Putnam
Global Natural
Resources
Fund
ANNUAL REPORT ON PERFORMANCE AND OUTLOOK
8-31-00
[SCALE LOGO OMITTED]
FROM THE TRUSTEES
[GRAPHIC OMITTED: PHOTO OF JOHN A. HILL AND GEORGE PUTNAM III]
Dear Shareholder:
It is a pleasure to greet you in our new roles as Chairman of the
Trustees and President of the Funds. As you know, both of us have been
members of the Board of Trustees for a number of years -- years during
which the global securities markets, the mutual fund industry, and
Putnam itself have experienced tremendous growth and change.
As we look to the future, we are certain that the changes that lie ahead
will be even more breathtaking in their scope. What will not change is
the Trustees' dedication to serving the best interests of our
shareholders.
We are pleased to announce the addition of James Falvey to your fund's
management team. James joined the management team of Putnam Global
Natural Resources Fund shortly after the close of the fiscal year.
Before joining Putnam earlier this year, he was with the firms of
Dresdner Klienwort Benson and Smith Barney. He has 12 years of
investment experience.
Respectfully yours,
/S/ JOHN A. HILL /S/ GEORGE PUTNAM, III
John A. Hill George Putnam, III
Chairman of the Trustees President of the Funds
October 18, 2000
REPORT FROM FUND MANAGEMENT
Dolores Snyder Bamford
An overall increase in oil prices, most notably in the second half of
the fiscal year, contributed to Putnam Global Natural Resources Fund's
strong performance for the 12 months ended August 31, 2000. Energy
resources account for the largest portion of the fund's portfolio, and
this sector has been one of the best performers during an intensely
volatile period for stock prices.
Technology stocks soared early in the year, many reaching price levels
that were hundreds of times their earnings. Some high- flying stocks did
not even have earnings to use as a basis for valuations. By the spring,
concern about these soaring valuations set in, and many investors turned
to the energy sector, where rising energy prices were improving margins
for many companies in energy, natural gas, oil and gas, and electric
utilities. Since these sectors accounted for more than 70% of total
assets during the period, your fund performed well for its 2000 fiscal
year.
Total return for 12 months ended 8/31/00
Class A Class B Class C Class M
NAV POP NAV CDSC NAV CDSC NAV POP
-----------------------------------------------------------------------
12.07% 5.62% 11.19% 6.19% 11.22% 10.22% 11.47% 7.56%
-----------------------------------------------------------------------
Past performance is not indicative of future results. Performance
information for longer periods and explanation of performance
calculation methods begin on page 6.
* FUND EMPHASIZES SOME OF THE WORLD'S LARGEST ENERGY COMPANIES
Enron is a good example of the large-capitalization, multifaceted
companies featured in your fund's portfolio. With a market
capitalization of $60 billion, this giant company is forward-looking,
innovative, and aggressive, making effective use of its experience and
expertise in trading natural gas and electricity to the
telecommunications industry. It is also successfully capitalizing on
deregulation in the electricity markets and on strength in natural gas,
as well as using the Internet to revolutionize the way business is
conducted around the world. EnronOnline, the company's online commodity
trading system, allows users to transact business instantaneously using
real-time prices for a range of energy and related commodities. Enron's
other Internet subsidiaries include EnergyDesk.com, NewPowerCompany.com
(a joint venture with IBM and America Online), Enron Weather and
WaterDesk.com.
[GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY SECTORS]
TOP INDUSTRY SECTORS*
Oil and gas 36.0%
Energy 18.7%
Natural gas
utilities 14.0%
Chemicals 8.7%
Paper and
forest products 6.3%
Footnote reads:
*Based on net assets as of 8/31/00. Holdings will vary over time.
Another major position for the fund throughout the past year has been
companies that provide parts and services to oil companies, allowing
them to increase drilling and production per well and to explore for new
reserves. Stock prices for these companies were depressed in the
beginning of 1999 but have rebounded with the rise in oil prices.
Transocean Sedco Forex, a company with a $13 billion market
capitalization, is a good example. We believe that over the next 3 to 4
years, the company will benefit substantially from increased demand for
deep water oil rigs, as companies expand their search for new resources
farther offshore, where the reserves of oil are huge. Prime areas of
exploration are in deep areas of the Gulf of Mexico and off the coasts
of West Africa and Brazil.
* DEMAND FOR OIL GROWING BY 2 MILLION BARRELS A DAY
One of the reasons oil prices were high during the period was that
inventories were at 10-year lows, while demand was growing faster than
production. U.S. reserves of home heating oil were so low that, shortly
after the close of the period, President Clinton released some oil from
the strategic petroleum reserves to help keep prices down as winter
approaches. Only two OPEC countries -- Saudi Arabia and Kuwait -- have
excess capacity right now, and any plans to increase supply may take
about a year to benefit consumers. So even though OPEC announced plans
to increase crude-oil output by 800,000 barrels a day starting October
1, over the near term oil prices were still expected to rise from $35
per barrel, where they stood at the close of the period.
"[Natural resources funds] typically invest most of their assets in the
energy sector, specifically, the oil and natural gas industries. They
also invest in other commodity-based companies like paper, steel and
chemical concerns. . . The funds' reliance on commodity prices can make
them volatile and keep them from moving in step with the S&P 500 index.
It can also make them a good choice if inflation rears its ugly head. . ."
-- The Street.com, May 16, 2000
However, in the next 3 or 4 years oil prices should subside if OPEC is
able to boost production and as additional reserves from offshore
drilling come to market. This is why we believe it is prudent to
concentrate on large-cap stocks and leaders in exploration and
production. In addition to Transocean, your fund's portfolio included
companies such as Apache and Anadarko Petroleum Corp -- leaders in
exploration and production -- as well as energy-services companies like
Schlumberger, which offers oil-field services and customized
integrated services for electricity and gas companies.
