PUTNAM
RESEARCH
ANALYSTS
FUND
SEMIANNUAL REPORT
February 28, 1995
[LOGO]
BOSTON * LONDON * TOKYO<PAGE>
FROM THE CHAIRMAN
Dear Shareholder:
As we recently notified you by mail, your Trustees voted to
close Putnam Research Analysts Fund, effective February 6,
1995. This vote was based on Putnam Managements
recommendation not to proceed with a full public offering of
this incubated fund.
Since its inception in November 1992, the funds fundamental
strength has been Putnams team of equity research analysts.
Their expertise and knowledgeable recommendations, combined
with the funds innovative team approach, contributed to a
strong first fiscal year performance. The funds performance
during its second fiscal-year, while dampened overall, was
ahead of many other stock funds during 1994s volatile
economic environment.
Patrick ODonnell, Putnams Director of Research and Manager
of Putnam Research Analysts Fund, has expanded and
reorganized the research department since joining Putnam in
1994. His recommendation not to proceed with a public
offering of this fund reflects his belief that there is a
better way to structure such a fund and that a more
systematic, disciplined management approach would make
better use of the talents of the analyst team and provide
stronger potential returns for shareholders.
Although this fund will not make the transition into a
nationally marketed vehicle, you will be able to benefit
from the expertise of Putnams research analysts as they
contribute to the performance of all our equity funds. We
will continue looking for other ways to showcase this
expertise perhaps through another fund that draws on the
research analysts strengths while taking a different
approach to the management process.
<PAGE>
By allowing Putnam to continually try out innovative
investment ideas, you have allowed our incubated fund
program to make a very valuable contribution to our
business, and I would like to thank you for your
participation.
Respectfully yours,
/s/ George Putnam
George Putnam
Chairman of the Trustees
April 19, 1995<PAGE>
PERFORMANCE SUMMARY
This section provides, at a glance, information about your
funds performance. Total return shows how the value of the
funds shares changed over time, assuming you held the shares
through the entire period and reinvested all distributions
back into the fund. We show total return in two ways: on a
cumulative long-term basis and on average how the fund might
have grown each year over varying periods. For comparative
purposes, we show how the fund performed relative to
appropriate indexes and benchmarks.
TOTAL RETURN FOR PERIODS ENDED 2/28/95
STANDARD & CONSUMER
NAV POORS 500 INDEX PRICE INDEX
9/1/942/6/95 -1.71% 3.15% 0.87%
2/28/94 2/6/95 -4.16 6.03 2.45
LIFE-OF-FUND
(since 11/3/92) 18.90 22.08 5.99
ANNUAL AVERAGE 7.96 9.23 2.61
Fund performance data do not take into account any
adjustment for taxes payable on reinvested distributions.
Performance data represent past results. Investment returns
and net asset value will fluctuate so an investors shares,
when sold, may be worth more or less than their original
cost.<PAGE>
TERMS AND DEFINITIONS
NET ASSET VALUE (NAV) is the value of all your funds assets,
minus any liabilities, divided by the number of outstanding
shares, not including any initial or contingent deferred
sales charge.
COMPARATIVE BENCHMARKS
STANDARD & POORS 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 funds portfolio contains
securities that do not match those in the index.
CONSUMER PRICE INDEX (CPI) is a commonly used measure of
inflation; it does not represent an investment return.
