Putnam
Research
Fund
SEMIANNUAL REPORT
January 31, 1997
[LOGO: BOSTON * LONDON * TOKYO]
The following report contains a list of your fund's portfolio holdings and
complete financial statements for the six months ended 1/31/97. Additional
details, including fund strategy, performance, and managers' outlook, will be
provided in the annual report, which will cover the 12 months ended 7/31/97.
Portfolio of investments owned
January 31, 1997 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (98.7%) *
NUMBER OF SHARES VALUE
Aerospace and Defense (2.5%)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
1,000 Boeing Co. $ 107,125
900 Textron, Inc. 87,638
----------
194,763
Apparel (0.8%)
- ---------------------------------------------------------------------------------------------------------
900 Nike, Inc. Class B 61,088
Appliances (0.7%)
- ---------------------------------------------------------------------------------------------------------
1,100 Whirlpool Corp. 55,963
Automotive (1.9%)
- ---------------------------------------------------------------------------------------------------------
1,000 TRW, Inc. 50,750
1,600 General Motors Corp. 94,400
----------
145,150
Banks (7.9%)
- ---------------------------------------------------------------------------------------------------------
2,700 BankAmerica Corp. 301,388
1,100 Citicorp 128,013
1,600 NationsBank Corp. 172,800
----------
602,201
Business Services (1.7%)
- ---------------------------------------------------------------------------------------------------------
11,050 Officemax, Inc. + 132,600
Chemicals (3.6%)
- ---------------------------------------------------------------------------------------------------------
1,100 Air Products & Chemicals, Inc. 78,513
900 Eastman Chemical Co. 49,163
3,300 Union Carbide Corp. 149,738
----------
277,414
Computer Services (0.7%)
- ---------------------------------------------------------------------------------------------------------
1,100 Electronic Data Systems Corp. 50,600
Computer Software (3.7%)
- ---------------------------------------------------------------------------------------------------------
2,000 Baan Co., N.V. (Netherlands) + 90,750
4,300 Computer Associates Intl., Inc. 195,113
----------
285,863
Computers (1.9%)
- ---------------------------------------------------------------------------------------------------------
900 IBM Corp. 141,525
Computer Peripherals (0.8%)
- ---------------------------------------------------------------------------------------------------------
1,600 EMC Corp. + 60,600
Conglomerates (0.7%)
- ---------------------------------------------------------------------------------------------------------
800 United Technologies Corp. 55,800
Consumer Products (2.4%)
- ---------------------------------------------------------------------------------------------------------
1,300 Kimberly-Clark Corp. 126,750
1,800 Lowe's Cos., Inc. 59,625
----------
186,375
Electric Utilities (3.4%)
- ---------------------------------------------------------------------------------------------------------
4,200 Duke Power Co. 196,875
1,900 Pinnacle West Capital Corp. 60,088
----------
256,963
Electronics and Electrical Equipment (2.3%)
- ---------------------------------------------------------------------------------------------------------
1,300 Applied Materials, Inc. + 64,188
2,100 Hewlett-Packard Co. 110,513
----------
174,701
Farm Equipment (0.7%)
- ---------------------------------------------------------------------------------------------------------
1,200 Deere (John) & Co. 51,300
Finance (1.0%)
- ---------------------------------------------------------------------------------------------------------
1,200 American Express Co. 74,850
Financial Services (4.9%)
- ---------------------------------------------------------------------------------------------------------
1,300 Associates First Capital Corp. 63,213
4,350 Franklin Resources, Inc. 237,075
2,075 MBNA Corp. 71,588
----------
371,876
Food and Beverages (4.6%)
- ---------------------------------------------------------------------------------------------------------
8,700 PepsiCo, Inc. 303,413
2,100 Whitman Corp. 48,300
----------
351,713
Gas Pipelines (1.5%)
- ---------------------------------------------------------------------------------------------------------
2,800 Enron Corp. 115,500
Gas Utilities (0.7%)
- ---------------------------------------------------------------------------------------------------------
800 Columbia Gas Systems, Inc. 52,100
Household Products (1.3%)
- ---------------------------------------------------------------------------------------------------------
1,500 Corning, Inc. 53,438
900 Tupperware Corp. + 42,188
----------
95,626
Insurance (3.4%)