Looking ahead, trends also appear positive for natural gas companies
because of increased demand for electricity. Natural gas is a domestic
rather than a global market; supply has to come from within North
America. U.S. companies likely to benefit from increased demand for
natural gas include the exploration companies mentioned previously and
companies such as El Paso Energy. El Paso recently merged with Sonat,
the largest natural gas transmission system in the United States, and
like Transocean, it has been a big winner for your fund. The business
units of El Paso, one of the fastest growing companies in the United
States, operate both nationally and internationally in diverse
energy-related technologies.
* UTILITIES POSITION ADDS TO DIVERSIFICATION
While major integrated oil services firms continued to be of primary
importance to your fund, we also maintained positions in other natural
resource sectors, including basic materials and, most recently, electric
utilities companies, which accounted for approximately 3% of the fund's
total assets at the close of the period. This sector has outperformed
the market lately, not only because of the world's increasing demand for
energy, but also because of deregulation, which is taking place in the
United States and many developed economies overseas. Deregulation has
transformed this staid, mature industry into a growth sector.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
TOP 10 HOLDINGS
ExxonMobil Corp.
Oil and gas
Total Fina Elf S.A. ADR (France)
Oil and gas
Royal Dutch Petroleum Co. PLC
ADR (The Netherlands)
Oil and gas
Enron Corp.
Natural gas utilities
Halliburton Co.
Energy
Transocean Sedco Forex, Inc.
Energy
BP Amoco PLC ADR
(United Kingdom)
Oil and gas
du Pont (E.I.) de Nemours & Co., Ltd.
Chemicals
Baker Hughes, Inc.
Energy
Williams Cos., Inc.
Natural gas utilities
Footnote reads:
These holdings represent 36.7% of the fund's net assets as of 8/31/00.
Portfolio holdings will vary over time.
Stocks in the fund's basic materials sector, such as papers, chemicals,
and metals, have lagged the market in part because they are more
sensitive to changes in interest rates. Repeated efforts by the Federal
Reserve Board to slow the economy have put a damper on these companies'
near-term growth prospects. Rising oil prices and the weakness of the
euro have also affected earnings of companies in these sectors. However,
the companies we selected were attractively priced and we believe their
long-term outlook is positive. One example is Alcoa, which we think is
one of the best in the business because of its ability to grow earnings
by improving the manufacturing process to lower costs. Alcoa has
outperformed other basic materials companies by doing better than their
competition, and we believe it will benefit when the sector returns to
favor.
* FOCUS REMAINS ON INNOVATIVE ENERGY COMPANIES
We believe companies that take a revolutionary approach to their
businesses offer the strongest growth potential, and that these
companies will be the best performers over the long term. While our
focus remains on energy -- exploration, production generation and
transmission -- many of the companies we have selected also are active
in technology to improve productivity and keep expenses down.
Technological advances have made possible a prolonged period of growth
with relatively low inflation that is spreading around the world. Risks
are always present and the volatile climate the equity markets have been
experiencing lately is likely to continue. However, our long-term
forecast is for continued positive performance from a wide range of
natural resources companies around the world and especially those able
to combine experience and technology to boost production and keep their
prices competitive.
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 8/31/00, 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.
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 primarily through stocks of companies in the energy and
natural resources industries.
TOTAL RETURN FOR PERIODS ENDED 8/31/00
Class A Class B Class C Class M
(inception dates) (7/24/80) (2/1/94) (7/26/99) (7/3/95)
NAV POP NAV CDSC NAV CDSC NAV POP
------------------------------------------------------------------------------
1 year 12.07% 5.62% 11.19% 6.19% 11.22% 10.22% 11.47% 7.56%
------------------------------------------------------------------------------
5 years 80.08 69.74 73.40 71.40 73.53 73.53 75.52 69.41
Annual average 12.48 11.16 11.64 11.38 11.65 11.65 11.91 11.12
------------------------------------------------------------------------------
10 years 146.69 132.57 128.53 128.53 128.93 128.93 134.17 125.98
Annual average 9.45 8.81 8.62 8.62 8.63 8.63 8.88 8.49
------------------------------------------------------------------------------
Annual average
(life of fund) 7.48 7.17 6.57 6.57 6.68 6.68 6.84 6.65
------------------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 8/31/00
Lipper Natural
S&P 500 Resources
Index Average
-------------------------------------------------------------------------
1 year 16.32% 19.43%
-------------------------------------------------------------------------
5 years 193.58 73.37
Annual average 24.02 10.94
-------------------------------------------------------------------------
10 years 493.39 132.80
Annual average 19.49 8.34
-------------------------------------------------------------------------
Annual average
(life of fund) 17.15 11.23
-------------------------------------------------------------------------
Past performance is no assurance of future results. More recent returns
may be more or less than those shown. 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,
if 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. For class C
shares, returns for periods prior to their inception are derived from
the historical performance of class A shares, adjusted to reflect both
the CDSC currently applicable to class C shares, which is 1% for the
first year and is eliminated thereafter, and the higher operating
expenses applicable to class C shares. All returns assume reinvestment
of distributions at NAV. 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.
