Putnam
Corporate Asset Trust
SEMIANNUAL REPORT
May 31, 1994
[ARTWORK]
Boston * London * Tokyo
<PAGE>
Performance highlights
Morningstar again awarded the fund its four star rating for
above-average risk-adjusted performance among funds with
similar investment objectives as of May 31, 1994.*
Performance should always be considered in light of a fund's
investment strategy. Putnam Corporate Asset Trust is designed
for corporate investors seeking high current income qualifying
for the federal 70% corporate dividends-received deduction; for
all investors seeking current income with minimum fluctuations
in principal.
<TABLE>
SEMIANNUAL RESULTS AT A GLANCE
- ---------------------------------------------------------------
<S> <C> <C>
Total return: NAV POP
- ---------------------------------------------------------------
6 months ended 5/31/94
(change in value plus
reinvested distributions) -2.25% -4.70%
- ---------------------------------------------------------------
<S> <C> <C>
Share value: NAV POP
- ---------------------------------------------------------------
11/30/93 $44.06 $45.19
5/31/94 41.69 42.76
- ---------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital
Distributions: Number Income gains Total
- ---------------------------------------------------------------
6 months ended 5/31/94 6 $1.39817 -$1.39817
- ---------------------------------------------------------------
<S> <C> <C> <C> <C>
Taxable
equivalents(1)
Current return: NAV POP NAV POP
- ---------------------------------------------------------------
End of period
Current dividend rate(2) 6.72% 6.55% 9.25% 9.02%
Current 30-day SEC yield(3) 6.15 6.00 8.47 8.26
- ---------------------------------------------------------------
</TABLE>
Performance data represent past results.
(1) The taxable equivalent examples in this report show the
return a corporation taxed at the 35% corporate tax rate would
have to earn from a nontax-advantaged investment to produce an
after-tax return equal to the fund's.
(2) Most recent distribution, annualized and divided by NAV or
POP at end of period.
(3) Based only on investment income, calculated using SEC guidelines.
* Morningstar is an independent research firm that rates funds
relative to funds with similar objectives, based on risk-
adjusted medium- and long-term performance, as applicable, and
adjusted for sales charges. Ratings are subject to change monthly.
<PAGE>
From the Chairman
[Photo of George Putnam]
(c) Karsh, Ottawa
Dear Shareholder:
The Federal Reserve Board's primary concern remains fighting
not only inflation but the fear of inflation. It is pursuing
this goal by gradually raising the short-term interest rates
under its control to slow the economy's growth to what it
regards as a sustainable pace.
The policy continues as the effects of last year's tax increase
are being keenly felt by individuals and businesses. Dr. Robert
Goodman, Putnam Investments' senior economic advisor, believes
this confluence could result in a greater slowing of business
than many observers now expect.
Bob also believes that as this slowing becomes more obvious,
the Fed will come under growing pressure from both the White
House and Capitol Hill to ease up. Insulated as it is from such
political demands, the Fed is not likely to yield. But the very
fact that investors think it might could cause some more volatility
in the bond markets in the months ahead.
In the following report, Fund Manager Sheldon Simon explains
how he is positioning your fund's portfolio to respond to
1994's unfolding events.
Respectfully yours,
[Signature of George Putnam]
George Putnam
Chairman of the Trustees
July 20, 1994
<PAGE>
Report from the fund manager
Sheldon Simon
The past several months represent one of the most challenging
interest-rate environments in a decade, one in which all
classes of income-oriented securities were affected to some
degree. We are pleased to report, nonetheless, a certain amount
of success in managing Putnam Corporate Asset Trust's interest-
rate sensitivity during the six months ended May 31, 1994.
While we were able to cushion the portfolio against recent
volatility to some extent, the fund, like most other fixed-
income investments, provided a negative total return for the
first half of fiscal 1994. The tables on page 8 provide details.
On a more positive note, the fund continued to deliver a
competitive stream of income qualifying for the 70% corporate
dividends-received deduction. As the table on page 2 shows, at
the end of the period a fully taxable investment would have had
to yield 9.25% to match the fund's 6.72% current dividend rate
at net asset value.
HIGHER INTEREST RATES SEND MARKETS TUMBLING
After more than five years of generally declining interest rate
s, the Federal Reserve Board raised short-term rates by a
quarter of a percentage point in February and another quarter-
point in March. The increases caught many investors off guard,
sending both the stock and bond markets reeling. The Fed raised
rates once more, in May, before the end of the period. The
graph on page 5 shows how the Fed's actions affected the market
for preferred stocks, which make up the predominant portion of
your fund's portfolio.
Although investor reaction to the Fed's actions was initially
one of surprise, we had anticipated such a move in the fourth
quarter of 1993. Short-term rates then were practically zero
when adjusted for inflation. While it was not possible to
predict exactly when rates would rise, it became increasingly
obvious to us that a change in direction was imminent. In
anticipation of such an event, we made some defensive changes
to the portfolio.
To help maintain the fund's stability in this environment, we
began by allocating nearly one-third of the fund's assets to
adjustable-rate preferred stocks (ARPs). We allocated another
20% or so to sinking fund preferred stocks. Both types of
securities have defensive characteristics in a rising interest-
rate environment.
ARPS, SINKING-FUND PREFERREDS LEND STABILITY
ARPs offer relatively low levels of price fluctuation because
their dividends are automatically adjusted periodically within
a stated range (generally once a quarter) in response to
changing interest rates. These automatic adjustments keep
yields on an ARP closely in line with current interest rates on
a regular basis, provided current rates remain within an ARP's
stated adjustment range.
