Putnam
International
Growth
Fund
ANNUAL REPORT ON PERFORMANCE AND OUTLOOK
6-30-00
[SCALE LOGO OMITTED]
FROM THE TRUSTEES
[GRAPHIC OMITTED: PHOTO OF JOHN A. HILL AND GEORGE PUTNAM, III]
Dear Shareholder:
It is a pleasure to greet you in our new roles as Chairman of the
Trustees and President of the Funds. As you know, both of us have been
members of the Board of Trustees for a number of years -- years during
which the global securities markets, the mutual fund industry, and
Putnam itself have experienced tremendous growth and change.
As we look to the future, we are certain that the changes that lie ahead
will be even more breathtaking in their scope. What will not change is
the Trustees' dedication to serving the best interests of our
shareholders.
We are pleased to announce the addition of Joshua L. Byrne to your
fund's management team. Joshua is a Senior Vice President in Putnam's
Global Core Equity Group. He joined Putnam in 1992 and has a total of 13
years of investment experience.
Respectfully yours,
/S/ JOHN A. HILL /S/ GEORGE PUTNAM, III
John A. Hill George Putnam, III
Chairman of the Trustees President of the Funds
August 16, 2000
REPORT FROM FUND MANAGEMENT
Omid Kamshad
Paul C. Warren
Joshua L. Byrne
Justin M. Scott
Focusing primarily on business fundamentals, international markets
achieved solid gains during the 12 months ended June 30, 2000, which
marked Putnam International Growth Fund's 2000 fiscal year. In contrast
to previous years, international markets experienced no turbulence
stemming from currency crises. Widespread economic improvement around
the globe allowed markets to concentrate on the strong growth prospects
of sectors such as telecommunications, media, and technology. Our
research had prompted us to overweight these sectors generally during
the year, and we identified stocks that proved to be leading performers
in these industries. Our investment team also selected companies
undertaking fundamental improvements in more traditional industries such
as energy, pharmaceuticals, and financial services, and several of these
holdings also contributed to gains. We are pleased to report a solid
gain for the portfolio, well above its long-term average and well ahead
of its performance benchmark, the Morgan Stanley Capital International
EAFE Index. See page 7 for complete details.
Total return for 12 months ended 6/30/00
Class A Class B Class C Class M
NAV POP NAV CDSC NAV CDSC NAV POP
----------------------------------------------------------------------
44.03% 35.74% 43.00% 38.00% 42.98% 41.98% 43.32% 38.29%
----------------------------------------------------------------------
Past performance is not indicative of future results. Performance
information for longer periods and explanation of performance
calculation methods begin on page 7.
* GLOBAL RALLY LIFTS FUND
During 1999, international markets showed increasing confidence in the
potential of technology and telecommunications companies.
Internationally, however, the story was less about dot-coms than about
manufacturers of computer and communications hardware, networking
equipment, handheld devices, and the service companies that stand
behind them. Fund holdings whose performance reflected this strength
included Finland's Nokia, maker of wireless phones, Japan's Kyocera,
maker of components for phones and other wireless devices, and Germany's
Mannesmann, a provider of wireless services that was recently acquired
by Vodafone Air Touch. Optimism for technology stocks also boosted the
fortunes of many traditional telecommunications companies that offer
wireless services. Media companies benefited as growth companies spent
considerable sums to build global brand images. Although these holdings,
as well as others mentioned 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.
[GRAPHIC OMITTED: horizontal bar chart TOP COUNTRY ALLOCATIONS]
TOP COUNTRY ALLOCATIONS*
United Kingdom 18.6%
Japan 14.0%
France 13.7%
Netherlands 8.5%
Switzerland 7.6%
Footnote reads:
*Based on net assets as of 6/30/00. Holdings will vary over time.
"The mobile-phone equipment industry is now led by, of all things, a
Finnish company, Nokia, that used to manufacture Wellington boots and
toilet paper. Vodafone Air Touch is the world's biggest wireless
service provider. In wireless software, a mainly European consortium
seems to be in front."
-- The Wall Street Journal, June 26, 2000
The technology rally peaked during the first quarter of 2000. As
sometimes happens, market enthusiasm had pushed stock prices beyond what
company earnings justified. In the first quarter, we reduced positions
in traditional fixed-line phone companies such as Deutsche Telecom and
British Telecom, believing that increasing competition among fixed-line
companies was cutting into profits. We maintained the fund's exposure to
wireless opportunities and deployed more assets into energy companies
that were benefiting from industry consolidation and rising prices for
oil and natural gas. This first quarter repositioning helped to moderate
risk, although the fund experienced some volatility stemming from
interest rates and profit taking in the technology and telecom sectors
in the closing months of the fiscal year.
Analysis of stock valuations is a key risk control element of your
fund's investment process. This process begins with analysis of a broad
array of growing, well-established international companies. We look for
stocks priced at a discount to the company's return on assets. If the
price of a holding appreciates beyond what we think is justified by
fundamentals, we begin to sell it. In addition to stock-specific
factors such as return on assets and valuations, we also analyze market,
sector, economic, and currency factors, seeking to optimize the
portfolio based on potential rewards and risks.
* TELECOMS EXPERIENCE GROWTH, REALIGNMENT
In the previous two years, country weightings have had more impact on
the performance of international investments than sector strategies.
This past year, the equation reversed and sector positioning took
priority. Part of this change was explained by the absence of regional
currency problems as had occurred in Asia, Latin America, and Russia
during recent years. Viewed positively, however, performance in the past
year reflected the increasing integration of the global economy and the
decision of major corporations to compete on a global scale.
"In its latest Economic Outlook, the Organization for Economic
Cooperation and Development describes the health of the world economy as
better than at any time since the late 1980s, with the U.S., Europe, and
Asia all seeing strong growth."
-- Financial Times, May 31, 2000
This was especially true of the telecommunications sector. We have
already mentioned its strong performance, but we must also highlight how
we positioned the fund to take advantage of this sector from many
angles. In Europe, the fund was invested in both sides in the
high-profile takeover battle between Vodafone Group of the United
Kingdom and Mannesmann of Germany. Vodafone is positioned as Europe's
dominant wireless service company and has a presence in the United
States through its AirTouch subsidiary.
