Putnam
American
Renaissance
Fund
[GRAPHIC OMITTED: PUTNAM SCALES LOGO]
BOSTON * LONDON * TOKYO
SEMIANNUAL REPORT
January 31, 1996
From the Chairman
Dear Shareholder:
One of the essential characteristics of successful money management is
vision -- the ability to forecast trends that can cut across a variety
of industries and market sectors while positioning a portfolio to
benefit accordingly. It is a pleasure to introduce to you a new Putnam
fund that makes this vision an integral element of its strategy: Putnam
American Renaissance Fund.
The fund seeks capital appreciation by investing primarily in stocks of
well-established large-capitalization growth companies that Putnam
believes will benefit from major long-term economic trends, business
conditions, and/or consumer behavior. These stocks are selected by an
innovative process that weaves together three strands of criteria --
proprietary screening, traditional research, and forecasting -- each
given approximately equal emphasis.
Like other funds managed by Putnam's Core Growth Equity Team, Putnam
American Renaissance Fund's investment process begins by utilizing the
team's proprietary screening methods, which evaluate companies for four
key characteristics.
* Cash plowback, which is a good measure of a company's
ability to finance its own growth
* Dividend yield, incorporating both the current yield
and expectations of its sustainability and growth potential
* Price-to-sales ratio, which the group considers the best
indicator of whether a company's stock price acccurately reflects its
value
* The existence of a fundamental catalyst that has
contributed to positive earnings surprises
Companies that meet the fund's criteria in each of these areas also
undergo more traditional in-depth research to evaluate the strength of
their management, product lines, competitive position, and balance
sheets. But, at the same time, the fund's most distinctive feature comes
into play -- the identification of those stocks with the strongest
potential to profit from macroeconomic trends.
* AN EFFECTIVE BLEND OF RESEARCH AND
MACROECONOMIC FORECASTING
As part of the fund's investment process, Portfolio Manager Carol
McMullen meets each quarter with the senior members of Putnam's Equity
Research and Core Growth portfolio management teams to review events and
patterns of change around the world, focusing on those most likely to be
major drivers of business trends. These conferences determine the themes
that will influence the portfolio for the next quarter.
One trend identified over the four months ended January 31, 1996 -- the
fund's initial, although abbreviated, semiannual period -- was the
globalization of consumer markets. With its large distribution and
product franchise in the United States, Maybelline was one cosmetics
company that appeared -- in Putnam Management's opinion -- very likely
to succeed in the international arena. Other investors shared this
assessment; shortly after the fund purchased some of the company's
stock, a bidding war ensued, followed by a tender offer -- resulting in
a handsome profit for the fund. (While this stock, along with others
discussed in this report, was viewed favorably at the end of the fiscal
period, all portfolio holdings are subject to review and adjustment in
accordance with the fund's investment strategy and may well vary in the
future.)
Demographic trends are also an important consideration for the fund. For
example, the aging of the baby boomer generation has sparked a renewed
interest in retirement planning and led to expectations of increased
health-care consumption. Financial and health-care stocks are benefiting
as a result, and the fund has sizable positions in both industry
sectors. Aging boomers are also spending heavily on entertainment and
leisure, and companies such as Disney and Marriott -- both fund holdings
- -- are capturing a large share of their business.
But perhaps the most significant trend influencing the fund is the one
that inspired its name. Since the late 1980s, corporate America has
been undergoing a period of rebirth, revitalization, and re-engineering.
This transition has a great deal in common with the fundamental changes
in European culture and thought that marked the original. While the
companies and industries in which this fund invests will change over
time, this theme of re-engineered growth is likely to remain one of the
fund's foundations and is exemplified by holdings throughout the
portfolio.
* INITIAL PERFORMANCE CLEARLY DEMONSTRATES
STRATEGY'S POTENTIAL
As the fund's first semiannual period drew to a close, it became
apparent that we have chosen a very firm foundation to build on. For the
period October 2, 1995 (commencement of operations) to January 31, 1996,
Putnam American Renaissance Fund's performance at net asset value has
already demonstrated the ability to surpass two key measures of stock
market performance: the Standard & Poor's 500(registered trademark)
Index and the S&P/Barra Growth Index. Complete performance details
follow.
