Putnam
International
Growth Fund
SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK
12-31-99
[LOGO: BOSTON * LONDON * TOKYO]
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
[copyright] Karsh, Ottawa
Dear Shareholder:
It is always a pleasure to bring shareholders a report containing news of
robust performance, and this year's semiannual report for Putnam
International Growth Fund is no exception. It is also customary in such
cases to caution that results of this magnitude should not become an
annual expectation, though we remain confident that your fund's long-term
prospects remain exceedingly bright.
This is the last letter to you and the other shareholders of Putnam
International Growth Fund that I will be signing. After more than 30 years
as Chairman of the Trustees and President of the Putnam Funds, the time
has come for me to step aside. In June, John Hill will become Chairman.
John is currently an independent Trustee and has served on the board for
the past 14 years. In addition, my son, George Putnam, III, will take on
the role of President. I am confident that the leadership of the funds
will be in exceptionally strong hands.
I will become Chairman Emeritus, remain a Putnam shareholder, and stay in
close touch with the funds. It has been my privilege to serve you.
Respectfully yours,
/S/GEORGE PUTNAM
George Putnam
Chairman of the Trustees
February 16, 2000
Report from the Fund Managers
Omid Kamshad
Mark D. Pollard
Justin M. Scott
Paul Warren
Joshua L. Byrne
Putnam International Growth Fund can certainly be said to have enjoyed the
best of all possible worlds during the first half of fiscal 2000. Markedly
improved returns in international markets, a global economic recovery, and
record levels of mergers and acquisitions in Europe and Japan all served
to create a particularly favorable environment for the fund. Specifically,
long-standing positions in technology and telecommunications stocks as
well as other companies benefiting from the global recovery helped to
drive fund performance over the six months ended December 31, 1999.
The fund continued to generate attractive risk-adjusted returns relative
to its peers, as indicated by the Morningstar reference on page 3.
Additionally the fund's total return remained significantly higher than
its benchmark index, the Morgan Stanley Capital International EAFE Index.
(See page 7 for complete performance information.)
Total return for 6 months ended 12/31/99
Class A Class B Class C Class M
NAV POP NAV CDSC NAV CDSC NAV POP
- --------------------------------------------------------------------------
42.87% 34.66% 42.36% 37.36% 42.36% 41.36% 42.55% 37.55%
- --------------------------------------------------------------------------
Past performance is no indication of future results. Performance
information for longer periods and explanation of performance calculation
methods begin on page 7.
* TECHNOLOGY AND TELECOMMUNICATIONS STOCKS STAND OUT WORLDWIDE
The rise of the Internet around the world, rapidly increasing flows of
data through broadband networks, and worldwide demand for cellular and
wireless telecommunications services have all contributed to the
outstanding performance of technology and telecommunications companies
over the period. Investors continued to recognize the strong fundamentals
and extraordinary growth potential present in these sectors, much of which
is based overseas. Technology and telecommunications leaders can be found
in Europe, Japan, the Pacific Rim, and Latin America.
[GRAPHIC OMITTED: horizontal bar chart TOP COUNTRY ALLOCATIONS]
TOP COUNTRY ALLOCATIONS*
Japan 21.8%
United Kingdom 15.1%
France 13.2%
Netherlands 6.0%
Switzerland 5.3%
Footnote reads:
*Based on net assets as of 12/31/99. Holdings will vary over time.
Over the past few years, we have sought out technology and
telecommunications companies that have significant growth potential in
their respective industries or regions, are recognized leaders in product
innovation, and are focused on earning a high return on capital. European
companies such as Nokia, Ericsson, Vodafone AirTouch (sold prior to the
end of the period), Bouygues, Telecom Italia Mobil (TIM), and Mannesmann
all epitomize these themes. (The sidebar on page 4 discusses the
Vodafone/Mannesmann deal as well as other important developments that
affected the fund in this record year of European mergers and
acquisitions.)
For example, Nokia retains the bulk of market share in the handset market
and has moved aggressively into the development of next-generation
wireless products. Cellular companies Bouygues of France and TIM in Italy
are experiencing astounding volume growth in their respective markets. TIM
had seen a drop in revenues as its subscriber base shifted from contract
to prepaid; however, the company's strong revenue growth has recently
resumed.
Demand for the products and services of technology and telecommunications
companies in Asia continued to surge. In Japan, for example, Sony
maintained its status as a global consumer electronics brand name by
positioning itself in the burgeoning market for digital equipment and
products. Kyocera, a mobile handset maker, benefited from its relationship
with DDI, the second-largest mobile operator in Japan. Outside Japan,
Samsung Electronics of South Korea is a major beneficiary of the upturn in
global semiconductor prices and has been one of the most aggressive
companies leading the country's restructuring wave. China Telecom (Hong
Kong) is a leader in the rapidly growing, yet underdeveloped Chinese
market for mobile communications and Internet infrastructure.
Morningstar gave the fund's class A shares its highest rating of five out of
five stars for risk-adjusted performance for the three years ended
December 31, 1999. This put the fund among the top 10% of the 1104
international equity funds rated.
Past performance is not indicative of future results. Morningstar ratings
reflect risk-adjusted performance through 12/31/99 and are subject to change
every month. Morningstar ratings are calculated from a fund's 3-, 5-, and
10-year returns (with fee adjustments) in excess of 90-day Treasury bill
returns and a risk factor that reflects performance below 90-day Treasury
bill returns. For the 5-year period, the fund received five stars. Performance
of other share classes will vary.
Like China, Latin America is racing to catch up technologically with the
large markets. Incumbent telecommunications operators such as Telefonos de
Mexico and foreign companies such as Spain's Telefonica are battling to
provide broadband capabilities to a region in which demand for Internet
access by companies and individuals is expected to generate exponential
growth in Internet-related revenue. While these holdings, along with
others discussed in this report, were viewed favorably at the end of the
period, all are subject to review and adjustment in accordance with the
fund's investment strategy and may vary in the future.
* FUND FOCUSES ON COMPANIES THAT BENEFIT FROM GLOBAL RECOVERY
With economic growth accelerating around the world, we targeted
value-added exporters such as telecommunications equipment companies,
luxury goods companies, and advertising and media firms. We've found that
classic cyclical industries such as autos and commodity chemicals have far
too much capacity and little pricing power.
Record mergers and acquisitions activity positive but must be evaluated on an
individual basis
According to Thomson Financial Securities Data, mergers and acquisitions
activity involving European companies rose to $1.23 trillion in 1999, double
1998 levels. Additionally Europe took a greater share of the world's biggest
mergers as European M&A activity accounted for 39% of the global total, up from
22% in 1998. Japan also posted record M&A activity with about $85 billion in
deals, although that was a small percentage of the world total. The level of
hostile takeover activity in 1999 was unprecedented in Europe with takeover
fights such as Telecom Italia and Olivetti, Total Fina and Elf Aquitaine, and
the three-way fight among BNP, Paribas, and Societe Generale. More friendly
deals also occurred such as those of Vodafone and AirTouch and Mannesmann and
Orange -- all being a precursor to the recent hostile bid by Vodafone AirTouch
for Mannesman to create a European telecommunications giant. Your fund has
benefited from participation in many of 1999's largest mergers. Of course, not
all mergers are positive for shareholders and some may be undertaken out of
weakness. As portfolio managers, our job is to evaluate these deals on a
case-by-case basis to determine if value is actually created, if the promised
cost savings might occur, if synergies exist, and if the new entity can achieve
the growth potential outlined by the new management.