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
February 28, 1995 (Unaudited)
ASSETS
Cash $16,691
Unamortized organization expenses (Note 1)
9,596
Total assets
$26,287
LIABILITIES
Payable for compensation of Manager (Note 2)
$5,388
Payable for administrative services (Note 2) 10
Payable for investor servicing
and custodian fees (Note 2)
1,279
Payable for distribution fees (Note 2) 722
Payable for organization expense (Note 1)
17,552
Other accrued expenses 848
TOTAL LIABILITIES
25,799
NET ASSETS $
488
REPRESENTED BY
Paid-in capital $
41
Undistributed net investment income 382
Accumulated net realized gain on investment 65
TOTAL REPRESENTING NET ASSETS APPLICABLE TO
CAPITAL SHARES OUTSTANDING $
488
The accompanying notes are an integral part of these
financial statements.<PAGE>
STATEMENT OF OPERATIONS
For the six months ended February 28, 1995 (Unaudited)
INVESTMENT INCOME
Dividends (net of foreign tax of $173) $24,429
Interest
3,958
TOTAL INVESTMENT INCOME
28,387
EXPENSES:
Compensation of Manager (Note 2)
8,679
Investor servicing and custodian fees (Note 2)
1,917
Compensation of Trustees (Note 2) 674
Reports to shareholders 239
Auditing
1,348
Legal
5,631
Postage 224
Distribution fees (Note 2)
3,337
Administrative services (Note 2) 23
Amortization of organization expenses (Note 1)
1,530
Fees waived by Manager (Note 2)
(4,999)
Other expenses 270
TOTAL EXPENSES
18,873
NET INVESTMENT INCOME
9,514
Net realized gain on investments (Notes 1 and 3)
240,473
Net unrealized depreciation of investments
during the period
(310,483)
NET LOSS ON INVESTMENTS
(70,010)
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS
$(60,496)
The accompanying notes are an integral part of these
financial statements.<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
Six
months
Year ended ended
February 28 August 31
1995* 1994
DECREASE IN NET ASSETS
OPERATIONS:
Net investment income $ 9,514 $ 160
Net realized gain on investments 240,473 213,003
Net unrealized depreciation on investments
(310,483)
(141,234)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS (60,496) 71,929
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (12,273)
Net realized gain on investments (355,954) (159,512)
Decrease from capital share
transactions (Note 4) (2,929,151) (70,951)
TOTAL DECREASE IN NET ASSETS (3,357,874) (158,534)
NET ASSETS
Beginning of period 3,358,362 3,516,896
END OF PERIOD
(including undistributed
net investment income of
$382 and $3,141, respectively) $488 $3,358,362
*Unaudited.
The accompanying notes are an integral part of these
financial statements.<PAGE>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
For the period For the period
September 1, 1994 November 3, 1992
to February 6, 1995Year ended (commencement
(cessation of operations) August 31 of operations) to
1995* 1994 August 31, 1993
NET ASSET VALUE,
BEGINNING OF PERIOD $9.78 $10.03 $8.50
INVESTMENT OPERATIONS:
Net investment income .03 .02(a)(b)
Net realized and unrealized
gain (loss) on investments (.21) .21 1.54
TOTAL FROM INVESTMENT
OPERATIONS (.18) .21 1.56
LESS DISTRIBUTIONS FROM:
Net investment income (.04) (.03)
Net realized gain on
investments (1.20) (.46)
TOTAL DISTRIBUTIONS (1.24) (.46) (.03)
NET ASSET VALUE, END OF PERIOD $8.36 $9.78 $10.03
TOTAL INVESTMENT RETURN
AT NET ASSET VALUE (%) (c) (1.71)(d) 2.17 18.41(d)
NET ASSETS, END OF
PERIOD (in thousands) $3,358 $3,517
Ratio of expenses to
average net assets (%)(b) 0.62(d) 1.70 1.42(d)
Ratio of net investment income
to average net assets (%)(b) 0.31(d) 0.16(d)
Portfolio turnover (%) 31.51(d) 83.96 87.76(d)
* Unaudited.
(a) Per share net investment income for the period ended August
31, 1993 has been determined on the basis of the weighted
average number of shares outstanding during the period.
(b) Reflects a voluntary expense limitation during the period.
As a result of such limitation, expenses of the Fund for the
periods ended August 31, 1993, 1994, and February 6, 1995
reflect a reduction of approximately $0.05, $0.03 and $0.02
per share, respectively. See Note 2.
(c) Total investment return assumes dividend reinvestment and
does not reflect the effect of sales charges.
(d) Not annualized.<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOTE 1
SIGNIFICANT ACCOUTNING 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 capital appreciation by investing
primarily in common stocks recommended by Putnam Investment
Management, Inc.s Equity Research Group.
The fund discontinued operations, liquidated all holdings and
reimbursed shareholders on February 6, 1995.
The following is a summary of significant accounting policies
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. 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 SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date
the order to buy or sell is executed). Interest income is
recorded on the accrual basis and dividend income is recorded on
the ex-dividend date, except that certain dividends from foreign
securities are recorded as soon as the Fund is informed of the
ex-dividend date.
