)
- ------------------------------------------------------------------------------------------------------------
20,000 Kimberly-Clark Corp. 1,113,750
Containers (0.8%)
- ------------------------------------------------------------------------------------------------------------
47,200 Temple Inland, Inc. 2,814,300
Electric Utilities (0.8%)
- ------------------------------------------------------------------------------------------------------------
54,726 Duke Power Co. 3,040,713
Gas Pipelines (7.4%)
- ------------------------------------------------------------------------------------------------------------
123,000 Coastal Corp. 7,825,875
28,000 Columbia Gas System, Inc. 2,136,750
37,185 El Paso Natural Gas Co. 2,468,154
165,000 Enron Corp. 7,755,000
77,000 Sonat, Inc. 3,320,625
123,000 Williams Cos., Inc. 4,020,563
--------------
27,526,967
Gas Utilities (2.0%)
- ------------------------------------------------------------------------------------------------------------
31,000 Consolidated Natural Gas Co. 1,782,500
70,000 K N Energy, Inc. 3,635,625
55,000 Pacific Enterprises 1,997,188
--------------
7,415,313
Machinery (1.6%)
- ------------------------------------------------------------------------------------------------------------
36,600 Caterpillar, Inc. 1,999,275
67,000 Deere (John) & Co. 3,760,375
--------------
5,759,650
Metals and Mining (10.0%)
- ------------------------------------------------------------------------------------------------------------
515,000 Barrick Gold Corp. 9,945,938
86,000 Euro Nevada Mining Corp. 1,314,292
199,374 Freeport-McMoRan Copper & Gold Co., Inc. Class A 2,866,001
99,000 Newmont Gold Co. 2,895,750
58,050 Newmont Mining Corp. 1,679,822
40,000 Phelps Dodge Corp. 2,540,000
553,000 Placer Dome, Inc. (Canada) 7,119,875
436,000 Rio Tinto PLC (United Kingdom) + 5,880,489
60,000 RMI Titanium Co. + 1,425,000
46,000 Titanium Metals Corp. + 1,385,750
--------------
37,052,917
Oil and Gas (30.4%)
- ------------------------------------------------------------------------------------------------------------
144,200 Amoco Corp. 12,257,000
37,000 Anadarko Petroleum Corp. 2,386,500
173,000 Atlantic Richfield Co. 13,450,750
51,761 British Petroleum Co., PLC ADR (United Kingdom) 4,279,981
88,500 Burlington Resources, Inc. 3,960,375
45,300 Chevron Corp. 3,674,963
68,300 Elf Aquitane ADR (France) 3,905,906
46,400 Ente Nazionale Idrocarburi S.P.A. (ENI) ADR (Italy) 2,726,000
158,400 Exxon Corp. 10,117,800
107,000 Kerr-McGee Corp. 7,235,875
184,800 Mobil Corp. 13,386,450
40,000 NGC Corp. 620,000
249,000 Occidental Petroleum Corp. 6,365,063
47,000 Pennzoil Co. 3,146,063
196,000 Royal Dutch Petroleum Co. (NY Registered) (Netherlands) 10,645,250
36,000 Total Corp. ADR (France) 1,991,250
60,000 Unocal Corp. 2,261,250
182,000 USX-Marathon Group Inc. 6,290,375
66,300 Western Gas Resources, Inc. 1,135,388
95,000 YPF S.A. ADR (Argentina) 3,004,375
--------------
112,840,614
Oil and Gas Exploration and Production (3.2%)
- ------------------------------------------------------------------------------------------------------------
73,000 Apache Corp. 2,482,000
60,000 Mitchell Energy & Development Corp. Class B 1,646,250
64,000 Noble Affiliates, Inc. 2,496,000
230,326 Union Pacific Resources Group Inc. 5,153,544
--------------
11,777,794
Oil Services (13.0%)
- ------------------------------------------------------------------------------------------------------------
194,000 Baker Hughes, Inc. 7,941,875
87,200 BJ Services Co. + 2,997,500
42,000 Diamond Offshore Drilling, Inc. 1,903,125
139,000 Halliburton Co. 6,463,500
189,000 Schlumberger Ltd. 14,245,875
40,000 Smith International, Inc. + 2,130,000
45,000 Transocean Offshore, Inc. 1,935,000
100,000 Varco International, Inc. + 2,487,500
53,000 Weatherford Enterra, Inc. + 1,835,125
80,000 Western Atlas, Inc. + 6,075,000
--------------
48,014,500
Paper and Forest Products (6.7%)
- ------------------------------------------------------------------------------------------------------------
29,600 Boise Cascade Corp. 986,050
46,000 Champion International Corp. 2,348,875
29,875 Fort James Corp. 1,355,578
60,000 Georgia Pacific Corp. 2,445,000
131,700 International Paper Co. 6,140,513
100,600 Mead Corp. 3,439,263
21,900 Union Camp Corp. 1,308,525
94,200 Weyerhaeuser Co. 4,704,113
54,000 Willamette Industries, Inc. 1,994,625
--------------
24,722,542
Railroads (4.2%)
- ------------------------------------------------------------------------------------------------------------
62,433 Burlington Northern Santa Fe Corp. 6,219,888
35,000 CSX Corp. 1,957,813
132,000 Norfolk Southern Corp. 4,545,750
57,100 Union Pacific Corp. 2,912,100
--------------
15,635,551
Refining and Marketing (1.9%)
- ------------------------------------------------------------------------------------------------------------
34,098 Ashland, Inc. 1,898,832
32,733 Sun Co., Inc. 1,307,274
105,000 Tosco Corp. 3,898,125
--------------
7,104,231
Steel (2.4%)
- ------------------------------------------------------------------------------------------------------------
70,000 Birmingham Steel Corp. 1,229,375
50,000 Carpenter Technology Corp. 2,365,625
41,900 Ispat International NV (Canada) + 1,031,788
61,000 Nucor Corp. 3,141,500
31,000 USX-U.S. Steel Group 1,088,875
--------------
8,857,163
Transportation (0.6%)
- ------------------------------------------------------------------------------------------------------------
80,000 Avondale Industries, Inc. + 2,300,000
--------------
Total Common Stocks (cost $302,055,856) $ 362,988,607
CONVERTIBLE PREFERRED STOCKS (0.5%) *(cost $3,037,961)
NUMBER OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------
46,000 Amax Gold, Inc. Ser. B, $3.75 cv. pfd. $ 2,001,000
CONVERTIBLE BONDS AND NOTES (0.2%) *(cost $770,000)
PRINCIPAL AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------