[GRAPHIC OMITTED: worm chart GROWTH OF A $10,000 INVESTMENT]
GROWTH OF A $10,000 INVESTMENT
Cumulative total return of a $10,000 investment since 8/31/90
Fund's class A S&P 500 Lipper Natural
Date shares at POP Index Resources Average
8/31/90 9,425 10,000 10,000
8/31/91 10,052 12,690 9,659
8/31/92 10,566 13,696 9,539
8/31/93 12,869 15,780 11,943
8/31/94 11,625 16,643 11,968
8/31/95 12,915 20,212 12,854
8/31/96 14,845 23,997 15,665
8/31/97 19,506 33,752 20,209
8/31/98 14,563 36,484 12,488
8/31/99 20,752 51,014 18,877
8/31/00 $23,257 $59,339 $23,280
Footnote reads:
Past performance is no assurance of future results. At the end of the
same time period, a $10,000 investment in the fund's class B and class C
shares would have been valued at $22,853 and $22,893, respectively, and
no contingent deferred sales charges would apply; a $10,000 investment
in the fund's class M shares would have been valued at $23,417 ($22,598
at public offering price). See first page of performance section for
performance calculation method.
PRICE AND DISTRIBUTION INFORMATION 12 MONTHS ENDED 8/31/00
Class A Class B Class C Class M
--------------------------------------------------------------------------
Distributions
(number) 1 1 1 1
--------------------------------------------------------------------------
Income $0.190 $0.053 $0.176 $0.084
--------------------------------------------------------------------------
Capital gains
Long-term 0.108 0.108 0.108 0.108
--------------------------------------------------------------------------
Short-term 0.205 0.205 0.205 0.205
--------------------------------------------------------------------------
Total $0.503 $0.366 $0.489 $0.397
--------------------------------------------------------------------------
Share value: NAV POP NAV NAV NAV POP
--------------------------------------------------------------------------
8/31/99 $19.98 $21.20 $19.61 $19.98 $19.82 $20.54
--------------------------------------------------------------------------
8/31/00 21.79 23.12 21.37 21.64 21.62 22.40
--------------------------------------------------------------------------
TOTAL RETURN FOR PERIODS ENDED 9/30/00 (most recent calendar quarter)
Class A Class B Class C Class M
(inception dates) (7/24/80) (2/1/94) (7/26/99) (7/3/95)
NAV POP NAV CDSC NAV CDSC NAV POP
------------------------------------------------------------------------------
1 year 14.86% 8.26% 14.02% 9.02% 14.05% 13.04% 14.32% 10.30%
------------------------------------------------------------------------------
5 years 78.04 67.76 71.43 69.43 71.60 71.60 73.52 67.41
Annual average 12.23 10.90 11.38 11.12 11.40 11.40 11.65 10.85
------------------------------------------------------------------------------
10 years 155.36 140.68 136.61 136.61 136.96 136.96 142.50 134.04
Annual average 9.83 9.18 8.99 8.99 9.01 9.01 9.26 8.88
------------------------------------------------------------------------------
Annual average
(life of fund) 7.41 7.10 6.50 6.50 6.61 6.61 6.77 6.59
------------------------------------------------------------------------------
Past performance is no assurance of future results. More recent returns
may be more or less than those shown. They do not take into account any
adjustment for taxes payable on reinvested distributions. Investment
returns and principal value will fluctuate so that an investor's shares
when sold 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 C shares are not subject to an initial sales charge and are
subject to a contingent deferred sales charge only if the shares are
redeemed during the first year.
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 5.75% maximum 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 or C shares and assumes redemption at the
end of the period. Your fund's class B 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. The CDSC for class C shares is 1% for one
year after purchase.
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 unmanaged list of common stocks that
is frequently used as a general measure of stock market performance.
*Securities indexes assume reinvestment of all distributions and interest
payments and do not take into 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.
A GUIDE TO THE FINANCIAL STATEMENTS
These sections of the report, preceded by the Report of independent
accountants, constitute the fund's financial statements.
The fund's portfolio lists all the fund's investments and their values
as of the last day of the reporting period. Holdings are organized by
asset type and industry sector, country, or state to show areas of
concentration and diversification.
Statement of assets and liabilities shows how the fund's net assets and
share price are determined. All investment and noninvestment assets are
added together. Any unpaid expenses and other liabilities are
subtracted from this total. The result is divided by the number of
shares to determine the net asset value per share, which is calculated
separately for each class of shares. (For funds with preferred shares,
the amount subtracted from total assets includes the net assets
allocated to remarketed preferred shares.)
Statement of operations shows the fund's net investment gain or loss
for the reporting period. This is determined by adding up all the fund's
earnings -- from dividends and interest income -- and subtracting its
operating expenses. This statement also lists any net gain or loss the
fund realized on the sales of its holdings and -- for holdings that
remain in the portfolio -- any change in unrealized gains or losses over
the period.
Statement of changes in net assets shows how the fund's net assets were
affected by distributions to shareholders and by changes in the number
of the fund's shares. It lists distributions and their sources (net
investment income or realized capital gains) over the current reporting
period and the most recent fiscal year-end. The distributions listed
here may not match the sources listed in the Statement of operations
because the distributions are determined on a tax basis and may be paid
in a different period from the one in which they were earned.
Financial highlights provide an overview of the fund's investment
results, per-share distributions, expense ratios, net investment income
ratios and portfolio turnover in one summary table, reflecting the five
most recent reporting periods. In a semiannual report, the highlight
table also includes the current reporting period. For open-end funds, a
separate table is provided for each share class.
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Trustees and Shareholders of
Putnam Global Natural Resources Fund
We have audited the accompanying statement of assets and liabilities of
Putnam Global Natural Resources Fund, including the fund's portfolio, as
of August 31, 2000, and the related statement of operations, statement
of changes in net assets and financial highlights for the year then
ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial
highlights based on our audit. The statement of changes in net assets
for the year ended August 31, 1999 and the financial highlights for each
of the years or periods in the four-year period ended August 31, 1999
were audited by other auditors whose report dated October 12, 1999
expressed an unqualified opinion on that financial statement and those
financial highlights.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that
we plan and perform our audit to obtain reasonable assurance about
whether the financial statements and financial highlights are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as
of August 31, 2000 by correspondence with the custodian and brokers. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of Putnam Global Natural Resources Fund as of August
31, 2000, the results of its operations, changes in its net assets and
financial highlights for the year then ended, in conformity with
accounting principles generally accepted in the United States of
America.