Media companies thrive in competitive world
It's easy to see how investors bid up the prices of technology and
telecommunications stocks in the past year -- these companies continue to
deliver innovativeproducts and services. But the media, third sector that
joined the market rally in late 1999, is benefiting from this growth.
Advertising, marketing, cable, and broadcasting companies are thriving
because young technology companies must build global brand names, and
older companies in every sector are competing in new and deregulated
markets. As the Financial Times noted on July 21, 2000, "Generally, the
greater the competition, the more companies need to advertise: and most
companies are operating in a more competitive environment than at any time
in their history." Examples of fund holdings that have benefited include
Societe Television Francaise, which will attract new advertising as it
is privatized by the French government, and Havas Advertising, France's
largest ad agency and a leading provider of Internet advertising.
The Vodafone-Mannesmann episode was just one of many ways that your fund
has taken advantage of the growth of wireless services. Many of the
fund's current holdings are also introducing third- generation wireless
services, including messaging functions that enable cell phones to send
e-mails or access the Internet. Already, millions of consumers in Japan
and Scandinavia use their phones to send personal messages, make
reservations for travel or entertainment, manage their bank accounts, or
use vending machines. It's important to note that international
companies have a significant advantage over their U.S. counterparts in
this industry. Examples of service companies and equipment manufacturers
that benefit include France's STMicroelectronics, Sweden's Ericsson, and
Taiwan's Hon Hai Precision Industry.
* BULLISH OUTLOOK FOR ENERGY, INSURANCE SECTORS
Near the middle of the fiscal year, we began to build up larger
positions in energy companies. Our reasoning was based on both
short-term cyclical factors, such as rising prices for oil and natural
gas, and the strategic, secular changes occurring in the industry.
TotalFinaElf of France offers an excellent example of such changes. This
company is the product of a three-way combination undertaken over the
past two years involving Total, Elf Aquitaine, and Petrofina of Belgium.
The merged company can significantly reduce costs by combining petroleum
and chemical refineries and increase efficiencies. At the retail end of
the business, there will also be further consolidation among rival
filling stations.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
TOP 10 HOLDINGS
TotalFinaElf S.A., class B
France
Energy
Vodafone AirTouch PLC
United Kingdom
Telecommunications services
Shell Transportation & Trading, PLC
United Kingdom
Energy
Philips Electronics N.V.
Netherlands
Technology
Nokia Oyj AB, class A
Finland
Technology
Nippon Telegraph & Telephone Corp.
Japan
Telecommunications services
Internationale Nederlanden
Groep (ING), N.V.
Netherlands
Financial
Samsung Electronics Co.
South Korea
Technology
NEC Corp.
Japan
Technology
Fujitsu, Ltd.
Japan
Technology
Footnote reads:
These holdings represent 28.3% of the fund's net assets as of 6/30/00.
Portfolio holdings will vary over time.
In addition to energy stocks, we added to financial services companies
during the period. ING, a European bank based in the Netherlands, is
benefiting from a revival in its global life insurance business.
Insurers had been significantly out of favor with markets in the past
couple of years. The fund also enjoyed strong performance from Nikko
Securities, a Japanese brokerage house that improved its earnings by
implementing American-style management techniques such as a
cost-cutting, restructuring, and a new compensation system that rewards
executives with stock options.
* OUTLOOK FOR CONTINUED GROWTH
As we enter the 2001 fiscal year, we expect that both growth companies
and companies more sensitive to the business cycle will continue to
achieve solid profits. World economic growth looks solid, with Europe
leading the way. Although the European Central Bank could raise interest
rates again, we anticipate that the tightening cycle will soon conclude
and will succeed in restraining inflation. Economic sluggishness in
Japan remains a concern for us. For this reason, and because of Japan's
large public sector debts, we have reduced the portfolio's exposure to
Japanese stocks. Prospects for the rest of Asia look far brighter. We
are especially impressed by Korea's ongoing efforts to restructure large
corporations and reform its banking sector. Our fundamental research
leads us to anticipate strong results for companies involved in wireless
communications, media, energy, and insurance, in particular. As we have
described above, however, diversification is a consistent feature of
this fund, and we look forward to attractive performance across a broad
range of stocks and industries in the coming year.
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 6/30/00, 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 of the United States.
TOTAL RETURN FOR PERIODS ENDED 6/30/00
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
------------------------------------------------------------------------------
1 year 44.03% 35.74% 43.00% 38.00% 42.98% 41.98% 43.32% 38.29%
------------------------------------------------------------------------------
5 years 191.81 174.99 181.12 179.12 180.97 180.97 184.65 174.66
Annual average 23.89 22.42 22.96 22.79 22.95 22.95 23.27 22.39
------------------------------------------------------------------------------
Life of fund 329.51 304.65 298.59 298.59 300.43 300.43 308.86 294.58
Annual average 16.89 16.14 15.96 15.96 16.01 16.01 16.27 15.83
------------------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 6/30/00
MSCI EAFE Consumer
Index price index
--------------------------------------------------------------
1 year 17.16% 3.67%
--------------------------------------------------------------
5 years 70.99 12.98
Annual average 11.32 2.47
--------------------------------------------------------------
Life of fund 115.96 27.82
Annual average 8.60 2.66
--------------------------------------------------------------
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.