$770,000 Lomak Petroleum, Inc. 144A cv. sub. deb. 6s, 2007 $ 837,375
- ------------------------------------------------------------------------------------------------------------
Total Investments (cost $305,863,817) *** $365,826,982
- ------------------------------------------------------------------------------------------------------------
* Percentages indicated are based on net assets of $370,777,815.
*** The aggregate identified cost on a tax basis is $305,937,696, resulting in gross unrealized
appreciation and depreciation of $73,365,311 and $13,476,025, respectively, or net unrealized
appreciation of $59,889,286.
+ Non-income-producing security.
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.
ADR after the name of a foreign holding stands for American Depository Receipt, representing ownership
of foreign securities 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
February 28, 1998 (Unaudited)
<S> <C>
Assets
- ---------------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $305,863,817) (Note 1) $365,826,982
- ---------------------------------------------------------------------------------------------------
Dividends and other receivable 1,085,839
- ---------------------------------------------------------------------------------------------------
Receivable for securities sold 7,839,223
- ---------------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 2,888,260
- ---------------------------------------------------------------------------------------------------
Total assets 377,640,304
Liabilities
- ---------------------------------------------------------------------------------------------------
Payable to subcustodian (Note 2) 898,535
- ---------------------------------------------------------------------------------------------------
Distributions payable to shareholders 3,905
- ---------------------------------------------------------------------------------------------------
Payable for securities purchased 3,324,035
- ---------------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 1,570,732
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 634,589
- ---------------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 39,647
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 11,272
- ---------------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 1,215
- ---------------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 202,124
- ---------------------------------------------------------------------------------------------------
Payable for closed forward currency contracts 120,754
- ---------------------------------------------------------------------------------------------------
Other accrued expenses 55,681
- ---------------------------------------------------------------------------------------------------
Total liabilities 6,862,489
- ---------------------------------------------------------------------------------------------------
Net assets $370,777,815
Represented by
- ---------------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $301,052,562
- ---------------------------------------------------------------------------------------------------
Undistributed net investment income (Note 1) 618,578
- ---------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments
and foreign transactions (Note 1) 9,143,432
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and assets
and liabilities in foreign currencies 59,963,243
- ---------------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $370,777,815
Computation of net asset value and offering price
- ---------------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($221,351,522 divided by 10,878,846 shares) $20.35
- ---------------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $20.35)* $21.59
- ---------------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($141,390,873 divided by 7,049,906 shares)** $20.06
- ---------------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($8,035,420 divided by 397,107 shares) $20.23
- ---------------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $20.23)* $20.96
- ---------------------------------------------------------------------------------------------------
* 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
Six months ended February 28, 1998 (Unaudited)
<S> <C>
Investment income:
- --------------------------------------------------------------------------------------------------
Dividends (net of foreign tax of $30,041) $ 3,874,490
- --------------------------------------------------------------------------------------------------
Interest 75,108
- --------------------------------------------------------------------------------------------------
Total investment income 3,949,598
Expenses:
- --------------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 1,345,876
- --------------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 334,986
- --------------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 9,568
- --------------------------------------------------------------------------------------------------
Administrative services (Note 2) 3,654
- --------------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 292,048
- --------------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 710,755
- --------------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 31,614
- --------------------------------------------------------------------------------------------------
Reports to shareholders 23,260
- --------------------------------------------------------------------------------------------------
Registration fees 4,107
- --------------------------------------------------------------------------------------------------
Auditing 19,528
- --------------------------------------------------------------------------------------------------