KPMG LLP
Boston, Massachusetts
October 6, 2000
<TABLE>
<CAPTION>
THE FUND'S PORTFOLIO
August 31, 2000
COMMON STOCKS (99.4%) (a)
NUMBER OF SHARES VALUE
<S> <C> <C>
Banking (1.6%)
-------------------------------------------------------------------------------------------------------------------
100,400 Charter One Financial, Inc. $ 2,384,500
92,200 Washington Mutual, Inc. 3,227,000
-------------
5,611,500
Chemicals (8.7%)
-------------------------------------------------------------------------------------------------------------------
54,200 Air Products & Chemicals, Inc. 1,968,138
71,100 BOC Group PLC 1,035,255
82,000 Dow Chemical Co. 2,147,375
240,000 du Pont (E.I.) de Nemours & Co., Ltd. 10,770,000
98,700 Engelhard Corp. 1,850,625
101,800 Minnesota Mining & Manufacturing Co. 9,467,400
35,800 Praxair, Inc. 1,584,150
38,500 Rohm & Haas Co. 1,114,094
-------------
29,937,037
Consumer Goods (0.3%)
-------------------------------------------------------------------------------------------------------------------
19,700 Kimberly-Clark Corp. 1,152,450
Electric Utilities (3.7%)
-------------------------------------------------------------------------------------------------------------------
113,200 CP&L Energy, Inc. 4,188,400
104,400 Entergy Corp. 3,177,675
90,700 Reliant Energy, Inc. 3,367,238
76,500 SCANA Corp. 2,094,188
-------------
12,827,501
Energy (18.7%)
-------------------------------------------------------------------------------------------------------------------
292,200 Baker Hughes, Inc. 10,683,563
47,600 BJ Services Co. (NON) 3,189,200
31,300 Cooper Cameron Corp. (NON) 2,435,531
229,500 Global Marine, Inc. 7,415,719
238,000 Halliburton Co. 12,614,000
119,600 Schlumberger, Ltd. 10,203,375
204,019 Transocean Sedco Forex, Inc. 12,190,135
119,300 Weatherford International, Inc. (NON) 5,599,644
-------------
64,331,167
Insurance (2.0%)
-------------------------------------------------------------------------------------------------------------------
53,500 American General Corp. 3,895,469
53,600 Lincoln National Corp. 2,894,400
-------------
6,789,869
Machinery (0.7%)
-------------------------------------------------------------------------------------------------------------------
62,000 Caterpillar, Inc. 2,278,500
Metals (4.0%)
-------------------------------------------------------------------------------------------------------------------
16,100 Alcan Aluminum Ltd. (Canada) 528,281
149,400 Alcoa, Inc. 4,967,550
85,900 Barrick Gold Corp. 1,369,031
75,600 Broken Hill Proprietary Co., Ltd. (Australia) 1,663,200
170,674 Freeport-McMoRan Copper & Gold Co., Inc. Class A 1,621,403
40,800 Inco Ltd. (Canada) 729,300
21,060 Phelps Dodge Corp. 937,170
33,000 Pohang Iron & Steel Company, Ltd. ADR (South Korea) 701,250
72,100 Rio Tinto PLC (United Kingdom) 1,152,594
11,900 USX-U.S. Steel Group 206,763
-------------
13,876,542
Natural Gas Utilities (14.0%)
-------------------------------------------------------------------------------------------------------------------
122,400 Coastal Corp. 8,430,300
165,500 El Paso Energy Corp. 9,640,375
156,200 Enron Corp. 13,257,470
45,100 Equitable Resources, Inc. 2,539,694
100,400 Kinder Morgan, Inc. 3,695,975
231,600 Williams Companies, Inc. 10,668,075
-------------
48,231,889
Oil & Gas (36.0%)
-------------------------------------------------------------------------------------------------------------------
85,600 Alberta Energy Company Ltd. 3,156,500
132,814 Anadarko Petroleum Corp. 8,735,177
115,800 Apache Corp. 7,295,400
220,352 BP Amoco PLC ADR (United Kingdom) 12,174,448
98,700 Chevron, Inc. 8,340,150
161,700 Conoco, Inc. 4,072,819
288,153 Conoco, Inc. Class B 7,527,997
67,700 Devon Energy Corp. 3,964,681
29,000 ENI-Ente Nazionale Idrocarburi SpA ADR (Italy) 1,694,688
143,200 EOG Resources, Inc. 5,477,400
192,560 ExxonMobil Corp. 15,717,710
230,200 Royal Dutch Petroleum Co. PLC ADR (Netherlands) 14,085,363
88,000 Sunoco, Inc. 2,392,500
132,400 Talisman Energy, Inc. (Canada) (NON) 4,460,225
65,300 Texaco, Inc. 3,362,950
106,600 Tosco Corp. 3,251,300
192,044 Total Fina Elf S.A. ADR (France) 14,307,278
95,905 Unocal Corp. 3,200,829
28,600 Valero Energy Corp. 861,575
-------------
124,078,990
Paper & Forest Products (6.3%)
-------------------------------------------------------------------------------------------------------------------
120,600 Boise Cascade Corp. 3,602,925
76,701 Bowater, Inc. 3,940,514
219,700 Sappi, Ltd. ADR (South Africa) 1,894,913
45,500 Sealed Air Corp. (NON) 2,334,719
626,000 Smurfit (Jefferson) Group PLC 1,238,388
186,700 Smurfit-Stone Container Corp. (NON) 2,450,438
71,200 Temple Inland, Inc. 3,021,550
72,000 Weyerhaeuser Co. 3,334,500
-------------
21,817,947
Pharmaceuticals (2.4%)
-------------------------------------------------------------------------------------------------------------------
26,800 Bristol-Myers Squibb Co. 1,420,400
44,600 Johnson & Johnson 4,100,413
47,900 Pharmacia Corp. 2,805,144
-------------
8,325,957
Railroads (0.4%)
-------------------------------------------------------------------------------------------------------------------
23,700 Kansas City Southern Industries, Inc. 219,225
25,900 Union Pacific Corp. 1,029,525
-------------
1,248,750
Telecommunications (0.6%)
-------------------------------------------------------------------------------------------------------------------
36,800 ALLTEL Corp. 1,860,700
-------------
Total Common Stocks (cost $267,394,173) $ 342,368,799
<CAPTION>
SHORT-TERM INVESTMENTS (0.6%) (a) (cost $1,933,000)
PRINCIPAL AMOUNT VALUE
<S> <C> <C>
-------------------------------------------------------------------------------------------------------------------
$ 1,933,000 Interest in $749,144,000 joint repurchase agreement
dated August 31, 2000 with S.B.C. Warburg Inc.