[Line Graph]
Preferred Stock Prices
(Source: Merill Lynch Preferred Stock Index)
(Plot points)
5/31/93 120.48
6/30/93 120.15
7/31/93 120.48
8/31/93 120.89
9/30/93 120.73
10/31/93 120.90
11/30/93 120.53
12/31/93 119.75
1/31/94 121.31
2/28/94 118.47
3/31/94 113.20
4/30/94 112.60
5/31/94 112.43
On the other hand, the only way for fixed-rate securities to
reflect current interest rates is for their prices to
fluctuate. That means when interest rates rise, prices on
existing fixed-rate securities must decline. ARPs are among the
few investments that offer the potential for rising dividends
in a rising interest rate environment.
Sinking-fund preferred stocks derive their stability from
provisions in their charters that require the issuing company
to set aside funds periodically toward paying off principal.
They also differ from conventional preferred stocks, called
"perpetual" preferreds, in that they have limited maturities
of, say, 10 or 15 years. Issuers sometimes make partial
principal repayments during the life of the security.
These liquidation features, in effect, both protect principal
and provide access to it at specified times. The presence of
this safety net translates into stability of price and income.
WHY WE TRIMMED THE UTILITIES WEIGHTING
Recognizing that any market declines would be especially severe
on utility companies, we reduced holdings in this sector during
the period. Electric utilities, particularly, have been under
pressure lately and have not shown their characteristic resilience.
Our defensive tactic proved accurate; prices of utility stocks
underwent a significant correction in early spring. We are
taking a closer look at utilities now, since they appear to be
more attractive in price and hold higher total return potential
than at any time over the past year.
We continued to commit about 12% of the fund's net assets to
common stocks. Investments in companies that tend to do well in
a rising economy have helped offset some of the difficulties in
the interest-rate sector as stock prices reflected the continued
recovery of business.
OUTLOOK: MORE MARKET VOLATILITY IN STORE
We believe the bond market has seen most of its decline for the
year, though there is a chance it will experience volatility
for a time, especially if the Fed continues to nudge short-term
interest rates higher in its ongoing quest to slow economic
growth in order to keep inflation under control.
- ---------------------------------------------------------------
Top 10 Holdings (5/31/94)
- ---------------------------------------------------------------
SunAmerica, Inc.
Life insurance, tax-deferred investments
- ---------------------------------------------------------------
Chemical Banking Corp.
Banking, mortgage lending, credit card operations
- ---------------------------------------------------------------
USX Corp.
Natural gas, energy exploration, production and refining
- ---------------------------------------------------------------
McDermott Inc.
Oil, gas, and power generation systems construction
- ---------------------------------------------------------------
Cincinnati Gas & Electric Co.
Electric power and natural gas distributor
- ---------------------------------------------------------------
Chase Manhattan Corp.
U.S. and foreign banking, credit and operations
- ---------------------------------------------------------------
Western Resources, Inc.
Electricity, natural gas utility
- ---------------------------------------------------------------
Aon Corp.
Multiline insurance holding company
- ---------------------------------------------------------------
Bank of Boston Corp.
Banking, mortgage lending, investment management
- ---------------------------------------------------------------
General Motors Corp.
Cars and trucks, computer services, electronics
- ---------------------------------------------------------------
These holdings represent 31.9% of the fund's net assets.
Portfolio holdings are subject to change.
The stock market, too, may be in for further correction in the
near term, especially if the recovery slows more substantially
than many observers have been expecting. However, we continue
to believe that in the intermediate to long term, equities will
continue to offer attractive returns. We continue to find
stocks that offer both income and capital appreciation potential.
Meanwhile, we believe we have adequately protected the fund
against the vicissitudes of the markets, while positioning it
to take advantage of opportunities that may arise during the
second half of fiscal '94.
<PAGE>
Performance summary
This section provides, at a glance, information about your
fund's performance. Total return shows how the value of the
fund's shares changed over time, assuming you held the shares
through the entire period and reinvested all distributions back
into the fund. We show total return in two ways: On a
cumulative long-term basis and how the fund might have grown
each year, on average, over varying periods. For comparative
purposes, we show how the fund performed relative to
appropriate indexes and benchmarks.
<TABLE>
TOTAL RETURN FOR PERIODS ENDING 5/31/94
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
Standard & Consumer
Fund Poor's Price
NAV POP 500(R) Index Index
- ----------------------------------------------------------------
6 months -2.25% -4.70% 0.21% 1.17%
- ----------------------------------------------------------------
1 year 2.11 -0.45 4.26 2.29
- ----------------------------------------------------------------
5 years 53.88 50.05 66.60 19.14
Annual average 9.00 8.45 10.75 3.57
- ----------------------------------------------------------------
10 YEARS 132.27 126.51 326.90 42.65
Annual average 8.79 8.52 15.62 3.62
- ----------------------------------------------------------------
</TABLE>
<TABLE>
TOTAL RETURN FOR PERIODS ENDING 6/30/94
(most recent calendar quarter)
<S> <C> <C>
NAV POP
- ---------------------------------------------------------------
6 months -2.36% -4.80%
- ---------------------------------------------------------------
1 year 0.78 -1.73
- ---------------------------------------------------------------
5 years 51.59 47.79
Annual average 8.68 8.13
- ---------------------------------------------------------------
10 years 132.03 126.20
Annual average 8.78 8.50
- ---------------------------------------------------------------
</TABLE>
Performance data represent past results. Investment returns and
principal value will fluctuate so an investor's shares, when
sold, may be worth more or less than their original cost. Fund
performance data do not take into account any adjustment for
taxes payable on reinvested distributions.
