Lifestage(SM) Funds
Putnam
Asset
Allocation
Funds
(COVER GRAPHIC)
SEMIANNUAL REPORT
March 31, 1994
(SCALES GRAPHIC)
B O S T O N * L O N D O N * T O K Y O
<PAGE>
From the
Chairman
(PHOTO)
George Putnam
Chairman
of the Trustees
Dear Shareholder:
It is always a pleasure to introduce the first report of a new Putnam
fund. However, in the case of the three portfolios that make up Putnam
Asset Allocation Funds, the pleasure is somewhat dampened by the fact that
the funds' first few weeks of operations coincide with one of the most
turbulent securities markets in recent memory. The Federal Reserve raised
Federal Funds rates twice in the first three months of 1994, sending U.S.
securities markets into a tailspin. We were pleased with the funds'
performances relative to the markets.
This report covers the period from the start of investment operations on
February 7, 1994, through March 31, 1994. There is a market review
discussing events in each of the areas where the fund invests, followed by
asset allocation summaries for each of the portfolios. More detailed
performance commentary will be included in the annual report for the period
ended September 30, 1994, when more substantive results will be available.
This program is designed to provide investors with a diversified mutual
fund that is allocated according to their risk profile and Putnam
Management's determination of relative attractiveness of the various asset
classes.
Despite the changes of the past few months, we remain positive toward
financial markets. We believe the next several years will provide a real
opportunity to position ourselves for the next bull market. Investors with
a long-term view, clear investment objectives, and discipline can take
advantage of today's corrected securities prices to build a foundation for
tomorrow's growth.
Respectfully yours,
(Signature)
George Putnam
May 18, 1994
George Putnam
Chairman
of the Trustees
(C) Karsh, Ottawa
<PAGE>
Market Overview
Putnam Asset Allocation Funds
Equities
* United States
Unusually strong economic growth in late 1993 prompted the Federal Reserve
to make a preemptive strike against inflation by raising Federal Funds
rates twice in the first three months of 1994. The impact of these rate
increases was felt in every sector of the U.S. securities markets,
affecting stocks as well as bonds.
In response to the tightening move by the Federal Reserve, capital markets
around the world went into a substantial retreat. Interest rates increased
and equities declined as uncertainty crept into the horizon.
Once the spring's turbulence settles, this environment should be favorable
toward U.S. stocks -- despite high historical valuations -- due to the
uninspiring returns of various fixed-income investment alternatives. The
continued inflow of funds to the stock market supports this view.
* International
Despite a sharp downturn in Japan, international stock markets produced
strong returns during the period, buoyed by spectacular performance in the
Southeast Asian markets. Putnam Management remains optimistic about the
long-term growth prospects for overseas equities. We expect that lower
interest rates outside the U.S., eventual economic recovery in Europe, and
continued growth in the emerging Pacific Basin markets will provide further
opportunities for growth in the international arena. The strength of the
international equities sector helped cushion the fund against the downturn
in the U.S. markets, but was not sufficient to offset the decline. Aided by
a combination of quantitative and fundamental analysis, we will continue to
monitor economic conditions worldwide to take advantage of attractive
buying opportunities as they arise.
Fixed income
* U.S. government
As noted above, the federal reserve's decision to raise short-term interest
rates this spring had a disastrous effect on the bond markets for virtually
all securities, culminating in a complete reversal of bond investor
psychology to one of widespread pessimism. Putnam Management believes that
the recent bond market correction offers a host of opportunities. Despite
recent trends, interest rates remain relatively low and we expect them to
remain so. We also anticipate that U.S. Treasuries prices will remain
relatively stable in an environment of rising short-term rates, while still
outperforming shorter-term securities. What's more, we believe that the
surge of economic growth in the end of 1993 was an aberration, and will be
replaced this year with more subdued growth rates in the 3% range. This
should go a long way toward keeping inflation under control and minimizing
the impact of future rate increases -- if they occur.
* International
In the arena of international fixed-income investing, the turbulent first
few months of 1994 will be remembered for many things, but most of all for
the tidal wave of forced selling that swept world bond markets in February.
Faced with what was arguably the largest collective margin call in the
history of the world's financial markets, highly leveraged investors sold
off their overextended positions in Europe and elsewhere, resulting in a
global tailspin in bond prices. Looking ahead, our international bond
strategy will focus on markets such as Germany, Italy, the U.K., and Japan,
all of which have begun to stabilize now that the technical slide seems to
have abated.
* Corporate bonds
Investor sentiment toward corporate bonds exhibited capricious swings
during the beginning of 1994. Following a strong start in January, the
demand for investment-grade corporate bonds tapered as the first quarter
progressed and increased volatility across all maturities pushed investors
to the sidelines. Fundamentally, credit profiles remain very strong across
the majority of industries as corporations benefited from previously
instituted restructuring programs, improved efficiency, and the stronger
economy. Despite this healthy outlook, Putnam Management believes that
short-term volatility will require investors to be nimble in their approach
to corporate bond investments. We believe this volatility will continue
until technical conditions -- i.e., yield curve stability -- improve.
* Money markets
A national economy that continues to strengthen could prompt the Federal
Reserve to raise rates again in order to keep a tight rein on inflation.
The current goal appears to be a "neutral" Federal funds rate, usually
defined as 1% over the inflation rate. Even if inflation remains relatively
low (at or below 3%), this could mean substantially higher short-term rates
in the next several months.
Consequently, we will be closely monitoring economic developments in an
effort to determine the trends of interest rates. Throughout the period,
all three portfolios had large cash holdings because we were taking a
cautious approach to investment markets. Looking ahead, we will also be
preparing the fund to be in the most advantageous position to benefit from
interest rate trends.
<PAGE>
Asset Allocation update:
Growth Fund
Designed to seek maximum growth of an investment over time.
(BAR CHART)
Asset Allocation update:
Balanced Fund
Designed to seek total return for investors in their peak accumulation
years.
(BAR CHART)
Asset Allocation update:
Conservative Fund
Designed to seek income, while protecting the original value of an
investment, for investors concerned about maintaining their purchasing
power.
(BAR CHART)
<PAGE>
Putnam
Asset
Allocation
Funds
Semiannual
Report
For the Period ended March 31, 1994
Report of Independent Accountants
To the Trustees and Shareholders of
Putnam Asset Allocation Funds
In our opinion, the accompanying statements of assets and liabilities,
including the portfolios of investments owned, and the related statements
of operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of each of
the Funds (Growth Portfolio, Balanced Portfolio and Conservative Portfolio)
constituting Putnam Asset Allocation Funds (the "Trust") at March 31, 1994
and the results of each of their operations, the changes in each of their
net assets and the financial highlights for the periods indicated, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which require that we
plan and perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of investments owned at March 31,
1994 by correspondence with the custodian and brokers and the application
of alternative auditing procedures where confirmations from brokers were
not received, provide a reasonable basis for the opinion expressed above.
Price Waterhouse
Boston, Massachusetts
May 18, 1994
<PAGE>
Portfolio of
investments owned
March 31, 1994
Common Stocks (67.1%)(a)
Number of Shares Value
Insurance and Finance (8.2%)
1,000 Aetna Life & Casualty Co. $ 53,125
15 Baer Holdings (Switzerland) (b) 16,094
2,200 Banc One Corp. 72,600
1,500 Beneficial Corp. 54,938
1,200 Chemical Banking Corp. 43,650
120 Credit Locale de France (France) (b) 8,853
11,000 Credito Italiano S.A. (Italy) (b) 17,734
1,700 Dean Witter Discover & Co. 55,464
2,000 Daiwa Securities Co. Ltd. (Japan) (b) 31,922
3,200 Equitable Cos., Inc. 72,000
900 First Interstate Bancorp 65,925
2,200 Grupo Financiero Banacci (Registered) (Mexico) (b) 14,951
3,000 Guoco Group Ltd. (Hong Kong) (b) 13,298
350 HCC Insurance Hldgs, Inc. 8,575
250 Healthsource, Inc. (c) 7,125
300 Internationale Nederlanden (Netherlands) (b) 12,812
250 Mid Atlantic Medical Services (c) 9,438
2,200 National City Corp. 58,575
3,400 Royal Insurance Holdings PLC (United Kingdom) (b) 13,719
150 Societe Generale (France) (b) 16,533
70 Sovac (France) (b) 22,043
3,000 Tokio Marine & Fire Insurance Co. Ltd.
(The) (Japan) (b) 35,912
1,400 Transamerica Corporation 70,700
1,200 Travelers, Inc. 42,150
3,500 USF&G Corp. 45,938
3,000 United Overseas Bank Ltd. (Registered)
(Singapore) (b) 21,418
400 Wells Fargo & Co. 55,750
941,242
Health Care (5.5%)
500 Ballard Medical Products 6,938
2,500 Baxter International, Inc. 56,563
1,000 Bristol-Myers Squibb Co. 51,625
375 Clinicom, Inc. 7,594
2,300 Columbia/HCA Healthcare Corp. 92,575
200 Cor Therapeutics, Inc. (c) 2,375
Health Care (continued)
200 Essilor International ADP (France) (b) $18,055
500 Grancare, Inc. (c) 10,063
235 HEALTHSOUTH Rehabilitation Corp. (c) 6,815
525 Haemonetics Corp. (c) 10,434
245 Health Management Assoc., Inc. (c) 7,442
630 Healthcare Services Group, Inc. 6,458
460 Homecare Management, Inc. (c) 7,648
480 Horizon Healthcare Corp. (c) 10,320
200 Immulogic Pharmaceutical Corp. (c) 2,100
800 Johnson & Johnson 30,200
1,100 Lilly (Eli) & Co. 54,725
325 Lincare Holdings, Inc. (c) 7,069
445 Mariner Health Group, Inc. (c) 9,011
220 Medaphis Corp. (c) 7,315
2,500 Merck & Co., Inc. 74,375
85 Oxford Health Plan (c) 4,686
585 Protocol Systems, Inc. 5,850
905 Ren Corp (c) 8,145
315 Renal Treatment Centers, Inc. (c) 7,088
600 SmithKline Beecham PLC ADS (United Kingdom) (b) 15,000
750 U.S. Healthcare Inc. 30,750
2,200 Upjohn Co. 59,675
385 Vencor Inc. (c) 12,898
135 Zoll Medical Corp. (c) 4,016
627,808
Consumer Services (4.6%)
2,300 Blockbuster Entertainment Corp. 58,075
250 Broadcasting Partners, Inc. (c) 3,188
300 Buffets, Inc. (c) 6,525
150 CBS Inc. 45,900
75 Casino America, Inc. (c) 2,513
370 Century Communications Corp. Class A 3,284
350 Clear Channel Communications, Inc. (c) 12,294
180 Centennial Cellular Corp. Class A 3,555
265 DF&R Restaurants, Inc. (c) 7,122
700 Davco Restaurants, Inc. 11,725
260 EZ Communications, Inc. Class A (c) 3,218
350 Fresh Choice, Inc. (c) 9,275
3,000 Genting Berhad Co. (Malaysia) (b) 29,175
1,100 Hilton Hotels Corp. 62,700
Consumer Services (continued)
210 Hospitality Franchise Systems, Inc. (c) $11,550
475 Infinity Broadcasting Corp. Class A (c) 11,994
300 Landry's Seafood Restaurants, Inc. (c) 7,500
235 Paging Network, Inc. (c) 5,346
600 Premark International, Inc. 43,200
1,200 Procter & Gamble Co. 64,350
1,500 Promus Companies, Inc. 59,063
450 Renaissance Communications 9,450
140 SFX Broadcasting, Inc. Class A (c) 1,785
440 Stewart Enterprises, Inc. Class A 10,560
285 TCA Cable TV, Inc. 6,234
380 Taco Cabana, Inc. (c) 6,650
1,200 Tele-Communications, Inc. Class A 24,900
225 Valuevision International, Inc. Class A 1,716
522,847
Business Equipment and Services (6.0%)
100 A+ Communications, Inc. (c) 1,025