[GRAPHIC OMITTED: worm chart GROWTH OF A $10,000 INVESTMENT]
GROWTH OF A $10,000 INVESTMENT
Cumulative total return of a $10,000 investment since 2/28/91
Fund's class A MSCI EAFE Consumer price
Date shares at POP Index index
2/28/91 9,421 10,000 10,000
6/30/91 8,930 8,887 10,089
6/30/92 9,780 8,829 10,401
6/30/93 10,623 10,619 10,712
6/30/94 13,364 12,425 10,979
6/30/95 13,867 12,630 11,313
6/30/96 16,669 14,308 11,632
6/30/97 20,858 16,144 11,899
6/30/98 25,183 17,129 12,092
6/30/99 28,096 18,433 12,329
6/30/00 $40,465 $21,596 $12,782
Footnote reads:
Past performance is no assurance of future results. At the end of the
same time period, a $10,000 investment in the fund's class B and class C
shares would have been valued at $39,859 and $40,043, respectively, and
no contingent deferred sales charges would apply; a $10,000 investment
in the fund's class M shares would have been valued at $40,886 ($39,458
at public offering price). See first page of performance section for
performance calculation method.
PRICE AND DISTRIBUTION INFORMATION 12 MONTHS ENDED 6/30/00
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 -- --
-----------------------------------------------------------------------------
6/30/00 29.92 31.75 29.23 29.74 29.61 30.68
-----------------------------------------------------------------------------
*Inception date for 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. 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.
Consumer price index (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
A GUIDE TO THE FINANCIAL STATEMENTS
These sections of the report, preceded by the Report of independent
accountants, 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.
REPORT OF INDEPENDENT ACCOUNTANTS
For the fiscal year ended June 30, 2000
To the Trustees and Shareholders of
Putnam International Growth Fund
In our opinion, the accompanying statement of assets and liabilities,
including the fund's portfolio, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Putnam International Growth Fund (the "fund") at June 30, 2000, and the
results of its operations, the changes in its net assets and the
financial highlights for the periods indicated, in conformity with
accounting principles generally accepted in the United States. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the fund's
management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of
these financial statements in accordance with auditing standards
generally accepted in the United States, which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of investments owned at June
30, 2000 by correspondence with the custodian, provide a reasonable
basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
August 11, 2000
<TABLE>
<CAPTION>
THE FUND'S PORTFOLIO
June 30, 2000
COMMON STOCKS (95.8%) (a)
NUMBER OF SHARES VALUE
<S> <C> <C>
Australia (1.4%)
-------------------------------------------------------------------------------------------------------------------
2,255,100 CSR, Ltd. $ 6,279,245
2,974,680 News Corp., Ltd. ADR 162,120,060
----------------
168,399,305
Brazil (0.2%)
-------------------------------------------------------------------------------------------------------------------
2 Telesp Participacoes S.A. 36
1,324,332 Telesp-Telecomunicacoes de Sao Paulo S.A. ADR 24,500,142
----------------
24,500,178
Canada (4.3%)
-------------------------------------------------------------------------------------------------------------------
2,520,488 Bank of Nova Scotia 61,769,994
3,041,000 BCE, Inc. -- New York Exchange 72,413,813
704,303 BCE, Inc. -- Toronto Exchange 16,689,870
3,602,326 Nortel Networks Corp. 249,769,700
895,600 Seagram Co., Ltd. 51,944,800
3,548,000 Sun Life Financial Services of Canada, Inc. 59,764,110
942,142 Suncor Energy, Inc. 21,753,481
----------------
534,105,768
Finland (3.3%)
-------------------------------------------------------------------------------------------------------------------
6,847,697 Nokia Oyj AB, Class A 350,783,413
673,812 Sonera Group Oyj 30,836,063
294,068 Stora Enso Oyj, Class A 2,705,614
2,756,321 Stora Enso Oyj, Class R 25,227,834
----------------
409,552,924
France (13.7%)
-------------------------------------------------------------------------------------------------------------------
2,636,745 Aventis S.A. 193,193,462
1,213,228 Axa S.A. 191,855,023
231,533 Bouygues S.A. 155,330,859
820,443 France Telecom S.A. 115,116,160
507,532 Groupe Danone 67,612,195
3,255,780 Havas Advertising S.A. 74,732,132
954,168 Lafarge Coppee 74,438,233
102,850 Publicis S.A. 40,512,862
3,330,615 Sanofi-Synthelabo S.A. 159,283,865
1,497,610 Societe Television Francaise 104,777,588
1,651 STMicroelectronics N.V. ADR 105,974
3,472,978 TotalFinaElf S.A., Class B 534,557,440
----------------
1,711,515,793
Germany (2.6%)
-------------------------------------------------------------------------------------------------------------------
204,073 Allianz AG 74,321,754
3,986,786 Bayerische Motoren Werke (BMW) AG 120,741,568
2,071,800 Deutsche Lufthansa AG 48,647,521
585,753 ProSieben Media AG 73,541,523
----------------
317,252,366
Hong Kong (3.0%)
-------------------------------------------------------------------------------------------------------------------
12,773,000 Cheung Kong Infrastructure Holdings 141,334,127
25,955,000 China Telecom, Ltd. (NON) 228,922,647
1,930,000 Hong Kong and China Gas Co., Ltd. 2,166,508
1,136,000 Hong Kong Electric Holdings, Ltd. 3,658,028
----------------
376,081,310
Ireland (2.0%)
-------------------------------------------------------------------------------------------------------------------
6,507,239 CRH PLC 117,870,566
1,694,656 Elan Corp. PLC -- New York Exchange (NON) 79,340,133
1,041,393 Elan Corp. PLC ADR -- Dublin Exchange (NON) 50,442,473
----------------
247,653,172
Italy (2.4%)
-------------------------------------------------------------------------------------------------------------------
89,400 Alleanza Assicurazioni 1,195,249
7,189,400 Banca Intesa SpA 32,315,605
2,957,836 Bulgari SpA 39,687,060
24,046,300 Ente Nazionale Idrocarburi (ENI) SpA 139,428,142
5,420,925 Mediaset SpA 83,126,632
----------------
295,752,688
Japan (14.0%)
-------------------------------------------------------------------------------------------------------------------
336,700 Asatsu, Inc. 13,846,143
70 Circle K Japan Co., Ltd. 2,548
1,948,000 Eisai Co., Ltd. 62,612,970
446,100 Fujisawa Pharmaceutical Co. (NON) 18,091,974
7,201,400 Fujitsu, Ltd. 249,850,047