Luxury goods companies Gucci Group -- which fended off a hostile takeover
attempt from rival LVMH in 1999 -- and Compagnie Financiere Richemont
particularly benefited from the Asian economic recovery and renewed Asian
consumer demand for Gucci's high-fashion products and Richemont's Cartier
jewelry. These companies are able to retain pricing power because high-end
consumers appreciate the cachet of paying higher prices for fashion and
jewelry.
Media companies such as cable operator TF1 (Televison Francaise), Granada
Group of the United Kingdom, Mediaset in Italy, and Grupo Televisa in
Mexico all have a role to play in the development and distribution of
content that is driving the convergence of old media and new media. One
example is Televisa, Mexico's largest broadcaster. Through its variety of
interests in newspapers, magazines, and cable, the company is well
positioned as a premier content provider in Latin America.
Advertisers such as Havas Advertising, WPP, and Publicis are all
generating high revenues from global multinational clients intent on
raising their worldwide brand awareness. For example, Havas is one of
Europe's leading advertising agencies and is quickly becoming one of the
top agencies in the world. The company's client list includes large
well-known names such as Microsoft, Volvo, MCI WorldCom, and Procter &
Gamble. Some of the newer, less capital-intensive European companies we
favor, with their U.S.-style business models and the ability to achieve
high returns on capital, are also Havas clients.
* UNITED KINGDOM HOLDINGS, EUROPEAN BANKS, AND PHARMACEUTICAL COMPANIES
DE-EMPHASIZED
The fund maintains investments in the United Kingdom; however, this
weighting demands some explanation. In general, we've had difficulty
finding investment opportunities in the United Kingdom that meet our stock
selection criteria. If you look at the largest listed companies in the UK
by market capitalization, 28.5% of the U.K. market is made up of banking
and pharmaceutical stocks. Currently, we believe both of these sectors are
too richly valued given their growth prospects. A substantial portion of
our U.K. weighting is made up of growing global companies such as Vodafone
AirTouch or multinationals such as Shell Transport and Trading, the sister
company of the multinational oil company Royal Dutch Shell.
Banking and financial companies across Europe are now feeling the pressure
that low interest rates can have on their loan profitability. The Internet
is also beginning to play a role in fulfilling the financial needs of
Europeans and we are concerned that, as financial intermediaries, European
banks are not responding quickly enough. In the pharmaceutical industry,
we think industry growth may be lessened by lack of unexplored major
therapeutic areas and the quickening pace of patents being lost resulting
in a decline in profits.
* GLOBAL SHAREHOLDER VALUE TREND POSITIVE, BUT OPPORTUNITIES MUST BE EVALUATED
ON INDIVIDUAL MERITS
For the past several years in Europe and more recently in Japan,
international companies have announced new-found intentions to raise value
for their shareholders by restructuring, cost cutting, or entering into
strategic mergers. In general, this is positive for investors; however,
the challenge becomes the need to sort out the companies willing to make
the tough decisions and to change the status quo from those merely
attempting to placate foreign investors by telling them what they want to
hear.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
TOP 10 HOLDINGS
Sony Corp.
Japan
Electronics and electrical equipment
Oy Nokia A Class
Finland
Telecommunications
Shell Transportation & Trading
United Kingdom
Oil and gas
Total S.A. Class B
France
Oil and gas
Kyocera Corp.
Japan
Electronics and electrical equipment
Nikko Securities Co. Ltd.
Japan
Insurance and finance
Mannesmann AG
Germany
Business equipment and services
China Telecom Ltd.
Hong Kong
Telecommunications
Telefonaktiebolaget LM Ericsson
Class B
Sweden
Telecommunications
Telecom Italia Mobile SpA
Italy
Telecommunications
Footnote reads:
These holdings represent 28.0% of the fund's net assets as of 12/31/99.
Portfolio holdings will vary over time.
Some examples of companies we've targeted that are matching action with
their words are NEC in Japan and Philips Electronics in Europe. Both of
these companies have global franchises in several growing businesses, but
they are also taking a hard look at their less profitable divisions and
shutting them down in favor of focusing on more profitable areas. These
companies offer good value relative to their peers and that value may be
recognized by investors as these changes improve overall profitability.
Looking ahead, we believe the portfolio is well positioned for a continued
upswing in global economic growth with relatively low inflation. We
believe this type of environment can work in the favor of a great variety
of international companies. We stand at the ready to rotate out of
companies that have become more richly valued relative to their peers and
redistribute those assets to companies with compelling growth prospects
that stand to become beneficiaries of economic improvement around the
world.
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 12/31/99, there is no guarantee the fund will
continue to hold these securities in the future.
International investing involves certain risks, such as currency
fluctuations, economic instability, and political developments.
Performance summary
This section provides information about your fund's performance, which should
always be considered in light of its investment strategy. Putnam International
Growth Fund is designed for investors seeking capital appreciation primarily
through equity securities of issuers located outside the United States.
<TABLE>
<CAPTION>
TOTAL RETURN FOR PERIODS ENDED 12/31/99
Class A Class B Class C Class M
(inception dates) (2/28/91) (6/1/94) (7/26/99) (12/1/94)
NAV POP NAV CDSC NAV CDSC NAV POP
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6 months 42.87% 34.66% 42.36% 37.36% 42.36% 41.36% 42.55% 37.55%
- ------------------------------------------------------------------------------------------
1 year 60.77 51.56 59.61 54.61 59.61 58.61 60.01 54.43
- ------------------------------------------------------------------------------------------
5 years 198.09 180.88 187.29 185.29 187.11 187.11 191.31 181.03
Annual average 24.41 22.94 23.50 23.33 23.48 23.48 23.84 22.96
- ------------------------------------------------------------------------------------------
Life of fund 326.06 301.41 296.82 296.82 298.68 298.68 306.65 292.45
Annual average 17.82 17.03 16.87 16.87 16.93 16.93 17.20 16.73
- ------------------------------------------------------------------------------------------
</TABLE>
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 12/31/99
MSCI Consumer
EAFE Index price index
- ---------------------------------------------------------------------
6 months 22.12% 1.56%
- ---------------------------------------------------------------------
1 year 26.96 2.80
- ---------------------------------------------------------------------
5 years 82.87 12.76
Annual average 12.83 2.43
- ---------------------------------------------------------------------
Life of fund 125.11 25.22
Annual average 9.62 2.58
- ---------------------------------------------------------------------
Past performance is no assurance of future results. More recent returns
may be more or less than those shown. Returns for class A and class M
shares reflect the current maximum initial sales charges of 5.75% and
3.50% respectively. Class B share returns for the 1-, 5-, and 10-year
(where available) and life-of-fund periods reflect the applicable
contingent deferred sales charge (CDSC), which is 5% in the first year,
declines to 1% in the sixth year, and is eliminated thereafter. Returns
shown for class B and class M shares for periods prior to their inception
are derived from the historical performance of class A shares, adjusted to
reflect both the initial sales charge or CDSC, if any, currently
applicable to each class and in the case of class B and class M shares the
higher operating expenses applicable to such shares. For class C shares,
returns for periods prior to their inception are derived from the
historical performance of class A shares, adjusted to reflect both the
CDSC currently applicable to class C shares, which is 1% for the first
year and is eliminated thereafter, and the higher operating expenses
applicable to class C shares. All returns assume reinvestment of
distributions at NAV. Investment return and principal value will fluctuate
so that an investor's shares when redeemed may be worth more or less than
their original cost. Performance data reflect an expense limitation
previously in effect. Without it, total returns would have been lower.