300 Cambridge Tech Partners 4,650
2,100 Cisco Systems, Inc. (c) 71,925
600 Compaq Computer Corp. (c) 58,650
1,900 Computer Associates International, Inc. 58,663
2,000 Dai Nippon Printing Co., Ltd. (Japan) (b) 34,453
1,000 Dun & Bradstreet Corp. 58,750
260 FTP Software, Inc. (c) 7,085
900 Federal Express Corp. (c) 60,188
460 Fiserv Inc. (c) 9,373
345 Interim Svcs., Inc. 8,582
295 Loewen Group, Inc. 7,228
2,900 Moore Corp. Ltd. 54,013
345 Novellus Systems Inc. (c) 11,989
235 Olsten Corp. (The) 7,549
180 PeopleSoft, Inc. (c) 6,188
225 Robert Half International, Inc. (c) 6,891
150 SGS Holdings 23,055
1,800 Security Services PLC (United Kingdom) (b) 20,294
115 Synopsys, Inc. (c) 5,031
1,400 Tandy Corp. 50,750
4,800 Unisys Corp. 71,400
Business Equipment and Services (continued)
450 Viewlogic Systems, Inc. (c) $11,531
230 Wall Data, Inc. (c) 10,321
320 Westcott Communications, Inc. (c) 6,000
300 Wolters Kluwer N.V. (Netherlands) (b) 17,732
230 Zilog Inc. (c) 7,648
690,964
Oil and Gas (4.5%)
1,500 Anadarko Petroleum Corp. 69,000
900 Chevron Corp. 75,825
900 Exxon Corp. 56,588
2,300 MCN Corp. 82,513
2,200 McDermott International, Inc. 44,550
1,200 Mobil Corp. 89,250
700 Repsol S.A. (Spain) (b) 21,912
200 Royal Dutch Petroleum Co. (Netherlands) (b) 20,196
900 Texaco Inc. 56,700
516,534
Electronics and Electrical Equipment (4.7%)
500 Actel Corp. (c) 5,625
1,900 Analog Devices Inc. (c) 49,400
20 BBC Brown Boveri AG Company (Switzerland) (b) 16,601
525 Baldor Electric Co. 12,403
100 First Alert, Inc. 1,813
3,900 General Electric Co. PLC (United Kingdom) (b) 17,155
290 Integrated Device Technology 7,359
900 Intel Corp. 60,750
400 Level One Communications, Inc. (c) 7,700
2,000 Matsushita Electric Industrial Co., Ltd. (Japan) (b) 33,090
240 Maxim Integrated Products Inc. (c) 12,060
900 Motorola, Inc. 91,125
1,000 Murata Manufacturing Co. Ltd. (Japan) (b) 47,202
2,000 Nippondenso Co. Ltd. (Japan) (b) 36,399
2,000 Omron Tateisi Electronics Co. (Japan) (b) 32,701
Electronics and Electrical Equipment (continued)
325 Sanmina Corp. (c) $6,094
400 Schneider S.A. (France) (b) 28,062
1,500 Siebe PLC (United Kingdom) (b) 13,173
285 Stratacom, Inc. (c) 5,344
440 Teradyne, Inc. (c) 11,110
3,300 Westinghouse Electric Corp. 39,600
534,766
Retail (3.7%)
420 Bed Bath & Beyond, Inc. (c) 12,180
520 Books-A-Million, Inc. 10,790
500 Copart, Inc. 6,938
4,000 Cycle & Carriage Ltd. (Singapore) (b) 24,222
275 Heilig-Meyers Co. 8,525
3,100 K mart Corp. 56,188
2,300 Kroger Co. (c) 54,913
340 Musicland Stores Corp. (c) 6,630
1,500 Office Depot, Inc. (c) 52,313
320 One Price Clothing Stores, Inc. (c) 7,200
1,400 Penney (J.C.) Co., Inc. 74,025
420 Stein Mart, Inc. (c) 7,823
2,100 TJX Cos., Inc. (The) 55,388
185 Tommy Hilfiger (c) 6,637
2,600 Woolworth Corp. 39,325
423,097
Basic Industrial Products (3.2%)
300 Atlas Copco (Sweden) (b) 18,193
2,200 Ball Corp. 56,375
1,800 CBI Industries, Inc. 53,775
800 Caterpillar, Inc. 89,900
500 Hercules, Inc. 57,375
2,000 Komatsu Limited (Japan) (b) 17,518
1,400 Rockwell International Corp. 55,650
40 Sommer Allibert (France) (b) 16,585
365,371
Utilities (3.5%)
1,800 FPL Group, Inc. 59,625
1,800 GTE Corp. 55,800
1,500 NYNEX Corp. 51,750
Utilities (continued)
2,600 North West Water Group PLC (United Kingdom) (b) $20,828
2,500 Northeast Utilities Co. 59,063
1,800 Northern Electric PLC (United Kingdom) (b) 18,852
1,900 Sprint Corp. 65,075
300 Telefonos de Mexico S.A., Ser. L, ADR (Mexico) (b) 18,075
1,500 Texas Utilities Co. 56,063
405,131
Automotive (3.1%)
350 A.P.S. Holding Corp. (c) 6,825
410 Allied Holdings, Inc. (c) 7,790
900 Chrysler Corp. 46,463
1,300 Daimler Benz AKT-ADR (Germany) (b) 66,138
3,000 Edaran Otomobil Nasional Berhad (Malaysia) (b) 17,168
295 Exide Corp. 10,915
10,700 Fiat Preferred (Italy) (b) 23,652
1,900 General Motors Corp. 102,600
900 Magna International, Inc. Class A 42,300
700 Michelin (C.G.D.E) (France) (b) 30,493
354,344
Conglomerates (2.8%)
2,600 Fleming Co., Inc. 64,025
1,200 General Electric Co. 119,550
900 ITT Corp. 77,175
2,600 Ogden Corp. 57,850
318,600
Consumer Non-Durables (2.3%)
790 Authentic Fitness Corp. (c) 10,468
1,200 Avon Products, Inc. 67,800
385 Department 56 (c) 11,743
2,200 Dibrell Bros., Inc. 41,250
225 Drypers Corp. 2,756
310 Fastenal Co. 10,075
270 Gymboree Corp. (c) 11,880
265 Inbrand (c) 6,095
1,400 Philip Morris Cos., Inc. 71,050
Consumer Non-Durables (continued)
295 St. John Knits, Inc. (c) $7,154
3,200 Tate & Lyle PLC (United Kingdom) (b) 20,888
261,159
Transportation (1.5%)
800 Burlington Northern, Inc. 47,600
525 Expeditors International of Washington, Inc. 9,319
1,800 Illinois Central Corp. 60,750
3,000 Jurong Shipyard Ltd. (Singapore) (b) 24,477
5,000 Swire Pacific Ltd. Class A (Hong Kong) (b) 34,619
176,765
Chemicals (1.9%)
300 Akzo N.V. (Netherlands) (b) 34,633
150 BASF AG Company (Germany) (b) 28,279
1,400 Mallinckrodt Group, Inc. 44,800
1,300 Olin Corp. 61,750
2,200 Union Carbide Corp. 49,500
218,962
Building and Construction (1.9%)
7,800 Amec PLC (United Kingdom) (b) 15,043
400 Armstrong World Industries, Inc. 21,600
3,000 CRH PLC (Ireland) (b) 16,508
2,000 Champion International Corp. 58,000
5,000 Hong Leong Industries (Malaysia) (b) 20,573
1,000 Marui Co. Ltd. (Japan) (b) 14,891
325 Redman Industries (c) 5,769
445 Schuler Homes, Inc. (c) 11,904
11,300 Senior Engineering Group PLC (United Kingdom) (b) 21,625
1,000 Taihei Dengyo Ltd. (Japan) (b) 29,878
215,791
Metals and Mining (1.7%)
8,800 British Steel PLC Company (United Kingdom) (b) 18,538
1,400 CRA Ltd. (Australia) (b) 16,359
Metals and Mining (continued)
20 Fischer (George) Bearer (Switzerland) (b) $18,414
3,100 Freeport-McMoRan, Inc. 60,063
9,500 MIM Holdings Ltd. (Australia) (b) 19,857
40 N.V. Bekaert S.A. (Belgium) (b) 27,395
4,000 Nisshin Steel Co. Ltd. (Japan) (b) 15,299
370 Schnitzer Steel Industries, Inc. 9,713
525 Webco Industries, Inc. (c) 8,925
194,563
Technology (1.3%)
900 DSC Communications Corp. (c) 45,225
1,300 Pitney Bowes, Inc. 52,813
2,300 Silicon Graphics, Inc. (c) 54,913
152,951
Computer Services/Software (1.1%)
115 America Online, Inc. 8,280
255 Compuware Corp. 10,742
700 Getronics N.V. (Netherlands) (b) 17,332
300 Gupta Corp. (c) 7,950
200 Infosoft International, Inc. 4,150
335 Keane, Inc. (c) 10,678
370 Mercury Interactive Corp. 6,383
1,400 Oracle Systems Corp. (c) 44,975
105 Powersoft Corp. (c) 5,775
315 Softdesk, Inc. (c) 5,985
122,250
Banks (1.0%)
4,900 Allied Irish Banks PLC (Ireland) (b) 17,579
1,700 Barclays Bank PLC (United Kingdom) (b) 13,215
7,000 Christiana Bank (Norway) (b) 13,944
4,000 Yamaguchi Bank Ltd. (Japan) (b) 70,073
114,811
Real Estate (0.9%)
6,000 Cheung Kong Holdings Ltd. (Hong Kong) (b) 30,672
1,900 Meditrust Corp. 61,513
Real Estate (continued)
4,000 New World Development Co., Ltd. (Hong Kong) (b) $13,822
106,007
Food and Beverages (1.3%)
2,300 Coca-Cola Company 93,438
80 Docks de France (France) (b) 10,063
205 Papa Johns International, Inc. 5,996
2,500 Wendy's International, Inc. 42,813
152,310
Forest Products (0.5%)
2,400 Amcor Ltd. (Australia) (b) 15,975
1,000 Repola (Finland) (b) 16,986
1,200 Svenska Cellulosa AB Co. (Sweden) (b) 19,303
52,264
Photography (0.5%)
1,200 Eastman Kodak Co. 53,250
Consumer: Durable Goods (0.4%)
800 Whirlpool Corp. 48,600
Distribution and Drug Retailing (0.4%)
1,500 American Brands, Inc. 45,375
Publishing (0.3%)
200 Elsevier N.V. (Netherlands) (b) 17,604
1,800 Pearson PLC (United Kingdom) (b) 17,117
34,721
Computers (0.2%)
390 Union Switch & Signal, Inc. 8,580
245 Zebra Technologies Corp. (c) 9,678
18,258
Pharmaceuticals (0.1%)
1,000 Revco D.S., Inc. (c) 16,374
Biotechnology (--%)
100 Procyte Corp. (c) 1,100
Total Common Stocks (cost $8,090,116) $7,686,215
Corporate Bonds and Notes (5.1%)(a)
Principal Amount Value
Consumer Services (0.9%)
$10,000 AMC Entertainment, Inc. sr. sub. notes
12-5/8s, 2002 $11,300
10,000 Argyle Television Operations sr. sub. notes
9-7/8s, 2003 9,800
10,000 Century Communications Corp. sr. sub. deb.
11-7/8s, 2003 10,800
20,000 Continental Cablevision, Inc. sr. deb. 9s, 2008 19,100
10,000 Flagstar Corp. sr. sub. deb. 11-1/4s, 2004 9,850
10,000 Insight Communications Co. sr. sub. notes 8-1/4s 2000 10,000
20,000 John Q. Hammons Hotels 1st. Mortgage 8-7/8s, 2004 18,500
10,000 La Quinta Motor Inns Inc. deb. 9-1/4s, 2003 9,600
15,000 NEXTEL Communications Inc. sr. disc. notes
stepped-coupon zero % (9-3/4s, 2/15/99), 2004 (d) 8,925
107,875
Insurance and Finance (0.4%)
10,000 Associates Corp. sub. notes 5.49s, 1999 9,456
10,000 Comdata Network, Inc. sr. sub. deb. 13-1/4s, 2002 11,000
10,000 Comdata Network, Inc. sr. notes 12-1/2 s, 1999 10,800
10,000 Household International sub. notes 6s, 1999 9,638
10,000 Reliance Group Holdings sr. sub. notes 9-3/4s, 2003 9,300
50,194
Health Care (0.4%)
$10,000 EPIC Holdings Inc. sr. notes stepped-coupon
zero % (12s, 3/15/97), 2002 (d) $8,038
10,000 Healthsouth Rehabilitation 9-1/2s, 2000 9,825
5,000 Mediplex Group, Inc. sr. sub. notes 11-3/4s, 2002 5,400
25,000 Paracelsus Healthcare Corp. sr. sub.
notes 9-7/8s, 2003 24,250
47,513
Retail (0.4%)
10,000 Finlay Enterprises, Inc. sr. notes 10-5/8s, 2003 10,000
35,000 Grand Union Co. sr. sub. notes 12-1/4s, 2002 34,650
44,650
Food and Beverages (0.3%)
10,000 Chiquita Brands International Inc. sub. deb.
11-1/2s, 2001
10,450
20,000 Fresh Del Monte Produce Corp. sr. notes 10s, 2003 (e) 19,200
10,000 RJR Nabisco, Inc. sr. notes 8-3/4s, 2004 9,181
38,831
Metals and Mining (0.3%)
10,000 Geneva Steel Corp. sr. notes 9-1/2s, 2004 9,250
25,000 WCI Steel Inc. sr. notes 10-1/2s,
2002 (e) 26,813
36,063
Basic Industrial Products (0.3%)
10,000 Anchor Glass Container Corp. sr. sub. deb.
9-7/8s, 2008 9,600
20,000 Ivex Packaging Corp. sr. sub. notes 12-1/2s, 2002 22,250
31,850
Chemicals (0.3%)
$10,000 Harris Chemical Corp. sr. sub. notes 10-3/4s, 2003 $10,200
10,000 OSI Specialties Inc. sr. sub. notes 9-1/4s , 2003 10,000
10,000 UCC Investors Holding, Inc. sr. notes 10-1/2s, 2002 10,600
30,800
Consumer Non-Durables (0.3%)
10,000 Foamex (L.P.) Capital Corp. sr. notes 11-1/4s, 2002 10,700
10,000 Philip Morris Cos., Inc. notes 9-1/4s, 1997 10,831
10,000 Playtex Family Products Corp. sr. sub.
notes 9s, 2003 9,100
30,631
Automotive (0.3%)
25,000 Key Plastics Corp. sr. notes 14s, 1999 30,000
Oil and Gas (0.2%)
25,000 Chesapeake Energy Corp. deb. 12s, 2001 (e) 25,000
Transportation (0.2%)
10,000 Blue Bird Acquisition Corp. sub. deb. 11-3/4s, 2002 10,700
10,000 Viking Star Shipping sr. secd. notes 9-5/8s, 2003 (e)
10,300
21,000
Conglomerates (0.2%)
10,000 Jordan Industries, Inc. sr. notes 10-3/8s, 2003 9,900
5,000 MacAndrews & Forbes Group Inc. deb. 12-1/4s, 1996 5,050
5,000 MacAndrews & Forbes Holdings Inc. sub. deb. 13s, 1999 5,013
19,963
Forest Products (0.2%)
$10,000 Gaylord Container Corp. sr. notes 11-1/2s, 2001 $10,100
10,000 Stone Container Corp. sr. sub. notes 10-3/4s, 1997 9,800
19,900
Specialty Consumer Products (0.2%)
20,000 Stater Brothers sr. notes 11s, 2001 (e) 19,750
Utilities (0.1%)
10,000 Puget Sound Power & Light Co. 1st mtge. 7-7/8s, 1997 10,475
5,000 Texas Utilities Electric sub. notes 5-7/8s, 1998 4,856
15,331
Building and Construction (0.1%)
10,000 Snydergeneral Corp. sr. sub. deb. 14-1/4s, 2000 10,500
Environmental Control (--%)
5,000 ICF Kaiser International Inc. sr. sub. notes 12s, 2003 5,050
Total Corporate Bonds and Notes (cost $599,640) $584,901
U.S. Government and Agency Obligations (3.4%)(a)
$ 22,000 U.S. Treasury Bonds 7-1/8s, February 15, 2023 $ 21,739
70,000 U.S. Treasury Notes 7-3/4s, February 15, 2001 74,441
308,000 U.S. Treasury Notes 5-1/8s, June 30, 1998 296,643
Total U.S. Government and Agency Obligations
(cost $400,584) $392,823
Foreign Bonds and Notes (2.9%)(a)(f)
Principal Amount Value
DKK112,000 Denmark (Government of) bonds 7s, 2004 $ 17,196
FF98,000 France (Government of) Oat 6-3/4s, 2003 17,558
(yen) 9,800,000 Japan (Government of) bonds 4-1/2s, 2003 99,936
NLG91,000 Netherlands (Government of) bonds 5-3/4s, 2004 46,500
SEK120,000 Sweden (Government of) bonds 7-3/4s, 2002 77,522
P45,000 United Kingdom Treasury bonds 9-1/2s, 2005 76,003
Total Foreign Bonds and Notes (cost $334,734) $334,715
Yankee Bonds and Notes (0.2%)(a)(cost $24,938)
Principal Amount Value
$25,000 Eletson Holdings, Inc. 1st pfd. mtge.