<PAGE>
TERMS AND DEFINITIONS
Net asset value (NAV) is the value of all fund assets, minus
liabilities, divided by the number of outstanding shares. It
does not include any sales charges.
Public offering price (POP) is the price of a fund share plus
the maximum sales charge levied at the time of purchase. POP
performance figures shown here assume the maximum 2.5% sales
charge.
COMPARATIVE BENCHMARKS
Standard & Poor's 500 Index is an unmanaged list of common
stocks that is frequently used as a general measure of stock
market performance. The index assumes reinvestment of all
distributions and does not take into account brokerage
commissions or other costs. The fund's portfolio contains
securities that do not match those in the index.
Consumer Price Index is a commonly used measure of inflation;
it does not represent an investment return.
<PAGE><TABLE>
Portfolio of investments owned
May 31, 1994 (Unaudited)
PREFERRED STOCKS (80.3%) (a)
<S> <C> <C>
NUMBER OF SHARES VALUE
- ---------------------------------------------------------------
Banks (22.0%)
- ---------------------------------------------------------------
20,900 Ahmanson (H. F.) & Co.
Ser. C, $2.10, preferred (pfd.) $496,375
135,000 Bank of Boston Corp.
Ser. E, $2.15, dep. shs. pfd. 3,3 75,000
32,000 BankAmerica Corp. Ser. B, $6.00,
Adjustable Rate Preferred (ARP) 2,680,000
11,000 BankAmerica Corp. Ser. M, $1.96875,
dep. shs. pfd. 266,750
100,000 Bankers Trust New York Corp.
Ser. Q,$1.58, ARP 2,512,500
50,000 Chase Manhattan Corp. Ser. H, $2.44, pfd. 1,362,500
19,850 Chase Manhattan Corp. Ser. M, $2.10, pfd. 506,175
80,000 Chase Manhattan Corp. Ser. N, $1.5525, ARP 1,980,000
14,000 Chemical Banking Corp.
$1.895, dep. shs. pfd. 329,000
344,000 Chemical Banking Corp. Ser. C, $0.702, ARP 4,300,000
22,510 Citicorp Ser. 18, $1.60, ARP 557,121
17,400 Citicorp Ser. 3, $7.00, ARP 1,670,400
52,000 First Chicago Corp. $3.50, ARP 2,587,000
45,000 First Interstate Bancorp Ser. G, $2.25,
dep. shs. fd. 1,158,750
15,000 Indosuez Holdings ADS, $2.59375,pfd. (b)(c) 382,500
60,000 Lasalle National Corp.
Ser. K, $4.375,pfd. (b) 2,887,500
40,000 Union Bank Corp. Ser. A,
$2.09375, dep. shs. pfd. 970,000
35,000 Westpac Banking Corp. ADS, $3.00,pfd. (c) 936,250
- ---------------------------------------------------------------
28,957,821
- ---------------------------------------------------------------
Electric Utilities (16.9%)
- ---------------------------------------------------------------
72,000 Alabama Power Co. Ser. 1993, $1.25, ARP 1,773,000
20,000 Central Maine Power Co. Sinking Fund,
Ser. A, $7.999, pfd. 1,807,500
1,000 Cleveland Electric Illuminating Co.
Sinking Fund, Ser. R, $8.80, pfd. 852,500
7,476 Cleveland Electric Illuminating Co.
Sinking Fund, Ser. M, $7.00, ARP 721,434
7,070 Commonwealth Edison Co. Ser. F, $8.40, pfd. 696,395
5,500 Detroit Edison Co. $7.45, pfd. 495,000
40,000 Georgia Power Co. Ser. 1993, $1.495, ARP 1,025,000
17,522 Gulf States Utilities Co. $8.52, pfd. 1,660,210
10,000 Indiana Michigan Power Co.
Sinking Fund, $5.90, pfd. 887,500
40,000 Niagara Mohawk Power Corp.
Ser. C, $1.90, ARP 1,020,000
39,800 Niagara Mohawk Power Corp.
Ser. A, $1.625, ARP 955,200
12,500 PacifiCorp Sinking Fund, $7.48, pfd. 1,281,250
13,000 PacifiCorp Sinking Fund, $7.12, pfd. 1,241,500
10,000 Peco Energy Co., $7.80, pfd. 952,500
10,000 Pennsylvania Power & Light Co.
Sinking Fund, $6.125, pfd. 932,500
10,000 Pennsylvania Power & Light Co.
Sinking Fund, $6.33, pfd. 955,000
40,000 Puget Sound Power & Light Co.
Ser. B, $1.5075, ARP 970,000
79,500 Texas Utilities Electric Co.
Ser. B, $0.45125, dep. shs. pfd. 1,699,313
15,000 Virginia Electric & Power Co.
Sinking Fund, $6.35, pfd. 1,473,750
9,381 Virginia Electric & Power Co.
Sinking Fund, $7.30, pfd. 909,957
- ---------------------------------------------------------------
22,309,509
- ---------------------------------------------------------------
Combined Utilities (9.9%)
- ---------------------------------------------------------------
12,900 Arizona Public Service Co.
Sinking Fund, Ser. S, $8.48, pfd. 1,296,450
20,000 Cincinnati Gas & Electric Co.
Sinking Fund, $7.375, pfd. 1,950,000
20,000 Cincinnati Gas & Electric Co.
Sinking Fund, $9.15, pfd. 2,060,000
9,000 Jersey Central Power & Light Co.
Ser. E, $7.88, pfd. 886,500
80,000 Long Island Lighting Co.
Sinking Fund, Ser. NN, $1.95, pfd. 1,560,000
116,000 New York State Electric & Gas Corp.