Respectfully yours,
/s/George Putnam
Chairman of the Trustees
March 20, 1996
The views expressed here are exclusively those of Putnam Management.
They are not meant as investment advice. Although the described holdings
were viewed favorably as of 1/31/96, there is no guarantee the fund will
continue to hold these securities in the future.
[GRAPHIC OMITTED: TOP 10 HOLDINGS (1/31/96)
Eli Lilly & Co.
Pharmaceuticals
Pharmacia & Upjohn Inc.
Pharmaceuticals
Boeing Co.
Aircraft and defense contracting
Kimberly-Clark Corp.
Paper and consumer durables
PepsiCo, Inc.
Soft drinks
Halliburton
Oil services
Procter & Gamble, Inc.
Consumer nondurables
Amgen, Inc.
Biotechnology
Walt Disney Productions, Inc.
Entertainment
Honeywell
Computers and electronics
Footnote reads:
These holdings represent 31.8% of the fund's net assets. Portfolio
holdings will vary over time. ]
Performance summary
Performance should always be considered in light of a fund's investment
strategy. Putnam American Renaissance Fund seeks capital appreciation by
investing primarily in stocks of well-established, large-capitalization
companies that Putnam believes will benefit from major long-term
economic trends, business conditions, and/or consumer behavior.
This section provides, at a glance, information about your fund's
performance. Total return shows how the value of the fund's shares
changed over time, assuming you held the shares through the entire
period and reinvested all distributions back into the fund.
total return for periods ended 1/31/96
TOTAL RETURN FOR PERIODS ENDED 1/31/96
Standard Standard
& Poor's & Poor's/Barra
NAV POP 500 Index Growth Index
- ------------------------------------------------------------------------
Life-of-fund
(since 10/2/95) 11.29% 4.88% 9.46% 9.64%
- ------------------------------------------------------------------------
TOTAL RETURN FOR PERIODS ENDED 12/31/95
(most recent calendar quarter)
NAV POP
- ------------------------------------------------------------------------
Life-of-fund
(since 10/2/95) 7.65% 1.44%
- ------------------------------------------------------------------------
Fund performance data do not take into account any adjustment for taxes
payable on reinvested distributions. Performance data represent past
results. Investment returns and net asset value will fluctuate so an
investor's shares, when sold, may be worth more or less than their
original cost. POP data assumes 5.75% maximum sales charge. The fund's
performance reflects a voluntary expense limitation currently in effect.
Had it not been in effect, the fund's total return would have been
lower. The short-term results of a relatively new fund are not
necessarily indictative of its long-term prospects.
TERMS AND DEFINITIONS
Net asset value (NAV) is the value of all your fund's assets, minus any
liabilities, divided by the number of outstanding shares, not including
any initial or contingent deferred sales charge.
Public offering price (POP) is the price of a mutual fund share plus
the maximum sales charge levied at the time of purchase. POP
performance figures shown here assume the maximum 5.75% sales charge for
class A shares.
COMPARATIVE BENCHMARKS
Standard & Poor's 500 Index is an unmanaged list of common stocks that
is frequently used as a general measure of stock market performance.
Standard & Poor's/Barra Growth Index is a capitalization-weighted index
of all common stocks within the S&P 500 with high price-earnings ratios.
The indexes assume reinvestment of all distributions and do not take
into account brokerage commissions or other costs. The fund's portfolio
contains securities that do not match those in the indexes. It is not
possible to invest directly in an index.