notes 9-1/4s, 2003 $ 25,125
Preferred Stocks(0.2%)(a)
Number of Shares Value
50 Calfed Inc. Ser. B, $10.625 pfd. $4,963
152 Pantry Pride $14.875 pfd. 15,451
Total Preferred Stocks (cost $20,451) $ 20,414
Warrants (--%)(a)(c)(e) (cost $130)
Number of Warrants Expiration Date Value
10 UCC Investor Holding, Inc. 1/1/99 $130
Short-Term Investments(25.7%)(a)
Principal Amount Value
$580,000 U.S. Treasury Bills 3.3s, April 28, 1994 $578,565
500,000 U.S. Treasury Bills 3.28s, April 28, 1994 498,770
1,000,000 U.S. Treasury Bills 3.24s, April 28, 1994 996,986
865,000 U.S. Treasury Bills 3.23s, April 28, 1994 862,905
Total Short-Term Investments (cost $2,937,226) $2,937,226
Total Investments (cost $12,407,819)(g) $11,981,549
(a) Percentages indicated are based on net assets of $11,454,239, which
correspond to a net asset value per Class A share and Class B share of
$8.15 and $8.14, respectively.
(b) Securities whose values are determined or significantly influenced by
trading on exchanges not in the United States or Canada. ADR or ADS after
the name of a foreign holding stands for American Depository Receipt or
American Depository Shares, respectively, representing ownership of foreign
securities on deposit with a domestic custodian bank.
(c) Non-income-producing security.
(d) The interest rate and date shown parenthetically represent the new
interest rate to be paid and the date the Fund will begin receiving
interest at this rate.
(e) Security 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 March 31,
1994, these securities were valued at $101,193 or 0.9% of net assets.
(f) Foreign currency-denominated. Market value is translated at the current
exchange rate.
(g) The aggregate identified cost on a tax basis is $12,408,042, resulting
in gross unrealized appreciation and depreciation of $37,736 and $464,229,
respectively, or net unrealized depreciation of $426,493.
Forward Currency Contracts Outstanding at March 31, 1994
Market Aggregate Delivery Unrealized
Value Face Date Appreciation/
Value (Depreciation)
Deutschemarks $41,794 $41,794 7/6/94 $ --
(Sell)
Deutschemarks 83,284 83,284 7/6/94 --
(Sell)
$ --
The accompanying notes are an integral part of these financial statements.
<PAGE>
Statement of
assets and liabilities
March 31, 1994
Assets Investments in securities, at
value (identified cost $12,407,819)
(Note 1)
$11,981,549
Cash 765,952
Interest, dividends and other 35,505
receivables
Receivable for shares of the 1,636,475
Fund sold
Receivable from Manager (Note 21,951
3)
Receivable for securities sold 23,643
Unamortized organization 12,893
expenses (Note 1)
Total assets 14,477,968
Liabilities Payable for securities $2,933,888
purchased
Payable for shares of the Fund 45,263
repurchased
Payable for administrative 500
services (Note 3)
Payable for compensation of 500
Trustees (Note 3)
Payable for investor servicing 5,004
and custodian fees (Note 3)
Payable for distribution fees 2,917
(Note 3)
Other accrued expenses 22,393
Payable for organization 13,264
expenses
Total liabilities 3,023,729
Net assets $11,454,239
Represented Paid-in capital (Notes 2 and $11,869,557
by 5)
Undistributed net investment 11,831
income
Accumulated net realized loss (879)
on investment transactions
(Note 1)
Net unrealized depreciation of (426,270)
investments and forward
currency contracts
Total--Representing net assets $11,454,239
applicable to capital shares
outstanding
Computation Net asset value and redemption $8.15
of net asset price of Class A shares
value and ($7,388,465 divided by 906,360
offering shares)
price
Offering price per share $8.65
(100/94.25 of $8.15)*
Net asset value and offering $8.14
price of Class B shares
($4,065,774 divided by 499,367
shares)**
*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.
<PAGE>
Statement of
operations
For the period February 7, 1994
(commencement of operations) to March 31, 1994
The accompanying notes are an integral part of these financial statements.
Investment income:
Interest $12,722
Dividends (Net of foreign tax of $173) 8,853
Total investment income 21,575
Expenses:
Compensation of Manager (Note 3) $4,857
Investor servicing and custodian fees (Note 3) 5,004
Compensation of Trustees (Note 3) 500
Auditing 14,000
Reports to shareholders 1,000
Registration fee 4,093
Legal 2,800
Postage 500
Amortization of organization expenses (Note 1) 371
Administrative services (Note 3) 500
Distribution fees -- Class A (Note 3) 1,399
Distribution fees -- Class B (Note 3) 1,518
Other 10
Fees waived and other expenses absorbed by
the Manager (Note 3) (26,808)
Total expenses 9,744
Net investment income 11,831
Net realized loss on investments (Notes 1 and 4) (879)
Net unrealized depreciation of investments and
forward currency contracts during the period (426,270)
Net loss on investment transactions (427,149)
Net decrease in net assets resulting from operations
$(415,318)
<PAGE>
Statement of
changes in net assets
For the period
February 7, 1994
(commencement of
operations) to March 31
1994
Increase in net assets
Operations:
Net investment income
$11,831
Net realized loss on investments
(879)
Net unrealized depreciation of investments and
forward currency contracts
(426,270)
Net decrease in net assets resulting from operations
(415,318)
Increase from capital share transactions (Note 5)
11,836,223
Total increase in net assets
11,420,905
Net assets
Beginning of period
33,334
End of period (including undistributed net
investment income of $11,831)
$11,454,239
<PAGE>
Financial
Highlights
(For a share
outstanding
throughout the
period)
Putnam Asset Allocation Growth Fund
For the For the
period period
February 16, February 8,
1994 1994
(commencement (commencement
of of
operations) operations)
to March 31 to March 31
1994 1994
Class B Class A
Net Asset Value, Beginning of Period $8.50 $8.50
Investment Operations
Net Investment Income* .01(a) .02(a)
Net Realized and Unrealized Loss on (.37) (.37)
Investments
Total from Investment Operations* (.36) (.35)
Net Asset Value, End of Period $8.14 $8.15
Total Investment Return at Net Asset (28.20) (27.47)
Value (%) (b)(c)
Net Assets, End of Period (in $4,066 $7,388
thousands)
Ratio of Expenses to Average Net 1.98(a)(c) 1.23(a)(c)
Assets (%)
Ratio of Net Investment Income to 1.13(a)(c) 1.88(a)(c)
Average Net Assets (%)
Portfolio Turnover (%) 3.40(d) 3.40(d)
*Per share net investment income for the period ended March 31, 1994 have
been determined on the basis of the weighted average number of shares
outstanding during the period.
(a) Reflects a voluntary absorption of expenses incurred by the Fund. As a
result of this limitation, expenses for the period ended March 31, 1994,
reflect a reduction of $.05 and $.03 for Class A and Class B, respectively.
See Note 3.
(b) Total Investment Return assumes dividend reinvestment and does not
reflect the effect of sales charges.
(c) Annualized
(d) Not annualized
<PAGE>
Portfolio of
investments owned
March 31, 1994
Common Stocks (51.0%)(a)
Number of Shares Value
Insurance and Finance (6.3%)
1,200 Aetna Life & Casualty Co. $63,750
20 Baer Holdings (Switzerland) (b) 21,459
2,700 Banc One Corp. 89,100
1,900 Beneficial Corp. 69,588
1,200 Chemical Banking Corp. 43,650
350 Credit Locale de France (France) (b) 25,821
14,000 Credito Italiano S.A. (Italy) (b) 22,571
1,900 Dean Witter Discover & Co. 61,968
3,500 Equitable Cos., Inc. 78,750
1,200 First Interstate Bancorp 88,260
3,000 Grupo Financiero Banacci (Registered Shares)
(Mexico) (b) 20,387
4,000 Guoco Group Ltd. (Hong Kong) (b) 17,730
500 HCC Insurance Hldgs. Inc. 12,250
320 Healthsource, Inc. (c) 9,120
4,900 IMI (Istit Mobiliare Ital Spa) (Italy) (b) 38,984
500 Internationale Nederlanden (Netherlands) (b) 21,353
400 Mid Atlantic Medical Services (c) 15,100
2,700 National City Corp. 71,888
5,300 Royal Insurance Holdings PLC (United Kingdom) (b) 21,386
200 Soci t G n rale (France) (b) 22,043
100 Sovac (France) (b) 31,491
4,000 Tokio Marine & Fire Insurance Co. Ltd. (The)
(Japan) (b) 47,883
1,500 Transamerica Corporation 75,750
1,200 Travelers, Inc. 42,150
4,300 USF&G Corp. 56,438
5,000 United Overseas Bank Ltd. (Registered Shares)
(Singapore) (b) 35,696
500 Wells Fargo & Co. 69,688
1,174,254
Health Care (4.1%)
700 Ballard Medical Products 9,713
3,100 Baxter International, Inc. 70,138
1,200 Bristol-Myers Squibb Co. 61,950
550 Clinicom, Inc. 11,138
2,100 Columbia/HCA Healthcare Corp. 84,525
Health Care (continued)
285 Cor Therapeutics, Inc. (c) $3,384
250 Essilor International ADP (France) (b) 22,568
755 Grancare, Inc. (c) 15,194
345 HEALTHSOUTH Rehabilitation Corp. (c) 10,005
800 Haemonetics Corp. (c) 15,900
315 Health Management Assoc., Inc. (c) 9,568
915 Healthcare Services Group, Inc. 9,379
665 Homecare Management, Inc. (c) 11,056
750 Horizon Healthcare Corp. (c) 16,125
340 Immulogic Pharmaceutical Corp. (c) 3,570
800 Johnson & Johnson 30,200
1,400 Lilly (Eli) & Co. 69,650
470 Lincare Holdings, Inc. (c) 10,223
650 Mariner Health Group, Inc. (c) 13,163
320 Medaphis Corp. (c) 10,640
2,500 Merck & Co., Inc. 74,375
120 Oxford Health Plan (c) 6,615
845 Protocol Systems, Inc. 8,450
1,410 Ren Corp. USA (c) 12,690
455 Renal Treatment Centers, Inc. (c) 10,238
800 SmithKline Beecham PLC ADS (b) 20,000
900 U.S. Healthcare Inc. 36,900
2,700 Upjohn Co. 73,238
550 Vencor Inc. (c) 18,425
200 Zoll Medical Corp. (c) 5,950
754,970
Electronics and Electrical Equipment (3.5%)
1,900 Analog Devices Inc. (c) 49,400
40 BBC Brown Boveri AG Company (Switzerland) (b) 33,201
780 Baldor Electric Co. 18,428
225 First Alert, Inc. 4,078
5,000 General Electric Co. PLC (United Kingdom) (b) 21,993
450 Integrated Device Technology 11,419
900 Intel Corp. 60,750
2,000 Matsushita Electric Industrial Co., Ltd. (Japan) (b) 33,090
Electronics and Electrical Equipment (continued)
355 Maxim Integrated Products Inc. (c) $17,839
900 Motorola, Inc. 91,125
1,000 Murata Manufacturing Co. Ltd. 47,202
2,000 Nippondenso Co. Limited (Japan) (b) 36,399
3,000 Omron Tateisi Electric (Japan) (b) 49,051
470 Sanmina Corp. (c) 8,813
600 Schneider S.A. (France) (b) 42,092
1,000 Sony Corp. (c) 56,934
425 Stratacom, Inc. (c) 7,969