Ser. B, $1.4175, ARP 2,871,000
23,200 Western Resources, Inc.
Sinking Fund, $7.58, pfd. 2,369,300
- ---------------------------------------------------------------
12,993,250
- ---------------------------------------------------------------
Insurance (8.8%)
- ---------------------------------------------------------------
143,500 Aon Corp. $7.10, pfd. 3,444,000
86,210 SunAmerica Inc. Ser. C, $7.10, ARP 8,114,516
- ---------------------------------------------------------------
11,558,516
- ---------------------------------------------------------------
Finance (5.3%)
- ---------------------------------------------------------------
10,000 Bear, Stearns & Co. Inc. Ser. A, $2.825, ARP 495,000
48,000 Bear, Stearns & Co. Inc. Ser. B,
$1.97,dep. shs. pfd. 1,146,000
36,000 Ford Holdings Corp. $2.00, pfd. 891,000
95,000 Heller Financial Inc. Ser. A,
$2.03125,sr. pfd. 2,303,750
24,000 Morgan Stanley Group Inc. $7.375, pfd. 543,000
50,000 Travelers Corp. Ser. D,
$2.3125,dep. shs. pfd. 1,293,750
10,000 Travelers Corp. Ser. A, $2.03125,
dep. shs. pfd. 247,500
- ---------------------------------------------------------------
6,920,000
- ---------------------------------------------------------------
Oil Services (4.0%)
57,500 LASMO PLC ADS, Ser. A, $2.50, pfd. (c) 1,272,188
129,051 McDermott Inc. Sinking Fund, Ser. B,
$2.60, pfd. 4,032,844
- ---------------------------------------------------------------
5,305,032
- ---------------------------------------------------------------
Oils (3.1%)
- ---------------------------------------------------------------
81,950 USX Corp. $3.75, ARP 4,077,013
- ---------------------------------------------------------------
Automobiles (3.0%)
- ---------------------------------------------------------------
35,500 Ford Motor Co. Ser. B, $2.0625,dep. shs. pfd. 909,688
115,000 General Motors Corp. Ser. B,
$2.28125, dep. shs. pfd. 3,033,125
- ---------------------------------------------------------------
3,942,813
- ---------------------------------------------------------------
Forest Products (2.3%)
- ---------------------------------------------------------------
120,000 Boise Cascade Corp. Ser. F,
$2.35,dep. shs. pfd. 3,015,000
- ---------------------------------------------------------------
Tobacco (1.1%)
- ---------------------------------------------------------------
67,300 RJR Nabisco Holding Co.
Ser. B,$2.3125, pfd. 1,455,361
- ---------------------------------------------------------------
Paper (1.0%)
- ---------------------------------------------------------------
60,000 Bowater, Inc. Ser. C, $2.10, pfd. 1,342,500
- ---------------------------------------------------------------
Gas Pipelines (1.0%)
- ---------------------------------------------------------------
13,000 ENSERCH Corp. Ser. E, $7.00, ARP 1,293,500
- ---------------------------------------------------------------
Broadcasting (0.9%)
- ---------------------------------------------------------------
49,500 Newscorp Overseas Corp.
Ser. A,$2.15625, pfd. 1,126,125
- ---------------------------------------------------------------
Industrial (0.8%)
- ---------------------------------------------------------------
50,304 Amerco, Ser. A, $2.125, pfd. 1,112,977
- ---------------------------------------------------------------
Natural Gas (0.2%)
- ---------------------------------------------------------------
15,000 Phillips Gas Co. Ser. A, $2.33, pfd. 388,125
- ---------------------------------------------------------------
Total Preferred Stocks (cost $109,948,862) $105,797,542
- ---------------------------------------------------------------
COMMON STOCKS (11.9%) (a)
NUMBER OF SHARES VALUE
- ---------------------------------------------------------------
Chemicals (3.4%)
- ---------------------------------------------------------------
20,000 Dow Chemical Co. $1,365,000
20,000 du Pont (E.I.) de Nemours & Co., Ltd. 1,240,000
20,000 Olin Corp. 980,000
30,000 Union Carbide Corp. 810,000
- ---------------------------------------------------------------
4,395,000
- ---------------------------------------------------------------
Electric Utilities (2.2%)
- ---------------------------------------------------------------
50,000 Detroit Edison Co. 1,287,500
35,000 Northeast Utilities Co. 796,250
25,000 Texas Utilities Co. 825,000
- ---------------------------------------------------------------
2,908,750
- ---------------------------------------------------------------
Retail (1.8%)
- ---------------------------------------------------------------
50,000 K mart Corp. $750,000
17,000 Sears, Roebuck & Co. 860,625
50,000 Woolworth Corp. 787,500
- ---------------------------------------------------------------
2,398,125
- ---------------------------------------------------------------
Combined Utilities (1.4%)
40,000 Delmarva Power & Light Co. 740,000
40,000 Western Resources, Inc. 1,120,000
- ---------------------------------------------------------------
1,860,000
- ---------------------------------------------------------------
Tobacco (1.1%)
- ---------------------------------------------------------------
30,000 Philip Morris Cos., Inc. 1,477,500
- ---------------------------------------------------------------
Health Care (0.7%)
- ---------------------------------------------------------------
16,000 American Home Products Corp. 928,000
- ---------------------------------------------------------------
Insurance (0.6%)
- ---------------------------------------------------------------
15,000 Aetna Life & Casualty Co. 811,875
- ---------------------------------------------------------------
Telephone Utilities (0.4%)
- ---------------------------------------------------------------
14,005 US WEST, Inc. 561,950
- ---------------------------------------------------------------
Natural Gas (0.3%)
- ---------------------------------------------------------------
15,000 UGI Corp. 316,875
- ---------------------------------------------------------------
Total Common Stocks (cost $16,084,722) $15,658,075
- ---------------------------------------------------------------
</TABLE>
<TABLE>
CONVERTIBLE PREFERRED STOCKS (2.8%) (a)
<S> <C> <C>
NUMBER OF SHARES VALUE
- ---------------------------------------------------------------
29,000 Burlington Northern, Inc. Ser. A,
$3.125, cv. pfd. $1,877,750
10,000 Freeport-McMoRan, Inc. $4.375,cv. pfd. (b) 458,125
25,000 Unocal Corp. $3.50, cv. pfd. 1,350,000
Total Convertible Preferred Stocks
(cost $3,206,850) $3,685,875
- ---------------------------------------------------------------
</TABLE>
<TABLE>
SHORT-TERM INVESTMENTS (3.2%) (a) (COST $4,168,491)
<S> <C> <C>
PRINCIPAL AMOUNT VALUE
- ---------------------------------------------------------------
4,168,000 Interest in $489,000,000 joint repurchase
agreement dated May 31, 1994 with
Kidder, Peabody & Co., Inc., due
June 1, 1994 with respect to various
U.S. Treasury obligations--maturity value
of $4,168,491 for an effective
yield of 4.24% $4,168,491
- ---------------------------------------------------------------
Total Investments (cost $133,408,925)(d) $129,309,983
- ---------------------------------------------------------------
- ---------------------------------------------------------------
</TABLE>
(a) Percentages indicated are based on total net assets of
$131,721,087, which correspond to a net asset value per
share of $41.69.