<TABLE>
<CAPTION>
Portfolio of investments owned
January 31, 1996 (Unaudited)
COMMON STOCKS (94.0%)*
NUMBER OF SHARES VALUE
<S> <C> <C> <C>
Aerospace (5.7%)
- ------------------------------------------------------------------------------------------------
1,200 Boeing Co. $ 93,143
600 Sundstrand Corp. 41,400
------------------
134,543
Alcoholic Beverages (1.8%)
- ------------------------------------------------------------------------------------------------
600 Anheuser-Busch Cos., Inc. 41,700
Apparel (2.1%)
- ------------------------------------------------------------------------------------------------
700 Nike, Inc. 48,825
Banks (1.8%)
- ------------------------------------------------------------------------------------------------
1,100 Fleet Financial Group, Inc. 44,000
Business Services (3.2%)
- ------------------------------------------------------------------------------------------------
1,800 Officemax, Inc. + 41,400
900 Reynolds & Reynolds Co. Class A 34,988
------------------
76,388
Chemicals (0.9%)
- ------------------------------------------------------------------------------------------------
300 Goodrich (B.F.) Co. 22,088
Computer Services (2.6%)
- ------------------------------------------------------------------------------------------------
400 America Online, Inc. + 17,900
634 First Data Corp. 44,856
------------------
62,756
Computer Software (5.1%)
- ------------------------------------------------------------------------------------------------
1,200 Informix Corp. + 40,050
700 Parametric Technology Corp. + 45,325
800 Sun Microsystems, Inc. + 36,800
------------------
122,175
Consumer Products (2.8%)
- ------------------------------------------------------------------------------------------------
800 Procter & Gamble Co. 67,100
Cosmetics (0.9%)
- ------------------------------------------------------------------------------------------------
500 Maybelline Inc. 21,938
Electrical Equipment (1.8%)
- ------------------------------------------------------------------------------------------------
500 Hewlett-Packard Co. 42,375
Electronics and Electrical Equipment (3.6%)
- ------------------------------------------------------------------------------------------------
1,000 Honeywell, Inc. 50,875
600 Diebold, Inc. 33,525
------------------
84,400
Entertainment (3.5%)
- ------------------------------------------------------------------------------------------------
900 Disney (Walt) Productions, Inc. 57,825
600 Viacom, Inc. Class B + 24,300
------------------
82,125
Environmental Control (0.9%)
- ------------------------------------------------------------------------------------------------
1,000 USA Waste Services + 20,750
Financial Services (1.1%)
- ------------------------------------------------------------------------------------------------
500 Franklin Resources, Inc. 26,813
Food and Beverages (2.1%)
- ------------------------------------------------------------------------------------------------
700 Hershey Foods Corp. 49,525
Forest Products (3.1%)
- ------------------------------------------------------------------------------------------------
900 Kimberly-Clark Corp. 72,563
HMOs (1.2%)
- ------------------------------------------------------------------------------------------------
300 Pacificare Health Systems, Inc. Class B + 27,675
Insurance (3.8%)
- ------------------------------------------------------------------------------------------------
700 MGIC Investment Corp. 45,150
700 Travelers Group Inc. 46,025
------------------
91,175
Lodging (1.6%)
- ------------------------------------------------------------------------------------------------
900 Marriott International, Inc. 38,588
Medical Supplies and Devices (3.6%)
- ------------------------------------------------------------------------------------------------
900 Boston Scientific Corp. + 46,125
700 Medtronic, Inc. 39,988
------------------
86,113
Metals and Mining (1.0%)
- ------------------------------------------------------------------------------------------------
800 Freeport-McMoRan Copper & Gold Co., Inc. Class A 23,200
Networking (2.7%)
- ------------------------------------------------------------------------------------------------
500 3Com Corp. + 22,938
500 Cisco Systems, Inc. + 41,625
------------------
64,563
Oil and Gas (2.8%)
- ------------------------------------------------------------------------------------------------
1,300 Halliburton Co. 67,113
Pharmaceuticals and Biotechnology (11.5%)
- ------------------------------------------------------------------------------------------------
1,000 Amgen, Inc. + 60,125
1,900 Lilly (Eli) & Co. 109,250
2,500 Pharmacia & Upjohn, Inc. 104,688
------------------
274,063
Photography (1.9%)
- ------------------------------------------------------------------------------------------------
600 Eastman Kodak Co. 44,025
Publishing (0.8%)
- ------------------------------------------------------------------------------------------------
500 Harcourt General, Inc. 19,500
Retail (7.3%)
- ------------------------------------------------------------------------------------------------
2,100 General Nutrition Companies, Inc. + 45,938
300 Rite Aid Corp. 9,638
1,400 Safeway, Inc. + 35,700
1,000 Sears, Roebuck & Co. 41,500
1,600 Staples, Inc. + 39,400
------------------
172,176
Soft Drinks (3.0%)
- ------------------------------------------------------------------------------------------------
1,200 PepsiCo, Inc. 71,550
Telecommunication Equipment (3.0%)
- ------------------------------------------------------------------------------------------------
1,000 Tellabs, Inc. + 44,000
300 U.S. Robotics Corp. + 26,475
------------------
70,475
Telephone Services (3.8%)
- ------------------------------------------------------------------------------------------------
800 NYNEX Corp. 42,900
1,100 Sprint Corp. 47,438
------------------
90,338
Telephone Utilities (1.8%)
- ------------------------------------------------------------------------------------------------
1,300 Cincinnati Bell, Inc. 42,250
Textiles (1.2%)
- ------------------------------------------------------------------------------------------------
700 Nautica Enterprises, Inc. + $ 27,300
------------------
Total Common Stocks (cost $1,988,712)*** $2,230,168
- ------------------------------------------------------------------------------------------------
* Percentages indicated are based on net assets of $2,373,022.