640 Teradyne, Inc. (c) 16,160
3,800 Westinghouse Electric Corp. 45,600
651,543
Business Equipment and Services (3.5%)
500 Cambridge Tech Partners 7,750
2,200 Cisco Systems, Inc. (c) 75,350
800 Compaq Computer Corp. (c) 78,200
2,000 Computer Associates International, Inc. 61,750
3,000 Dai Nippon Printing Co., Ltd. (Japan) (b) 51,679
1,300 Dun & Bradstreet Corp. 76,375
400 FTP Software, Inc. (c) 10,900
685 Fiserv Inc. (c) 13,957
495 Novellus Systems Inc. (c) 17,201
340 Olsten Corp. (The) 10,923
260 PeopleSoft, Inc. (c) 8,938
290 Robert Half International, Inc. (c) 8,881
165 Synopsys, Inc. (c) 7,219
1,400 Tandy Corp. 50,750
6,000 Unisys Corp. 89,250
660 Viewlogic Systems, Inc. (c) 16,913
350 Wall Data, Inc. (c) 15,706
465 Westcott Communications, Inc. (c) 8,719
400 Wolters Kluwer N.V. (Netherlands) (b) 23,642
255 Zilog Inc. (c) 8,479
642,582
Consumer Services (3.4%)
2,100 Blockbuster Entertainment Corp. $53,025
390 Broadcasting Partners, Inc. (c) 4,973
460 Buffets Inc. (c) 10,005
150 CBS Inc. 45,900
95 Casino America, Inc. (c) 3,183
475 Century Communications Corp. Class A 4,216
500 Clear Channel Communications, Inc. (c) 17,563
420 DF&R Restaurants, Inc. (c) 11,288
1,025 Davco Restaurants, Inc. 17,169
330 EZ Communications, Inc. Class A (c) 4,084
525 Fresh Choice, Inc. (c) 13,913
5,000 Genting Berhad Co. (Malaysia) (b) 48,626
1,200 Hilton Hotels Corp. 68,400
305 Hospitality Franchise Systems, Inc. (c) 16,775
675 Infinity Broadcasting Corp. Class A (c) 17,044
440 Landry's Seafood Restaurants, Inc. (c) 11,000
340 Paging Network, Inc. (c) 7,735
700 Premark International, Inc. 50,400
1,200 Procter & Gamble Co. 64,350
1,500 Promus Companies, Inc. 59,063
185 SFX Broadcasting, Inc. Class A (c) 2,359
655 Stewart Enterprises, Inc. Class A 15,720
380 TCA Cable TV, Inc. 8,313
550 Taco Cabana, Inc. (c) 9,625
1,200 Tele-Communications, Inc. Class A 24,900
2,300 Wendy's International, Inc. 39,388
629,017
Oil and Gas (3.0%)
1,500 Anadarko Petroleum Corp. 69,000
900 Chevron Corp. 75,825
800 Exxon Corp. 50,300
2,300 MCN Corp. 82,513
2,700 McDermott International, Inc. 54,675
1,200 Mobil Corp. 89,250
Oil and Gas (continued)
1,000 Repsol S.A. (Spain) (b) $31,303
250 Royal Dutch Petroleum Co. (Netherlands) (b) 25,245
1,100 Texaco Inc. 69,300
547,411
Retail (2.9%)
610 Bed Bath & Beyond, Inc. (c) 17,690
820 Books-A-Million, Inc. 17,015
575 Copart, Inc. 7,978
6,000 Cycle & Carriage Ltd. (Singapore) (b) 36,334
2,000 Daiwa Securities Co. Ltd. (Japan) (b) 31,922
425 Heilig-Meyers Co. 13,175
3,800 K mart Corp. 68,875
2,900 Kroger Co. (c) 69,238
520 Musicland Stores Corp. (c) 10,140
1,500 Office Depot, Inc. (c) 52,313
470 One Price Clothing Stores, Inc. (c) 10,575
1,400 Penney (J.C.) Co., Inc. 74,025
610 Stein Mart, Inc. (c) 11,361
2,100 TJX Cos., Inc. (The) 55,388
270 Tommy Hilfiger (c) 9,686
3,300 Woolworth Corp. 49,913
535,628
Utilities (2.7%)
2,200 FPL Group, Inc. 72,875
2,200 GTE Corp. 68,200
1,900 NYNEX Corp. 65,550
4,000 North West Water Group PLC (United Kingdom) (b) 32,044
3,000 Northeast Utilities Co. 70,875
2,300 Northern Electric PLC (United Kingdom) (b) 24,089
2,100 Sprint Corp. 71,925
350 Telefonos de Mexico S.A., Ser. L, ADR (Mexico) (b) 21,088
1,900 Texas Utilities Co. 71,013
497,659
Basic Industrial Products (2.6%)
400 Atlas Copco Free (Sweden) (b) $24,257
2,700 Ball Corp. 69,188
2,200 CBI Industries, Inc. 65,725
800 Caterpillar, Inc. 89,900
1,200 Eastman Kodak Co. 53,250
600 Hercules, Inc. 68,850
3,000 Komatsu Ltd. (Japan) (b) 26,277
1,400 Rockwell International Corp. 55,650
60 Sommer Allibert (France) (b) 24,878
477,975
Automotive (2.3%)
500 A.P.S. Holding Corp. (c) 9,750
590 Allied Holdings, Inc. (c) 11,210
900 Chrysler Corp. 46,463
1,600 Daimler Benz AKT-ADR (Germany) (b) 81,400
4,000 Edaran Otomobil Nasional Berhad (Malaysia) (b) 22,891
420 Exide Corp. 15,540
16,100 Fiat Preferred (Italy) (b) 35,589
2,100 General Motors Corp. 113,400
800 Magna International, Inc. Class A 37,600
1,000 Michelin (C.G.D.E) (France) (b) 43,562
417,405
Consumer Non-Durables (2.0%)
1,200 Authentic Fitness Corp. (c) 15,900
1,500 Avon Products, Inc. 84,750
555 Department 56 (c) 16,928
2,700 Dibrell Bros., Inc. 50,625
250 Drypers Corp. 3,063
446 Fastenal Co. 14,495
400 Gymboree Corp. (c) 17,600
385 Inbrand (c) 8,855
1,700 Philip Morris Cos., Inc. 86,275
430 St. John Knits, Inc. (c) 10,428
5,000 Tate & Lyle PLC (United Kingdom) (b) 32,637
6,000 Toray Industries Inc. (Japan) (b) 37,547
379,103
Conglomerates (1.9%)
3,300 Fleming Co. S, Inc. $81,263
1,200 General Electric Co. 119,550
900 ITT Corp. 77,175
3,300 Ogden Corp. 73,425
351,413
Building and Construction (1.5%)
10,000 AMEC PLC (United Kingdom) (b) 19,286
400 Armstrong World Industries, Inc. 21,600
4,000 CRH PLC (Ireland) (b) 22,011
2,400 Champion International Corp. 69,600
7,000 Hong Leong Industries (Malaysia) (b) 28,802
2,000 Marui Co. Ltd. (Japan) (b) 29,781
470 Redman Industries (c) 8,343
640 Schuler Homes, Inc. (c) 17,120
17,500 Senior Engineering Group PLC (United Kingdom) (b) 33,490
1,000 Taihei Dengyo Ltd. (Japan) (b) 29,878
279,911
Transportation (1.5%)
800 Burlington Northern, Inc. 47,600
785 Expeditors International of Washington, Inc. 13,934
800 Federal Express Corp. (c) 53,500
2,200 Illinois Central Corp. 74,250
4,000 Jurong Shipyard Ltd. (Singapore)(b) 32,636
7,500 Swire Pacific Ltd. Class A (Hong Kong) (b) 51,929
273,849
Chemicals (1.5%)
400 Akzo N.V. (Netherlands) (b) 46,177
200 BASF AG Company (Germany) (b) 37,705
1,500 Mallinckrodt Group, Inc. 48,000
1,600 Olin Corp. 76,000
2,700 Union Carbide Corp. 60,750
268,632
Metals and Mining (1.4%)
12,800 British Steel PLC Company (United Kingdom) (b) $26,964
1,900 CRA Ltd. (Australia) (b) 22,202
30 Fischer (George) Bearer (Switzerland) (b) 27,620
3,800 Freeport-McMoRan, Inc. 73,625
13,000 MIM Holdings Ltd. (Australia) (b) 27,173
50 N.V. Bekaert S.A. (Belgium) (b) 34,244
6,000 Nisshin Steel Co. Ltd. (Japan) (b) 22,949
540 Schnitzer Steel Industries, Inc. 14,175
750 Webco Industries, Inc. (c) 12,750
261,702
Computer Services/Software (0.9%)
160 America Online, Inc. 11,520
400 Compuware Corp. 16,850
1,000 Getronics N.V. (Netherlands) (b) 24,760
400 Gupta Corp. (c) 10,600
300 Infosoft International, Inc. 6,225
480 Keane, Inc. (c) 15,300
595 Mercury Interactive Corp. 10,264
1,400 Oracle Systems Corp. (c) 44,975
150 Powersoft Corp. (c) 8,250
460 Softdesk, Inc. (c) 8,740
157,484
Technology (0.8%)
900 DSC Communications Corp. (c) 45,225
1,400 Pitney Bowes, Inc. 56,875
2,100 Silicon Graphics, Inc. (c) 50,138
152,238
Banks (0.8%)
7,100 Allied Irish Banks PLC (Ireland) (b) 25,471
2,700 Barclays Bank PLC (United Kingdom) (b) 20,988
9,000 Christiana Bank (Norway) (b) 17,928
5,000 Yamaguchi Bank Ltd. (Japan) (b) 87,592
151,979
Real Estate (0.8%)
9,000 Cheung Kong Holdings Ltd. (Hong Kong) (b) $46,008
2,300 Meditrust Corp. 74,463
6,000 New World Development Co., Ltd. (Hong Kong) (b) 20,732
141,203
Food and Beverages (0.7%)
2,300 Coca-Cola Company 93,438
200 Docks de France (France) (b) 25,157
300 Papa Johns International, Inc. 8,775
127,370
Business Services (0.6%)
515 Interim Svcs., Inc. 12,811
430 Loewen Group, Inc. 10,535
3,500 Moore Corp. Ltd. 65,188
20 SGS Holdings 30,741
119,275
Forest Products (0.4%)
3,000 Amcor Ltd. (Australia) (b) 19,969
1,500 Repola (Finland) (b) 25,479
1,900 Svenska Cellulosa AB (Sweden) (b) 30,564
76,012
Computers (0.4%)
4,000 Fujitsu Ltd. (Japan) (b) 39,708
565 Union Switch & Signal, Inc. 12,430
360 Zebra Technologies Corp. (c) 14,220
66,358
Distribution and Drug Retailing (0.3%)
1,900 American Brands, Inc. 57,475
Consumer Durable Goods (0.3%)
800 Whirlpool Corp. 48,600
Electronic Components and Equipment (0.3%)
800 Actel Corp. (c) 9,000
620 Level One Communications, Inc. (c) 11,935
Electronic Components and Equipment (continued)
3,000 Siebe PLC (United Kingdom) (b) $26,347
47,282
Publishing (0.2%)
250 Elsevier N.V. (Netherlands) (b) 22,005
2,300 Pearson PLC (United Kingdom) (b) 21,871
43,876
Business Equipment (0.2%)
170 A+ Communications, Inc. (c) 1,743
2,800 Security Services PLC (United Kingdom) (b) 31,569
33,312
Pharmaceuticals (0.1%)
1,430 Revco D. S., Inc. (c) 23,416
Broadcasting (0.1%)
235 Centennial Cellular Corp. Class A 4,641
625 Renaissance Communications 13,125
290 Valuevision International, Inc. Class A 2,211
19,977
Biotechnology (--%)
145 Procyte Corp. (c) 1,595
Total Common Stocks (cost $9,877,017) $9,410,506
Corporate Bonds and Notes (9.4%)(a)
Principal Amount Value
Consumer Services (2.1%)
$ 20,000 AMC Entertainment, Inc. sr. sub. notes 12-5/8s, 2002
$ 22,600
25,000 Argyle TV Operations sr. sub. notes 9-7/8s, 2003 24,500
25,000 Cellular, Inc. sr. sub. disc. notes
stepped-coupon zero % (11-3/4s, 9/1/98), 2003 (e) 15,500
Consumer Services (continued)
$ 25,000 Century Communications Corp. sr. sub. deb.
11-7/8s, 2003 $27,000
60,000 Continental Cablevision, Inc. sr. deb. 9s, 2008 57,300
25,000 Flagstar Corp. sr. sub. deb. 11-1/4s, 2004 24,625
25,000 Insight Communications Co. sr. sub. notes 8-1/4s, 2000 25,000
60,000 John Q. Hammons Hotels 1st. mtge. 8-7/8s, 2004 55,500
25,000 La Quinta Motor Inns Inc. deb. 9-1/4s, 2003 24,000
80,000 Marvel Holdings, Inc. sr. secd. disc.
notes zero %, 1998 49,600
40,000 NEXTEL Communications Inc. sr. disc. notes
stepped-coupon zero % (9-3/4s, 2/15/99), 2004 (e) 23,800
40,000 SFX Broadcasting sr. sub. notes 11-3/8s, 2000 41,000
390,425
Health Care (0.8%)
30,000 EPIC Holdings Inc. sr. notes stepped-coupon
zero % (12s, 3/15/97), 2002 (e) 24,113
40,000 Healthsouth Rehabilitation 9-1/2s, 2000 39,300
15,000 Mediplex Group, Inc. sr. sub. notes 11-3/4s, 2002 16,200
65,000 Paracelsus Healthcare Corp. sr. sub. notes
9-7/8s, 2003 63,050
142,663
Insurance and Finance (0.7%)
25,000 Associates Corp. sub. notes 5.49s, 1999 23,641
35,000 Comdata Network, Inc. sr. notes 12-1/2s, 1999 37,800
25,000 Comdata Network, Inc. sr. sub. deb. 13-1/4s, 2002 27,500
25,000 Household International sub. notes 6s, 1999 24,094
Insurance and Finance (continued)
$ 25,000 Reliance Group Holdings sr. sub. notes 9-3/4s, 2003 $23,250
136,285
Foods and Beverages (0.7%)
25,000 Chiquita Brands International Inc. sub. deb.