46 KDD Corp. 4,653
759,400 Kyocera Corp. 129,151,125
400 Mitsumi Electric Co., Ltd. 14,748
8,218,946 NEC Corp. 258,735,963
19,835,000 Nikko Securities Co., Ltd. 196,887,408
350,400 Nintendo Co., Ltd. 61,348,157
25,289 Nippon Telegraph and Telephone Corp. 337,091,038
157,080 Nippon Television Network Corp. 102,462,847
1,453,000 Nomura Securities Co., Ltd. 35,645,065
39,300 Rohm Co., Ltd. 11,517,300
500 Sharp Corp. 8,863
4,399,000 Shiseido Co., Ltd. 68,201,550
910,700 Sony Corp. 85,232,842
4,314,000 Sumitomo Corp. 48,653,829
6,057,000 Toshiba Corp. 68,540,641
56,000 Tokyo Broadcasting System, Inc. 2,424,655
----------------
1,750,324,366
Mexico (1.7%)
-------------------------------------------------------------------------------------------------------------------
16,665,012 Carso Global Telecom (NON) 47,599,800
599,844 Grupo Televisa S.A. GDR (NON) 41,351,746
2,130,639 Telefonos de Mexico S.A. ADR, Class L 121,712,753
----------------
210,664,299
Netherlands (8.5%)
-------------------------------------------------------------------------------------------------------------------
2,496,721 Akzo-Nobel N.V. 106,482,155
1,261,833 Gucci Group N.V. 119,558,677
4,689,651 Internationale Nederlanden Groep (ING) N.V. 318,214,956
2,333,358 Koninklijke Ahold N.V. 68,944,830
7,761,362 Philips Electronics N.V. 367,461,373
3,150,140 Wolters Kluwer N.V. 84,232,728
----------------
1,064,894,719
Singapore (0.8%)
-------------------------------------------------------------------------------------------------------------------
4,349,648 DBS Group Holdings, Ltd. 55,864,730
4,745,685 Overseas-Chinese Banking Corp. 32,672,058
191,000 Singapore Press Holdings, Ltd. 2,983,512
309,000 Venture Manufacturing, Ltd. 3,146,312
----------------
94,666,612
South Korea (3.1%)
-------------------------------------------------------------------------------------------------------------------
1,123,730 Korea Electric Power Corp. 34,874,032
1,485,197 Korea Telecom Corp. 71,846,405
1,006,900 Pohang Iron & Steel Co., Ltd. ADR 24,165,600
788,349 Samsung Electronics Co. 260,920,962
----------------
391,806,999
Spain (2.0%)
-------------------------------------------------------------------------------------------------------------------
2,382,310 Banco de Bilbao Vizcaya (BBV) 35,732,172
2,961,730 Iberdrola S.A. (NON) 38,320,047
8,042,967 Telefonica S.A. (NON) 173,438,540
----------------
247,490,759
Sweden (3.6%)
-------------------------------------------------------------------------------------------------------------------
3,531,970 Enea Data AB 24,175,017
10,080,873 Investor AB 138,574,629
483,313 NetCom AB (NON) 35,892,855
1,721,651 Sandvik AB (NON) 36,334,182
857,364 SKF Corp. AB 13,692,786
2,661,250 Svenska Handelsbanken 38,859,229
8,171,220 Telefonaktiebolaget LM Ericsson, Class B 162,660,038
----------------
450,188,736
Switzerland (7.6%)
-------------------------------------------------------------------------------------------------------------------
308,250 ABB, Ltd. -- Swiss Exchange 37,023,753
99,210 ABB, Ltd. -- Stockholm Exchange 11,566,578
176,520 Ares-Serono Group, Class B 147,679,134
73,859 Cie Finance Richemont AG 199,686,457
155,483 Clariant AG 57,961,797
27,553 Julius Baer Holdings AG 109,323,850
63,950 Nestle S.A. 128,442,883
151,617 Swatch Group AG (The) 39,685,675
70,394 Swatch Group AG, Class B (The) 89,811,243
64,345 Swiss Reinsurance Co. 131,611,174
----------------
952,792,544
Taiwan (1.2%)
-------------------------------------------------------------------------------------------------------------------
8,178,000 Hon Hai Precision Industry 73,934,439
16,235,160 Taiwan Semiconductor Manufacturing Co. 77,084,012
----------------
151,018,451
United Kingdom (18.6%)
-------------------------------------------------------------------------------------------------------------------
17,169,509 Aegis Group PLC 50,542,871
1,560,800 ARM Holdings PLC (NON) 16,724,877
6,116,123 BOC Group PLC (NON) 87,939,146
23,057,549 British Petroleum Co. PLC 221,250,787
4,051,477 Cable & Wireless PLC 68,616,075
10,195,775 Carlton Communications PLC (NON) 131,166,096
5,861,258 Diageo PLC 52,605,113
2,564,881 EMAP PLC 41,265,101
8,965,249 EMI Group PLC 81,413,426
19,532,245 Granada Group PLC 195,109,549
10,716,391 Invensys PLC 40,223,759
4,898,842 Misys PLC 41,372,337
4,853,000 Royal Bank of Scotland Group PLC 81,235,871
10,407,662 Scottish Power PLC 88,211,180
45,237,076 Shell Transportation & Trading PLC 377,591,725
1,936,698 Smiths Industries PLC 25,208,255
25,715,632 Tesco PLC 79,981,852
115,973,849 Vodafone AirTouch PLC 468,655,547
3,897,446 Williams PLC 22,710,320
6,287,453 WPP Group PLC 91,829,980
1,260,300 Zeneca Group PLC 58,845,266
----------------
2,322,499,133
United States (1.8%)
-------------------------------------------------------------------------------------------------------------------
3,992,804 Pharmacia Corp. 206,378,063
733,000 Snyder Communications, Inc. 17,408,750
----------------
223,786,813
----------------
Total Common Stocks (cost $9,477,922,662) $ 11,944,946,935
UNITS (0.7%) (a)
NUMBER OF UNITS VALUE
-------------------------------------------------------------------------------------------------------------------
24,550 Nippon Television Network Corp. Structured
Warrants (Issued by Lehman Brothers
Finance S.A., Exp. 8/4/00) (Japan) (NON) $ 32,020,811
483,500 Tokyo Broadcasting System, Inc. - Structured
Call Warrants (Issued by Lehman Brothers
Finance S.A., Exp. 11/17/00) (Japan) (NON) 20,916,210
701,000 Tokyo Broadcasting System, Inc. Structured Notes
(Issued by UBS, AG) 3.15%, 2000 (Japan) 31,194,780
----------------
Total Units (cost $61,242,079) $ 84,131,801
SHORT-TERM INVESTMENTS (3.6%) (a)
PRINCIPAL AMOUNT VALUE
-------------------------------------------------------------------------------------------------------------------
$50,000,000 Delaware Funding Corp. effective yield
of 6.15%, July 13, 2000 $ 49,890,833
44,000,000 Falcon Asset Securitization Corp. effective yield
of 6.6%, July 6, 2000 43,959,667
50,000,000 Morgan Stanley Dean Witter & Co. effective yield
of 6.85%, July 5, 2000 49,952,431
100,000,000 Prudential Funding Corp. effective yield
of 6.95%, July 3, 2000 99,942,083
93,500,000 Rabobank USA Financial Corp. effective yield
of 6.92%, July 5, 2000 (Netherlands) 93,410,136
46,400,000 UBS AG effective yield of 6.74%, July 3, 2000 46,382,626
70,512,000 Interest in $729,703,000 joint repurchase agreement
dated June 30, 2000 with Morgan (J.P.) & Co. Inc.