(b) Securities 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. At May 31, 1994, these
securities amounted to $3,728,125 or 2.8% of net assets.
(c) Securities whose value is determined or significantly
influenced by trading on exchanges not in the United
States or Canada. ADS after the name of a foreign holding
stands for American Depository Shares, representing
ownership of foreign securities on deposit with a domestic
custodian bank.
(d) The aggregate identified cost on a tax cost basis is
$133,418,734 resulting in gross unrealized appreciation
and depreciation of $3,163,752 and $7,272,503
respectively, or net unrealized depreciation of
$4,108,751.
<PAGE>
Statement of assets and liabilities
May 31, 1994 (unaudited)
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------
Assets
- ---------------------------------------------------------------
Investments in securities at value
(identified cost $133,408,925) (Note 1) $129,309,983
- ---------------------------------------------------------------
Dividends receivable 1,035,965
- ---------------------------------------------------------------
Receivable for shares of the fund sold 2,078,183
- ---------------------------------------------------------------
Receivable for securities sold 2,641,712
- ---------------------------------------------------------------
Total assets 135,065,843
- ---------------------------------------------------------------
Liabilities
- ---------------------------------------------------------------
Payable to subcustodian (Note 2) $6,766
- ---------------------------------------------------------------
Distributions payable to shareholders 245,137
- ---------------------------------------------------------------
Payable for shares of the
fund repurchased 2,817,617
- ---------------------------------------------------------------
Payable for compensation
of Manager (Note 2) 221,044
- ---------------------------------------------------------------
Payable for administrative services (Note 2) 1,486
- ---------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 500
- ---------------------------------------------------------------
Payable for investor servicing and
custodian fees (Note 2) 20,186
- ---------------------------------------------------------------
Other accrued expenses 32,020
- ---------------------------------------------------------------
Total liabilities 3,344,756
- ---------------------------------------------------------------
Net assets $131,721,087
- ---------------------------------------------------------------
Represented by Paid-in capital (Note 4) $203,043,771
- ---------------------------------------------------------------
Undistributed net investment income 315,919
- ---------------------------------------------------------------
Accumulated net realized loss on investments (67,539,661)
- ---------------------------------------------------------------
Net unrealized depreciation of investments (4,098,942)
- ---------------------------------------------------------------
Total--Representing net assets
applicable to capital shares outstanding $131,721,087
- ---------------------------------------------------------------
Computation of net asset value and offering price
Net asset value and redemption price per share
($131,721,087 divided by 3,159,498 shares) $41.69
- ---------------------------------------------------------------
Offering price per share (100/97.50 of $41.69)* $42.76
- ---------------------------------------------------------------
</TABLE>
* On single retail sales of less than $250,000. On sales of
$250,000 or more and on group sales the offering price is
reduced.
The accompanying notes are an integral part of these
financial statements.
<PAGE>
Statement of operations
Six months ended May 31, 1994 (Unaudited)
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------
Investment income
- ---------------------------------------------------------------
Dividends (net of foreign tax of $18,662) $5,026,567
- ---------------------------------------------------------------
Interest 18,758
- ---------------------------------------------------------------
Total investment income 5,045,325
- ---------------------------------------------------------------
Expenses:
- ---------------------------------------------------------------
Compensation of Manager (Note 2) $448,506
- ---------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 69,874
- ---------------------------------------------------------------
Compensation of Trustees (Note 2) 6,096
- ---------------------------------------------------------------
Reports to shareholders 9,278
- ---------------------------------------------------------------
Auditing 15,907
- ---------------------------------------------------------------
Legal 2,548
- ---------------------------------------------------------------
Administrative services (Note 2) 4,273
- ---------------------------------------------------------------
Total expenses 556,482
- ---------------------------------------------------------------
Net investment income 4,488,843
- ---------------------------------------------------------------
Net realized loss on investments (Notes 1 and 3) (402,409)
- ---------------------------------------------------------------
Net unrealized depreciation of investments
during the period (7,199,392)
- ---------------------------------------------------------------
Net loss on investments (7,601,801)
- ---------------------------------------------------------------
Net decrease in net assets resulting
from operations $(3,112,958)
- ---------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these
financial statements.