C FEDERAL INCOME TAXES It is the policy of the Fund to
distribute all of its income within the prescribed time and
otherwise comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies. It is also the
intention of the Fund to distribute an amount sufficient to avoid
imposition of any excise tax under Section 4982 of the Internal
Revenue Code of 1986. Therefore, no provision has been made for
federal taxes on income, capital gains or unrealized appreciation
of securities held and excise tax on income and capital gains.
D DISTRIBUTIONS TO SHAREHOLDERS Distributions to shareholders
are recorded by the Fund on the ex-dividend date.
E Unamortized organization expenses Expenses incurred by the
Fund in connection with its organization, its registration with
the Securities and Exchange Commission and with various state and
the initial public offering of its shares aggregated $17,585
These expenses are being amortized by the Fund on a straight-line
basis over a five-year period.
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 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, 0.5% of the
next $500 million, 0.45% of any amount over $1.5 billion, subject
to reduction in any year to the extent that expenses (exclusive
of distribution fees, 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 Funds
portfolio transactions.
The Manager voluntarily agreed to reduce its compensation through
February 6, 1995, to the extent that expenses of the Fund exceed
1.5% of the Funds average net assets. The Funds expenses subject
to this limitation were exclusive of brokerage, interest, taxes,
insurance, amortization of deferred organization expenses and
extraordinary expenses, if any, and expenses incurred under the
Funds distribution plan described below. This limitation was
accomplished by a reduction of the compensation payable under the
management contract to the Manager.
The Fund also reimburses the Manager for the compensation and
related expenses of certain officers of the Fund and their staff
who provide administrative services to the Fund. The aggregate
amount of all such reimbursements is determined annually by the
Trustees.
Trustees of the Fund receive an annual Trustees fee of $100 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 Funds assets are being provided by
Putnam Fiduciary Trust Company (PFTC), a subsidiary of Putnam
Investments, Inc. Investor servicing agent functions were
provided by Putnam Investor Services, Inc., a division of PFTC.
Investor servicing and custodian fees reported in the Statement
of operations for the six months ended February 28, 1995 have
been reduced by credits allowed by PFTC.
Pursuant to the Funds underwriting agreement and to a
distribution plan adopted under Rule 12b-1 of the Investment
Company Act of 1940, the Fund pays Putnam Mutual Funds Corp. a
quarterly distribution fee at the annual rate of .25% of the
average net asset value of shares of the Fund attributable to
qualifying investment dealers of record for Fund shareholders.
The Fund also pays Putnam Mutual Funds Corp. for certain
additional expenses related to shareholder services and the
distribution of shares, subject to the overall limitation that
payments under the plan shall not exceed a maximum annual rate of
0.25% of the Funds average net assets.
During the six months ended February 28, 1995, Putnam Mutual
Funds Corp., acting as an underwriter, received no net
commissions from the sale of shares of the Fund.
NOTE 3
PURCHASES AND SALES OF SECURITIES
During the six months ended February 28, 1995, purchases and
sales of investment securities other than short-term investments
aggregated $697,550 and $3,933,161, respectively. There were no
purchases or sales of U.S. government obligations during the
period. In determining the net gain or loss on securities sold,
the cost of securities has been determined on the identified cost
basis.
NOTE 4
CAPITAL SHARES
At February 28, 1995, there was an unlimited number of shares of
beneficial interest authorized. Transactions in capital shares
were as follows:
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28 AUGUST 31
1995 1994
SHARES AMOUNT SHARES AMOUNT
Shares sold 1,542 $14,859 15,366 $153,061
Shares issued in
connection with
reinvestment of
distributions 43,043 368,028 16,560 159,476
44,585 382,887 31,926 312,537
Shares repurchased (387,814) (3,312,038) (39,248)(383,488)
NET DECREASE (343,229)$(2,929,151) (7,322)$(70,951)
<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
Robert E. Patterson
Donald S. Perkins
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
Patrick ODonnell
Vice President
and Fund Manager
Richard England
Vice President
William N. Shiebler
Vice President
Paul M. ONeil
Vice President
John D. Hughes
Vice President
and Treasurer
Beverly Marcus
Clerk and Assistant Treasurer