PRICE AND DISTRIBUTION INFORMATION 6 MONTHS ENDED 12/31/99
Class A Class B Class C Class M
- ------------------------------------------------------------------------------
Distributions (number) 1 1 1 1
- ------------------------------------------------------------------------------
Income $0.339 $0.197 $0.315 $0.239
- ------------------------------------------------------------------------------
Capital gains
Long-term 0.597 0.597 0.597 0.597
- ------------------------------------------------------------------------------
Short-term 0.193 0.193 0.193 0.193
- ------------------------------------------------------------------------------
Total $1.129 $0.987 $1.105 $1.029
- ------------------------------------------------------------------------------
Share value NAV POP NAV NAV NAV POP
- ------------------------------------------------------------------------------
6/30/99 $21.64 $22.96 $21.20 -- $21.45 $22.23
- ------------------------------------------------------------------------------
7/26/99* -- -- -- $21.87 -- --
- ------------------------------------------------------------------------------
12/31/99 29.68 31.49 29.10 29.61 29.45 30.52
- ------------------------------------------------------------------------------
*Inception of class C shares.
Terms and definitions
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 in the fund.
Class A shares are generally subject to an initial sales charge.
Class B shares may be subject to a sales charge upon redemption.
Class C shares are not subject to an initial sales charge and are subject
to a contingent deferred sales charge only if the shares are redeemed
during the first year.
Class M shares have a lower initial sales charge and a higher 12b-1 fee
than class A shares and no sales charge on redemption.
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 5.75% maximum sales charge for class A
shares and 3.50% for class M shares.
Contingent deferred sales charge (CDSC) is a charge applied at the time of
the redemption of class B or C shares and assumes redemption at the end of
the period. Your fund's class B CDSC declines from a 5% maximum during the
first year to 1% during the sixth year. After the sixth year, the CDSC no
longer applies. The CDSC for class C shares is 1% for one year after
purchase.
Comparative benchmarks
Morgan Stanley Capital International (MSCI) EAFE Index is an unmanaged
list of equity securities from Europe, Australasia and the Far East, with
all values expressed in U.S. dollars.
Consumer price index (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
Securities indexes assume reinvestment of all distributions and interest
payments and do not take in account brokerage fees or taxes. Securities in
the fund do not match those in the indexes and performance of the fund
will differ. It is not possible to invest directly in an index.
A guide to the financial statements
These sections of the report constitute the fund's financial
statements.
The fund's portfolio lists all the fund's investments and their values as
of the last day of the reporting period. Holdings are organized by asset
type and industry sector, country, or state to show areas of concentration
and diversification.
Statement of assets and liabilities shows how the fund's net assets and
share price are determined. All investment and noninvestment assets are
added together. Any unpaid expenses and other liabilities are subtracted
from this total. The result is divided by the number of shares to
determine the net asset value per share, which is calculated separately
for each class of shares. (For funds with preferred shares, the amount
subtracted from total assets includes the net assets allocated to
remarketed preferred shares.)
Statement of operations shows the fund's net investment gain or loss for
the reporting period. This is determined by adding up all the fund's
earnings -- from dividends and interest income -- and subtracting its
operating expenses. This statement also lists any net gain or loss the
fund realized on the sales of its holdings and -- for holdings that remain
in the portfolio -- any change in unrealized gains or losses over the
period.
Statement of changes in net assets shows how the fund's net assets were
affected by distributions to shareholders and by changes in the number of
the fund's shares. It lists distributions and their sources (net
investment income or realized capital gains) over the current reporting
period and the most recent fiscal year-end. The distributions listed here
may not match the sources listed in the Statement of operations because
the distributions are determined on a tax basis and may be paid in a
different period from the one in which they were earned.
Financial highlights provide an overview of the fund's investment results,
per-share distributions, expense ratios, net investment income ratios and
portfolio turnover in one summary table, reflecting the five most recent
reporting periods. In a semiannual report, the highlight table also
includes the current reporting period. For open-end funds, a separate
table is provided for each share class.
<TABLE>
<CAPTION>
The fund's portfolio
December 31, 1999 (Unaudited)
COMMON STOCKS (95.8%) (a)
NUMBER OF SHARES VALUE
<S> <C> <C>
Australia (1.5%)
- --------------------------------------------------------------------------------------------------------------------------
4,186,447 Cable & Wireless Optus Ltd. (NON) $ 13,989,368
3,070,214 News Corp. Ltd. ADR 117,435,686
--------------
131,425,054
Brazil (1.7%)
- --------------------------------------------------------------------------------------------------------------------------
1,672,686 Companhia Energetica de Minas Gerais ADR 36,799,092
600,122 Tele Centro Sul Participacoes S.A. 54,461,072
1,524,249 Telesp Celular Participacoes S.A. ADR 64,590,051
--------------
155,850,215
Canada (2.7%)
- --------------------------------------------------------------------------------------------------------------------------
1,113,633 Abitibi-Consolidated Inc. (NON) 13,003,799
2,167,709 BCE, Inc. 196,431,321
331,924 Nortel Networks Corp. 33,449,243
--------------
242,884,363
Finland (3.9%)
- --------------------------------------------------------------------------------------------------------------------------
78,700 Helsingin Puhelin Oyj (Helsinki Telephone Corp.) Class E 6,547,541
135,922 HPY Holding Oyj (NON) 5,093,473
1,748,625 Oy Nokia AB Class A 316,641,015
1,373,987 Stora Enso Oyj Class R 23,926,417
284,400 Stora Enso Oyj Class A 5,035,473
--------------
357,243,919
France (13.2%)
- --------------------------------------------------------------------------------------------------------------------------
29,670 Alcatel Alsthom CGE S.A. 6,805,349
2,014,770 Aventis S.A. 116,544,369
547,184 Axa S.A. 76,184,647
377,317 Banque Nationale de Paris 34,769,611
186,630 Bouygues S.A. 118,470,111
668,637 France Telecom S.A. 88,318,790
105,456 Groupe Danone 24,824,764
123,499 Havas Advertising S.A. 52,553,517
571,381 Lafarge Coppee 66,447,953
100,392 Publicis S.A. 37,872,882
1,712,465 Sanofi-Synthelabo S.A. 71,218,063
133,786 Societe Generale 31,089,993
317,751 STMicroelectronics N.V. ADR 48,119,417