- ---------------------------------------------------------------------------------------------------------
1,200 American General Corp. 47,850
1,400 AON Corp. 90,475
2,300 Travelers Group Inc. 120,463
----------
258,788
Medical Supplies and Devices (1.2%)
- ---------------------------------------------------------------------------------------------------------
1,300 Medtronic, Inc. 89,050
Metals and Mining (1.3%)
- ---------------------------------------------------------------------------------------------------------
3,600 Freeport-McMoRan Copper & Gold Co., Inc. Class A 98,550
Networking Equipment (1.4%)
- ---------------------------------------------------------------------------------------------------------
1,400 Cabletron Systems, Inc. + 48,650
800 Cisco Systems, Inc. + 55,800
----------
104,450
Office Equipment (0.8%)
- ---------------------------------------------------------------------------------------------------------
1,000 Xerox Corp. 58,625
Oil and Gas (7.4%)
- ---------------------------------------------------------------------------------------------------------
421 British Petroleum PLC ADR (United Kingdom) 59,624
1,700 Mobil Corp. 223,125
6,508 Total Corp. ADR (France) 280,658
----------
563,407
Pharmaceuticals (2.6%)
- ---------------------------------------------------------------------------------------------------------
2,200 Merck & Co., Inc. 199,650
Pharmaceuticals and Biotechnology (4.9%)
- ---------------------------------------------------------------------------------------------------------
1,700 Astra AB ADR (Sweden) 81,388
2,300 Lilly (Eli) & Co. 200,388
2,500 Pharmacia & Upjohn, Inc. 93,125
----------
374,901
Photography (2.5%)
- ---------------------------------------------------------------------------------------------------------
2,200 Eastman Kodak Co. 190,850
Publishing (1.9%)
- ---------------------------------------------------------------------------------------------------------
1,300 Gannett Co., Inc. 99,613
1,200 Tribune Co. 45,900
----------
145,513
Railroads (1.0%)
- ---------------------------------------------------------------------------------------------------------
900 Burlington Northern Santa Fe Corp. 78,750
Restaurants (1.4%)
- ---------------------------------------------------------------------------------------------------------
2,400 McDonald's Corp. 109,200
Retail (1.4%)
- ---------------------------------------------------------------------------------------------------------
1,100 Nine West Group, Inc. + 56,788
1,400 Revco D.S., Inc. + 52,500
----------
109,288
Satellite Services (0.9%)
- ---------------------------------------------------------------------------------------------------------
2,200 PanAmSat Corp. + 64,900
Semiconductors (5.1%)
- ---------------------------------------------------------------------------------------------------------
2,000 Intel Corp. 324,500
800 Texas Instruments, Inc. 62,700
----------
387,200
Telecommunication Equipment (1.1%)
- ---------------------------------------------------------------------------------------------------------
2,100 Tellabs, Inc. + 86,494
Telephone Services (5.6%)
- ---------------------------------------------------------------------------------------------------------
3,500 GTE Corp. 164,500
6,400 Sprint Corp. 260,800
----------
425,300
Telephone Utilities (1.6%)
- ---------------------------------------------------------------------------------------------------------
1,800 Ericsson (L. M.) Telephone Co. ADR Class B, (Sweden) 60,609
1,100 SBC Communications, Inc. 60,363
----------
120,972
Tobacco (2.7%)
- ---------------------------------------------------------------------------------------------------------
1,100 Philip Morris Cos., Inc. 130,750
2,200 RJR Nabisco Holdings Corp. 72,050
----------
202,800
Wireless Communications (0.8%)
- ---------------------------------------------------------------------------------------------------------
2,500 Airtouch Communications, Inc. + 64,688
----------
Total Common Stocks (cost $6,249,240) $7,527,947
SHORT-TERM INVESTMENTS (1.3%) * (cost $99,015)
PRINCIPAL AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------------
99,000 Interest in $718,546,000 joint repurchase agreement
dated January 31, 1997, with Morgan (J.P.) & Co., Inc.,
due February 3, 1997, with respect to various
U.S. Treasury obligations -- maturing value of
$99,046 for an effective yield of 5.55% $ 99,015
- ---------------------------------------------------------------------------------------------------------
Total Investments (cost $6,348,255) *** $7,626,962
- ---------------------------------------------------------------------------------------------------------
* Percentages indicated are based on net assets of $7,624,780.