Legal 2,782
- --------------------------------------------------------------------------------------------------
Postage 20,533
- --------------------------------------------------------------------------------------------------
Other 33,459
- --------------------------------------------------------------------------------------------------
Total expenses 2,832,170
- --------------------------------------------------------------------------------------------------
Expense reduction (Note 2) (70,918)
- --------------------------------------------------------------------------------------------------
Net expenses 2,761,252
- --------------------------------------------------------------------------------------------------
Net investment income 1,188,346
- --------------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 13,446,280
- --------------------------------------------------------------------------------------------------
Net realized loss on foreign currency transactions (Notes 1 and 3) (120,349)
- --------------------------------------------------------------------------------------------------
Net unrealized appreciation of assets and liabilities in foreign
currencies during the period 196,729
- --------------------------------------------------------------------------------------------------
Net unrealized depreciation of investments during the period (18,983,104)
- --------------------------------------------------------------------------------------------------
Net loss on investments (5,460,444)
- --------------------------------------------------------------------------------------------------
Net decrease in net assets resulting from operations $ (4,272,098)
- --------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
Six months ended Year ended
February 28 August 31
1998* 1997
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets
- ----------------------------------------------------------------------------------------------------------------------
Operations:
- ----------------------------------------------------------------------------------------------------------------------
Net investment income $ 1,188,346 $ 3,262,560
- ----------------------------------------------------------------------------------------------------------------------
Net realized gain on investments and foreign
currency transactions 13,325,931 25,198,035
- ----------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation
(depreciation) of investments and assets
and liabilities in foreign currencies (18,786,375) 57,283,898
- ----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations (4,272,098) 85,744,493
- ----------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ----------------------------------------------------------------------------------------------------------------------
From net investment income
Class A (2,239,396) (1,593,014)
- ----------------------------------------------------------------------------------------------------------------------
Class B (484,058) (385,225)
- ----------------------------------------------------------------------------------------------------------------------
Class M (57,359) (26,332)
- ----------------------------------------------------------------------------------------------------------------------
From net realized gain on investments
Class A (14,717,567) (11,629,001)
- ----------------------------------------------------------------------------------------------------------------------
Class B (9,190,367) (5,843,416)
- ----------------------------------------------------------------------------------------------------------------------
Class M (572,336) (248,026)
- ----------------------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 12,476,876 84,120,311
- ----------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (19,056,305) 150,139,790
Net assets
- ----------------------------------------------------------------------------------------------------------------------
Beginning of period 389,834,120 239,694,330
- ----------------------------------------------------------------------------------------------------------------------
End of period (including undistributed net investment
income of $618,578 and $2,211,045, respectively) 370,777,815 389,834,120
- ----------------------------------------------------------------------------------------------------------------------
* Unaudited
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS A
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended
Per-share February 28
operating performance (Unaudited) Year ended August 31
- ------------------------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $22.13 $18.03 $16.09 $14.73 $20.51 $17.57
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income .10(d) .25(d) .28(d) .29 .19 .23
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.30) 5.18 2.09 1.31 (2.37) 3.41
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations (.20) 5.43 2.37 1.60 (2.18) 3.64
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.21) (.16) (.34) (.24) (.19) (.18)
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (1.37) (1.17) (.09) -- (2.91) (.52)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net
realized gain on investments -- -- -- -- (.50) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (1.58) (1.33) (.43) (.24) (3.60) (.70)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $20.35 $22.13 $18.03 $16.09 $14.73 $20.51
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) (.57)* 31.39 14.95 11.10 (9.67) 21.79
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $221,352 $239,539 $170,678 $135,330 $129,449 $133,585
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .59* 1.23 1.27 1.13 1.24 1.18
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) .45* 1.26 1.62 1.89 1.24 1.25