11-1/2s, 2001 26,125
55,000 Fresh Del Monte Produce Corp. sr. notes 10s,
2003 (d) 52,800
50,000 RJR Nabisco, Inc. sr. notes 8-3/4s, 2004 45,906
124,831
Retail (0.6%)
25,000 Finlay Enterprises, Inc. sr. notes 10-5/8s, 2003 25,000
90,000 Grand Union Co. sr. sub. notes 12-1/4s, 2002 89,100
114,100
Metals and Mining (0.5%)
25,000 Geneva Steel Corp. sr. notes 9-1/2s, 2004 23,125
65,000 WCI Steel Inc. sr. notes 10-1/2s, 2002 (d) 69,713
92,838
Specialty Consumer Products (0.4%)
38,000 International Semi-Tech. Corp. sr. secd. disc.
notes stepped-coupon zero % (11-1/2s, 8/15/00),
2003 (e) 19,000
60,000 Stater Brothers sr. notes 11s, 2001 (d) 59,250
78,250
Automotive (0.4%)
65,000 Key Plastics Corp. sr. notes 14s, 1999 78,000
Consumer Non-Durables (0.4%)
25,000 Foamex (L.P.) Capital Corp. sr. notes 11-1/4s, 2002 26,750
Consumer Non-Durables (continued)
$ 25,000 Philip Morris Cos., Inc. notes 9-1/4s, 1997 $27,078
25,000 Playtex Family Products Corp. sr. sub. notes 9s,
2003 22,750
76,578
Basic Industrial Products (0.4%)
25,000 Anchor Glass Container Corp. sr. sub. deb. 9-7/8s,
2008 24,000
45,000 Ivex Packaging Corp. sr. sub. notes 12-1/2s, 2002 50,063
74,063
Chemicals (0.4%)
25,000 Harris Chemical Corp. sr. sub. notes 10-3/4s, 2003 25,500
25,000 OSI Specialties Inc. sr. sub. notes 9-1/4s, 2003 25,000
20,000 UCC Investors Holding, Inc. sr. notes 10-1/2s, 2002 21,200
71,700
Oil and Gas (0.4%)
65,000 Chesapeake Energy Corp. deb. 12s, 2001 (d) 65,000
Conglomerates (0.3%)
25,000 Jordan Industries, Inc. sr. notes 10-3/8s, 2003 24,750
15,000 MacAndrews & Forbes Group Inc. deb. 12-1/4s, 1996 15,150
15,000 MacAndrews & Forbes Holdings Inc. sub. deb. 13s, 1999 15,038
54,938
Forest Products (0.3%)
25,000 Gaylord Container Corp. sr. notes 11-1/2s, 2001 25,250
30,000 Stone Container Corp. sr. sub. notes 10-3/4s, 1997 29,400
54,650
Transportation (0.3%)
$ 30,000 Blue Bird Acquisition Corp. sub. deb. 11-3/4s, 2002 $32,100
20,000 Viking Star Shipping sr. secd. notes 9-5/8s, 2003 (d) 20,600
52,700
Business Services (0.3%)
50,000 Corporate Express, Inc. sr. notes 9-5/8s, 2004 (d) 46,750
Utilities (0.2%)
25,000 Puget Sound Power & Light Co. 1st mtge. 7-7/8s, 1997 26,188
10,000 Texas Utilities Electric Co. 5-7/8s, 1998 9,713
35,901
Building and Construction (0.1%)
25,000 Snydergeneral Corp. sr. sub. deb. 14-1/4s, 2000 26,250
Environmental Control (0.1%)
10,000 ICF Kaiser International Inc. sr. sub. units
12s, 2003 10,100
Total Corporate Bonds and Notes (cost $1,787,696) $1,726,022
U.S. Government and Agency Obligations (6.2%)(a)
Principal Amount Value
$ 66,000 U.S. Treasury Bonds 7-1/8s, February 15, 2023 $65,216
200,000 U.S. Treasury Notes 7-3/4s, February 15, 2001 212,688
896,000 U.S. Treasury Notes 5-1/8s, June 30, 1998 862,960
Total U.S. Government and Agency Obligations
(cost $1,162,474) $1,140,864
Foreign Bonds and Notes (5.2%)(a)(f)
Principal Amount Value
DKK352,000 Denmark (Government of) bonds 7s, 2004 $ 54,044
FF308,000 France (Government of) Oat 6-3/4s, 2003 55,184
(yen)30,800,000 Japan (Government of) bonds 4-1/2s, 2003 314,084
NLG286,000 Netherlands (Government of) 5-3/4s, 2004 146,144
SEK220,000 Sweden (Government of) 7-3/4s, 2002 142,159
(pound)143,000 United Kingdom Treasury bonds 9-1/2s, 2005 241,521
Total Foreign Bonds and Notes (cost $ 953,136) $953,136
Preferred Stocks (0.6%)(a)
Number of Shares Value
400 Calfed Inc. Ser. B, $10.625 pfd. $39,700
800 Pantry Pride $14.875 pfd. 81,320
Total Preferred Stocks (cost $121,320) $121,020
Yankee Bonds and Notes (0.3%)(a) (cost $64,838)
Principal Amount Value
$ 65,000 Eletson Holdings, Inc. 1st pfd. mtge. notes
9-1/4s, 2003 $ 65,325
Options On Foreign Currencies (--%)(a)(f)
Currency Expiration Date/Strike Price
Value
DM 200,000 Deutschemarks in Exchange
for U.S. Dollars 6/21/94 DM 1.725
$2,060
DM 100,000 Deutschemarks in Exchange for
U.S. Dollars 6/21/94 DM 1.725 $940
Total Options On Foreign Currencies (cost $5,165) $3,000
Warrants (--%)(a)(c)(d) (cost $390)
Number of Warrants Expiration Date Value
30 UCC Investor Holding, Inc.1/1/99 $ 390
Short-Term Investments (24.1%)(a)
Principal Amount Value
$220,000 U.S. Treasury Bills 3.3s, April 28, 1994 $219,456
200,000 U.S. Treasury Bills 3.26s, April 28, 1994 199,511
600,000 U.S. Treasury Bills 3.25s, April 28, 1994 598,537
2,330,000 U.S. Treasury Bills 3.23s, April 28, 1994 2,324,355
800,000 U.S. Treasury Bills 3.23s, April 28, 1994 798,062
120,000 U.S. Treasury Bills 3.22s, April 28, 1994 119,410
200,000 U.S. Treasury Bills 3.2s, April 28, 1994 199,519
Total Short-Term Investments (cost $4,458,850) $4,458,850
Total Investments (cost $18,430,886) (g) $17,879,113
Notes
Forward Currency Contracts Outstanding
at March 31, 1994
(a) Percentages indicated are based on net assets of $18,463,774, which
correspond to a net asset value for class A and B shares of $8.20 and
$8.18, respectively.
(b) Securities whose values are determined or significantly influenced by
trading on exchanges not in the United States or Canada. ADR or ADS after
the name of a foreign holding stands for American Depository Receipt or
American Depository Shares, respectively, representing ownership of foreign
securities on deposit with a domestic custodian bank.
(c) Non-income-producing security.
(d) Security 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 March 31,
1994, these securities were valued at $314,503 or 1.7% of net assets.
(e) The interest rate and date shown parenthetically represent the new
interest rate to be paid and the date the Fund will begin receiving
interest at this rate.
(f) Foreign currency-denominated. Market value is translated at the current
exchange rate.
(g) The aggregate identified cost on a tax basis is $18,430,933 resulting
in gross unrealized appreciation and depreciation of $53,009 and $604,829,
respectively, or net unrealized depreciation of $551,820.
Market Aggregate Delivery Unrealized
Value Face Value Date Appreciation/
(Depreciation)
Deutschemarks $71,646 $71,646 7/6/94 $ --
(Sell)
Deutschemarks 261,749 261,749 7/6/94 --
(Sell)
$ --
The accompanying notes are an integral part of these financial statements.
<PAGE>
Statement of
assets and liabilities
March 31, 1994
The accompanying notes are an integral part of these financial
statements.
Assets Investments in securities, $17,879,113
at value (identified cost
$18,430,886) (Note 1)
Cash 864,555
Interest, dividends and 84,862
other receivables
Receivable for shares of 4,121,634
the Fund sold
Receivable for securities 31,203
sold
Receivable from Manager 23,363
(Note 3)
Unamortized organization 12,893
expenses (Note 1)
Total assets $23,017,623
Liabilities Payable for securities $4,484,954
purchased
Payable for shares of the 19,022
Fund repurchased
Payable for administrative 500
services (Note 3)
Payable for compensation of 500
Trustees (Note 3)
Payable for investor 4,542
servicing and custodian
fees (Note 3)
Payable for distribution 4,716
fees (Note 3)
Other accrued expenses 26,352
Payable for organization 13,263
expenses
Total liabilities 4,553,849
Net assets $18,463,774
Represented Paid-in capital (Notes 2 $18,998,403
by and 5)
Undistributed net 19,448
investment income
Accumulated net realized (2,304)
loss on investment
transactions (Note 1)
Net unrealized depreciation (551,773)
of investments, options and
forward currency contracts
Total--Representing net $18,463,774
assets applicable to
capital shares outstanding
Computation
of net
asset
value and Net asset value and $8.20
offering redemption price of class A
price shares ($9,720,209 divided
by 1,185,704 shares)
Offering price per share $8.70
(100/94.25 of $8.20)*
Net asset value and $8.18
offering price of class B
shares ($8,743,565 divided
by 1,068,371 shares)**
*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.
<PAGE>
Statement of
operations
For the period February 7, 1994
(commencement of operations) to March 31, 1994
The accompanying notes are an integral part of these financial statements.
Putnam Asset Allocation Balanced Fund
Investment income:
Interest $23,166
Dividends (net of foreign tax of $301) 9,979
Total investment income 33,145
Expenses:
Compensation of Manager (Note 3) $7,038
Investor servicing and custodian fees (Note 3) 4,548
Compensation of Trustees (Note 3) 500
Auditing 15,500
Reports to shareholders 1,000
Legal 2,800
Postage 500
Administrative services (Note 3) 500
Distribution fees -- Class A (Note 3) 1,756
Distribution fees -- Class B (Note 3) 2,960
Amortization of organization expenses (Note 1) 370
Other 6,626
Fees waived and other expenses absorbed by the
Manager (Note 3) (30,401)
Total expenses 13,697
Net investment income 19,448
Net realized loss on investments (Notes 1 and 4) (2,574)
Net realized gain on options (Notes 1 and 4) 270
Net unrealized depreciation of investments, options
and forward currency contracts during the period (551,773)
Net loss on investment transactions (554,077)
Net decrease in net assets resulting from operations
$(534,629)
<PAGE>
Statement of
changes in net assets
For the period
February 7, 1994
(commencement of
operations) to March 31
1994
Increase in net assets
Operations:
Net investment income $19,448
Net realized loss on investments (2,574)
Net realized gain on options 270
Net unrealized depreciation of investments, options and
forward currency contracts (551,773)
Net decrease in net assets resulting from operations (534,629)
Increase in capital stock transactions (Note 5) 18,965,070
Total increase in net assets 18,430,441
Net assets
Beginning of period 33,333
End of period (including undistributed net investment
income of $19,448) $18,463,774
<PAGE>
Financial
Highlights
(For a share
outstanding
throughout the
period)
Putnam Asset Allocation Balanced Fund
For the period For the period
February 11, February 7,
1994 1994
(commencement (commencement
of operations) of operations)
to March 31 to March 31
1994 1994
Class B Class A
Net Asset Value, Beginning of Period $8.50 $8.50
Investment Operations
Net Investment Income* .01(a) .03(a)
Net Realized and Unrealized Loss on (.33) (.33)
Investments
Total from Investment Operations* (.32)(a) (.30)(a)
Net Asset Value, End of Period $8.18 $8.20
Total Investment Return at Net Asset (25.07)(c) (23.53)(c)
Value (%) (b)
Net Assets, End of Period (in $8,744 $9,720
thousands)
Ratio of Expenses to Average Net Assets 1.89(a)(c) 1.14(a)(c)
(%)
Ratio of Net Investment Income to 1.40(a)(c) 2.15(a)(c)
Average Net Assets (%)
Portfolio Turnover (%) 2.52(d) 2.52(d)
*Per share net investment income for the period ended March 31, 1994 have
been determined on the basis of the weighted average number of shares
outstanding during the period.
(a) Reflects a voluntary absorption of expenses incurred by the Fund. As a
result of this limitation, expenses for the period ended March 31, 1994,
reflect a reduction of $0.04 and $0.02 for Class A and Class B,
respectively. See Note 3.
(b) Total Investment Return assumes dividend reinvestment and does not
reflect the effect of sales charges.
(c) Annualized.
(d) Not annualized.
<PAGE>
Portfolio of
investments owned
March 31, 1994
Common Stocks (27.2%)(a)
Putnam Asset Allocation Conservative Fund
Number of Shares Value
Insurance and Finance (3.7%)
400 Aetna Life & Casualty Co. $ 21,250
10 Baer Holdings (Switzerland ) (b) 10,729
800 Banc One Corp. 26,400
600 Beneficial Corp. 21,975
600 Chemical Banking Corp. 21,825
150 Credit Locale de France (France) (b) 11,066
6,500 Credito Italiano S.A. (Italy) (b) 10,479
1,000 Daiwa Securities Co. Ltd. (Japan) (b) 15,961
600 Dean Witter Discover & Co. 19,575
1,200 Equitable Cos., Inc. 27,000
200 First Interstate Bancorp 14,650
1,400 Grupo Financiero Banacci (Registered Shares)
(Mexico) (b) 9,514
2,000 Guoco Group Ltd. (Hong Kong) (b) 8,865
80 Healthsource, Inc. (c) 2,280
175 HCC Insurance Hldgs, Inc. 4,269
2,000 IMI (Istit Mobiliare Ital Spa) (Italy) (b) 15,912
200 Internationale Nederlanden (Netherlands) (b) 8,541
150 Mid Atlantic Medical Services (c) 5,663
800 National City Corp. 21,300
2,200 Royal Insurance Holdings PLC (United Kingdom) (b) 8,877
80 Soci t G n rale (France) (b) 8,817
50 Sovac (France) (b) 15,745
2,000 Tokio Marine & Fire Insurance Co. Ltd. (The)
(Japan) (b) 23,942
600 Transamerica Corporation 30,300
400 Travelers, Inc. 14,050
1,400 USF&G Corp. 18,375
2,000 United Overseas Bank Ltd. (Registered Shares)
(Singapore) (b) 14,278
200 Wells Fargo & Co. 27,875
439,513
Health Care (2.1%)
300 Ballard Medical Products 4,163
1,000 Baxter International, Inc. 22,625
400 Bristol-Myers Squibb Co. 20,650
200 Clinicom, Inc. 4,050
Health Care (continued)
800 Columbia/HCA Healthcare Corp. $ 32,200
80 Cor Therapeutics, Inc. (c) 950
150 Essilor International ADP (France) (b) 13,541
250 Grancare, Inc. (c) 5,031
115 HEALTHSOUTH Rehabilitation Corp. (c) 3,335
255 Haemonetics Corp. (c) 5,068
85 Health Management Assoc., Inc. (c) 2,582
305 Healthcare Services Group, Inc. 3,126
220 Homecare Management, Inc. (c) 3,658
225 Horizon Healthcare Corp. (c) 4,838
80 Immulogic Pharmaceutical Corp. (c) 840
400 Johnson & Johnson 15,100
400 Lilly (Eli) & Co. 19,900
155 Lincare Holdings, Inc. (c) 3,371
230 Mariner Health Group, Inc. (c) 4,658
105 Medaphis Corp. (c) 3,491
800 Merck & Co., Inc. 23,800
30 Oxford Health Plan (c) 1,654
280 Protocol Systems, Inc. 2,800
440 Ren Corp. USA (c) 3,960
150 Renal Treatment Centers, Inc. (c) 3,375
450 SmithKline Beecham PLC ADS (b) 11,250
150 U.S. Healthcare Inc. 6,150
800 Upjohn Co. 21,700
185 Vencor Inc. (c) 6,198
65 Zoll Medical Corp. (c) 1,934
255,998
Electronics and Electrical Equipment (2.0%)
600 Analog Devices Inc. (c) 15,600
15 BBC Brown Boveri AG Company (Switzerland) (b) 12,450
275 Baldor Electric Co. 6,497
75 First Alert, Inc. 1,359
1,500 General Electric Co. PLC (United Kingdom) (b) 6,598
140 Integrated Device Technology 3,553
200 Intel Corp. 13,500
Electronics and Electrical Equipment (continued)
1,000 Matsushita Electric Industrial Co., Ltd.