166,985 Television Francaise I 87,353,193
1,935,237 Total S.A. Class B 257,957,416
938,509 Vivendi 84,642,156
--------------
1,203,172,231
Germany (4.0%)
- --------------------------------------------------------------------------------------------------------------------------
2,547,989 Bayerische Motoren Werke (BMW) AG 77,667,291
96 Celanese AG (NON) 1,752
996,541 Mannesmann AG 240,103,599
886 SAP AG 435,854
70,193 SAP AG Vorzug 42,227,266
--------------
360,435,762
Hong Kong (3.4%)
- --------------------------------------------------------------------------------------------------------------------------
5,272,000 Cheung Kong Infrastructure Holdings 66,976,716
35,169,000 China Telecom Ltd. (NON) 219,891,090
1,245,000 Hutchison Whampoa, Ltd. 18,099,190
--------------
304,966,996
Ireland (1.4%)
- --------------------------------------------------------------------------------------------------------------------------
3,900,998 CRH Plc 83,982,245
1,284,799 Elan Corp. Plc ADR (NON) 36,897,866
3,395,066 Jefferson Smurfit Group Plc 10,173,543
--------------
131,053,654
Italy (3.6%)
- --------------------------------------------------------------------------------------------------------------------------
378,500 Banca Popolare di Brescia SPA (PIK)(RES) 33,450,732
6,202,457 Mediaset SPA 96,340,532
17,902,187 Telecom Italia Mobile SPA 199,726,465
--------------
329,517,729
Japan (21.8%)
- --------------------------------------------------------------------------------------------------------------------------
443,100 Advantest Corp. 117,084,557
202,400 Asatsu Inc. 13,667,644
198,700 Benesse Corp. 47,837,341
70 Circle K Japan Co. Ltd. 2,870
9,742 DDI Corp. 133,478,162
1,113,000 Eisai Co. Ltd. 21,403,844
16,800 Fancl Corp. 4,504,991
40,400 Fancl Corp. 144A 10,833,430
5,148,000 Fuji Bank Ltd. (The) 50,029,002
130,900 Fuji Machine Manufacturing Co., Ltd. 10,556,037
1,119,000 Fujitsu Ltd. 51,032,878
11,000 Industrial Bank Of Japan 106,038
869,000 Ito-Yokado Co., Ltd. 94,401,047
190,746 KDD Corp. 26,433,383
311,600 Kojima Co. Ltd. 12,198,081
934,600 Kyocera Corp. 242,384,982
400 Mitsumi Electric Company, Ltd. 12,527
3,725,000 NEC Corp. 88,768,585
19,072,000 Nikko Securities Co. Ltd. 241,339,729
6,290 Nippon Telegraph and Telephone Corp. 107,726,550
99,790 Nippon Television Network Corp. 117,193,176
485,300 Promise Co., Ltd. 24,697,198
2,518,000 Sharp Corp. 64,440,889
4,081,000 Shiseido Co., Ltd. 59,509,585
1,166,100 Sony Corp. 345,790,041
56,000 Tokyo Broadcasting System, Inc. 1,896,261
10,814,000 Toshiba Corp. 82,549,618
568,000 Yamanouchi Pharmaceutical Co., Ltd. 19,844,977
--------------
1,989,723,423
Luxembourg (0.6%)
- --------------------------------------------------------------------------------------------------------------------------
1,497 NTT Mobile Communications 57,576,916
Mexico (2.4%)
- --------------------------------------------------------------------------------------------------------------------------
3,084,385 Carso Global Telecom 29,018,000
2,370,600 Grupo Financiero Bancomer, S.A. de C.V. 9,522,495
970,308 Grupo Televisa S.A.GDR (NON) 66,223,521
989,793 Telefonos de Mexico S.A. ADR Class L 111,351,713
--------------
216,115,729
Netherlands (6.0%)
- --------------------------------------------------------------------------------------------------------------------------
1,596,961 Akzo-Nobel N.V. 80,005,830
388,606 ASM Lithography Holding N.V. (NON) 43,120,421
992,875 Gucci Group N.V. 113,684,188
2,481,905 Internationale Nederlanden Groep 149,657,978
1,038,141 Philips Electronics N.V. 140,989,929
175,640 United Pan-Europe N.V. 22,440,118
--------------
549,898,464
Singapore (1.1%)
- --------------------------------------------------------------------------------------------------------------------------
2,518,648 DBS Group Holdings Ltd. (NON) 41,321,569
3,960,685 Overseas-Chinese Banking Corp. Ltd. 36,417,356
2,115,168 United Overseas Bank Ltd. 18,685,679
--------------
96,424,604
South Korea (2.3%)
- --------------------------------------------------------------------------------------------------------------------------
1,398,349 Korea Electric Power Corp. 43,367,434
549,497 Korea Telecom Corp. 41,074,901
333,800 Pohang Iron & Steel Company, Ltd. ADR 11,683,000
461,299 Samsung Electronics Co. 108,110,700
--------------
204,236,035
Spain (0.9%)
- --------------------------------------------------------------------------------------------------------------------------
3,243,467 Telefonica S.A. 80,920,609
Sweden (4.0%)
- --------------------------------------------------------------------------------------------------------------------------
7,140,083 Investor AB 100,735,987
542,611 Sandvik AB Class A 17,001,449
700,407 Sandvik AB Class B 22,316,183
1,291,523 Svenska Handelsbanken 16,247,482
3,275,771 Telefonaktiebolaget LM Ericsson Class B 210,669,177
--------------
366,970,278
Switzerland (5.3%)
- --------------------------------------------------------------------------------------------------------------------------
34,196 Ares-Serono Group Class B 73,031,658
54,556 Compagnie Financiere Richmont AG 130,221,607
129,202 Clariant AG 61,598,189
231,658 Credit Suisse Group 46,055,123
60,111 Fantastic Corp. (NON) 11,368,673
22,192 Julius Baer Holdings AG 67,049,949
69,676 Publicitas Holding S.A. 68,931,972
2,050 Swatch Group AG (The) 477,732
23,490 Swatch Group AG Class B (The) 27,060,716
--------------
485,795,619
Taiwan (0.8%)
- --------------------------------------------------------------------------------------------------------------------------
2,894,000 Hon Hai Precision Industry 21,580,496
12,021,000 Winbond Electronics Corp. 28,539,340
1,082,600 Winbond Electronics Corp. 144A GDR 24,629,150
--------------
74,748,986
United Kingdom (15.1%)
- --------------------------------------------------------------------------------------------------------------------------
10,538,522 Aegis Group Plc 38,303,839
2,318,589 Barclays Plc 66,743,895
198,000 British Petroleum Co. Plc 1,991,061
6,694,773 British Telecommunications Plc ADR 163,626,960
715,000 Cable & Wireless Communications (NON) 10,279,598
6,661,500 Cable & Wireless Plc 112,882,755
8,517,200 Carlton Communications Plc 82,964,870
4,574,331 Diageo Plc 36,799,084
7,915,382 EMI Group Plc 77,678,037
10,774,538 Granada Group Plc 109,217,559
2,426,774 Orange Plc ADR (NON) 81,932,404
6,721,512 Scottish Power Plc 50,923,694
6,662,159 Securicor Group Plc 17,299,998
33,613,936 Shell Transportation & Trading 279,373,254
13,862,117 Siebe Plc 75,463,951
3,961,924 Smiths Industries Plc 59,200,851
18,077,608 Tesco Plc 54,973,834
3,581,682 WPP Group Plc 56,759,180
--------------
1,376,414,824
United States (0.1%)
- --------------------------------------------------------------------------------------------------------------------------
104,700 NTL Inc. 13,061,325
--------------
Total Common Stocks (cost $5,674,561,373) $8,728,436,735
UNITS (0.6%) (a)
NUMBER OF UNITS VALUE
- --------------------------------------------------------------------------------------------------------------------------
114,400 Pohang Iron & Steel Co., Ltd. Structured Warrants expiration
4/17/00 (Issued by Lehman Brothers Finance S.A.)