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 15.24* 39.25 47.71 42.75 189.83 170.54
- ------------------------------------------------------------------------------------------------------------------------------------
Average commission
rate paid (c) $.0484 $.0511 $.0547
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the period ended August 31, 1996 and thereafter
includes amounts paid through expense offset and brokerage service arrangements. Prior period ratios
exclude these amounts. (Note 2)
(c) Average commission rate paid on security trades is required for fiscal periods beginning on
or after September 1, 1995.
(d) Per share net investment income has been determined on the basis of the weighted average number
of shares outstanding during the period.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS B
- -----------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share February 28 Feb. 1, 1994+
operating performance (Unaudited) Year ended August 31 to August 31
- -----------------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $21.77 $17.81 $15.94 $14.65 $14.78
- -----------------------------------------------------------------------------------------------------------------------------
Investment operations
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income .02(d) .10(d) .15(d) .16 .13(d)
- -----------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.29) 5.11 2.07 1.33 (.26)
- -----------------------------------------------------------------------------------------------------------------------------
Total from
investment operations (.27) 5.21 2.22 1.49 (.13)
- -----------------------------------------------------------------------------------------------------------------------------
Less distributions:
- -----------------------------------------------------------------------------------------------------------------------------
From net
investment income (.07) (.08) (.26) (.20) --
- -----------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (1.37) (1.17) (.09) -- --
- -----------------------------------------------------------------------------------------------------------------------------
In excess of net
realized gain on investments -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Total distributions (1.44) (1.25) (.35) (.20) --
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $20.06 $21.77 $17.81 $15.94 $14.65
- -----------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- -----------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) (.92)* 30.40 14.14 10.38 (.88)*
- -----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $141,391 $142,442 $66,375 $29,916 $10,244
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .96* 1.98 2.04 1.87 1.11*
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) .07* .52 .85 1.20 .90*
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 15.24* 39.25 47.71 42.75 189.83
- -----------------------------------------------------------------------------------------------------------------------------
Average commission
rate paid (c) $.0484 $.0511 $.0547
- -----------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the period ended August 31, 1996 and thereafter
includes amounts paid through expense offset and brokerage service arrangements. Prior period ratios
exclude these amounts. (Note 2)
(c) Average commission rate paid on security trades is required for fiscal periods beginning on
or after September 1, 1995.
(d) Per share net investment income has been determined on the basis of the weighted average number
of shares outstanding during the period.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS M
- ------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share February 28 July 3, 1995+
operating performance (Unaudited) Year ended August 31 to August 31
- ------------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $21.99 $17.97 $16.07 $15.59
- ------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------
Net investment income .04(d) .15(d) .19(d) .03
- ------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments (.30) 5.16 2.09 .45
- ------------------------------------------------------------------------------------------------------------------------
Total from
investment operations (.26) 5.31 2.28 .48
- ------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------
From net
investment income (.13) (.12) (.29) --
- ------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (1.37) (1.17) (.09) --
- ------------------------------------------------------------------------------------------------------------------------
In excess of net
realized gain on investments -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------
Total distributions (1.50) (1.29) (.38) --
- ------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $20.23 $21.99 $17.97 $16.07
- ------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) (.83)* 30.79 14.39 3.08*
- ------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $8,035 $7,853 $2,641 $46
- ------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .84* 1.73 1.85 .28*
- ------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) .20* .77 1.07 .44*
- ------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 15.24* 39.25 47.71 42.75
- ------------------------------------------------------------------------------------------------------------------------
Average commission
rate paid (c) $.0484 $.0511 $.0547
- ------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the period ended August 31, 1996 and thereafter
includes amounts paid through expense offset and brokerage service arrangements. Prior period ratios
exclude these amounts. (Note 2)
(c) Average commission rate paid on security trades is required for fiscal periods beginning on
or after September 1, 1995.