+ Non-income producing security.
*** The aggregate identified cost on a tax basis is $6,366,137,
resulting in gross unrealized appreciation and depreciation of
$1,339,559 and $78,734, respectively, or net unrealized appreciation of
$1,260,825.
ADR after the name of a foreign holding stands for American Depository
Receipts, representing ownership of foreign securities on deposit with a
domestic custodian bank.
The accompaning notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
January 31, 1997 (Unaudited)
<S> <C>
Assets
- ---------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $6,348,255) (Note 1) $7,626,962
- ---------------------------------------------------------------------------------------
Cash 331
- ---------------------------------------------------------------------------------------
Dividends and other receivables 4,658
- ---------------------------------------------------------------------------------------
Receivable for shares of the fund sold 13,144
- ---------------------------------------------------------------------------------------
Unamortized organization expenses (Note 1) 7,379
- ---------------------------------------------------------------------------------------
Total assets 7,652,474
Liabilities
- ---------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 5,114
- ---------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 1,238
- ---------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 27
- ---------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 13
- ---------------------------------------------------------------------------------------
Payable for organization expenses (Note 1) 8,843
- ---------------------------------------------------------------------------------------
Other accrued expenses 12,459
- ---------------------------------------------------------------------------------------
Total liabilities 27,694
- ---------------------------------------------------------------------------------------
Net Assets $7,624,780
Represented by
- ---------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $5,939,943
- ---------------------------------------------------------------------------------------
Undistributed net investment income (Note 1) 759
- ---------------------------------------------------------------------------------------
Accumulated net realized gain on investments (Note 1) 405,371
- ---------------------------------------------------------------------------------------
Net unrealized appreciation of investments 1,278,707
- ---------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $7,624,780
Computation of net asset value and offering price
- ---------------------------------------------------------------------------------------
Net asset value per share ($7,624,780 divided by 675,944 shares) $11.28
- ---------------------------------------------------------------------------------------
Offering price per share (100/94.25 of $11.28)* $11.97
- ---------------------------------------------------------------------------------------
* 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
Six months ended January 31, 1997 (Unaudited)
<S> <C>
Investment income:
- ----------------------------------------------------------------------------------------
Dividends (net of foreign tax of $297) $ 63,042
- ----------------------------------------------------------------------------------------
Interest 593
- ----------------------------------------------------------------------------------------
Total investment income 63,635
Expenses:
- ----------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 23,610
- ----------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 5,763
- ----------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 784
- ----------------------------------------------------------------------------------------
Administrative services (Note 2) 20
- ----------------------------------------------------------------------------------------
Reports to shareholders 3,418
- ----------------------------------------------------------------------------------------
Auditing 13,201
- ----------------------------------------------------------------------------------------
Legal 2,332
- ----------------------------------------------------------------------------------------
Other 118
- ----------------------------------------------------------------------------------------
Fees waived by Manager (Note 2) (12,965)
- ----------------------------------------------------------------------------------------
Total expenses 36,281
- ----------------------------------------------------------------------------------------
Expense reduction (Note 2) (1,810)
- ----------------------------------------------------------------------------------------
Net expenses 34,471
- ----------------------------------------------------------------------------------------
Net investment income 29,164
- ----------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 599,418
- ----------------------------------------------------------------------------------------
Net unrealized appreciation of investments during the period 978,183
- ----------------------------------------------------------------------------------------
Net gain on investments 1,577,601
- ----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $1,606,765
- ----------------------------------------------------------------------------------------
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
Six months of operations)
January 31 to July 31,
------------------------------------------
1997* 1996
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets
- ---------------------------------------------------------------------------------------
Operations:
- ---------------------------------------------------------------------------------------