(South Korea) $ 12,626,328
483,800 Tokyo Broadcasting System, Inc. Structured Call Warrants
expiration 11/17/00 (Issued by Lehman Brothers
Finance S.A.) (Japan) 16,347,602
701,000 Tokyo Broadcasting System, Inc. Structured Note
(Issued by UBS, AG) 3.15%, 2000 (Japan) 24,223,265
--------------
Total Units (cost $41,809,688) $ 53,197,195
SHORT-TERM INVESTMENTS (3.4%) (a)
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------
$24,135,000 Federal Home Loan Mortgage Corp., effective yield of 5.76%,
February 17, 2000 $ 23,953,505
49,451,000 Federal Home Loan Mortgage Corp., effective yield of 5.74%,
February 15, 2000 49,096,189
50,000,000 Federal Home Loan Mortgage Corp., effective yield of 5.50%,
January 27, 2000 49,801,389
50,000,000 Merrill Lynch & Co., Inc., effective yield of 5.85%,
January 20, 2000 49,852,222
60,952,000 Interest in $200,000,000 joint repurchase agreement dated
December 31, 1999 with Credit Suisse First Boston due
January 3, 2000 with respect to various U.S. Treasury
obligations -- maturity value of $60,965,460 for an
effective yield of 2.65% 60,952,000
76,541,000 Interest in $624,736,000 joint repurchase agreement
December 31, 1999 with S.B.C. Warburg Inc. due
January 3, 2000 with respect to various U.S. Treasury
obligations -- maturity value of $76,558,541 for an
effective yield of 2.75% 76,541,000
--------------
Total Short-Term Investments (cost $310,196,305) $ 310,196,305
- --------------------------------------------------------------------------------------------------------------------------
Total Investments (cost $6,026,567,366) (b) $9,091,830,235
- --------------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $9,111,496,779.
(b) The aggregate identified cost on a tax basis is $6,103,253,968, resulting in gross unrealized appreciation and
depreciation of $3,061,801,928 and $73,225,661, respectively, or net unrealized appreciation of $2,988,576,267.
(NON) Non-income-producing security.
(REL) Banca Popolare di Brescia is involved in a joint venture with Putnam Investments.
144A after the name of a security represents those 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.
ADR and GDR after the name of a foreign holding stands for American Depositary Receipts and Global Depositary
Receipts, respectively, representing ownership of foreign securities on deposit with a custodian bank.
The fund had the following industry group concentrations greater than 10% at December 31, 1999 (as a percentage of
net assets):
Telecommunications 23.8%
Electronics and electrical equipment 15.7
Insurance and finance 12.2
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
December 31, 1999 (Unaudited)
<S> <C>
Assets
- -----------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $6,026,567,366) (Note 1) $9,091,830,235
- -----------------------------------------------------------------------------------------------
Cash 597
- -----------------------------------------------------------------------------------------------
Foreign currency, at value (cost $1,261,399) 12,398
- -----------------------------------------------------------------------------------------------
Dividends, interest and other receivable 13,707,485
- -----------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 57,498,056
- -----------------------------------------------------------------------------------------------
Receivable for securities sold 56,175,107
- -----------------------------------------------------------------------------------------------
Total assets 9,219,223,878
Liabilities
- -----------------------------------------------------------------------------------------------
Payable for securities purchased 71,080,689
- -----------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 18,016,016
- -----------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 11,257,649
- -----------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 1,310,785
- -----------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 40,875
- -----------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 9,186
- -----------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 5,394,626
- -----------------------------------------------------------------------------------------------
Other accrued expenses 617,273
- -----------------------------------------------------------------------------------------------
Total liabilities 107,727,099
- -----------------------------------------------------------------------------------------------
Net assets $9,111,496,779
Represented by
- -----------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $5,858,338,204
- -----------------------------------------------------------------------------------------------
Distributions in excess of net investment income (Note 1) (118,631,884)
- -----------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and
foreign currency transactions (Note 1) 308,582,892
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and
assets and liabilities in foreign currencies 3,063,207,567
- -----------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $9,111,496,779
Computation of net asset value and offering price
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($5,014,581,890 divided by 168,962,576 shares) $29.68
- -----------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $29.68)* $31.49
- -----------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($2,985,808,587 divided by 102,619,798 shares)** $29.10
- -----------------------------------------------------------------------------------------------
Net asset value and offering price per class C share
($102,579,999 divided by 3,464,279 shares)** $29.61
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($327,982,915 divided by 11,136,878 shares) $29.45
- -----------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $29.45)* $30.52
- -----------------------------------------------------------------------------------------------
Net asset value, offering price and redemption price per class Y share
($680,543,388 divided by 22,843,618 shares) $29.79
- -----------------------------------------------------------------------------------------------
* 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.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
Six months ended December 31, 1999 (Unaudited)
<S> <C>
Investment income:
- -----------------------------------------------------------------------------------------------
Dividends (net of foreign tax of $6,023,817) $ 37,900,541
- -----------------------------------------------------------------------------------------------
Interest 4,548,274
- -----------------------------------------------------------------------------------------------
Total investment income 42,448,815
Expenses:
- -----------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 20,128,112
- -----------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 7,454,531
- -----------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 35,886
- -----------------------------------------------------------------------------------------------
Administrative services (Note 2) 18,331
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 4,468,368
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 10,942,596
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class C (Note 2) 154,881
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 916,846
- -----------------------------------------------------------------------------------------------
Reports to shareholders 79,677
- -----------------------------------------------------------------------------------------------
Registration fees 411,880
- -----------------------------------------------------------------------------------------------
Auditing 33,448
- -----------------------------------------------------------------------------------------------
Legal 19,851
- -----------------------------------------------------------------------------------------------
Postage 323,860
- -----------------------------------------------------------------------------------------------
Other 528,984
- -----------------------------------------------------------------------------------------------
Total expenses 45,517,251
- -----------------------------------------------------------------------------------------------
Expense reduction (Note 2) (1,974,675)
- -----------------------------------------------------------------------------------------------
Net expenses 43,542,576
- -----------------------------------------------------------------------------------------------
Net investment loss (1,093,761)
- -----------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 439,300,984
- -----------------------------------------------------------------------------------------------
Net realized gain on foreign currency transactions (Note 1) 584,651
- -----------------------------------------------------------------------------------------------
Net unrealized depreciation of assets and liabilities in
foreign currencies during the period (2,424,071)
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments during the period 2,134,588,791
- -----------------------------------------------------------------------------------------------
Net gain on investments 2,572,050,355
- -----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $2,570,956,594
- -----------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
Six months ended Year ended
December 31 June 30
1999* 1999
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
Increase in net assets
- ---------------------------------------------------------------------------------------------------------------
Operations:
- ---------------------------------------------------------------------------------------------------------------
Net investment income (loss) $ (1,093,761) $ 3,933,285
- ---------------------------------------------------------------------------------------------------------------
Net realized gain on investments and
foreign currency transactions 439,885,635 72,892,717
- ---------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and
assets and liabilities in foreign currencies 2,132,164,720 460,292,239
- ---------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 2,570,956,594 537,118,241
- ---------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ---------------------------------------------------------------------------------------------------------------
From net investment income
Class A (53,779,843) (22,568,753)
- ---------------------------------------------------------------------------------------------------------------
Class B (19,094,099) (7,287,243)
- ---------------------------------------------------------------------------------------------------------------
Class C (806,547) --
- ---------------------------------------------------------------------------------------------------------------
Class M (2,507,298) (1,060,968)
- ---------------------------------------------------------------------------------------------------------------
Class Y (7,728,554) (1,891,655)