due July 3, 2000 with respect to various U.S. Treasury
obligations -- maturity value of $70,549,900 for an
effective yield of 6.45% 70,512,000
----------------
Total Short-Term Investments (cost $454,049,776) $ 454,049,776
-------------------------------------------------------------------------------------------------------------------
Total Investments (cost $9,993,214,517) (b) $ 12,483,128,512
-------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $12,466,548,637.
(b) The aggregate identified cost on a tax basis is $10,129,852,386,
resulting in gross unrealized appreciation and depreciation of
$2,659,391,796 and $306,115,670, respectively, or net unrealized
appreciation of $2,353,276,126.
(NON) Non-income-producing security.
ADR or GDR after the name of a foreign holding stands for American
Depositary Receipts or Global Depositary Receipts, respectively,
representing ownership of foreign securities on deposit with a domestic
custodian bank.
The fund had the following industry group concentrations greater
than 10% at June 30, 2000 (as a percentage of net assets):
Technology 19.5%
Telecommunications services 14.5
Financial 12.3
Consumer staples 12.0
Energy 10.4
---------------------------------------------------------------------------
Forward Currency Contracts to Buy at June 30, 2000
Aggregate Face Delivery Unrealized
Market Value Value Date Depreciation
---------------------------------------------------------------------------
Euro Dollars $663,232,130 $669,718,170 10/18/00 $(6,486,040)
---------------------------------------------------------------------------
Forward Currency Contracts to Sell at June 30, 2000
(aggregate face value $281,054,623)
Unrealized
Market Aggregate Face Delivery Appreciation/
Value Value Date (Depreciation)
---------------------------------------------------------------------------
Canadian Dollars $112,378,567 $112,498,993 10/18/00 $120,426
Hong Kong Dollars 168,672,493 168,555,630 10/18/00 (116,863)
---------------------------------------------------------------------------
$3,563
---------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000
<S> <C>
Assets
-------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $9,993,214,517) (Note 1) $12,483,128,512
-------------------------------------------------------------------------------------------
Cash 4,690,674
-------------------------------------------------------------------------------------------
Foreign currency, at value (cost $149,711,444) 150,919,822
-------------------------------------------------------------------------------------------
Dividends, interest and other receivables 17,424,756
-------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 102,169,582
-------------------------------------------------------------------------------------------
Receivable for securities sold 54,693,730
-------------------------------------------------------------------------------------------
Receivable for open forward currency contracts 120,426
-------------------------------------------------------------------------------------------
Receivable for closed forward currency contracts 813,627
-------------------------------------------------------------------------------------------
Total assets 12,813,961,129
Liabilities
-------------------------------------------------------------------------------------------
Payable for securities purchased 265,382,444
-------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 38,239,977
-------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 17,296,299
-------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 1,905,668
-------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 97,263
-------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 9,153
-------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 7,541,825
-------------------------------------------------------------------------------------------
Payable for open forward currency contracts 6,602,903
-------------------------------------------------------------------------------------------
Payable for closed forward currency contracts 8,955,368
-------------------------------------------------------------------------------------------
Other accrued expenses 1,381,592
-------------------------------------------------------------------------------------------
Total liabilities 347,412,492
-------------------------------------------------------------------------------------------
Net assets $12,466,548,637
Represented by
-------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $ 9,105,538,109
-------------------------------------------------------------------------------------------
Undistributed net investment income (Note 1) 50,955,785
-------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and
foreign currency transactions (Note 1) 826,073,191
-------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and
assets and liabilities in foreign currencies 2,483,981,552
-------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to capital shares outstanding $12,466,548,637
Computation of net asset value and offering price
-------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($7,040,669,193 divided by 235,281,333 shares) $29.92
-------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $29.92)* $31.75
-------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($3,591,545,611 divided by 122,890,195 shares)** $29.23
-------------------------------------------------------------------------------------------
Net asset value and offering price per class C share
($439,521,988 divided by 14,776,594 shares)** $29.74
-------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($367,637,952 divided by 12,416,802 shares) $29.61
-------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $29.61)* $30.68
-------------------------------------------------------------------------------------------
Net asset value, offering price and redemption price per class Y share
($1,027,173,893 divided by 34,163,436 shares) $30.07
-------------------------------------------------------------------------------------------
* 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
Year ended June 30, 2000
<S> <C>
Investment income:
-------------------------------------------------------------------------------------------
Dividends (net of foreign tax of $14,478,432) $ 249,095,556
-------------------------------------------------------------------------------------------
Interest 16,335,535
-------------------------------------------------------------------------------------------
Total investment income 265,431,091
Expenses:
-------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 53,176,675
-------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 19,781,886
-------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 76,745
-------------------------------------------------------------------------------------------
Administrative services (Note 2) 36,311
-------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 12,111,639
-------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 27,474,588
-------------------------------------------------------------------------------------------
Distribution fees -- Class C (Note 2) 1,504,457
-------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 2,297,566
-------------------------------------------------------------------------------------------
Other 3,805,621
-------------------------------------------------------------------------------------------
Total expenses 120,265,488
-------------------------------------------------------------------------------------------
Expense reduction (Note 2) (7,824,858)