+ Non-income-producing security.
*** The aggregate identified cost on a tax basis is $1,988,712 resulting in gross unrealized
appreciation and depreciation of $251,741 and $10,285, respectively, or net unrealized appreciation
of $241,456.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
January 31, 1996 (Unaudited)
<S> <C>
Assets
- ---------------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $ 1,988,712) (Note 1) $2,230,168
- ---------------------------------------------------------------------------------------------------
Cash 108,119
- ---------------------------------------------------------------------------------------------------
Dividends and interest receivable 1,289
- ---------------------------------------------------------------------------------------------------
Receivable for securities sold 294,667
- ---------------------------------------------------------------------------------------------------
Receivable from Manager (Note 3) 10,936
- ---------------------------------------------------------------------------------------------------
Unamortized organization expenses (Note 1) 8,421
- ---------------------------------------------------------------------------------------------------
Total assets 2,653,600
Liabilities
- ---------------------------------------------------------------------------------------------------
Payable for securities purchased 254,461
- ---------------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 241
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 3) 65
- ---------------------------------------------------------------------------------------------------
Payable for administrative services (Note 3) 3
- ---------------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 3) 5,433
- ---------------------------------------------------------------------------------------------------
Payable for organizational expenses (Note 1) 8,843
- ---------------------------------------------------------------------------------------------------
Other accrued expenses 11,532
- ---------------------------------------------------------------------------------------------------
Total liabilities 280,578
- ---------------------------------------------------------------------------------------------------
Net assets $2,373,022
Represented by
- ---------------------------------------------------------------------------------------------------
Paid-in-capital (Notes 2 and 5) $2,139,524
- ---------------------------------------------------------------------------------------------------
Distributions in excess of net investment income(Note 1) (7,751)
- ---------------------------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (Note 1) (207)
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 241,456
- ---------------------------------------------------------------------------------------------------
Total - Representing net assets applicable to
capital shares outstanding $2,373,022
Computation of net asset value and offering price
- ---------------------------------------------------------------------------------------------------
Net asset value and redemption price per share
($2,373,022 divided by 250,993 shares) $9.45
- ---------------------------------------------------------------------------------------------------
Offering price per share (100/94.25 of $9.45)* $10.03
- ---------------------------------------------------------------------------------------------------
* 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.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
For the period October 2, 1995
(commencement of operations) to January 31, 1996
(Unaudited)
<S> <C>
Investment income:
- ---------------------------------------------------------------------------------------------------
Dividends $ 7,446
- ---------------------------------------------------------------------------------------------------
Interest 2,412
- ---------------------------------------------------------------------------------------------------
Total investment income 9,858
Expenses:
- ---------------------------------------------------------------------------------------------------
Compensation of Manager (Note 3) 4,888
- ---------------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 3) 9,220
- ---------------------------------------------------------------------------------------------------
Compensation of Trustees (Note 3) 253
- ---------------------------------------------------------------------------------------------------
Reports to shareholders 283
- ---------------------------------------------------------------------------------------------------
Auditing 5,276
- ---------------------------------------------------------------------------------------------------
Legal 5,557
- ---------------------------------------------------------------------------------------------------
Postage 82
- ---------------------------------------------------------------------------------------------------
Registration fees 348
- ---------------------------------------------------------------------------------------------------
Amortization of organization expenses (Note 1) 422
- ---------------------------------------------------------------------------------------------------
Administrative services (Note 3) 13
- ---------------------------------------------------------------------------------------------------
Other expenses 10