due September 1, 2000 with respect to various
U.S. Treasury obligations-- maturity value of $1,933,357
for an effective yield of 6.65% $ 1,933,000
-------------------------------------------------------------------------------------------------------------------
Total Investments (cost $269,327,173) (b) $ 344,301,799
-------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $344,488,621.
(b) The aggregate identified cost on a tax basis is $275,376,674,
resulting in gross unrealized appreciation and depreciation of
$75,826,972 and $6,901,847, respectively, or net unrealized appreciation
of $68,925,125.
(NON) Non-income-producing security.
ADR after the name of a foreign holding stands for American
Depositary Receipts, representing ownership of foreign securities on
deposit with a domestic custodian bank.
DIVERSIFICATION BY COUNTRY
Distribution of investments by country of issue at August 31, 2000:
(as percentage of Market Value)
Canada 1.7
France 4.1
Netherlands 4.1
United Kingdom 3.9
United States 84.5
Other 1.7
------
Total 100.0%
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
August 31, 2000
<S> <C>
Assets
-------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $269,327,173) (Note 1) $344,301,799
-------------------------------------------------------------------------------------------
Cash 646
-------------------------------------------------------------------------------------------
Dividends and interest receivable 937,120
-------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 705,718
-------------------------------------------------------------------------------------------
Total assets 345,945,283
Liabilities
-------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 533,338
-------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 581,640
-------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 69,202
-------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 20,679
-------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 1,065
-------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 197,397
-------------------------------------------------------------------------------------------
Other accrued expenses 53,341
-------------------------------------------------------------------------------------------
Total liabilities 1,456,662
-------------------------------------------------------------------------------------------
Net assets $344,488,621
Represented by
-------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $256,349,297
-------------------------------------------------------------------------------------------
Undistributed net investment income (Note 1) 676,151
-------------------------------------------------------------------------------------------
Accumulated net realized gain on investments (Note 1) 12,488,989
-------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and assets and
liabilities in foreign currencies 74,974,184
-------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $344,488,621
Computation of net asset value and offering price
-------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($206,190,480 divided by 9,461,266 shares) $21.79
-------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $21.79)* $23.12
-------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($126,004,376 divided by 5,895,045 shares)** $21.37
-------------------------------------------------------------------------------------------
Net asset value and offering price per class C share
($4,040,066 divided by 186,719 shares)** $21.64
-------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($8,253,699 divided by 381,677 shares) $21.62
-------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of 21.62)* $22.40
-------------------------------------------------------------------------------------------
* 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, 2000
<S> <C>
Investment income:
-------------------------------------------------------------------------------------------
Dividends (net of foreign tax of $109,584) $ 5,942,192
-------------------------------------------------------------------------------------------
Interest 101,377
-------------------------------------------------------------------------------------------
Total investment income 6,043,569
Expenses:
-------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 2,285,658
-------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 478,937
-------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 17,016
-------------------------------------------------------------------------------------------
Administrative services (Note 2) 6,584
-------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 469,938
-------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 1,305,628
-------------------------------------------------------------------------------------------
Distribution fees -- Class C (Note 2) 15,230
-------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 51,362
-------------------------------------------------------------------------------------------
Other 139,966
-------------------------------------------------------------------------------------------
Total expenses 4,770,319
-------------------------------------------------------------------------------------------
Expense reduction (Note 2) (78,015)
-------------------------------------------------------------------------------------------
Net expenses 4,692,304
-------------------------------------------------------------------------------------------
Net investment income 1,351,265
-------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 21,244,918
-------------------------------------------------------------------------------------------
Net unrealized depreciation of assets and liabilities in foreign
currencies during the year (274)
-------------------------------------------------------------------------------------------
Net unrealized appreciation of investments during the year 11,036,420
-------------------------------------------------------------------------------------------
Net gain on investments 32,281,064
-------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $33,632,329
-------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
Year ended August 31
---------------------------------
2000 1999
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets
--------------------------------------------------------------------------------------------------
Operations:
--------------------------------------------------------------------------------------------------
Net investment income $ 1,351,265 $ 2,510,717
--------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments 21,244,918 (1,369,261)
--------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and
assets and liabilities in foreign currencies 11,036,146 106,473,706
--------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 33,632,329 107,615,162
--------------------------------------------------------------------------------------------------
Distributions to shareholders:
--------------------------------------------------------------------------------------------------
From net investment income
Class A (1,797,242) (2,162,804)
--------------------------------------------------------------------------------------------------
Class B (376,428) (565,276)
--------------------------------------------------------------------------------------------------
Class C (6,874) --
--------------------------------------------------------------------------------------------------
Class M (30,294) (41,873)
--------------------------------------------------------------------------------------------------
From net realized gain on investments
Class A (2,960,718) (10,182,664)
--------------------------------------------------------------------------------------------------
Class B (2,223,059) (7,302,527)
--------------------------------------------------------------------------------------------------
Class C (12,226) --
--------------------------------------------------------------------------------------------------
Class M (112,880) (375,903)
--------------------------------------------------------------------------------------------------
In excess of net realized gain on investments
Class A -- (1,150,430)
--------------------------------------------------------------------------------------------------