<PAGE>
Statement of changes of net assets
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------
Six months ended Year ended
May 31 November 30
- ---------------------------------------------------------------
1994* 1993
- ---------------------------------------------------------------
Increase (decrease) in net assets
- ---------------------------------------------------------------
Operations:
- ---------------------------------------------------------------
Net investment income $4,488,843 $10,014,893
- ---------------------------------------------------------------
Net realized gain (loss) on investments (402,409) 4,555,029
- ---------------------------------------------------------------
Net realized loss on options -- (82,780)
- ---------------------------------------------------------------
Net unrealized appreciation (depreciation)
of investments and options (7,199,392) 3,611,654
- ---------------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations (3,112,958) 18,098,796
- ---------------------------------------------------------------
Distributions to shareholders from
net investment income (4,475,350) (9,985,928)
- ---------------------------------------------------------------
Decrease from capital share
transactions (Note 4) (4,875,682) (6,305,696)
- ---------------------------------------------------------------
Total increase (decrease)
in net assets (12,463,990) 1,807,172
- ---------------------------------------------------------------
Net Assets:
- ---------------------------------------------------------------
Beginning of period 144,185,077 142,377,905
- ---------------------------------------------------------------
End of period (including undistributed
net investment income of $315,919 and
$213,197, respectively $131,721,087 $144,185,077
- ---------------------------------------------------------------
</TABLE>
* Unaudited
The accompanying notes are an integral part of these
financial statements.
<PAGE>
Financial Highlights*
(For a share outstanding throughout the period)
<TABLE>
<S> <C> <C> <C>
Six Months ended Year ended
May 31 November 30
1994+ 1993 1992
- ---------------------------------------------------------------
Net asset value, beginning of period $44.06 $ 41.71 $40.02
- ---------------------------------------------------------------
Investment operations:
From net investment income 1.40 2.98 3.41
From net realized and
unrealized gain (loss)
on investments (2.37) 2.34 1.68
- ---------------------------------------------------------------
Total from investment operations (.97) 5.32 5.09
- ---------------------------------------------------------------
Less distributions:
From net investment income (1.40) (2.97) (3.40)
From net realized gain on investments -- -- --
- ---------------------------------------------------------------
Total distributions (1.40) (2.97) (3.40)
- ---------------------------------------------------------------
Net asset value, end of period $41.69 $44.06 $41.71
- ---------------------------------------------------------------
Total investment return at
net asset value (%) (a) (4.46)(b) 13.07 13.08
- ---------------------------------------------------------------
Net assets, end of period
(in thousands) $131,721 $144,185 $142,378
- ---------------------------------------------------------------
Ratio of expenses to average
net assets (%) .80(b) .83 .83
- ---------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 6.51(b) 6.83 8.23
- ---------------------------------------------------------------
Portfolio turnover (%) 21.30(c) 114.53 188.68
- ---------------------------------------------------------------
- ---------------------------------------------------------------
<PAGE></TABLE>
Financial Highlights*--continued
(For a share outstanding throughout the period)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Year ended November 30
1991 1990 1989 1988 1987 1986 1985
- ---------------------------------------------------------------
$37.10 $41.23 $40.91 $42.08 $49.65 $48.19 $46.55
- ---------------------------------------------------------------
3.50 3.73 3.92 4.12 3.79 4.50 5.19
2.89 (3.96) .42 (1.27) (6.54) 2.34 2.32
- ---------------------------------------------------------------
6.39 (.23) 4.34 2.85 (2.75) 6.84 7.51
- ---------------------------------------------------------------
- ---------------------------------------------------------------
(3.47) (3.90) (4.02) (4.02) (3.73) (4.54) (5.21)
- ---------------------------------------------------------------
-- -- -- -- (1.09) (.84) (.66)
- ---------------------------------------------------------------
(3.47) (3.90) (4.02) (4.02) (4.82) (5.38) (5.87)
- ---------------------------------------------------------------
$40.02 $37.10 $41.23 $40.91 $42.08 $49.65 $48.19
- ---------------------------------------------------------------
17.86 (0.53) 11.00 6.99 (6.11) 14.84 17.00
- ---------------------------------------------------------------
$129,688 $137,136 $134,316 $195,960 $304,386 $436,038 $185,050
- ---------------------------------------------------------------
.93 .95 .83 .77 .69 .70 .86
- ---------------------------------------------------------------
8.98 9.55 9.18 9.75 7.92 9.10 10.92
- ---------------------------------------------------------------
157.11 208.58 178.42 135.50 174.79 260.04 286.60
- ---------------------------------------------------------------
</TABLE>
* Financial Highlights for periods ended through November 30,
1992 have been restated to conform with requirements issued by
the SEC in April, 1993.
+ Unaudited.
(a) Total investment return assumes dividend reinvestment and
does not reflect the effect of sales charges.
(b) Annualized.
(c) Not annualized.
<PAGE>
Notes to financial statements
May 31, 1994 (unaudited)
Note 1
Significant accounting policies
The fund is registered under the Investment Company Act of
1940, as amended, as a diversified, open-end management
investment company. The fund seeks high after-tax income for
corporate shareholders and current income for all investors
with minimum fluctuations in principal.
The following is a summary of significant accounting policies
consistently followed by the fund in the preparation of its
financial statements. The policies are in conformity with
generally accepted accounting principles.