- ---------------------------------------------------------------------------------------------------
Fees waived by manager (Note 3) (19,084)
- ---------------------------------------------------------------------------------------------------
Total expenses 7,268
- ---------------------------------------------------------------------------------------------------
Expense reduction (Note 3) (1,514)
- ---------------------------------------------------------------------------------------------------
Net expenses 5,754
- ---------------------------------------------------------------------------------------------------
Net investment income 4,104
- ---------------------------------------------------------------------------------------------------
Net realized loss on investments (Notes 1 and 4) (207)
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments during the period 241,456
- ---------------------------------------------------------------------------------------------------
Net gain on investment transactions 241,249
- ---------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $245,353
- ---------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
For the period
October 2, 1995
(commencement of
operations) to
January 31,
1996*
<S> <C>
- ---------------------------------------------------------------------------------------------------
Increase in net assets
- ---------------------------------------------------------------------------------------------------
Operations:
- ---------------------------------------------------------------------------------------------------
Net investment income $ 4,104
- ---------------------------------------------------------------------------------------------------
Net realized loss on investment transactions (207)
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 241,456
- ---------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 245,353
- ---------------------------------------------------------------------------------------------------
Distributions to shareholders
- ---------------------------------------------------------------------------------------------------
From net investment income: (11,855)
- ---------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 5) 139,524
- ---------------------------------------------------------------------------------------------------
Total increase in net assets 373,022
- ---------------------------------------------------------------------------------------------------
Net assets
- ---------------------------------------------------------------------------------------------------
Beginning of period 2,000,000
- ---------------------------------------------------------------------------------------------------
End of period (including distributions in excess
of net investment income of $7,751) $2,373,022
- ---------------------------------------------------------------------------------------------------
* Unaudited
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
For the period
October 2, 1995
(commencement
of operations)
to January 31,
------------------
1996*
- -----------------------------------------------------------------------------------
<S> <C>
Net asset value, beginning of period $8.50
- -----------------------------------------------------------------------------------
Investment operations
- -----------------------------------------------------------------------------------
Net investment income .02(a)
- -----------------------------------------------------------------------------------
Net realized and unrealized gain on investments .99
- -----------------------------------------------------------------------------------
Total from investment operations 1.01(a)
- -----------------------------------------------------------------------------------
Less distributions:
- -----------------------------------------------------------------------------------
From net investment income (.05)
- -----------------------------------------------------------------------------------
Total distributions (.05)
- -----------------------------------------------------------------------------------
Net asset value, end of period $9.46
- -----------------------------------------------------------------------------------
Total investment return at net asset value (%) (b) 11.29(d)
- -----------------------------------------------------------------------------------
Net assets, end of period (total fund) (in thousands) $2,373
- -----------------------------------------------------------------------------------
Ratio of expenses to average net assets (%) 1.25(a)(c)(d)
- -----------------------------------------------------------------------------------
Ratio of net investment income to average net assets (%) .20(a)(d)
- -----------------------------------------------------------------------------------
Portfolio turnover (%) 42.74(d)
- -----------------------------------------------------------------------------------
* Unaudited.
(a) Reflects an expense limitation in effect during the period (See Note 3). As a
result of such limitation, expenses for the fund reflect a reduction of
approximately $0.09 per share.
(b) Total investment return assumes dividend reinvestment and does not reflect the
effect of sales charges.
(c) The ratio of expenses to average net assets for the period October 2, 1995
(commencement of operations) to January 31, 1996 includes amounts paid through
expense offset arrangements (See Note 3).
(d) Not annualized.