- ---------------------------------------------------------------------------------------------------------------
From net realized gain on investments
Class A (125,327,657) (38,505,930)
- ---------------------------------------------------------------------------------------------------------------
Class B (76,570,245) (26,499,065)
- ---------------------------------------------------------------------------------------------------------------
Class C (2,022,769) --
- ---------------------------------------------------------------------------------------------------------------
Class M (8,287,723) (2,915,639)
- ---------------------------------------------------------------------------------------------------------------
Class Y (15,858,592) (2,723,694)
- ---------------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 1,638,906,264 1,434,362,924
- ---------------------------------------------------------------------------------------------------------------
Total increase in net assets 3,897,879,531 1,868,028,218
Net assets
- ---------------------------------------------------------------------------------------------------------------
Beginning of period 5,213,617,248 3,345,589,030
- ---------------------------------------------------------------------------------------------------------------
End of period (including distributions in excess of
net investment income of $118,631,884 and
$33,621,782, respectively) $9,111,496,779 $5,213,617,248
- ---------------------------------------------------------------------------------------------------------------
* Unaudited
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS A
- ---------------------------------------------------------------------------------------------------------------------------------
Six months
ended
Per-share December 31
operating performance (Unaudited) Year ended June 30
- ---------------------------------------------------------------------------------------------------------------------------------
1999 1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $21.64 $20.00 $17.58 $14.25 $12.10 $11.83
- ---------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) .03(c) .07(c) .20(c) .15(c) .13(c) .08(d)
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 9.14 2.14 3.26 3.39 2.29 .36
- ---------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 9.17 2.21 3.46 3.54 2.42 .44
- ---------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ---------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.34) (.21) (.25) (.15) (.26) --
- ---------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.79) (.36) (.79) (.06) (.01) (.11)
- ---------------------------------------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments -- -- -- -- -- (.06)
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions (1.13) (.57) (1.04) (.21) (.27) (.17)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $29.68 $21.64 $20.00 $17.58 $14.25 $12.10
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ---------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 42.87* 11.57 20.73 25.13 20.21 3.76
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $5,014,582 $2,928,662 $1,827,331 $728,849 $151,088 $32,856
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%) (b) .58* 1.27 1.36 1.59 1.74 1.61(d)
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average net assets (%) .12* .38 1.07 .98 .99 .97(d)
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 53.84* 97.24 93.53 86.40 44.14 25.83
- ---------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized
(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the period ended June 30, 1996 and thereafter includes amounts paid through
expense offset and brokerage service arrangements. Prior period ratios exclude these amounts (Note 2).
(c) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares
outstanding for the period.
(d) Reflects an expense limitation in effect during the year. As a result of such limitation, expenses for class A, B and M
shares for the period ended June 30, 1995 reflect a reduction of less than $0.01 per share.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS B
- --------------------------------------------------------------------------------------------------------------------------------
Six months
ended
Per-share December 31
operating performance (Unaudited) Year ended June 30
- --------------------------------------------------------------------------------------------------------------------------------
1999 1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $21.20 $19.63 $17.32 $14.10 $12.00 $11.82
- --------------------------------------------------------------------------------------------------------------------------------
Investment operations
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.06)(c) (.07)(c) .06(c) .03(c) .04(c) .01(d)
- --------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 8.95 2.10 3.21 3.34 2.26 .34
- --------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 8.89 2.03 3.27 3.37 2.30 .35
- --------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- --------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.20) (.10) (.17) (.09) (.19) --
- --------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.79) (.36) (.79) (.06) (.01) (.11)
- --------------------------------------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments -- -- -- -- -- (.06)
- --------------------------------------------------------------------------------------------------------------------------------
Total distributions (.99) (.46) (.96) (.15) (.20) (.17)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $29.10 $21.20 $19.63 $17.32 $14.10 $12.00
- --------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- --------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 42.36* 10.75 19.87 24.09 19.35 3.00
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $2,985,809 $1,821,024 $1,226,917 $472,663 $132,013 $25,892
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%) (b) .95* 2.02 2.11 2.34 2.49 2.41(d)
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average net assets (%) (.26)* (.38) .31 .18 .32 .23(d)
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 53.84* 97.24 93.53 86.40 44.14 25.83
- --------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized
(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the period ended June 30, 1996 and thereafter includes amounts paid through
expense offset and brokerage service arrangements. Prior period ratios exclude these amounts (Note 2).
(c) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares
outstanding for the period.
(d) Reflects an expense limitation in effect during the year. As a result of such limitation, expenses for class A, B and M
shares for the period ended June 30, 1995 reflect a reduction of less than $0.01 per share.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS C
- ---------------------------------------------------------------------------------------------------------------------------------
For the period
Per-share July 26, 1999+
operating performance to December 31
- ---------------------------------------------------------------------------------------------------------------------------------
1999
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Net asset value,
beginning of period $21.87
- ---------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (c) (.04)
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 8.89
- ---------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 8.85
- ---------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ---------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.32)
- ---------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.79)
- ---------------------------------------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments --
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions (1.11)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $29.61
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ---------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 40.92*
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $102,580
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%) (b) .82*
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average net assets (%) (.18)*
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 53.84*
- ---------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized
(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the period ended June 30, 1996 and thereafter includes amounts paid through
expense offset and brokerage service arrangements. Prior period ratios exclude these amounts (Note 2).
(c) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares
outstanding for the period.
(d) Reflects an expense limitation in effect during the year. As a result of such limitation, expenses for class A, B and M
shares for the period ended June 30, 1995 reflect a reduction of less than $0.01 per share.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS M
- ---------------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share December 31 Dec. 1,1994+
operating performance (Unaudited) Year ended June 30 to June 30
- ---------------------------------------------------------------------------------------------------------------------------------
1999 1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $21.45 $19.85 $17.48 $14.22 $12.09 $11.87
- ---------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.03)(c) (.02)(c) .10(c) .07(c) .08(c) .03(d)
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 9.06 2.11 3.26 3.36 2.28 .36
- ---------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 9.03 2.09 3.36 3.43 2.36 .39
- ---------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ---------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.24) (.13) (.20) (.11) (.22) --
- ---------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.79) (.36) (.79) (.06) (.01) (.11)
- ---------------------------------------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments -- -- -- -- -- (.06)
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions (1.03) (.49) (.99) (.17) (.23) (.17)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $29.45 $21.45 $19.85 $17.48 $14.22 $12.09
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ---------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 42.55* 10.97 20.18 24.40 19.71 3.33*
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $327,983 $208,064 $140,202 $58,471 $14,309 $1,777
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%) (b) .83* 1.77 1.86 2.09 2.25 1.61(d)*
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average net assets (%) (.14)* (.12) .54 .44 .61 .58(d)*
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 53.84* 97.24 93.53 86.40 44.14 25.83
- ---------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized
(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the period ended June 30, 1996 and thereafter includes amounts paid through
expense offset and brokerage service arrangements. Prior period ratios exclude these amounts (Note 2).