(d) Per share net investment income has been determined on the basis of the weighted average number
of shares outstanding during the period.
</TABLE>
Notes to financial statements
February 28, 1998 (Unaudited)
Note 1
Significant accounting policies
Putnam Global Natural Resources Fund ("the 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 not 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) Foreign currency translation The accounting records of the fund are
maintained in U.S. dollars. The market value of foreign securities, currency
holdings, other assets and liabilities are recorded in the books and records
of the fund after translation to U.S. dollars based on the exchange rates on
that day. The cost of each security is determined using historical exchange
rates. Income and withholding taxes are translated at prevailing exchange
rates when accrued or incurred. The fund does not isolate that portion of
realized or unrealized gains or losses resulting from changes in the foreign
exchange rate on investments from fluctuations arising from changes in the
market prices of the securities. Such gains and losses are included with the
net realized and unrealized gain or loss on investments. Net realized gains
and losses on foreign currency transactions represent net exchange gains or
losses on closed forward currency contracts, disposition of foreign currencies
and the difference between the amount of investment income and foreign
withholding taxes recorded on the fund's books and the U.S. dollar equivalent
amounts actually received or paid. Net unrealized appreciation and
depreciation of assets and liabilities in foreign currencies arise from
changes in the value of open forward currency contracts and assets and
liabilities other than investments at the period end, resulting from changes
in the exchange rate.
F) Forward currency contracts The fund may engage in forward currency
contracts, which are agreements between two parties to buy and sell currencies
at a set price on a future date, to protect against a decline in value
relative to the U.S. dollar of the currencies in which its portfolio
securities are denominated or quoted (or an increase in the value of a
currency in which securities a fund intends to buy are denominated, when a
fund holds cash reserves and short-term investments). The U.S. dollar value of
forward currency contracts is determined using current forward currency
exchange rates supplied by a quotation service. The market value of the
contract will fluctuate with changes in currency exchange rates. The contract
is "marked to market" daily and the change in market value is recorded as an
unrealized gain or loss. When the contract is closed, the fund records a
realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was closed.
The fund could be exposed to risk if the value of the currency changes
unfavorably, if the counterparties to the contracts are unable to meet the
terms of their contracts or if the fund is unable to enter into a closing
position.
G) Line of credit The fund has entered into a committed line of credit with
certain banks. This line of credit agreement includes restrictions that the
fund maintain an asset coverage ratio of at least 300% and borrowings must not
exceed prospectus limitations. For the six months ended February 28, 1998, the
fund had no borrowings against the line of credit.
H) 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, as amended. Therefore, no provision has been made for federal taxes
on income, capital gains or unrealized appreciation on securities held nor for
excise tax on income and capital gains.
I) 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 at
least 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. 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.
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, 0.50% of the next $5 billion, 0.475% of the next $5 billion, 0.455%
of the next $5 billion, 0.44% of the next $5 billion, and 0.43% thereafter.
As part of the subcustodian contract between the subcustodian bank and Putnam
Fiduciary Trust Company (PFTC), a subsidiary of Putnam Investments, Inc., the
subcustodian bank has a lien on the securities of the fund to the extent
permitted by the fund's investment restrictions to cover any advances made by
the subcustodian bank for the settlement of securities purchased by the fund.
At February 28, 1998, the payable to the subcustodian bank represents the
amount due for cash advance for the settlement of a security purchased.
The fund reimburses Putnam Management an allocated amount 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 PFTC. Investor
servicing agent functions are provided by Putnam Investor Services, a division
of PFTC.
For the six months ended February 28, 1998, fund expenses were reduced by
$70,918 under expense offset arrangements with PFTC and brokerage service
arrangements. 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.