A) Security valuation Investments for which market quotations
are readily available are stated at market value, which is
determined using the last reported sale price, or, if no sales
are reported -- as in the case of some securities traded over-
the-counter -- the last reported bid price, except that certain
U.S. government obligations are stated at the mean between the
bid and asked prices. Securities whose market quotations are
not readily available are stated at fair value on the basis of
valuations furnished by pricing services approved by the
Trustees, which determine valuations for normal, institutional-
size trading units of such securities using methods based on
market transactions for comparable securities and various
relationships between securities that 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 value, 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
managed by Putnam Investment Management, Inc. (Putnam
Management), the fund's Manager, a wholly-owned subsidiary of
Putnam Investments, Inc., and certain other accounts. These
balances may be invested in one or more repurchase agreements
and/or short-term money market instruments.
C) Repurchase agreements The fund, or any joint trading
account, through its custodian, receives delivery of the
underlying securities, the market value of which at the time of
purchase is required to be in an amount at least equal to the
resale price, including accrued interest. The fund's Manager is
responsible for determining that the value of these underlying
securities is at all times at least equal to the resale price,
including accrued interest.
D) Security transactions and related investment income Security
transactions are accounted for on the trade date (date the
order to buy or sell is executed). Interest income is recorded
on the accrual basis and dividend income is recorded on the ex-
dividend date.
E) Option accounting principles When the fund writes a call
option, an amount equal to the premium received by the fund is
included in the fund's "Statement of assets and liabilities" as
an asset and an equivalent liability. The amount of the
liability is subsequently "marked-to-market" to reflect the
current market value of the option written. The current market
value of an option is the last sale price or, in the absence of
a sale, the last offering price. If an option expires on its
stipulated expiration date, or if the fund enters into a
closing purchase transaction, the fund realizes a gain (or loss
if the cost of a closing purchase transaction exceeds the
premium received when the option was written) without regard to
any unrealized gain or loss on the underlying security, and the
liability related to such option is extinguished. If a written
call option is exercised, the fund realizes a gain or loss from
the sale of the underlying security and the proceeds of the
sale are increased by the premium originally received.
The fund writes covered call options; that is, options for
which it holds the underlying security or its equivalent.
Accordingly, the risk in writing a call option is that the fund
relinquishes the opportunity to profit if the market price
of the underlying security increases and the option is exercised.
F) Federal taxes It is the policy of the fund to distribute all
of its income within the prescribed time and otherwise comply
with the provisions of the Internal Revenue Code applicable to
regulated investment companies. It is also the intention of the
fund to distribute an amount sufficient to avoid imposition of
any excise tax subject to Section 4982 of the Internal Revenue
Code of 1986. Therefore, no provision has been made for federal
taxes on income, capital gains or unrealized appreciation of
securities held and excise tax on income and capital gains.
At November 30, 1993, the fund had a capital loss carryover of
approximately $150,632,000. This amount includes approximately
$83,504,000 of capital loss carryovers acquired in connection
with the fund's acquisition of the net assets of Putnam
Corporate Cash Trust-Adjustable Rate Preferred Portfolio in
1990, which expire at various dates through July 13, 1998.
The amount of the capital loss carryover that can be used to
offset realized capital gains by the fund in any one year may
be limited by the Internal Revenue Code and Regulations. To
the extent that capital loss carryovers are used to offset
realized capital gains, it is unlikely that gains so offset
would be distributed to shareholders since any such distribution
might be taxable as ordinary income.
<TABLE>
<S> <C>
Loss Carryovers Expiration
- ---------------------------------------------------------------
$7,003,000 November 30, 1995
- ---------------------------------------------------------------
64,235,000 November 30, 1996
- ---------------------------------------------------------------
40,491,000 November 30, 1997
- ---------------------------------------------------------------
27,937,000 July 13, 1998
- ---------------------------------------------------------------
5,705,000 November 30, 1998
- ---------------------------------------------------------------
5,261,000 November 30, 1999
- ---------------------------------------------------------------
</TABLE>
G) Distributions to shareholders The fund declares a
distribution each day based upon the projected net investment
income and short-term capital gains for a period, usually two
months, calculated as if earned pro-rata throughout the period
on a daily basis. Such distributions are recorded daily and
paid monthly. Long-term capital gain distributions, if any, are
recorded by the fund on the ex-dividend date and paid annually.
Note 2
Management fee, administrative services, and other transactions
Compensation of Putnam Management, the fund's Manager, for
management and investment advisory services is paid quarterly
based on the average net assets of the fund for the quarter.
Such fee is based on the following annual rates: 0.65% of the
first $500 million of average net assets, 0.55% of the next
$500 million, 0.50% of the next $500 million and 0.45% of any
amount over $1.5 billion, subject, under current law, to
reduction in any year to the extent that expenses (exclusive of
brokerage, interest and taxes) of the fund exceed 2.5% of the
first $30 million of average net assets, 2.0% of the next $70
million and 1.5% of any amount over $100 million and by the
amount of certain brokerage commissions and fees (less
expenses) received by affiliates of the Manager on the fund's
portfolio transactions.
The fund also reimburses the Manager for the compensation and
related expenses of certain officers of the fund and their
staff who provide administrative services to the fund. The
aggregate amount of all such reimbursements is determined
annually by the Trustees. For the six months ended May 31,
1994, the fund paid $4,273 for these services.
Trustees of the fund receive an annual Trustee's fee of $760
and an additional fee for each Trustees' meeting attended.
Trustees who are not interested persons of the Manager and who
serve on committees of the Trustees receive additional fees for
attendance at certain committee meetings.