(c) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares
outstanding for the period.
(d) Reflects an expense limitation in effect during the year. As a result of such limitation, expenses for class A, B and M
shares for the period ended June 30, 1995 reflect a reduction of less than $0.01 per share.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS Y
- --------------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share December 31 July 12, 1996+
operating performance (Unaudited) Year ended June 30 to June 30
- --------------------------------------------------------------------------------------------------------------------------------
1999 1999 1998 1997
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $21.72 $20.05 $17.60 $13.88
- --------------------------------------------------------------------------------------------------------------------------------
Investment operations
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) .06(c) .14(c) .22(c) .20(c)
- --------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 9.19 2.13 3.30 3.75
- --------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 9.25 2.27 3.52 3.95
- --------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- --------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.39) (.24) (.28) (.17)
- --------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.79) (.36) (.79) (.06)
- --------------------------------------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
Total distributions (1.18) (.60) (1.07) (.23)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $29.79 $21.72 $20.05 $17.60
- --------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- --------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 43.08* 11.83 21.08 25.44*
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $680,543 $255,867 $151,139 $96,375
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%) (b) .45* 1.02 1.11 1.30*
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average net assets (%) .25* .70 1.22 1.26*
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 53.84* 97.24 93.53 86.40
- --------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized
(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the period ended June 30, 1996 and thereafter includes amounts paid through
expense offset and brokerage service arrangements. Prior period ratios exclude these amounts (Note 2).
(c) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares
outstanding for the period.
(d) Reflects an expense limitation in effect during the year. As a result of such limitation, expenses for class A, B and M
shares for the period ended June 30, 1995 reflect a reduction of less than $0.01 per share.
</TABLE>
Notes to financial statements
December 31, 1999 (Unaudited)
Note 1
Significant accounting policies
Putnam International Growth Fund ("the fund") is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The fund seeks capital appreciation by
investing primarily in equity securities of companies located outside the
United States.
The fund offers class A, class B, class C, class M and class Y shares. The
fund began offering class C shares on July 26, 1999. Class A shares are
sold with a maximum front-end sales charge of 5.75%. Class B shares, which
convert to class A shares after approximately eight years, do not pay a
front-end sales charge but pay a higher ongoing distribution fee than
class A shares, and are subject to a contingent deferred sales charge, if
those shares are redeemed within six years of purchase. Class C shares are
subject to the same fees and expenses as class B shares, except that class
C shares have a one-year 1.00% contingent deferred sales charge and do not
convert to class A shares. Class M shares are sold with a maximum front
end sales charge of 3.50% and pay an ongoing distribution fee that is
higher than class A shares but lower than class B and class C shares.
Class Y shares, which are sold at net asset value, are generally subject
to the same expenses as class A, class B, class C and class M shares, but
do not bear a distribution fee. Class Y shares are sold to defined
contribution plans that invest at least $150 million in a combination of
Putnam funds and other accounts managed by affiliates of Putnam Investment
Management, Inc. ("Putnam Management"), the fund's manager, a wholly-owned
subsidiary of Putnam Investments, Inc.
Expenses of the fund are borne pro-rata by the holders of each class of
shares, except that each class bears expenses unique to that class
(including the distribution fees applicable to such class). Each class
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 the 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 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
of the financial statements and the reported amounts of increases and
decreases in net assets from operations during the reporting period.
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 sales price on its principal exchange, 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. Other investments, including restricted
securities, 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 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. Collateral
for certain tri-party repurchase agreements is held at the counterparty's
custodian in a segregated account for the benefit of the fund and the
counterparty. 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). Gains or losses on securities sold are determined on
the identified cost basis. 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) Foreign currency translation The accounting records of the fund are
maintained in U.S. dollars. The market value of foreign securities,
currency holdings, and other assets and liabilities are recorded in the
books and records of the fund after translation to U.S. dollars based on
the exchange rates on that day. The cost of each security is determined
using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when accrued or incurred. The fund
does not isolate that portion of realized or unrealized gains or losses
resulting from changes in the foreign exchange rate on investments from
fluctuations arising from changes in the market prices of the securities.
Such gains and losses are included with the net realized and unrealized
gain or loss on investments. Net realized gains and losses on foreign
currency transactions represent net realized exchange gains or losses on
closed forward currency contracts, disposition of foreign currencies and
the difference between the amount of investment income and foreign
withholding taxes recorded on the fund's books and the U.S. dollar
equivalent amounts actually received or paid. Net unrealized appreciation
and depreciation of assets and liabilities in foreign currencies arise
from changes in the value of open forward currency contracts and assets
and liabilities other than investments at the period end, resulting from
changes in the exchange rate. Investments in foreign securities involve
certain risks, including those related to economic instability,
unfavorable political developments, and currency fluctuations, not present
with domestic investments.
F) Line of credit The fund has entered into a committed line of credit
with certain banks. This line of credit agreement includes restrictions
that the fund maintain an asset coverage ratio of at least 300% and
borrowings must not exceed prospectus limitations. For the six months
ended December 31, 1999, the fund had no borrowings against the line of
credit.
G) 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, as amended. 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.
H) 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.
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: 0.80% of the first $500
million of average net assets, 0.70% of the next $500 million, 0.65% of
the next $500 million, and 0.60% of the next $5 billion, 0.575% of the
next $5 billion, 0.555% of the next $5 billion, 0.54% of the next $5
billion, and 0.53% thereafter.
The fund reimburses Putnam Management an allocated amount 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 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.
For the six months ended December 31, 1999, fund expenses were reduced by
$1,974,675 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.
Each Trustee of the fund receives an annual Trustee fee, of which $3,437
has been allocated to the fund, and an additional fee for each Trustee's
meeting attended. Trustees receive additional fees for attendance at
certain committee meetings.
The fund has adopted a Trustee Fee Deferral Plan (the "Deferral 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
invested in certain Putnam funds until distribution in accordance with the
Deferral 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 a 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 distribution plans (the "Plans") with respect to its
class A, class B, class C and class M shares pursuant to Rule 12b-1 under
the Investment Company Act of 1940. The purpose of the Plans 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 Plans provide for payments by the
fund to Putnam Mutual Funds Corp. at an annual rate up to 0.35%, 1.00%,
1.00% and 1.00% of the average net assets attributable to class A, class
B, class C and class M shares, respectively. The Trustees have approved
payment by the fund at an annual rate of 0.25%, 1.00%, 1.00% and 0.75% of
the average net assets attributable to class A, class B, class C and class
M shares, respectively.
For the six months ended December 31, 1999, Putnam Mutual Funds Corp.,
acting as underwriter received net commissions of $864,904 and $70,316
from the sale of class A and class M shares, respectively, and received
$1,169,543 and $2,590 in contingent deferred sales charges from
redemptions of class B and class C shares, respectively. A deferred sales
charge of up to 1% is assessed on certain redemptions of class A shares.