</TABLE>
Notes to financial statements
For the period October 2, 1995 (commencement of operations) to January
31, 1996 (Unaudited)
Note 1
Significant accounting policies
The fund is one of a series of Putnam Investment Funds (the "trust")
which is registered under the Investment Company Act of 1940, as
amended, as a diversified open-end management investment company. The
fund seeks capital appreciation by investing primarily in stocks of
well-established, large-capitalization companies that Putnam Investment
Management, Inc. ("Putnam Management") believes will benefit from major
long-term economic trends, business conditions, and/or consumer
behavior.
The following is a summary of significant accounting policies followed
by the fund in the preparation of its financial statements. The
preparation of financial statements are in conformity with generally
accepted accounting principles and requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities. Actual results could differ from those estimates.
A) Security valuation Investments for which market quotations are
readily available are stated at market value, which is determined using
the last reported sale price, or, if no sales are reported -- as in the
case of some securities traded over-the-counter -- the last reported bid
price, except that certain U.S. government obligations are stated at the
mean between the bid and asked prices. Short-term investments having
remaining maturities of 60 days or less are stated at amortized cost,
which approximates market value, and other investments are stated at
fair value following procedures approved by the Trustees.
B) Joint trading account Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the fund may transfer uninvested
cash balances into a joint trading account along with the cash of other
registered investment companies managed by Putnam Management, a wholly-
owned subsidiary of Putnam Investments, Inc. and certain other accounts.
These balances may be invested in one or more repurchase agreements
and/or short-term money market instruments.
C) Repurchase agreements The fund, or any joint trading account, through
its custodian, receives delivery of the underlying securities, the
market value of which at the time of purchase is required to be at least
equal to 102% of the resale price, including accrued interest. Putnam
Management is responsible for determining that the value of these
underlying securities is at all times at least equal to 102% of the
resale price, including accrued interest.
D) Security transactions and related investment income Security
transactions are accounted for on the trade date (date the order to buy
or sell is executed). Interest income is recorded on the accrual basis.
Dividend income is recorded on the ex-dividend date.
E) Federal taxes It is the policy of the fund to distribute all of its
income within the prescribed time and otherwise comply with the
provisions of the Internal Revenue Code applicable to regulated
investment companies. It is also the intention of the fund to distribute
an amount sufficient to avoid imposition of any excise tax 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 on securities held and for excise tax on income and capital
gains.
F) Distributions to shareholders Distributions to shareholders from net
investment income are recorded by the fund on the ex-dividend date.
Capital gain distributions, if any, are recorded on the ex-dividend date
and paid annually. The amount and character of income and gains to be
distributed are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles.
G) 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.
H) Unamortized organization expenses Expenses incurred by the fund in
connection with its organization, its registration with the Securities
and Exchange Commission and with various state and the initial public
offering of its shares aggregated $8,843. These expenses are being
amortized by the fund on a straight-line basis over a five-year period.
The fund will reimburse Putnam Management for payment of these expenses.
Note 2
Initial capitalization and
offering of shares
The trust was established as a Massachusetts business trust on October
31, 1994. During the period October 31, 1994 to October 2, 1995, the
fund had no operations other than those related to organizational
matters, including the initial capital contribution of $2,000,000, less
$8,843 in initial offering expenses, and the issuance of 235,294 shares
to Putnam Mutual Funds Corp., a wholly-owned subsidiary of Putnam
Investments, Inc.
At January 31, 1996, Putnam Investment Management, Inc. owned 236,617
shares of the fund (94.2% of shares outstanding), valued at $2,236,031.
Note 3
Management fees, administrative services, and other transactions
Compensation of Putnam Management for management and investment advisory
services is paid quarterly based on the average net assets of the fund
for the quarter. Such fee is based on the following annual rates: 0.70%
of the first $500 million of average net assets, 0.60% of the next $500
million, 0.55% of the next $500 million, 0.50% of the next $5 billion,
0.475% of the next $5 billion, 0.455% of the next $5 billion, 0.44% of
the next $5 billion, and 0.43% thereafter.
Through June 30, 1996 the fund's manager has agreed to limit it's
compensation to the extent that the expenses of the fund (exclusive of
brokerage, interest, taxes, deferred organizational and extraordinary
expense, and payments under the fund's distribution plan) exceed an
annual rate of 1.00% of the fund's average net assets.