Class B -- (825,034)
--------------------------------------------------------------------------------------------------
Class M -- (42,469)
--------------------------------------------------------------------------------------------------
Increase (decrease) from capital share transactions (Note 4) (39,423,087) 2,065,937
--------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (13,310,479) 87,032,119
Net assets
--------------------------------------------------------------------------------------------------
Beginning of year 357,799,100 270,766,981
--------------------------------------------------------------------------------------------------
End of year (including undistributed net investment
income of $676,151 and $1,535,724, respectively) $344,488,621 $357,799,100
--------------------------------------------------------------------------------------------------
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
------------------------------------------------------------------------------------------------
Per-share
operating performance Year ended August 31
------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $19.98 $15.28 $22.13 $18.03 $16.09
------------------------------------------------------------------------------------------------
Investment operations
------------------------------------------------------------------------------------------------
Net investment income (c) .14 .20 .20 .25 .28
------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 2.17 5.91 (5.47) 5.18 2.09
------------------------------------------------------------------------------------------------
Total from
investment operations 2.31 6.11 (5.27) 5.43 2.37
------------------------------------------------------------------------------------------------
Less distributions:
------------------------------------------------------------------------------------------------
From net
investment income (.19) (.23) (.21) (.16) (.34)
------------------------------------------------------------------------------------------------
From net realized gain
on investments (.31) (1.06) (1.37) (1.17) (.09)
------------------------------------------------------------------------------------------------
In excess of net
realized gain on investments -- (.12) -- -- --
------------------------------------------------------------------------------------------------
Total distributions (.50) (1.41) (1.58) (1.33) (.43)
------------------------------------------------------------------------------------------------
Net asset value,
end of period $21.79 $19.98 $15.28 $22.13 $18.03
------------------------------------------------------------------------------------------------
Ratios and supplemental data
------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 12.07 42.50 (25.34) 31.39 14.95
------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) 206,190 200,824 157,589 239,539 170,678
------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) 1.15 1.16 1.20 1.23 1.27
------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) .74 1.09 .95 1.26 1.62
------------------------------------------------------------------------------------------------
Portfolio turnover (%) 199.50 118.37 28.63 39.25 47.71
------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(b) Includes amounts paid through expense offset and brokerage service
arrangements (Note 2).
(c) 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
------------------------------------------------------------------------------------------------
Per-share
operating performance Year ended August 31
------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $19.61 $15.00 $21.77 $17.81 $15.94
------------------------------------------------------------------------------------------------
Investment operations
------------------------------------------------------------------------------------------------
Net investment income (loss)(c) (.01) .06 .04 .10 .15
------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 2.13 5.81 (5.37) 5.11 2.07
------------------------------------------------------------------------------------------------
Total from
investment operations 2.12 5.87 (5.33) 5.21 2.22
------------------------------------------------------------------------------------------------
Less distributions:
------------------------------------------------------------------------------------------------
From net
investment income (.05) (.08) (.07) (.08) (.26)
------------------------------------------------------------------------------------------------
From net realized gain
on investments (.31) (1.06) (1.37) (1.17) (.09)
------------------------------------------------------------------------------------------------
In excess of net
realized gain on investments -- (.12) -- -- --
------------------------------------------------------------------------------------------------
Total distributions (.36) (1.26) (1.44) (1.25) (.35)
------------------------------------------------------------------------------------------------
Net asset value,
end of period $21.37 $19.61 $15.00 $21.77 $17.81
------------------------------------------------------------------------------------------------
Ratios and supplemental data
------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 11.19 41.42 (25.91) 30.40 14.14
------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $126,004 $146,228 107,252 142,442 66,375
------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) 1.90 1.91 1.95 1.98 2.04
------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average net assets (%) (.04) .35 .21 .52 .85
------------------------------------------------------------------------------------------------
Portfolio turnover (%) 199.50 118.37 28.63 39.25 47.71
------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(b) Includes amounts paid through expense offset and brokerage service
arrangements (Note 2).
(c) Per share net investment income has been determined on the basis
of the weighted average number of shares outstanding during the period.
</TABLE>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
CLASS C
----------------------------------------------------------------------
For the period
Per-share Year ended July 26, 1999+
operating performance August 31 to August 31
----------------------------------------------------------------------
2000 1999
----------------------------------------------------------------------
Net asset value,
beginning of period $19.98 $19.78
----------------------------------------------------------------------
Investment operations
----------------------------------------------------------------------
Net investment income (c) .03 .02
----------------------------------------------------------------------
Net realized and unrealized
gain on investments 2.12 .18
----------------------------------------------------------------------
Total from
investment operations 2.15 .20
----------------------------------------------------------------------
Less distributions:
----------------------------------------------------------------------
From net
investment income (.18) --
----------------------------------------------------------------------
From net realized gain
on investments (.31) --
----------------------------------------------------------------------
In excess of net
realized gain on investments -- --
----------------------------------------------------------------------
Total distributions (.49) --
----------------------------------------------------------------------
Net asset value,
end of period $21.64 $19.98
----------------------------------------------------------------------
Ratios and supplemental data
----------------------------------------------------------------------
Total return at
net asset value (%)(a) 11.22 1.01*
----------------------------------------------------------------------
Net assets, end of period
(in thousands) $4,040 $209
----------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) 1.90 .19*
----------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) .14 .13*
----------------------------------------------------------------------
Portfolio turnover (%) 199.50 118.37
----------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(b) Includes amounts paid through expense offset and brokerage service
arrangements (Note 2).