Custodial functions for the fund are provided by Putnam
Fiduciary Trust Company (PFTC), a subsidiary of Putnam
Investments, Inc. Investor servicing agent functions are
provided by Putnam Investor Services, a division of PFTC. Fees
paid for these investor servicing and custodial functions for
the six months ended May 31, 1994, amounted to $69,874.
Investor servicing and custodian fees reported in the statement
of operations for the six months ended May 31, 1994 have been
reduced by credits allowed by PFTC.
As part of the custodian contract between PFTC and its
subcustodian, the subcustodian 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
for the settlement of securities purchased by the fund. At May
31, 1994 the payable to subcustodian represents the amount due
for cash advanced for the settlement of securities purchased.
During the six months ended May 31, 1994, Putnam Mutual Funds
Corp., a wholly-owned subsidiary of Putnam Investments, Inc.,
acting as an underwriter, received net commissions of $22,017
from the sale of shares of the fund.
A deferred sales charge of up to 1% is assessed on certain
redemptions of shares purchased as part of an investment of $1
million or more. For the six months ended May 31, 1994, Putnam
Mutual Funds Corp., acting as an underwriter, received $6,748
on such redemptions.
Note 3
Purchases and sales of securities
During the six months ended May 31, 1994, purchases and sales
of investment securities other than short-term investments
aggregated $28,822,165 and $39,036,927, respectively. 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 May 31, 1994, there was an unlimited number of shares of
beneficial interest authorized.
Transactions in capital shares were as follows:
<TABLE>
<S> <C> <C> <C> <C>
Six months ended May 31 Year ended November 30
1994 1993
Shares Amount Shares Amount
- ---------------------------------------------------------------
Shares sold 252,797 $10,937,183 827,510 $36,078,443
Shares issued in
connection
with reinvestment
of distributions 69,432 2,977,978 129,569 5,651,539
322,229 13,915,161 957,079 41,729,982
Shares
repurchased (435,428)(18,790,843) (1,098,310)(48,035,678)
Net decrease (113,199)$(4,875,682) (141,231)$(6,305,696)
- ---------------------------------------------------------------
</TABLE>
Note 5
Reclassification of Capital Accounts
Effective December 1, 1993, Putnam Corporate Asset Trust has
adopted the provision of Statement of Position 93-2
"Determination, Disclosure and Financial Statement Presentation
of Income, Capital Gain and Return of Capital Distributions, by
Investment Companies (SOP)." The purpose of this SOP is to
report the accumulated investment income (loss) and accumulated
net realized gain (loss) accounts in such a manner as to
approximate amounts available for future distributions (or to
offset future realized capital gains) and to achieve uniformity
in the presentation of distributions by investment companies.
As a result of the SOP, the Fund has reclassified $89,229 to
increase undistributed net investment income, $5,423,142 to
increase accumulated net realized loss and $5,333,913 to
increase additional paid-in-capital.
This adjustment represents the cumulative amounts necessary to
report these balances through November 30, 1993, the close of
the fund's last fiscal year end for financial reporting and tax
purposes.
These reclassifications, which have no impact on the total net
asset value of the fund, are primarily attributable to the
utilization of capital loss carryovers which are treated
differently in the computation of distributable capital gains
under federal income tax rules and regulations versus generally
accepted accounting principles.
<PAGE>
Our commitment to quality service
CHOOSE AWARD-WINNING SERVICE.
Putnam Investor Services has won the DALBAR Quality Tested
Service Seal every year since the award's 1990 inception.
DALBAR, an independent research firm, ran more than 10,000
tests of 38 shareholder service components. In every category,
Putnam outperformed the industry standard.
SWITCH FUNDS EASILY.
You can move money from one account to another with the same
class of shares without a service charge. For purposes of this
privilege, shares of the fund are considered class A shares.
(This privilege is subject to change or termination.)
ACCESS YOUR MONEY QUICKLY.
You can get checks sent regularly or redeem shares any business
day at the then-current net asset value, which may be more or
less than their original cost.
For details about any of these or other services, contact your
financial advisor or call the toll-free number shown below and
speak with a helpful Putnam representative.
To make an additional investment in this or any other Putnam
fund, contact your financial advisor or call our toll-free
number: 1-800-225-1581.
<PAGE>
Fund Information
INVESTMENT MANAGER
Putnam Investment
Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
TRUSTEES
George Putnam, Chairman
William Pounds, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
John A. Hill
Elizabeth T. Kennan
Lawrence J. Lasser
Donald S. Perkins
Robert E. Patterson
George Putnam, III
A.J.C. Smith
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Peter Carman
Vice President
Thomas V. Reilly
Vice President
Sheldon Simon
Vice President
and Fund Manager
William N. Shiebler
Vice President
John R. Verani
Vice President
Paul M. O'Neil
Vice President
John D. Hughes
Vice President
and Treasurer
Beverly Marcus
Clerk and Assistant Treasurer
This report is for the information of shareholders of Putnam
Corporate Asset Trust. 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.
<PAGE>
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
Bulk Rate
U.S. Postage
PAID
Boston, MA
Permit No. 53749
29-12982
<PAGE>
APPENDIX TO FORM N30D FILINGS TO DESCRIBE DIFFERENCES
BETWEEN PRINTED
AND EDGAR-FILED TEXTS.
(1) Rule lines for tables are omitted.
(2) Boldface and italic typefaces are displayed in normal type.
(3) Headers (e.g. the names of the fund) and footers (e.g. page
numbers and "The accompanying notes are an integral part of these
financial statements") are omitted.
(4) Because the printed page breaks are not reflected, certain tabular
and columnar headings and symbols are displayed differently in this
filing.
(5) Bullet points and similar graphic signals are omitted.
(6) Page numbering is different.