-------------------------------------------------------------------------------------------
Net expenses 112,440,630
-------------------------------------------------------------------------------------------
Net investment income 152,990,461
-------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 967,553,737
-------------------------------------------------------------------------------------------
Net realized gain on foreign currency transactions (Note 1) 5,325,644
-------------------------------------------------------------------------------------------
Net unrealized depreciation of assets and liabilities in
foreign currencies during the year (6,301,212)
-------------------------------------------------------------------------------------------
Net unrealized appreciation of investments during the year 1,559,239,917
-------------------------------------------------------------------------------------------
Net gain on investments 2,525,818,086
-------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $2,678,808,547
-------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
Year ended June 30
---------------------------------
2000 1999
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets
--------------------------------------------------------------------------------------------------
Operations:
--------------------------------------------------------------------------------------------------
Net investment income $ 152,990,461 $ 3,933,285
--------------------------------------------------------------------------------------------------
Net realized gain on investments and
foreign currency transactions 972,879,381 72,892,717
--------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and
assets and liabilities in foreign currencies 1,552,938,705 460,292,239
--------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 2,678,808,547 537,118,241
--------------------------------------------------------------------------------------------------
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) 4,886,106,169 1,434,362,924
--------------------------------------------------------------------------------------------------
Total increase in net assets 7,252,931,389 1,868,028,218
Net assets
--------------------------------------------------------------------------------------------------
Beginning of year 5,213,617,248 3,345,589,030
--------------------------------------------------------------------------------------------------
End of year (including undistributed net investment
income and distributions in excess of net investment
income of $50,955,785 and $33,621,782, respectively) $12,466,548,637 $5,213,617,248
--------------------------------------------------------------------------------------------------
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
------------------------------------------------------------------------------------------------
Per-share
operating performance Year ended June 30
------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $21.64 $20.00 $17.58 $14.25 $12.10
------------------------------------------------------------------------------------------------
Investment operations
------------------------------------------------------------------------------------------------
Net investment income (a) .54 .07 .20 .15 .13
------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 8.87 2.14 3.26 3.39 2.29
------------------------------------------------------------------------------------------------
Total from
investment operations 9.41 2.21 3.46 3.54 2.42
------------------------------------------------------------------------------------------------
Less distributions:
------------------------------------------------------------------------------------------------
From net
investment income (.34) (.21) (.25) (.15) (.26)
------------------------------------------------------------------------------------------------
From net realized gain
on investments (.79) (.36) (.79) (.06) (.01)
------------------------------------------------------------------------------------------------
Total distributions (1.13) (.57) (1.04) (.21) (.27)
------------------------------------------------------------------------------------------------
Net asset value,
end of period $29.92 $21.64 $20.00 $17.58 $14.25
------------------------------------------------------------------------------------------------
Ratios and supplemental data
------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 44.03 11.57 20.73 25.13 20.21
------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $7,040,669 $2,928,662 $1,827,331 $728,849 $151,088
------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) 1.14 1.27 1.36 1.59 1.74
------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 2.01 .38 1.07 .98 .99
------------------------------------------------------------------------------------------------
Portfolio turnover (%) 99.53 97.24 93.53 86.40 44.14
------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized
(a) Per share net investment income (loss) has been determined on the
basis of the weighted average number of shares outstanding for the
period.
(b) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(c) Includes amounts paid through expense offset and brokerage service
arrangements. (Note 2)
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
CLASS B
------------------------------------------------------------------------------------------------
Per-share
operating performance Year ended June 30
------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $21.20 $19.63 $17.32 $14.10 $12.00
------------------------------------------------------------------------------------------------
Investment operations
------------------------------------------------------------------------------------------------
Net investment income (loss)(a) .35 (.07) .06 .03 .04
------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 8.67 2.10 3.21 3.34 2.26
------------------------------------------------------------------------------------------------
Total from
investment operations 9.02 2.03 3.27 3.37 2.30
------------------------------------------------------------------------------------------------
Less distributions:
------------------------------------------------------------------------------------------------
From net
investment income (.20) (.10) (.17) (.09) (.19)
------------------------------------------------------------------------------------------------
From net realized gain
on investments (.79) (.36) (.79) (.06) (.01)
------------------------------------------------------------------------------------------------
Total distributions (.99) (.46) (.96) (.15) (.20)
------------------------------------------------------------------------------------------------
Net asset value,
end of period $29.23 $21.20 $19.63 $17.32 $14.10
------------------------------------------------------------------------------------------------
Ratios and supplemental data
------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 43.00 10.75 19.87 24.09 19.35
------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $3,591,546 $1,821,024 $1,226,917 $472,663 $132,013
------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) 1.89 2.02 2.11 2.34 2.49
------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average net assets (%) 1.26 (.38) .31 .18 .32
------------------------------------------------------------------------------------------------
Portfolio turnover (%) 99.53 97.24 93.53 86.40 44.14
------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized
(a) Per share net investment income (loss) has been determined on the
basis of the weighted average number of shares outstanding for the
period.