Net investment income $ 29,164 $ 45,467
- ---------------------------------------------------------------------------------------
Net realized gain on investments 599,418 240,380
- ---------------------------------------------------------------------------------------
Net unrealized appreciation
of investments 978,183 300,524
- ---------------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 1,606,765 586,371
- ---------------------------------------------------------------------------------------
Distributions to shareholders :
- ---------------------------------------------------------------------------------------
From net investment income (57,508) (17,804)
- ---------------------------------------------------------------------------------------
From net realized gain on investments (434,427) --
- ---------------------------------------------------------------------------------------
Increase (decrease) from capital share
transactions (Note 4) (109,131) 4,050,514
- ---------------------------------------------------------------------------------------
Total increase in net assets 1,005,699 4,619,081
- ---------------------------------------------------------------------------------------
Net Assets
- ---------------------------------------------------------------------------------------
Beginning of period 6,619,081 2,000,000
- ---------------------------------------------------------------------------------------
End of period (including undistributed net
investment income of $759 and $29,103, respectively) $7,624,780 $6,619,081
- ---------------------------------------------------------------------------------------
* Unaudited.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
For the period
Six months October 2, 1995
ended (commencement
January 31 of operations)
(unaudited) to July 31,
-------------------------------------------
1997 1996
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period $9.75 $8.50
- --------------------------------------------------------------------------------------------------------------
Investment operations
- --------------------------------------------------------------------------------------------------------------
Net investment income .05(d) .09(a)(d)
- --------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 2.27 1.21
- --------------------------------------------------------------------------------------------------------------
Total from investment operations 2.32 1.30
- --------------------------------------------------------------------------------------------------------------
Less distributions:
- --------------------------------------------------------------------------------------------------------------
From net investment income (.09) (.05)
- --------------------------------------------------------------------------------------------------------------
From net realized gain on investments (.70) --
- --------------------------------------------------------------------------------------------------------------
Total distributions (.79) (.05)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.28 $9.75
- --------------------------------------------------------------------------------------------------------------
Total investment return at net asset value (%)(b) 24.28* 15.28*
- --------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $7,625 $6,619
- --------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (%)(c) .50*(d) .86*(d)
- --------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets (%) .40*(d) .92*(d)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 53.51* 80.74*
- --------------------------------------------------------------------------------------------------------------
Average commission rate paid $0.0236 $0.0284
- --------------------------------------------------------------------------------------------------------------
* Not annualized.
(a) Per share net investment income has been determined on the basis of the
weighted average number of shares outstanding during the period.
(b) Total investment return assumes dividend reinvestment
and does not reflect the effect of sales charges.
(c) Includes amounts paid through broker service and expense offset arrangements (Note 2).
(d) Reflects an expense limitation in effect during the period (Note 2). As a result of such
limitation, expenses of the fund for the period ending January 31, 1997, and July 31, 1996,
reflect a reduction of $0.02 and $0.05 pe rshare respectively.
</TABLE>
Notes to financial statements
January 31, 1997 (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
objective of the fund is to seek capital appreciation by investing
primarily in common stocks.
The following is a summary of significant accounting policies
consistently followed by the fund in the preparation of its financial
statements. The preparation of financial statements is in conformity
with generally accepted accounting principles and requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities. 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. 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 market value.
B) Joint trading account Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the fund may transfer uninvested
cash balances into a joint trading account along with the cash of other
registered investment companies and certain other accounts managed by
Putnam Management. These balances may be invested in one or more
repurchase agreements and/or short-term money market instruments.
C) Repurchase agreements The fund, or any joint trading account, through
its custodian, receives delivery of the underlying securities, the
market value of which at the time of purchase is required to be in an
amount at least equal to the resale price, including accrued interest.