(c) Per share net investment income has been determined on the basis
of the weighted average number of shares outstanding during the period.
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
CLASS M
------------------------------------------------------------------------------------------------
Per-share
operating performance Year ended August 31
------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $19.82 $15.15 $21.99 $17.97 $16.07
------------------------------------------------------------------------------------------------
Investment operations
------------------------------------------------------------------------------------------------
Net investment income (c) .05 .11 .09 .15 .19
------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 2.14 5.86 (5.42) 5.16 2.09
------------------------------------------------------------------------------------------------
Total from
investment operations 2.19 5.97 (5.33) 5.31 2.28
------------------------------------------------------------------------------------------------
Less distributions:
------------------------------------------------------------------------------------------------
From net
investment income (.08) (.12) (.14) (.12) (.29)
------------------------------------------------------------------------------------------------
From net realized gain
on investments (.31) (1.06) (1.37) (1.17) (.09)
------------------------------------------------------------------------------------------------
In excess of net
realized gain on investments -- (.12) -- -- --
------------------------------------------------------------------------------------------------
Total distributions (.39) (1.30) (1.51) (1.29) (.38)
------------------------------------------------------------------------------------------------
Net asset value,
end of period $21.62 $19.82 $15.15 $21.99 $17.97
------------------------------------------------------------------------------------------------
Ratios and supplemental data
------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 11.47 41.72 (25.73) 30.79 14.39
------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) 8,254 $10,537 5,926 7,853 2,641
------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) 1.65 1.66 1.70 1.73 1.85
------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) .26 .62 .45 .77 1.07
------------------------------------------------------------------------------------------------
Portfolio turnover (%) 199.50 118.37 28.63 39.25 47.71
------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(b) Includes amounts paid through expense offset and brokerage service
arrangements (Note 2).
(c) 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
August 31, 2000
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.
The fund offers class A, class B, class C, 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 C shares are subject to the same fees and expenses as
class B shares, except that class C shares have a one-year 1.00%
contingent deferred sales charge and do not convert to class A shares.
Class M shares are sold with a maximum front end sales charge of 3.50%
and pay an ongoing distribution fee that is higher than class A shares
but lower than class B and class C 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 that 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 of the financial statements and the reported
amounts of increases and decreases in net assets from operations during
the reporting period. 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 sales price on its principal exchange, 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. Short-term investments having remaining maturities of 60
days or less are stated at amortized cost, which approximates market
value. Other investments, including restricted securities, 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.
Collateral for certain tri-party repurchase agreements is held at the
counterparty's custodian in a segregated account for the benefit of the
fund and the counterparty. 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). Gains or losses on securities sold are determined
on the identified cost basis. 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.
Non-cash dividends, if any, are recorded at the fair market value of the
securities received.
E) Foreign currency translation The accounting records of the fund are
maintained in U.S. dollars. The market value of foreign securities,
currency holdings, and 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 realized
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. Investments in foreign securities involve certain risks, including
those related to economic instability, unfavorable political
developments, and currency fluctuations, not present with domestic
investments.
F) 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 year ended
August 31, 2000, the fund had no borrowings against the line of credit.
G) 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.
H) 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. For the year
ended August 31, 2000, the fund required no such reclassifications.
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.
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 Putnam
Fiduciary Trust Company (PFTC), a subsidiary of Putnam Investments, Inc.
Investor agent functions are provided by Putnam Investor Services, a
division of PFTC.
For the year ended August 31, 2000, fund expenses were reduced by
$78,015 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 $692
has been allocated to the fund, and an additional fee for each Trustees
meeting attended. 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
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 a 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, class C 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 Retail Management, Inc., 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 Retail Management, Inc. at an annual rate up to
0.35%, 1.00%, 1.00% and 1.00% of the average net assets attributable to
class A, class B, class C and class M shares, respectively. The Trustees
have approved payment by the fund at an annual rate of 0.25%, 1.00%,
1.00% and 0.75% of the average net assets attributable to class A, class
B, class C and class M shares, respectively.
For the year ended August 31, 2000, Putnam Retail Management, Inc.,
acting as underwriter received net commissions of $44,023 and $1,900
from the sale of class A and class M shares, respectively, and received
$362,026 and $708 in contingent deferred sales charges from redemptions
of class B and class C shares, respectively. A deferred sales charge of
up to 1% is assessed on certain redemptions of class A shares. For the
year ended August 31, 2000, Putnam Retail Management, Inc., acting as
underwriter received $14,877 on class A redemptions.
Note 3
Purchases and sales of securities
During the year ended August 31, 2000, cost of purchases and proceeds
from sales of investment securities other than short-term investments
aggregated $648,486,219 and $694,689,380, respectively. There were no
purchases and sales of U.S. government obligations.