(Japan) (b) $ 16,545
120 Maxim Integrated Products Inc. (c) 6,030
200 Motorola, Inc. 20,250
1,000 Murata Manufacturing Co. Ltd. 47,202
1,000 Nippondenso Co. Ltd. (Japan) (b) 18,200
1,000 Omron Tateisi Electronics Co. (Japan) (b) 16,350
155 Sanmina Corp. (c) 2,906
300 Schneider S.A. (France) (b) 21,046
145 Stratacom, Inc. (c) 2,719
210 Teradyne, Inc. (c) 5,303
1,300 Westinghouse Electric Corp. 15,600
231,708
Business Equipment and Services (1.7%)
100 Cambridge Tech Partners 1,550
800 Cisco Systems, Inc. (c) 27,400
200 Compaq Computer Corp. (c) 19,550
700 Computer Associates International, Inc. 21,613
1,000 Dai Nippon Printing Co., Ltd. (Japan) (b) 17,226
400 Dunn & Bradstreet Corp. 23,500
125 FTP Software, Inc. (c) 3,406
230 Fiserv Inc. (c) 4,686
170 Novellus Systems Inc. (c) 5,908
115 Olsten Corp. (The) 3,694
85 PeopleSoft, Inc. (c) 2,922
75 Robert Half International, Inc. (c) 2,297
55 Synopsys, Inc. (c) 2,406
400 Tandy Corp. 14,500
1,900 Unisys Corp. 28,263
220 Viewlogic Systems, Inc. (c) 5,638
115 Wall Data, Inc. (c) 5,161
155 Westcott Communications, Inc. (c) 2,906
100 Wolters Kluwer N.V. (Netherlands) (b) 5,911
135 Zilog Inc. (c) 4,489
203,026
Consumer Services (1.7%)
900 Blockbuster Entertainment Corp. $ 22,725
150 Broadcasting Partners, Inc. (c) 1,913
170 Buffets Inc. (c) 3,698
25 Casino America, Inc. (c) 838
150 Century Communications Corp. Class A 1,331
175 Clear Channel Communications, Inc. (c) 6,147
150 DF&R Restaurants, Inc. (c) 4,031
350 Davco Restaurants, Inc. 5,863
90 EZ Communications, Inc. Class A (c) 1,114
175 Fresh Choice, Inc. (c) 4,638
2,000 Genting Berhad Co. (Malaysia) (b) 19,450
400 Hilton Hotels Corp. 22,800
110 Hospitality Franchise Systems, Inc. (c) 6,050
250 Infinity Broadcasting Corp. Class A (c) 6,313
145 Landry's Seafood Restaurants, Inc. (c) 3,625
110 Paging Network, Inc. (c) 2,503
100 Premark International, Inc. 7,200
400 Procter & Gamble Co. 21,450
600 Promus Companies, Inc. 23,625
50 SFX Broadcasting, Inc. Class A (c) 638
215 Stewart Enterprises, Inc. Class A 5,160
145 TCA Cable TV, Inc. 3,172
185 Taco Cabana, Inc. (c) 3,238
400 Tele-Communications, Inc. Class A 8,300
800 Wendy's International, Inc. 13,700
199,522
Retail (1.6%)
210 Bed Bath & Beyond, Inc. (c) 6,090
250 Books-A-Million, Inc. 5,188
200 Copart, Inc. 2,775
2,000 Cycle & Carriage Ltd. (Singapore) (b) 12,111
1,000 Daiichi Corp. (Japan) (b) 24,428
135 Heilig-Meyers Co. 4,185
Retail (continued)
1,200 K mart Corp. $ 21,750
900 Kroger Co. (c) 21,488
175 Musicland Stores Corp. (c) 3,413
600 Office Depot, Inc. (c) 20,925
160 One Price Clothing Stores, Inc. (c) 3,600
400 Penney (J.C.) Co., Inc. 21,150
205 Stein Mart, Inc. (c) 3,818
700 TJX Cos., Inc. (The) 18,463
90 Tommy Hilfiger (c) 3,229
1,000 Woolworth Corp. 15,125
187,738
Oil and Gas (1.5%)
600 Anadarko Petroleum Corp. 27,600
400 Chevron Corp. 33,700
100 Exxon Corp. 6,288
800 MCN Corp. 28,700
800 McDermott International, Inc. 16,200
400 Mobil Corp. 29,750
450 Repsol S.A. (Spain) (b) 14,086
100 Royal Dutch Petroleum (Netherlands) (b) 10,098
300 Texaco Inc. 18,900
185,322
Utilities (1.4%)
700 FPL Group, Inc. 23,188
700 GTE Corp. 21,700
600 NYNEX Corp. 20,700
1,800 North West Water Group PLC (United Kingdom) (b) 14,420
900 Northeast Utilities Co. 21,263
1,200 Northern Electric PLC (United Kingdom) (b) 12,568
600 Sprint Corp. 20,550
100 Telefonos de Mexico S.A., Ser. L, ADR (b) 6,025
600 Texas Utilities Co. 22,425
162,839
Automotive (1.3%)
170 A.P.S. Holding Corp. (c) $ 3,315
205 Allied Holdings, Inc. (c) 3,895
400 Chrysler Corp. 20,650
500 Daimler Benz AKT-ADR (b) 25,438
1,000 Edaran Otomobil Nasional Berhad (Malaysia) (b) 5,723
130 Exide Corp. 4,810
6,700 Fiat Preferred (Italy) (b) 14,810
800 General Motors Corp. 43,200
200 Magna International, Inc. Class A 9,400
500 Michelin (C.G.D.E) (France) (b) 21,781
153,022
Building and Construction (1.2%)
5,400 AMEC PLC (United Kingdom) (b) 10,414
300 Armstrong World Industries, Inc. 16,200
1,800 CRH PLC (Ireland) (b) 9,905
800 Champion International Corp. 23,200
3,000 Hong Leong Industries (Malaysia) (b) 12,344
1,000 Marui Co. Ltd. (Japan) (b) 14,891
155 Redman Industries (c) 2,751
230 Schuler Homes, Inc. (c) 6,153
7,200 Senior Engineering Group PLC (United Kingdom) (b) 13,779
1,000 Taihei Dengyo Ltd. (Japan) (b) 29,878
139,515
Consumer Non-Durables (1.1%)
370 Authentic Fitness Corp. (c) 4,903
500 Avon Products, Inc. 28,250
195 Department 56 (c) 5,948
800 Dibrell Bros., Inc. 15,000
110 Drypers Corp. 1,348
157 Fastenal Co. 5,103
120 Gymboree Corp. (c) 5,280
130 Inbrand (c) 2,990
500 Philip Morris Cos., Inc. 25,375
145 St. John Knits, Inc. (c) 3,516
2,100 Tate & Lyle PLC (United Kingdom) (b) 13,708
3,000 Toray Industries Inc. (Japan) (b) 18,774
130,195
Transportation (0.9%)
100 Burlington Northern, Inc. $ 5,950
265 Expeditors International of Washington, Inc. 4,704
400 Federal Express Corp. (c) 26,750
700 Illinois Central Corp. 23,625
2,000 Jurong Shipyard Ltd. (Singapore) (b) 16,318
3,500 Swire Pacific Ltd. Class A (Hong Kong) (b) 24,233
101,580
Conglomerates (0.9%)
1,000 Fleming Co. S, Inc. 24,625
200 General Electric Co. 19,925
400 ITT Corp. 34,300
1,000 Ogden Corp. 22,250
101,100
Metals and Mining (0.8%)
5,700 British Steel PLC Company (United Kingdom) (b) 12,008
800 CRA Ltd. (Australia) (b) 9,348
10 Fischer (George) Bearer (Switzerland) (b) 9,207
1,200 Freeport-McMoRan, Inc. 23,250
4,000 MIM Holdings Ltd. (Australia) (b) 8,361
25 N.V. Bekaert S.A. (Belgium) (b) 17,122
2,000 Nisshin Steel Co. Ltd. (Japan) (b) 7,650
180 Schnitzer Steel Industries, Inc. 4,725
260 Webco Industries, Inc. (c) 4,420
96,091
Basic Industrial Products (0.8%)
100 Atlas Copco Free (Sweden) (b) 6,064
800 Ball Corp. 20,500
700 CBI Industries, Inc. 20,913
100 Caterpillar, Inc. 11,238
100 Hercules, Inc. 11,475
400 Rockwell International Corp. 15,900
20 Sommer Allibert (France) (b) 8,293
94,383
Chemicals (0.8%)
200 Akzo N.V. (Netherlands) (b) $ 23,088
80 BASF AG Company (Germany) (b) 15,082
400 Mallinckrodt Group, Inc. 12,800
500 Olin Corp. 23,750
800 Union Carbide Corp. 18,000
92,720
Computer Services/Software (0.6%)
55 America Online, Inc. 3,960
150 Compuware Corp. 6,319
600 Getronics N.V. (Netherlands) (b) 14,856
155 Gupta Corp. (c) 4,108
100 Infosoft International, Inc. 2,075
170 Keane, Inc. (c) 5,419
190 Mercury Interactive Corp. 3,278
600 Oracle Systems Corp. (c) 19,275
50 Powersoft Corp. (c) 2,750
155 Softdesk, Inc. (c) 2,945
64,985
Technology (0.5%)
300 DSC Communications Corp. (c) 15,075
600 Pitney Bowes, Inc. 24,375
800 Silicon Graphics, Inc. (c) 19,100
58,550
Real Estate (0.4%)
4,000 Cheung Kong Holdings Ltd. (Hong Kong) (b) 20,448
700 Meditrust Corp. 22,663
2,000 New World Development Co., Ltd. (Hong Kong) (b) 6,911
50,022
Business Services (0.4%)
175 Interim Svcs., Inc. 4,353
145 Loewen Group, Inc. 3,553
1,100 Moore Corp. Ltd. 20,488
10 SGS Holdings 15,370
43,764
Food and Beverages (0.4%)
700 Coca-Cola Company $ 28,438
100 Docks de France (France) (b) 12,579
100 Papa Johns International, Inc. 2,925
43,942
Forest Products (0.3%)
1,500 Amcor Ltd. (Australia) (b) 9,984
500 Repola (Finland) (b) 8,493
800 Svenska Cellulosa AB (Sweden) (b) 12,869
31,346
Banks (0.2%)
3,200 Allied Irish Banks PLC (Ireland) (b) 11,480
1,100 Barclays Bank PLC (United Kingdom) (b) 8,551
4,200 Christiana Bank (Norway) (b) 8,366
28,397
Electronic Components and Equipment (0.2%)
280 Actel Corp. (c) 3,150
190 Level One Communications, Inc. (c) 3,658
1,400 Siebe PLC (United Kingdom) (b) 12,295
19,103
Distribution and Drug Retailing (0.2%)
600 American Brands, Inc. 18,150
Photography (0.1%)
400 Eastman Kodak Co. 17,750
Publishing (0.1%)
60 Elsevier N.V. (Netherlands) (b) 5,281
1,200 Pearson PLC (United Kingdom) (b) 11,411
16,692
Business Equipment (0.1%)
1,200 Security Services PLC (United Kingdom) (b) 13,530
Computers (0.1%)
195 Union Switch & Signal, Inc. $ 4,290
120 Zebra Technologies Corp. (c) 4,740
9,030
Pharmaceuticals (0.1%)
510 Revco D.S., Inc. (c) 8,351
Broadcasting (--%)
65 Centennial Cellular Corp. Class A 1,284
225 Renaissance Communications 4,725
75 Valuevision International, Inc. Class A 572
6,581
Consumer Durable Goods (--%)
100 Whirlpool Corp. 6,075
Biotechnology (--%)
40 Procyte Corp. (c) 440
Total Common Stocks (cost $3,447,976) $3,210,980
U.S. Government and Agency Obligations (22.1%)(a)
Principal Amount Value
$187,000 U.S. Treasury Bonds 7-1/8s, February 15, 2023 $ 184,779
480,000 U.S. Treasury Notes 7-3/4s, February 15, 2001 510,450
1,986,000 U.S. Treasury Notes 5-1/8s, June 30, 1998 1,912,766
Total U.S. Government and Agency Obligations
(cost $2,656,862) $2,607,995
Corporate Bonds and Notes (10.4%)(a)
Consumer Services (2.1%)
$10,000 AMC Entertainment, Inc. sr. sub. notes 12-5/8s,
2002 $ 11,300
15,000 Argyle Television Operations sr. sub.
notes 9-7/8s, 2003 14,700
15,000 Century Communications Corp. sr. sub. deb.