The fund also reimburses Putnam Management for the compensation and
related expenses of certain officers of the fund and their staff who
provide administrative services to the fund. The aggregate amount of all
such reimbursements is determined annually by the Trustees.
Trustees of the fund receive an annual Trustee's fee of $100 and an
additional fee for each Trustees' meeting attended. Trustees who are not
interested persons of the Putnam Management and who serve on committees
of the Trustees receive additional fees for attendance at certain
committee meetings.
The fund adopted a Trustee Fee Deferral Plan (the "plan") which allows
the Trustees to defer the receipt of all or a portion of Trustees fees
payable on or after July 1, 1995. The deferred fees remain in the fund
and are invested in the fund or in other Putnam funds until distribution
in accordance with the Plan.
Custodial functions for the fund's assets are provided by Putnam
Fiduciary Trust Company (PFTC), a wholly-owned subsidiary of Putnam
Investments, Inc. Investor servicing agent functions are provided by
Putnam Investor Services, Inc., a division of PFTC.
For the period October 2, 1995 (commencement of operations) to January
31, 1996, the fund expenses were reduced by $1,514 under expense offset
arrangements with PFTC. Investor servicing and custodian fees reported
in the Statement of operations exclude these credits. The fund could
have invested the assets utilized in connection with the expense offset
arrangements in an income producing asset if it had not entered into
such arrangements.
The fund has adopted a distribution plan (the "Plan") pursuant to Rule
12b-1 under the Investment Company Act of 1940, although the trust is
not currently making any payments pursuant to the plan. The purpose of
the Plan is to compensate Putnam Mutual Funds Corp., for services
provided and expenses incurred by it in distributing shares of the fund.
The Trustees have approved payment by the fund to Putnam Mutual Funds
Corp. at an annual rate of up to 0.35% of the fund's average net assets.
During the period October 2, 1995 (commencement of operations) to
January 31, 1996, Putnam Mutual Funds Corp., acting as underwriter
received no monies from net commissions from the sale of shares of the
fund.
Note 4
Purchases and sales of securities
During the period October 2, 1995 (commencement of operations) to
January 31, 1996, purchases and sales of investment securities other
than short-term investments aggregated $898,603 and $1,988,712,
respectively. There were no purchases and sales of U.S. government
obligations. In determining the net gain or loss on securities sold, the
cost of securities has been determined on the identified cost basis.
Note 5
Capital shares
For the period October 2, 1995 (commencement of operations) to January
31, 1996, there was an unlimited number of shares of beneficial interest
authorized. Transactions in capital shares were as follows:
For the period
October 2, 1995
(commencement of
operations) to
January 31, 1996
- ----------------------------------------------------
Shares Amount
- ----------------------------------------------------
Shares sold 16,147 $143,553
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- ----------------------------------------------------
16,147 $143,553
Shares
repurchased (448) (4,030)
- ----------------------------------------------------
Net increase 15,699 $139,523
- ----------------------------------------------------
Fund information
INVESTMENT MANAGER
Putnam Investment
Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
legal counsel
Ropes & Gray
TRUSTEES
George Putnam, Chairman
William F. Pounds, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
John A. Hill
Elizabeth T. Kennan
Lawrence J. Lasser
Robert E. Patterson
Donald S. Perkins
George Putnam, III
Eli Shapiro
A.J.C. Smith
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
John D. Hughes
Senior Vice President and Treasurer
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Peter Carman
Vice President
Carol C. McMullen
Vice President and Fund Manager
John R. Verani
Vice President
William N. Shiebler
Vice President
Paul M. O'Neil
Vice President
Beverly Marcus
Clerk and Assistant Treasurer
This report is for the information of shareholders of Putnam American
Renaissance Fund. It may also be used as sales literature when preceded
or accompanied by the current prospectus, which gives details of sales
charges, investment objectives, and operating policies of the fund, and
the most recent copy of Putnam's Quarterly Performance Summary. For more
information or to request a prospectus, call toll free 1-800-225-1581.
23306-2AQ 3/96