Putnam Management is responsible for determining that the value of these
underlying securities is at all times at least equal to the resale
price, including accrued interest.
D) Security transactions and related investment income Security
transactions are accounted for on the trade date (date the order to buy
or sell is executed). Interest income is recorded on the accrual basis.
Dividend income is recorded on the ex-dividend date except that certain
dividends from foreign securities are recorded as soon as the fund is
informed of the ex-dividend date.
E) Federal taxes It is the policy of the fund to distribute all of its
taxable income within the prescribed time and otherwise comply with the
provisions of the Internal Revenue Code applicable to regulated
investment companies. It is also the intention of the fund to distribute
an amount sufficient to avoid imposition of any excise tax under Section
4982 of the Internal Revenue Code of 1986. Therefore, no provision has
been made for federal taxes on income, capital gains or unrealized
appreciation on securities held nor for excise tax on income and capital
gains.
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 at least annually. The amount and character of income and gains
to be distributed are determined in accordance with income tax
regulations which may differ from generally accepted accounting
principles. Reclassifications are made to the fund's capital accounts to
reflect income and gains available for distribution (or available
capital loss carryovers) under income tax regulations.
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 states and the initial public
offering of its shares were $8,843. These expenses are being amortized
on projected net asset levels over a five-year period.
Note 2
Management fee, administrative services, and other transactions
Compensation of Putnam Management, for management and investment
advisory services is paid quarterly based on the average net assets of
the fund. Such fee is based on the following annual rates: 0.65% of the
first $500 million of average net assets, 0.55% of the next $500
million, 0.50% of the next $500 million, 0.45% of the next $5 billion,
0.425% of the next $5 billion, 0.405% of the next $5 billion, 0.39% of
the next $5 billion, and 0.38% thereafter.
The shareholders of the fund have approved a new management contract on
February 6, 1997, which will take effect on April 1, 1997. The contract
provides for a base management fee (as described above) and a
performance adjustment based on the investment performance of the fund
compared to changes in the value of the Standard & Poor's 500 Composite
Stock Price Index (the "S&P 500"), an index of common stocks frequently
used as a general measure of U.S. stock market performance.
The applicable base fee will be increased or decreased for each calendar
quarter by an incentive payment or penalty at the annual rate of 0.01%
of the fund's average net assets for each 1% increment by which the fund
outperforms or underperforms the S&P 500 in excess of 3%, subject to a
maximum increase or decrease of 0.07% of average net assets. In
determining the extent to which the fund outperforms or underperforms
S&P 500, fractional amounts will be rounded to the nearest whole
percent.
Putnam Management has agreed to limit its compensation (and, to the
extent necessary, bear other expenses) through June 30, 1997, to the
extent that expenses of the fund (exclusive of brokerage, interest,
taxes, deferred organizational and extraordinary expense, credits from
Putnam Fiduciary Trust Company (PFTC), a wholly-owned subsidiary of
Putnam Investments, Inc. and payments under the trust's distribution
plan) would exceed an annual rate of 1.00% of the fund's average net
assets.
The fund 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.
Custodial functions for the fund's assets are provided by PFTC. Investor
servicing agent functions are provided by Putnam Investor Services, a
division of PFTC.
For the period ended January 31, 1997, fund expenses were reduced by
$1,810 under expense offset arrangements with PFTC and brokerage service
arrangements. Investor servicing and custodian fees reported in the
Statement of operations exclude these credits. The fund could have
invested a portion of the assets utilized in connection with the expense
offset arrangements in an income producing asset if it had not entered
into such arrangements.
Trustees of the fund received an annual Trustees fee of $108 and an
additional fee for each Trustee's meeting attended. Trustees who are not
interested persons of Putnam Management and who serve on committees of
the Trustees receive additional fees for attendance at certain committee
meetings.
The fund has 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 certain Putnam funds until distribution in
accordance with the Plan.