11-7/8s, 2003 16,200
45,000 Continental Cablevision, Inc. sr. deb. 9s, 2008 42,975
15,000 Flagstar Corp. sr. sub. deb. 11-1/4s, 2004 14,775
15,000 Insight Communications Co. sr. sub. notes 8-1/4s
2000 15,000
40,000 John Q. Hammons Hotels 1st. mtge. 8-7/8s, 2004 37,000
15,000 La Quinta Motor Inns Inc. deb. 9-1/4s, 2003 14,400
45,000 Marvel Holdings, Inc. sr. secd. disc. notes
zero %, 1998 27,900
25,000 NEXTEL Communications Inc. sr. disc. notes
stepped-coupon zero % (9-3/4s, 2/15/99), 2004 (d) 14,875
25,000 SFX Broadcasting sr. sub. notes 11-3/8s, 2000 25,625
234,750
Insurance and Finance (1.4%)
60,000 Associates Corp. sub. notes 5.49s, 1999 56,738
25,000 Comdata Network, Inc. sr. notes 12-1/2s, 1999 27,000
15,000 Comdata Network, Inc. sr. sub. deb. 13-1/4s, 2002 16,500
60,000 Household International sub. notes 6s, 1999 57,825
15,000 Reliance Group Holdings sr. sub. notes 9-3/4s, 2003 13,950
172,013
Consumer Non-Durables (0.8%)
$15,000 Foamex (L.P.) Capital Corp. sr. notes 11-1/4s,
2002 $ 16,050
60,000 Philip Morris Cos., Inc. notes 9-1/4s, 1997 64,988
15,000 Playtex Family Products Corp. sr. sub. notes 9s,
2003 13,650
94,688
Health Care (0.8%)
15,000 EPIC Holdings Inc. sr. notes stepped-coupon zero %
(12s, 3/15/97), 2002 (d) 12,056
25,000 Healthsouth Rehabilitation 9-1/2s, 2000 24,563
10,000 Mediplex Group, Inc. sr. sub. notes 11-3/4s, 2002 10,800
45,000 Paracelsus Healthcare Corp. sr. sub. notes 9-7/8s,
2003 43,650
91,069
Utilities (0.7%)
60,000 Puget Sound Power & Light Co. 1st mtge. 7-7/8s, 1997 62,850
20,000 Texas Utilities Electric sub. notes 5-7/8s, 1998 19,425
82,275
Retail (0.6%)
15,000 Finlay Enterprises, Inc. sr. notes 10-5/8s, 2003 15,000
15,000 Grand Union Co. sr. sub. notes 12-1/4s, 2002 14,850
45,000 Grand Union Co. sr. sub. notes 12-1/4s, 2002 44,550
74,400
Food and Beverages (0.6%)
$15,000 Chiquita Brands International Inc. sub. deb.
11-1/2s, 2001 $ 15,675
40,000 Fresh Del Monte Produce Corp. sr. notes 10s, 2003 (e) 38,400
15,000 RJR Nabisco, Inc. sr. notes 8-3/4s, 2004 13,772
67,847
Metals and Mining (0.5%)
15,000 Geneva Steel Corp. sr. notes 9-1/2s, 2004 13,875
45,000 WCI Steel Inc. sr. notes 10-1/2s, 2002 (e) 48,263
62,138
Automotive (0.5%)
45,000 Key Plastics Corp. sr. notes 14s, 1999 54,000
Specialty Consumer Products (0.4%)
25,000 International Semi-Tech. Corp. sr. secd. disc.
notes stepped-coupon zero % (11-1/2s,
8/15/00), 2003 (d) 12,500
40,000 Stater Brothers sr. notes 11s, 2001 (e) 39,500
52,000
Oil and Gas (0.4%)
45,000 Chesapeake Energy Corp. deb. 12s, 2001 (e) 45,000
Chemicals (0.3%)
15,000 Harris Chemical Corp. sr. sub. notes 10-3/4s, 2003 15,300
15,000 OSI Specialties Inc. sr. sub. notes 9-1/4s, 2003 15,000
10,000 UCC Investors Holding, Inc. sr. notes 10-1/2s, 2002 10,600
40,900
Conglomerates (0.3%)
$15,000 Jordan Industries, Inc. sr. notes 10-3/8s, 2003 $ 14,850
10,000 MacAndrews & Forbes Group Inc. deb. 12-1/4s, 1996 10,100
5,000 MacAndrews & Forbes Holdings Inc. sub. deb. 13s, 1999 5,013
29,963
Forest Products (0.2%)
15,000 Gaylord Container Corp. sr. notes 11-1/2s, 2001 15,150
15,000 Stone Container Corp. sr. sub. notes 10-3/4s, 1997 14,700
29,850
Business Services (0.2%)
30,000 Corporate Express, Inc. sr. notes 9-5/8s, 2004 (e) 28,050
Basic Industrial Products (0.2%)
15,000 Anchor Glass Container Corp. sr. sub. deb.
Ser. B, 9-7/8s, 2008 14,400
10,000 Ivex Packaging Corp. sr. sub. notes 12-1/2s, 2002 11,125
25,525
Transportation (0.2%)
10,000 Blue Bird Acquisition Corp. sub. deb. Ser. B,
11-3/4s, 2002 10,700
10,000 Viking Star Shipping sr. secd. notes 9-5/8s, 2003 (e) 10,300
21,000
Building and Construction (0.1%)
15,000 Snydergeneral Corp. sr. sub. deb. 14-1/4s, 2000 15,750
Environmental Control (0.1%)
$ 10,000 ICF Kaiser International Inc. sr. sub. notes 12s,
2003 $10,100
Total Corporate Bonds and Notes
(cost $1,186,606) $1,231,318
Foreign Bonds and Notes (7.8%) (a)(f)
Principal Amount Value
DKK 336,000 Denmark (Government of) bonds 7s, 2004 $51,588
FF 294,000 France (Government of) Oat 6-3/4s, 2003 52,675
(yen) 29,400,000 Japan (Government of) BTPS 4-1/2s, 2003 299,808
NLG 273,000 Netherlands (Government of) bonds 5-3/4s, 2004 141,427
SEK 220,000 Sweden (Government of) bonds 7-3/4s, 2002 142,159
(pound) 137,000 United Kingdom (Treasury) bonds 9-1/2s, 2005 231,388
Total Foreign Bonds and Notes (cost $917,118) $919,045
Preferred Stocks (0.6%) (a)
Number of Shares Value
250 Calfed Inc. Ser.B, $10.625 pfd. $24,813
500 Pantry Pride $14.875 pfd. 50,825
Total Preferred Stocks (cost $75,825) $75,638
Yankee Bonds and Notes (0.4%)(a) (cost $44,888)
Principal Amount Value
$ 45,000 Eletson Holdings, Inc. 1st pfd. mtge. notes
9-1/4s, 2003 $ 45,225
Options On Foreign Currencies (--%)(a)(f)
Currency Expiration Date/Strike Price Value
DM 200,000 Deutschemarks In
Exchange for U.S. Dollars 6/21/94 DM1.725 $2,060
DM 100,000 Deutschemarks In
Exchange for U.S. Dollars 6/21/94 DM1.725 940
Total Options On Foreign Currencies (cost $5,165) $3,000
Warrants (--%)(a)(c)(e) (cost $260)
Number of Warrants Expiration Date Value
20 UCC Investor Holding, Inc. 1/1/99 $260
Short-Term Investments (26.7%)(a)
Principal Amount Value
$ 500,000 U.S. Treasury Bills 3.28s, April 28, 1994 $498,770
405,000 U.S. Treasury Bills 3.26s, April 28, 1994 404,010
600,000 U.S. Treasury Bills 3.25s, April 28, 1994 598,538
650,000 U.S. Treasury Bills 3.23s, April 28, 1994 648,425
200,000 U.S. Treasury Bills 3.23s, April 28, 1994 199,515
500,000 U.S. Treasury Bills 3.21s, April 28, 1994 498,796
300,000 U.S. Treasury Bills 3.2s, April 28, 1994 299,280
Total Short-Term Investments (cost $3,147,334) $3,147,334
Total Investments (cost $11,482,034) (g) $11,240,795
Notes
(a) Percentages indicated are based on net assets of $11,804,030, which
correspond to a net asset value per share for both class A and B shares of
$8.26.
(b) Securities whose values are determined or significantly influenced by
trading on exchanges not in the United States or Canada. ADR or ADS after
the name of a foreign holding stands for American Depository Receipt or
American Depository Shares, respectively, representing ownership of foreign
securities on deposit with a domestic custodian bank.
(c) Non-income-producing security.
(d) The interest rate and date shown parenthetically represent the new
interest rate to be paid and the date the Fund will begin receiving
interest at this rate.
(e) Security 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 March 31,
1994, these securities were valued at $209,773 or 1.8% of net assets.
(f) Foreign currency-denominated. Market value is translated at the current
exchange rate.
(g) The aggregate identified cost on a tax basis is $11,482,085 resulting
in gross unrealized appreciation and depreciation of $21,703 and $262,993
respectively, or net unrealized depreciation of $241,290.
Forward Currency Contracts Outstanding
at March 31, 1994
Market Aggregate Delivery Unrealized
Value Face Value Date Appreciation/
(Depreciation)
Deutschemarks $71,646 $71,646 7/6/94 $ --
(Sell)
Deutschemarks 249,851 249,851 7/6/94 --
(Sell)
$ --
The accompanying notes are an integral part of these financial statements.
<PAGE>
Statement of
assets and liabilities
March 31, 1994
The accompanying notes are an integral part of these financial statements.
Putnam Asset Allocation Conservative Fund
Assets Investments in securities, at $11,240,795
value (identified cost
$11,482,034) (Note 1)
Cash 4,721
Interest, dividends and other 81,285
receivables
Receivable for securities sold 425,218
Receivable for shares of the 2,312,420
Fund sold
Receivable from Manager (Note 3) 24,892
Unamortized organization 12,893
expenses (Note 1)
Total assets 14,102,224
Liabilities Payable for securities purchased $2,217,945
Payable for shares of the Fund 33,158
repurchased
Payable for administrative 500
services (Note 3)
Payable for compensation of 500
Trustees (Note 3)
Payable for investor servicing 4,179
and custodian fees (Note 3)
Payable for distribution fees 3,200
(Note 3)
Payable for organization 13,263
expenses
Other accrued expenses 25,449
Total liabilities 2,298,194
Net assets $11,804,030
Represented Paid-in capital (Notes 2 and 5) $12,032,584
by
Undistributed net investment 12,542
income
Accumulated net realized gain on 143
investment transactions (Note 1)
Net unrealized depreciation of (241,239)
investments, options and forward
currency contracts
Total--Representing net assets $11,804,030
applicable to capital shares
outstanding
Computation
of net asset
value and Net asset value and redemption $8.26
offering price of Class A shares
price ($5,461,742 divided by 661,021
shares)
Offering price per share $8.76
(100/94.25 of $8.26)*
Net asset value and offering $8.26
price of Class B shares
($6,342,288 divided by 768,057
shares)**
*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.
<PAGE>
Statement of
operations
For the period February 7, 1994
(commencement of operations)
to March 31, 1994
The accompanying notes are an integral part of these financial statements.
Investment income:
Interest $18,698
Dividends (net of foreign tax of $126) 3,175
Total investment income 21,873
Expenses:
Compensation of Manager (Note 3) $4,294
Investor servicing and custodian fees (Note 3) 4,179
Compensation of Trustees (Note 3) 500
Auditing 17,000
Reports to shareholders 1,000
Legal 2,800
Postage 500
Amortization of organization expenses (Note 1) 370
Administrative services (Note 3) 500
Registration fees 4,149
Distribution fees--Class A (Note 3) 954
Distribution fees--Class B (Note 3) 2,270
Fees waived and other expenses absorbed by the
Manager (Note 3) (29,185)
Total expenses 9,331
Net investment income 12,542
Net realized loss on investments (Notes 1 and 4) (127)
Net realized gain on options (Notes 1 and 4) 270
Net unrealized depreciation of investments, options and
forward currency contracts during the period (241,239)
Net loss on investment transactions (241,096)
Net decrease in net assets resulting from operations
$(228,554)
<PAGE>
Statement of
changes in net assets
For the period
February 7, 1994
(commencement of
operations) to March 31
1994
Increase in net assets
Operations:
Net investment income $12,542
Net realized loss on investments (127)
Net realized gain on options 270
Net unrealized depreciation of investments, options and
forward currency contracts (241,239)
Net decrease in net assets resulting from operations (228,554)
Increase from capital share transactions (Note 5) 11,999,251
Total increase in net assets 11,770,697
Net assets
Beginning of period 33,333
End of period (including undistributed net investment
income of $12,542) $11,804,030
<PAGE>
Financial
Highlights
(For a share
outstanding
throughout the
period)
Putnam Asset Allocation Conservative Fund
For the period For the period
February 18, February 7, 1994
1994 (commencement of
(commencement of operations) to
operations) to March 31
March 31
1994 1994
Class B Class A
Net Asset Value, Beginning of $8.50 $8.50
Period
Investment Operations
Net Investment Income* .01(a) .03(a)
Net Realized and Unrealized Gain (.25) (.27)
(Loss) on Investments
Total from Investment (.24)(a) (.24)(a)
Operations*
Net Asset Value, End of Period $8.26 $8.26
Total Investment Return at Net (18.80)(c) (18.80)(c)
Asset Value (%) (b)
Net Assets, End of Period (in $6,342 $5,462
thousands)
Ratio of Expenses to Average Net 2.00(a)(c) 1.25(a)(c)
Assets (%)
Ratio of Net Investment Income 1.57(a)(c) 2.32(a)(c)
to Average Net Assets (%)
Portfolio Turnover (%) 1.90(d) 1.90(d)
*Per share net investment income for the period ended March 31, 1994 have
been determined on the basis of the weighted average number of shares
outstanding during the period.