Each Trustee of the fund receives an annual Trustee fee, of which $780 has
been allocated to the fund, 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 has adopted a Trustee Fee Deferral Plan (the "Deferral 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
Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension plan
(the "Pension Plan") covering all Trustees of the fund who have served as
Trustee for at least five years. Benefits under the Pension Plan are equal to
50% of the Trustee's average total retainer and meeting fees for the three
years preceding retirement. Pension expense for the fund is included in
Compensation of trustees in the Statement of operations. Accrued pension
liability is included in Payable for compensation of Trustees in the Statement
of assets and liabilities.
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 currently limit payment by the fund to 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 six months ended February 28, 1998, Putnam Mutual Funds Corp., acting
as underwriter received net commissions of $52,742 and $2,911 from the sale of
class A and class M shares, respectively and $131,139 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 six
months ended February 28, 1998, Putnam Mutual Funds Corp., acting as
underwriter received $27,185 on class A redemptions.
Note 3
Purchase and sales of securities
During the six months ended February 28, 1998, purchases and sales of
investment securities other than short-term investments aggregated $58,787,146
and $76,982,880, 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 February 28, 1998, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Six months ended
February 28, 1998
- ------------------------------------------------------------
Class A Shares Amount
- ------------------------------------------------------------
Shares sold 3,686,979 $78,841,961
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 784,042 15,186,898
- ------------------------------------------------------------
4,471,021 94,028,859
Shares
repurchased (4,417,290) (93,092,514)
- ------------------------------------------------------------
Net increase 53,731 $936,345
- ------------------------------------------------------------
Year ended
August 31, 1997
- ------------------------------------------------------------
Class A Shares Amount
- ------------------------------------------------------------
Shares sold 12,910,287 $257,413,523
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 619,119 11,664,201
- ------------------------------------------------------------
13,529,406 269,077,724
Shares
repurchased (12,171,985) (243,305,067)
- ------------------------------------------------------------
Net increase 1,357,421 $25,772,657
- ------------------------------------------------------------
Six months ended
February 28, 1998
- ------------------------------------------------------------
Class B Shares Amount
- ------------------------------------------------------------
Shares sold 2,300,798 $49,627,271
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 428,658 8,195,935
- ------------------------------------------------------------
2,729,456 57,823,206
Shares
repurchased (2,222,847) (47,207,197)
- ------------------------------------------------------------
Net increase 506,609 $10,616,009
- ------------------------------------------------------------
Year ended
August 31, 1997
- ------------------------------------------------------------
Class B Shares Amount
- ------------------------------------------------------------
Shares sold 11,091,368 $217,130,354
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 289,947 5,401,714
- ------------------------------------------------------------
11,381,315 222,532,068
Shares
repurchased (8,565,885) (168,255,569)
- ------------------------------------------------------------
Net increase 2,815,430 $54,276,499
- ------------------------------------------------------------
Six months ended
February 28, 1998
- ------------------------------------------------------------
Class M Shares Amount
- ------------------------------------------------------------
Shares sold 198,076 $4,340,527
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 31,199 601,498
- ------------------------------------------------------------
229,275 4,942,025
Shares
repurchased (189,220) (4,017,503)
- ------------------------------------------------------------
Net increase 40,055 $924,522
- ------------------------------------------------------------
Year ended
August 31, 1997
- ------------------------------------------------------------
Class M Shares Amount
- ------------------------------------------------------------
Shares sold 512,227 $10,089,265
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 13,021 244,674
- ------------------------------------------------------------
525,248 10,333,939
Shares
repurchased (315,154) (6,262,784)
- ------------------------------------------------------------
Net increase 210,094 $4,071,155
- ------------------------------------------------------------
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
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John H. Mullin III
Robert E. Patterson
Donald S. Perkins
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
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
Ian C. Ferguson
Vice President
Brett C. Browchuk
Vice President
Thomas V. Reilly
Vice President
Anthony I. Kreisel
Vice President
Jeanne L. Mockard
Vice President and Fund Manager
William N. Shiebler
Vice President
John R. Verani
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. You can also learn more
at Putnam Investments' website: http://www.putnaminv.com.
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 the principal amount
invested.
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
- --------------------
Bulk Rate
U.S. Postage
PAID
Putnam
Investments
- --------------------
SA007 41235-018/501/2AD 4/98