Note 4
Capital shares
At August 31, 2000, there was an unlimited number of shares of
beneficial interest authorized. Transactions in capital shares were as
follows:
Year ended August 31, 2000
---------------------------------------------------------------------------
Class A Shares Amount
---------------------------------------------------------------------------
Shares sold 3,678,847 $ 73,922,198
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 234,570 4,276,206
---------------------------------------------------------------------------
3,913,417 78,198,404
Shares
repurchased (4,502,655) (88,599,595)
---------------------------------------------------------------------------
Net decrease (589,238) $(10,401,191)
---------------------------------------------------------------------------
Year ended August 31, 1999
---------------------------------------------------------------------------
Class A Shares Amount
---------------------------------------------------------------------------
Shares sold 9,489,587 $170,456,258
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 775,875 12,134,731
---------------------------------------------------------------------------
10,265,462 182,590,989
Shares
repurchased (10,527,918) (188,703,653)
---------------------------------------------------------------------------
Net decrease (262,456) $ (6,112,664)
---------------------------------------------------------------------------
Year ended August 31, 2000
---------------------------------------------------------------------------
Class B Shares Amount
---------------------------------------------------------------------------
Shares sold 2,973,938 $ 58,761,585
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 125,022 2,246,636
---------------------------------------------------------------------------
3,098,960 61,008,221
Shares
repurchased (4,661,636) (91,073,166)
---------------------------------------------------------------------------
Net decrease (1,562,676) $(30,064,945)
---------------------------------------------------------------------------
Year ended August 31, 1999
---------------------------------------------------------------------------
Class B Shares Amount
---------------------------------------------------------------------------
Shares sold 4,974,343 $89,304,868
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 476,918 7,358,783
---------------------------------------------------------------------------
5,451,261 96,663,651
Shares
repurchased (5,142,465) (91,552,333)
---------------------------------------------------------------------------
Net increase 308,796 $ 5,111,318
---------------------------------------------------------------------------
Year ended August 31, 2000
---------------------------------------------------------------------------
Class C Shares Amount
---------------------------------------------------------------------------
Shares sold 223,992 $4,523,666
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 862 15,683
---------------------------------------------------------------------------
224,854 4,539,349
Shares
repurchased (48,620) (967,579)
---------------------------------------------------------------------------
Net increase 176,234 $3,571,770
---------------------------------------------------------------------------
For the period July 26, 1999
(commencement of operations) to
August 31, 1999
---------------------------------------------------------------------------
Class C Shares Amount
---------------------------------------------------------------------------
Shares sold 10,485 $216,902
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
---------------------------------------------------------------------------
10,485 216,902
Shares
repurchased -- --
---------------------------------------------------------------------------
Net increase 10,485 $216,902
---------------------------------------------------------------------------
Year ended August 31, 2000
---------------------------------------------------------------------------
Class M Shares Amount
---------------------------------------------------------------------------
Shares sold 607,237 $12,195,438
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 7,420 134,665
---------------------------------------------------------------------------
614,657 12,330,103
Shares
repurchased (764,739) (14,858,824)
---------------------------------------------------------------------------
Net decrease (150,082) $(2,528,721)
---------------------------------------------------------------------------
Year ended August 31, 1999
---------------------------------------------------------------------------
Class M Shares Amount
---------------------------------------------------------------------------
Shares sold 866,310 $16,408,162
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 27,372 426,192
---------------------------------------------------------------------------
893,682 16,834,354
Shares
repurchased (753,129) (13,983,973)
---------------------------------------------------------------------------
Net increase 140,553 $ 2,850,381
---------------------------------------------------------------------------
Note 5
Change in independent
accountants (unaudited)
Based on the recommendation of the Audit Committee of the fund, the
Board of Trustees has determined not to retain PricewaterhouseCoopers
LLP as this fund's independent accountant and voted to appoint KPMG LLP
for the fund's fiscal year August 31, 2000. During the two previous
fiscal years, PricewaterhouseCoopers LLP audit reports contained no
adverse opinion or disclaimer of opinion; nor were its reports qualified
or modified as to uncertainty, audit scope, or accounting principle.
Further, in connection with its audits for the two previous fiscal years
and through July 24, 2000, there were no disagreements between the fund
and PricewaterhouseCoopers LLP on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or
procedure, which if not resolved to the satisfaction of
PricewaterhouseCoopers LLP would have caused it to make reference to the
disagreements in its report on the financial statements for such years.
FEDERAL TAX INFORMATION
(Unaudited)
Pursuant to Section 852 of the Internal Revenue Code, as amended, the
Fund hereby designates $10,918,336 capital gain, for its taxable year
ended August 31, 2000.
The fund has designated 100% of the distributions from net investment
income as qualifying for the dividends received deduction for
corporations.
The Form 1099 you receive in January 2001 will show the tax status of
all distributions paid to your account in calendar 2000.
FUND INFORMATION
WEB SITE
www.putnaminvestments.com
INVESTMENT MANAGER
Putnam Investment Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Retail Management, Inc.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
INDEPENDENT ACCOUNTANTS
KPMG LLP
TRUSTEES
John A. Hill, Chairman
Jameson Adkins Baxter
Hans H. Estin
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John H. Mullin III
Robert E. Patterson
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
W. Nicholas Thorndike
OFFICERS
George Putnam, III
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
Deborah Keunstner
Vice President
Dolores Snyder Bamford
Vice President and Fund Manager
Richard A. Monaghan
Vice President
Richard G. Leibovitch
Vice President
John R. Verani
Vice President
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
and Putnam's Quarterly Ranking Summary. For more information or to
request a prospectus, call toll free: 1-800-225-1581.
You can also learn more at Putnam Investments' Web site:
www.putnaminvestments.com.
Not FDIC Insured, May Lose Value, No Bank Guarantee
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
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PUTNAM
INVESTMENTS
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For account balances, economic forecasts, and the latest on Putnam funds, visit
www.putnaminvestments.com
AN007 64667 018/501/2AD 10/00