(a) Reflects a voluntary absorption of expenses incurred by the Fund. As a
result of this limitation, expenses for the period ended March 31, 1994,
reflect a reduction of $0.06 and $0.04 for Class A and Class B shares,
respectively. See Note 3.
(b) Total Investment Return assumes dividend reinvestment and does not
reflect the effect of sales charges.
(c) Annualized.
(d) Not annualized.
<PAGE>
Notes to
financial statements
March 31, 1994
Note 1 Significant accounting policies
Putnam Asset Allocation Funds (the "Trust") is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company which consists of a series of investment
portfolios (the "Funds"), each of which is represented by a separate series
of shares of beneficial interest. The Trust currently offers three Funds:
Growth Portfolio, Balanced Portfolio and Conservative Portfolio, whose
objectives are to seek capital appreciation, total return and total return
consistent with preservation of capital, respectively.
Each series of the Trust offers both class A and class B shares. The Trust
commenced its public offering of shares on February 7, 1994. Class A shares
are sold with a maximum front-end sales charge of 5.75%. Class B shares do
not pay a front-end sales charge but pay a higher ongoing distribution fee
than class A shares, and may be subject to a contingent deferred sales
charge, if those shares are redeemed within six years of purchase. Expenses
of the Trust are borne pro-rata by the holders of both classes of shares,
except that each class bears expenses unique to that class (including the
distribution fees applicable to such class), and 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 that 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 followed by
the Trust 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
last reported bid and asked prices. 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, and other investments,
including restricted securities, are stated at fair value following
procedures approved by the Trustees. Market quotations are not considered
to be readily available for long- term corporate bonds and notes; such
investments are stated at fair value on the basis of valuations furnished
by a pricing service, approved by the Trustees, which determines valuations
for normal, institutional-size trading units of such securities using
methods based on market transactions for comparable securities and various
relationships between securities that are generally recognized by
institutional traders. (See Section E of Note 1 with respect to valuation
of options and forward currency contracts.)
B) Joint trading account Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the Funds 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 Funds' 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 Funds, or any joint trading account, through
their custodian, receive 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 Funds'
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.
Discount on zero coupon bonds, original issue discount bonds, payment-in-
kind bonds and stepped-coupon bonds is accreted according to the effective
interest method.
Foreign currency-denominated receivables and payables are "marked-to-
market" using the current exchange rate. The fluctuation between the
original exchange rate and the current exchange rate is recorded as
unrealized gain or loss. Upon receipt or payment, the Funds realize a gain
or loss on foreign currency amounting to the difference between the
original value and the ending value of the receivable or payable. Foreign
currency gains and losses related to interest receivable are reported as
part of interest income.
Putnam Asset Allocation FundsE) Option accounting principles When a Fund
writes a call or put option, an amount equal to the premium received by the
Fund is included in that 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. If a written put
option is exercised, the amount of the premium originally received reduces
the cost of the security which the Fund purchases upon exercise of the
option.
Each of the Funds may write 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. In writing a put option, the Fund assumes the risk of
incurring a loss if the market price of the underlying security decreases
and the option is exercised.
The premium paid by a Fund for the purchase of a call or put option is
included in the Fund's "Statement of assets and liabilities" as an
investment and subsequently "marked-to- market" to reflect the current
market value of the option. If an option which the Fund has purchased
expires on the stipulated expiration date, the Fund realizes a loss in the
amount of the cost of the option. If the Fund enters into a closing sale
transaction, the Fund realizes a gain or loss, depending on whether
proceeds from the closing sale transaction are greater or less than the
cost of the option. If the Fund exercises a call option, the cost of the
securities acquired by exercising the call is increased by the premium paid
to buy the call. If the Fund exercises a put option, it realizes a gain or
loss from the sale of the underlying security and the proceeds from such
sale are decreased by the premium originally paid.
Options on foreign currencies Each of the Funds may write and purchase put
and call options on foreign currencies. The accounting principles and risks
involved are similar to those described above relating to options on
securities. The amount of potential loss to the Funds upon exercise of a
written call option is the value (in U.S. dollars) of the currency sold,
converted at the spot price, less the value of U.S. dollars received in
exchange. The amount of potential loss to the Funds upon exercise of a
written put option is the value (in U.S. dollars) of the currency received
converted at the spot price, less the value of the U.S. dollars paid in
exchange.
Forward currency contracts A forward currency contract is an agreement
between two parties to buy and sell a currency at a set price on a future
date. The market value of the contract will fluctuate with changes in
currency exchange rates. The contract is "marked-to-market" daily and the
change in market value is recorded as an unrealized gain or loss. When the
contract is closed, the Fund records a realized gain or loss equal to the
difference between the value of the contract at the time it was opened and
the value at the time it was closed. The maximum potential loss from
forward currency contracts is the aggregate face value in U.S. dollars at
the time the contracts were opened; however, management believes the
likelihood of such a loss to be remote.
F) Federal taxes It is the policy of each 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 each 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.
G) Distributions to shareholders Distributions to shareholders will be
recorded by the respective Funds on the ex-dividend date. The Growth
Portfolio will distribute any net investment income at least annually. The
Conservative Portfolio and the Balanced Portfolio will distribute any net
investment income at least quarterly. Each of the Funds will distribute any
net realized capital gains at least annually.
H) Expenses of the Trust Expenses directly charged or attributable to any
Fund will be paid from the assets of that Fund. Generally, expenses of the
Trust will be allocated among and charged to the assets of each Fund on a
basis that the Trustees deem fair and equitable, which may be based on the
relative assets of each Fund or the nature of the services performed and
relative applicability to each Fund.
I) Unamortized organization expenses Expenses incurred by the Trust in
connection with its organization, its registration with the Securities and
Exchange Commission and with various states, and the initial public
offering of its shares aggregated $39,790 allocated as follows:
Fund Amount
Growth Portfolio $13,264
Balanced Portfolio 13,263
Conservative Portfolio 13,263
These expenses are being amortized by each Fund on a straight-line basis
over a five-year period. Note 2 Initial capitalization and offering of
shares
The Trust was established as a Massachusetts business trust under the laws
of Massachusetts on November 4, 1993.
During the period November 4, 1993 to February 7, 1994, the Trust had no
operations other than those related to organizational matters, including
the initial capital contribution of $33,334, $33,333 and $33,333 for the
Growth Portfolio, Balanced Portfolio and Conservative Portfolio,
respectively, and the issuance of 1,960 Class A shares and 1,960 Class B
shares for each Fund, to Putnam Mutual Funds Corp., a wholly-owned
subsidiary of Putnam Investments, Inc. on December 20, 1993.
Fund Commencement of Operations
Growth Portfolio--Class A February 8, 1994
Growth Portfolio--Class B February 16, 1994
Balanced Portfolio--Class A February 7, 1994
Balanced Portfolio--Class B February 11, 1994
Conservative Portfolio--Class A February 7, 1994
Conservative Portfolio--Class B February 18, 1994
Note 3 Management fee, administrative services, and other transactions
Compensation of Putnam Management, the Trust's Manager, for management and
investment advisory services is paid quarterly based on the average net
assets of each Fund. Such fee is based on the following annual rates: 0.70%
of the first $500 million of the average net assets of a Fund, 0.60% of the
next $500 million, 0.55% of the next $500 million and 0.50% of any amount
over $1.5 billion.
Until December 31, 1994, the Manager has voluntarily agreed to reduce its
compensation and, to the extent necessary, limit expenses of each Fund
(exclusive of brokerage, interest, taxes, deferred organizational and
extraordinary expenses, if any, and expenses incurred under the Trust's
distribution plans described below) to an annual rate of 1.00% of each
Fund's average net assets. This limitation was accomplished by a reduction
of the compensation payable under the management contract to the Manager
and, to the extent necessary, by the Manager's assumption of additional
Fund expenses. As a result of these limitations, the expenses for the
period ended March 31, 1994, were reduced by $86,394.
The Trust also reimburses the Manager for the compensation and related
expenses of certain officers of the Trust and their staff who provide
administrative services to the Trust. The aggregate amount of all such
reimbursements is approved annually by the Trustees. For the period ended
March 31, 1994, the Trust paid $1,500 for these services.
Trustees of the Trust receive an annual Trustee's fee of $300 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 each of the Fund's assets 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 period ended March 31, 1994, amounted to
$13,731. Investor servicing and custodian fees reported in the Statement of
operations for the period ended March 31, 1994, have been reduced by
credits allowed by PFTC.
Each of the Funds has adopted a distribution plan with respect to their
class A shares (the "Class A Plan") pursuant to Rule 12b-1 under the
Investment Company Act of 1940. The purpose of the class A Plan is to
compensate Putnam Mutual Funds Corp., a wholly-owned subsidiary of Putnam
Investments Inc., for services provided and expenses incurred by it in
distributing class A shares. The Trustees have approved payment by each
Fund to Putnam Mutual Funds Corp. at an annual rate of 0.25% of each Fund's
average net assets attributable to its class A shares. For the period ended
March 31, 1994, the Funds paid Putnam Mutual Funds Corp. distribution fees
of $4,109 for class A shares.
During the period ended March 31, 1994, Putnam Mutual Funds Corp., acting
as an underwriter, received net commissions of $32,952 from the sale of
class A shares of the Trust.
Putnam Asset Allocation FundsA deferred sales charge of up to 1% is
assessed on certain redemptions of class A shares purchased as part of an
investment of $1 million or more. For the period ended March 31, 1994,
Putnam Mutual Funds Corp., acting as an underwriter, did not receive any
contingent deferred sales charges from redemptions during the period ended
March 31, 1994.
Each of the Funds has adopted a distribution plan with respect to their
class B shares (the "Class B Plan") pursuant to Rule 12b-1 under the
Investment Company Act of 1940. The purpose of the class B Plan is to
compensate Putnam Mutual Funds Corp. for services provided and expenses
incurred by it in distributing class B shares. The class B Plan provides
for payments by the Fund to Putnam Mutual Funds Corp. at an annual rate of
1.00% of each Fund's average net assets attributable to class B shares. For
the period ended March 31, 1994, the Funds paid Putnam Mutual Funds Corp.
distribution fees of $6,748 for class B shares.
Putnam Mutual Funds Corp. also receives the proceeds on the contingent
deferred sales charges on its class B share redemptions within six years of
purchase. The charge is based on declining rates, which begin at 5% of the
net asset value of the redeemed shares. Putnam Mutual Funds Corp. did not
receive any contingent deferred sales charges from redemptions during the
period ended March 31, 1994. Note 4 Purchases and sales of securities
During the period ended March 31, 1994, purchases and sales of investment
securities (other than short-term investments) were as follows:
In determining the net gain or loss on securities sold, the cost of
securities has been determined on the identified cost basis.
U.S. Government Obligations Other Securities
Purchases Sales Purchases Sales
Growth Portfolio $400,584 $-- $9,254,678 $184,037
Balanced Portfolio 1,162,474 -- 13,000,934 194,263
Conservative Portfolio 2,656,862 -- 5,768,432 88,977
Purchased option transactions during the period are summarized as follows:
Cost
Balanced Portfolio
Options purchased $5,495
Options sold (330)
Purchased options outstanding at end of period $5,165
Conservative Portfolio
Options purchased $5,495
Options sold (330)
Purchased options outstanding at end of period $5,165
Written option transactions during the period are summarized as follows:
Premiums Received
Balanced Portfolio
Options opened $ 60
Options closed (60)
Written options outstanding at end of period $--
Conservative Portfolio
Options opened $ 60
Options closed (60)
Written options outstanding at end of period $--
Transactions in forward currency contracts during the period are summarized
as follows:
Sales of Forward Currency Contracts
Aggregate Face Value
Growth Portfolio
Contracts opened $125,078
Contracts closed --
Open at end of period $125,078
Balanced Portfolio
Contracts opened $333,395
Contracts closed --
Open at end of period $333,395
Conservative Portfolio
Contracts opened $321,497
Contracts closed --
Open at end of period $321,497
Note 5 Capital shares
At March 31, 1994, there was an unlimited number of shares of beneficial
interest authorized, divided into two classes of shares, Class A and Class
B shares. Transactions in capital shares were as follows:
Class A Class B
For the period February For the period February
8, 1994 (commencement of 16, 1994 (commencement
operations) to March 31, of operations) to March
1994 31, 1994
Shares Amount Shares Amount
Growth
Portfolio
Shares sold 910,016 $ 7,701,734 497,414 $ 4,180,672
Shares (5,616) (46,119) (8) (64)
repurchased
Net Increase 904,400 $ 7,655,615 497,406 $ 4,180,608
For the period February For the period February
7, 1994 (commencement of 11, 1994 (commencement
operations) to March 31, of operations) to March
1994 31, 1994
Balanced
Portfolio
Shares sold 1,287,912 $10,878,749 1,122,318 $ 9,424,761
Shares (104,169) (879,928) (55,908) (458,512)
repurchased
Net Increase 1,183,743 $ 9,998,821 1,066,410 $ 8,966,249
For the period February For the period February
7, 1994 (commencement of 18, 1994 (commencement
operations) to March 31, of operations) to March
1994 31, 1994
Conservative
Portfolio
Shares sold 659,123 $ 5,563,888 770,061 $ 6,468,763
Shares (63) (530) (3,965) (32,870)
repurchased
Net Increase 659,060 $ 5,563,358 766,096 $ 6,435,893
<PAGE>
Putnam
Asset
Allocation
Funds
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
Investor servicing agent
Putnam Investor Services
Mailing address:
P.O. Box 41203
Providence, RI 02940-1203
1-800-225-1581
Custodian
Putnam Fiduciary
Trust Company
Legal counsel
Ropes & Gray
Independent accountants
Price Waterhouse
(DALBAR LOGO)
Putnam Investor Services
has received the DALBAR
award each year since
the award's 1990 inception.
In more than 10,000 tests
of 38 shareholder
service components,
Putnam outperformed
the industry standard
in every category.
Officers
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
John R. Verani
Vice President
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Gary N. Coburn
Vice President
Peter Carman
Vice President
William J. Landes
Vice President
and Fund Manager
William N. Shiebler
Vice President
Paul 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 Asset
Allocation Funds. 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.
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