For the six months ended December 31, 1999, Putnam Mutual Funds Corp.,
acting as underwriter received $97,578 on class A redemptions.
Note 3
Purchases and sales of securities
During the six months ended December 31, 1999, cost of purchases and
proceeds from sales of investment securities other than short-term
investments aggregated $4,629,807,306 and $3,429,424,104, respectively.
There were no purchases and sales of U.S. government obligations.
Note 4
Capital shares
At December 31, 1999, there was an unlimited number of shares of
beneficial interest authorized. Transactions in capital shares were as
follows:
Six months ended December 31, 1999
- -----------------------------------------------------------------------------
Class A Shares Amount
- -----------------------------------------------------------------------------
Shares sold 118,882,200 $2,825,170,233
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 6,124,357 165,908,022
- -----------------------------------------------------------------------------
125,006,557 2,991,078,255
Shares
repurchased (91,392,668) (2,155,025,745)
- -----------------------------------------------------------------------------
Net increase 33,613,889 $ 836,052,510
- -----------------------------------------------------------------------------
Year ended June 30, 1999
- -----------------------------------------------------------------------------
Class A Shares Amount
- -----------------------------------------------------------------------------
Shares sold 217,110,664 $4,256,867,643
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 3,117,893 57,181,946
- -----------------------------------------------------------------------------
220,228,557 4,314,049,589
Shares
repurchased (176,253,908) (3,467,222,878)
- -----------------------------------------------------------------------------
Net increase 43,974,649 $ 846,826,711
- -----------------------------------------------------------------------------
Six months ended December 31, 1999
- -----------------------------------------------------------------------------
Class B Shares Amount
- -----------------------------------------------------------------------------
Shares sold 21,395,842 $508,397,049
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 3,073,659 81,667,582
- -----------------------------------------------------------------------------
24,469,501 590,064,631
Shares
repurchased (7,753,236) (181,059,998)
- -----------------------------------------------------------------------------
Net increase 16,716,265 $409,004,633
- -----------------------------------------------------------------------------
Year ended June 30, 1999
- -----------------------------------------------------------------------------
Class B Shares Amount
- -----------------------------------------------------------------------------
Shares sold 39,583,994 $758,304,651
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 1,608,670 29,020,279
- -----------------------------------------------------------------------------
41,192,664 787,324,930
Shares
repurchased (17,794,641) (337,422,833)
- -----------------------------------------------------------------------------
Net increase 23,398,023 $449,902,097
- -----------------------------------------------------------------------------
For the period July 26, 1999
(commencement of operations)
to December 31, 1999
- -----------------------------------------------------------------------------
Class C Shares Amount
- -----------------------------------------------------------------------------
Shares sold 3,557,622 $89,129,643
- -----------------------------------------------------------------------------
Shares issued in c
connection with
reinvestment of
distributions 75,011 2,028,305
- -----------------------------------------------------------------------------
3,632,633 91,157,948
Shares
repurchased (168,354) (4,518,029)
- -----------------------------------------------------------------------------
Net increase 3,464,279 $86,639,919
- -----------------------------------------------------------------------------
Six months ended December 31, 1999
- -----------------------------------------------------------------------------
Class M Shares Amount
- -----------------------------------------------------------------------------
Shares sold 5,027,779 $121,518,427
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 380,894 10,242,155
- -----------------------------------------------------------------------------
5,408,673 131,760,582
Shares
repurchased (3,969,739) (95,709,692)
- -----------------------------------------------------------------------------
Net increase 1,438,934 $ 36,050,890
- -----------------------------------------------------------------------------
Year ended June 30, 1999
- -----------------------------------------------------------------------------
Class M Shares Amount
- -----------------------------------------------------------------------------
Shares sold 6,415,962 $125,270,005
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 208,034 3,791,905
- -----------------------------------------------------------------------------
6,623,996 129,061,910
Shares
repurchased (3,990,008) (77,706,579)
- -----------------------------------------------------------------------------
Net increase 2,633,988 $ 51,355,331
- -----------------------------------------------------------------------------
Six months ended December 31, 1999
- -----------------------------------------------------------------------------
Class Y Shares Amount
- -----------------------------------------------------------------------------
Shares sold 13,971,777 $342,179,579
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 867,337 23,587,146
- -----------------------------------------------------------------------------
14,839,114 365,766,725
Shares
repurchased (3,773,159) (94,608,413)
- -----------------------------------------------------------------------------
Net increase 11,065,955 $271,158,312
- -----------------------------------------------------------------------------
Year ended June 30, 1999
- -----------------------------------------------------------------------------
Class Y Shares Amount
- -----------------------------------------------------------------------------
Shares sold 7,133,724 $142,964,956
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 245,487 4,615,349
- -----------------------------------------------------------------------------
7,379,211 147,580,305
Shares
repurchased (3,139,377) (61,301,520)
- -----------------------------------------------------------------------------
Net increase 4,239,834 $ 86,278,785
- -----------------------------------------------------------------------------
Fund information
WEB SITE
www.putnaminv.com
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
John A. Hill, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John H. Mullin III
Robert E. Patterson
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
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
Ian C. Ferguson
Vice President
John J. Morgan
Vice President
Brett C. Browchuk
Vice President
Justin M. Scott
Vice President and Fund Manager
Omid Kamshad
Vice President and Fund Manager
Paul Warren
Vice President and Fund Manager
Mark D. Pollard
Vice President and Fund Manager
Joshua L. Byrne
Vice President and Fund Manager
Richard A. Monaghan
Vice President
John R. Verani
Vice President
This report is for the information of shareholders of Putnam International
Growth 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' Web site:
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 the
principal amount invested.
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
- ---------------------
BULK RATE
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
- ---------------------
For account balances, economic forecasts, and the latest on Putnam funds, visit
www.putnaminv.com
SA009-58382 841/524/891/2BA 2/00
PUTNAM INVESTMENTS [SCALE LOGO OMITTED]
- ------------------------------------------------------------------------------
Putnam International Growth Fund
Supplement to Semiannual Report dated 12/31/99
The following information has been prepared to provide class Y shareholders
with a performance overview specific to their holdings. Class Y shares are
offered exclusively to defined contribution plans investing $150 million or
more in one or more of Putnam's funds or private accounts. Performance of
class Y shares, which incur neither a front-end load, distribution fee, nor
contingent deferred sales charge, will differ from performance of class A, B,
C, and M shares, which are discussed more extensively in the semiannual
report.
ANNUAL RESULTS AT A GLANCE
- ------------------------------------------------------------------------------
Total return: NAV
Six months ended 12/31/99 43.08%
One year ended 12/31/99 61.19
Life of class (since 7/12/96) 17.94
Annual average
- ------------------------------------------------------------------------------
Share value: NAV
6/30/99 $21.72
12/31/99 29.79
- ------------------------------------------------------------------------------
Distributions: No. Income Capital gains Total
1 $0.385 $0.790 $1.175
- ------------------------------------------------------------------------------
Please note that past performance does not indicate future results.
Investment return and principal value will fluctuate so your shares, when
redeemed, may be worth more or less than their original cost. See full report
for information on comparative benchmarks. If you have questions, please
consult your fund prospectus or call Putnam toll free at 1-800-752-9894.