(b) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(c) Includes amounts paid through expense offset and brokerage service
arrangements. (Note 2)
</TABLE>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
CLASS C
----------------------------------------------------
For the period
Per-share July 26, 1999+
operating performance to June 30
----------------------------------------------------
2000
----------------------------------------------------
Net asset value,
beginning of period $21.87
----------------------------------------------------
Investment operations
----------------------------------------------------
Net investment income (a) .32
----------------------------------------------------
Net realized and unrealized
gain on investments 8.66
----------------------------------------------------
Total from
investment operations 8.98
----------------------------------------------------
Less distributions:
----------------------------------------------------
From net
investment income (.32)
----------------------------------------------------
From net realized gain
on investments (.79)
----------------------------------------------------
Total distributions (1.11)
----------------------------------------------------
Net asset value,
end of period $29.74
----------------------------------------------------
Ratios and supplemental data
----------------------------------------------------
Total return at
net asset value (%)(b) 41.54*
----------------------------------------------------
Net assets, end of period
(in thousands) $439,522
----------------------------------------------------
Ratio of expenses to
average net assets (%)(c) 1.76*
----------------------------------------------------
Ratio of net investment income
to average net assets (%) 1.12*
----------------------------------------------------
Portfolio turnover (%) 99.53
----------------------------------------------------
+ Commencement of operations.
* Not annualized
(a) Per share net investment income (loss) has been determined on the
basis of the weighted average number of shares outstanding for the
period.
(b) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(c) Includes amounts paid through expense offset and brokerage service
arrangements. (Note 2)
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
CLASS M
------------------------------------------------------------------------------------------------
Per-share
operating performance Year ended June 30
------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $21.45 $19.85 $17.48 $14.22 $12.09
------------------------------------------------------------------------------------------------
Investment operations
------------------------------------------------------------------------------------------------
Net investment income (loss)(a) .40 (.02) .10 .07 .08
------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 8.79 2.11 3.26 3.36 2.28
------------------------------------------------------------------------------------------------
Total from
investment operations 9.19 2.09 3.36 3.43 2.36
------------------------------------------------------------------------------------------------
Less distributions:
------------------------------------------------------------------------------------------------
From net
investment income (.24) (.13) (.20) (.11) (.22)
------------------------------------------------------------------------------------------------
From net realized gain
on investments (.79) (.36) (.79) (.06) (.01)
------------------------------------------------------------------------------------------------
Total distributions (1.03) (.49) (.99) (.17) (.23)
------------------------------------------------------------------------------------------------
Net asset value,
end of period $29.61 $21.45 $19.85 $17.48 $14.22
------------------------------------------------------------------------------------------------
Ratios and supplemental data
------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 43.32 10.97 20.18 24.40 19.71
------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $367,638 $208,064 $140,202 $58,471 $14,309
------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) 1.64 1.77 1.86 2.09 2.25
------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average net assets (%) 1.51 (.12) .54 .44 .61
------------------------------------------------------------------------------------------------
Portfolio turnover (%) 99.53 97.24 93.53 86.40 44.14
------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized
(a) Per share net investment income (loss) has been determined on the
basis of the weighted average number of shares outstanding for the
period.
(b) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(c) Includes amounts paid through expense offset and brokerage service
arrangements. (Note 2)
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
CLASS Y
------------------------------------------------------------------------------------------
For the period
Per-share July 12, 1996+
operating performance Year ended June 30 to June 30
------------------------------------------------------------------------------------------
2000 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 (a) .61 .14 .22 .20
------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 8.92 2.13 3.30 3.75
------------------------------------------------------------------------------------------
Total from
investment operations 9.53 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)
------------------------------------------------------------------------------------------
Total distributions (1.18) (.60) (1.07) (.23)
------------------------------------------------------------------------------------------
Net asset value,
end of period $30.07 $21.72 $20.05 $17.60
------------------------------------------------------------------------------------------
Ratios and supplemental data
------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 44.43 11.83 21.08 25.44*
------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $1,027,174 $255,867 $151,139 $96,375
------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .89 1.02 1.11 1.30*
------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 2.26 .70 1.22 1.26*
------------------------------------------------------------------------------------------
Portfolio turnover (%) 99.53 97.24 93.53 86.40
------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized
(a) Per share net investment income (loss) has been determined on the
basis of the weighted average number of shares outstanding for the
period.
(b) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(c) Includes amounts paid through expense offset and brokerage service
arrangements. (Note 2)
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
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. Securities quoted in
foreign currencies are translated into U.S. dollars at the current
exchange rate. Short-term investments having remaining maturities of 60
days or less are stated at amortized cost, which approximates market
value. Other investments, including restricted securities, are stated at
fair value following procedures approved by the Trustees.
Market quotations are not considered to be readily available for certain
debt obligations; such investments are stated at fair value on the basis
of valuations furnished by a pricing service or dealers, approved by the
Trustees, which determine valuations for normal institutional-size
trading units of such securities using methods based on market
transactions for comparable securities and variable relationships
between securities that are generally recognized by institutional
traders.
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. Non-cash dividends, if any, are recorded at the fair
market value of the securities received.
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) Forward currency contracts The fund may engage in forward currency
contracts, which are agreements between two parties to buy and sell
currencies at a set price on a future date, to protect against a decline
in value relative to the U.S. dollar of the currencies in which its
portfolio securities are denominated or quoted (or an increase in the
value of a currency in which securities a fund intends to buy are
denominated, when a fund holds cash reserves and short-term
investments). The U.S. dollar value of forward currency contracts is
determined using current forward currency exchange rates supplied by a
quotation service. The market value of the contract will fluctuate with
changes in currency exchange rates. The contract is "marked-to-market"
daily and the change in market value is recorded as an unrealized gain
or loss. When the contract is closed, the fund records a realized gain
or loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed. The fund
could be exposed to risk if the value of the currency changes
unfavorably, if the counterparties to the contracts are unable to meet
the terms of their contracts or if the fund is unable to enter into a
closing position.
G) 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 year ended
June 30, 2000, the fund had no borrowings against the line of credit.
H) 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.
I) 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. These differences include temporary and permanent
differences of losses on wash sale transactions, foreign currency gains
and losses, post-October loss deferrals, foreign taxes, realized and
unrealized gains and losses on passive foreign investment companies.