The fund has adopted an unfunded noncontributory defined benefit pension
plan (the "Pension Plan") covering all Trustees of the fund who have
served as Trustee for at least five years. Benefits under the Pension
Plan are equal to 50% of the Trustee's average total retainer and
meeting fees for the three years preceding retirement. Pension expense
for the fund is included in Compensation of Trustees in the Statement of
operations. Accrued pension liability is included in Payable for
compensation of Trustees in the Statement of assets and liabilities.
The fund has adopted a distribution plan (the "Plan") pursuant to Rule
12b-1 under the Investment Company Act of 1940. The purpose of the 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 shares of the fund. The Plan provides for 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. The fund is not currently making any
payments pursuant to the Plan.
For the period ended January 31, 1997, Putnam Mutual Funds Corp., acting
as underwriter received no commissions from the sale of shares.
Note 3
Purchase and sales of securities
During the six months ended January 31, 1997, purchases and sales of
investment securities other than short-term investments aggregated
$3,756,062 and $4,355,581, 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 4
Capital shares
At January 31, 1997, there was an unlimited number of shares of
beneficial interest authorized. Transactions in capital shares were as
follows:
Six months ended
January 31, 1997
- ------------------------------------------------------------
Shares Amount
- ------------------------------------------------------------
Shares sold 51,751 $568,613
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 46,401 491,852
- ------------------------------------------------------------
98,152 1,060,465
Shares
repurchased (101,201) (1,169,596)
- ------------------------------------------------------------
Net decrease (3,049) $(109,131)
- ------------------------------------------------------------
For the period
October 2, 1995
(commencement of
operations) to
July 31, 1996
- ------------------------------------------------------------
Shares Amount
- ------------------------------------------------------------
Shares sold 548,532 $5,054,069
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 1,989 17,804
- ------------------------------------------------------------
550,521 5,071,873
Shares
repurchased (106,822) (1,021,359)
- ------------------------------------------------------------
Net increase 443,699 $4,050,514
- ------------------------------------------------------------
At January 31, 1997, Putnam Management owned 509,128 shares
of the fund (75% of shares outstanding) valued at $5,742,964.
Results of February 6, 1997 shareholder meeting
(unaudited)
A meeting of shareholders of the fund was held on February 6, 1997.
At the meeting, each of the nominees for Trustees was elected,
as follows:
Votes
Votes for withheld
Jameson Adkins Baxter 532,008 0
Hans H. Estin 532,008 0
John A. Hill 532,008 0
Ronald J. Jackson 532,008 0
Elizabeth T. Kennan 532,008 0
Lawrence J. Lasser 532,008 0
Robert E. Patterson 532,008 0
Donald S. Perkins 532,008 0
William F. Pounds 532,008 0
George Putnam 532,008 0
George Putnam, III 532,008 0
Eli Shapiro 532,008 0
A.J.C. Smith 532,008 0
W. Nicholas Thorndike 532,008 0
A proposal to ratify the selection of Price Waterhouse LLP as
auditors for the fund was approved as follows: 532,008 votes
for, and 0 votes against, with 0 abstentions and broker
non-votes.
A proposal for the new management contract between your fund
and Putnam Investment Management was approved as follows:
532,008 votes for, and 0 votes against, with 0 abstentions
and broker non-votes.
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
Brett C. Browchuk
Vice President
Thomas R. Bogan
Vice President and Fund Manager
Patrick O'Donnell
Vice President and Fund Manager
William N. Shiebler
Vice President
John R. Verani
Vice President
Paul M. O'Neil
Vice President
Beverly Marcus
Clerk and Assistant Treasurer
This report is for the information of shareholders of Putnam Research 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. You can also learn more at Putnam
Investments' website: http://www.putnaminv.com.
Shares of mutual funds are not deposits or obligations of, or guaranteed or
endorsed by, any financial institution, are not insured by the Federal Deposit
Insurance Corporation (FDIC), the Federal Reserve Board or any other agency,
and involve risk, including the possible loss of principal amount invested.
31261-2AQ 4/97