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. For the year ended June 30,
2000, the fund reclassified $15,503,447 to increase undistributed net
investment income with a decrease to accumulated net realized gains of
$15,503,447. The calculation of net investment income per share in the
financial highlights table excludes these adjustments.
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, 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 year ended June 30, 2000, fund expenses were reduced by
$7,824,858 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 $4,001
has been allocated to the fund, and an additional fee for each Trustees
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 Retail Management, Inc., 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 Retail Management, Inc. 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 year ended June 30, 2000, Putnam Retail Management, Inc., acting
as underwriter received net commissions of $2,987,521 and $191,184 from
the sale of class A and class M shares, respectively, and received
$2,596,905 and $37,675 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 year ended June 30, 2000, Putnam Retail Management,
Inc., acting as underwriter received $213,100 on class A redemptions.
Note 3
Purchases and sales of securities
During the year ended June 30, 2000, cost of purchases and proceeds from
sales of investment securities other than short-term investments
aggregated $12,814,911,051 and $8,319,854,519, respectively. There were
no purchases and sales of U.S. government obligations.
Note 4
Capital shares
At June 30, 2000, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Year ended June 30, 2000
---------------------------------------------------------------------------
Class A Shares Amount
---------------------------------------------------------------------------
Shares sold 271,600,422 $7,332,945,195
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 6,124,845 165,921,249
---------------------------------------------------------------------------
277,725,267 7,498,866,444
Shares
repurchased (177,792,621) (4,715,016,742)
---------------------------------------------------------------------------
Net increase 99,932,646 $2,783,849,702
---------------------------------------------------------------------------
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
---------------------------------------------------------------------------
Year ended June 30, 2000
---------------------------------------------------------------------------
Class B Shares Amount
---------------------------------------------------------------------------
Shares sold 54,543,779 $1,471,243,178
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 3,074,114 81,679,684
---------------------------------------------------------------------------
57,617,893 1,552,922,862
Shares
repurchased (20,631,231) (549,799,728)
---------------------------------------------------------------------------
Net increase 36,986,662 $1,003,123,134
---------------------------------------------------------------------------
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 June 30, 2000
---------------------------------------------------------------------------
Class C Shares Amount
---------------------------------------------------------------------------
Shares sold 16,176,087 $462,505,811
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 75,039 2,029,056
---------------------------------------------------------------------------
16,251,126 464,534,867
Shares
repurchased (1,474,532) (43,027,757)
---------------------------------------------------------------------------
Net increase 14,776,594 $421,507,110
---------------------------------------------------------------------------
Year ended June 30, 2000
---------------------------------------------------------------------------
Class M Shares Amount
---------------------------------------------------------------------------
Shares sold 10,591,150 $286,010,819
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 380,914 10,242,696
---------------------------------------------------------------------------
10,972,064 296,253,515
Shares
repurchased (8,253,206) (223,214,024)
---------------------------------------------------------------------------
Net increase 2,718,858 $73,039,491
---------------------------------------------------------------------------
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
---------------------------------------------------------------------------
Year ended June 30, 2000
---------------------------------------------------------------------------
Class Y Shares Amount
---------------------------------------------------------------------------
Shares sold 38,621,878 $1,074,181,482
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 867,505 23,587,146
---------------------------------------------------------------------------
39,489,383 1,097,768,628
Shares
repurchased (17,103,610) (493,181,896)
---------------------------------------------------------------------------
Net increase 22,385,773 $ 604,586,732
---------------------------------------------------------------------------
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
---------------------------------------------------------------------------
FEDERAL TAX INFORMATION
(Unaudited)
Pursuant to Section 852 of the Internal Revenue Code, as amended, the
Fund hereby designates $470,877,513 as capital gain, for its taxable
year ended June 30, 2000.
For the period, interest and dividends from foreign countries were
$262,239,902 or $0.625 per share (for all classes of shares). Taxes paid
to foreign countries were $14,478,432 or $0.035 (for all classes of
shares).
The Form 1099 you receive in January 2001 will show the tax status of
all distributions paid to your account in calendar 2000.
FUND INFORMATION
WEB SITE
www.putnaminvestments.com
INVESTMENT MANAGER
Putnam Investment Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Retail Management, Inc.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
TRUSTEES
John A. Hill, 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 III
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
Brett C. Browchuk
Vice President
John J. Morgan, Jr.
Vice President
Justin M. Scott
Vice President and Fund Manager
Omid Kamshad
Vice President and Fund Manager
Paul C. Warren
Vice President and Fund Manager
Joshua L. Byrne
Vice President and Fund Manager
Richard A. Monaghan
Vice President
Richard G. Leibovitch
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.putnaminvestments.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
---------------------
PRST STD
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
---------------------
For account balances, economic forecasts, and the latest on Putnam funds, visit
www.putnaminvestments.com
AN009-63290 841/524/891/2BA 8/00
PUTNAM INVESTMENTS [SCALE LOGO OMITTED]
----------------------------------------------------------------------------
Putnam International Growth Fund
Supplement to Annual Report dated 6/30/00
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 annual
report.
ANNUAL RESULTS AT A GLANCE
----------------------------------------------------------------------------
Total return
for periods ended 6/30/00 NAV
1 year 44.43%
5 years 194.88
Annual average 24.15
Life of fund (since class A inception, 2/28/91) 334.03
Annual average 17.02
Share value: NAV
6/30/99 $21.72
6/30/00 $30.07
----------------------------------------------------------------------------
Distributions: No. Income Capital gains Total
1 $0.385 $0.790 $1.175
----------------------------------------------------------------------------
Please note that past performance does not indicate future results. More
recent returns may be more or less than those shown. Returns shown for class
Y shares for periods prior to their inception are derived from the
historical performance of class A shares, adjusted to reflect the initial
sales charge currently applicable to class A shares. These returns have not
been adjusted to reflect differences in operating expenses which, for class
Y shares, are lower than the operating expenses applicable to class A
shares. All returns assume reinvestment of distributions at net asset value.
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.
