Putnam
Global Equity
Fund
SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK
8-31-00
[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 Shigeki Makino,
who joined your fund's management team after the end of the fiscal
period. Shigeki is a managing director and a senior portfolio manager in
the Global Core Equity Group. He has 11 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
October 18, 2000
REPORT FROM FUND MANAGEMENT
Paul C. Warren
Michael P. Stack
Omid Kamshad
Justin M. Scott
Michael K. Arends
Change was the prevailing force in the global markets during the six
months ended August 31, 2000. Economic conditions were in transition
around the world. Central banks were changing their monetary policies.
Shifting investor concerns brought industries, sectors, and regions into
or out of favor. This theme of change was reflected in Putnam Global
Equity Fund's portfolio; your managers made significant changes in terms
of both country exposure and sector and industry emphasis. The period
was also characterized by a higher-than-usual level of price volatility,
and consequently, it is still too soon to tell whether all of our
changes have paid off. There is no question, though, that our decision
to take profits on some of the stronger-performing holdings has helped
cushion the fund against these volatile market conditions.
Total return for 6 months ended 8/31/00
Class A Class B Class C Class M
NAV POP NAV CDSC NAV CDSC NAV POP
-----------------------------------------------------------------------
-3.78% -9.32% -4.12% -8.92% -4.06% -5.02% -4.04% -7.39%
-----------------------------------------------------------------------
Past performance is not indicative of future results. Performance
information for longer periods and explanation of performance
calculation methods begin on page 6.
It may have occurred to some longer-standing shareholders that there is
an apparent contradiction within your managers' investment philosophy.
On the one hand, we have argued that the investment environment is
always changing. On the other, we take a deep pride in the consistent,
repetitive, and rigorous application of our valuation approach, which is
built on the belief that all companies, no matter what they make or do,
have an underlying business worth. If understanding change is so
essential, how can we reconcile it with applying the same investment
approach year after year?
[GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY SECTORS]
TOP INDUSTRY SECTORS*
Pharmaceuticals 10.6%
Communications
equipment 9.5%
Electronics 8.1%
Software 6.9%
Oil and gas 5.7%
Footnote reads:
*Based on net assets as of 8/31/00. Holdings will vary over time.
The answer is that we believe that our valuation approach copes with
changing economic and business conditions, provided we change the inputs
to our valuation models. We have described our approach as a
three-dimensional approach to managing money: first, forecasting the
outlook for regions; second, forecasting the outlook for sectors and
industries; and third, forecasting the valuation for individual
securities. Over the long term, your managers truly believe that this
enables them to identify the opportunities inherent in changing market
conditions -- and take advantage of them.
* REGIONAL ISSUES PROMPT CHANGES IN MARKET EXPOSURE
Over the period, many international markets, Japan in particular came
under pressure. The Japanese market continues to find itself between a
rock and a hard place. The economy is experiencing a stuttering and
unconvincing recovery accompanied by continuing deflation. The country
has accumulated enormous government and government agency debt --
amounting, by some estimates, to as much as 130% of gross domestic
product. This fiscal burden makes it hard for any real economic recovery
to make headway. Any attempt to raise taxes to pay off this debt would
curtail the nation's recovery. Any strong recovery that leads to a rise
in interest rates would compound the problem of the debt. The Japanese
are extremely unlikely to allow inflation to take care of their
government debt, and so for the time being, they must tread a delicate
line between trying to pay down the government debt without killing the
recovery. The country also has structural impediments to deregulating
its economy and restructuring its corporate sector, which further
complicate the situation. Thus, while we are maintaining the fund's
positions in several strong Japanese companies, we have reduced the
portfolio's weighting in Japan to approximately 7.3% of net assets, down
from 11% in February.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
TOP 10 HOLDINGS
Intel Corp.
United States
Electronics
Viacom Inc., Class B
United States
Entertainment
Cisco Systems, Inc.
United States
Communications equipment
Citigroup, Inc.
United States
Financial
Tyco International, Ltd.
United States
Conglomerate
Vodafone Group PLC
United Kingdom
Telecommunications
Pharmacia Corp.
United States
Pharmaceuticals
Pfizer, Inc.
United States
Pharmaceuticals
Sun Microsystems Inc.
United States
Computers
TotalFina Elf SA, Class B
France
Oil and gas
Footnote reads:
These holdings represent 25.6% of the fund's net assets as of 8/31/00.
Portfolio holdings will vary over time.
Early in the period, the U.S. market suffered a severe setback as
investors grew concerned about the possibility of a recession and lower
corporate profit growth. Putnam's view was that the Federal Reserve
Board might have successfully engineered a soft landing. With a more
benign interest-rate and inflationary backdrop, we increased the
portfolio's stake in U.S. equities to roughly 56% of net assets, up from
45% this past winter.
In Europe, the continued weakness of the euro has surprised most
observers. In the short-to-medium term, this weakness should give a
boost to traditional French and German manufacturers. Perhaps more
importantly, over the long term, European spending on technology and
media continues to grow at a rapid rate helping lift the overall level
of economic growth. Your fund continues to be well represented in
Europe, although it is underweight in the United Kingdom, where interest
rates may still be rising.
* MODIFICATIONS MADE TO INDUSTRY FOCUS
As the period progressed, we made changes to the portfolio's industry
weightings. We modified the fund's technology bias, although technology
remains a major emphasis. We have also increased the fund's exposure to
financial services, specifically insurance, and health care,
specifically pharmaceutical companies. The macro outlook for financial
services companies seems reasonable to us. Furthermore, it appears that
the bulk of the interest-rate increases are behind us and that
valuations, particularly in the United States, are compellingly
attractive.
Media companies offer considerable growth potential in a competitive
world.
It's easy to see why investors are attracted to technology and
telecommunications stocks. These companies continue to deliver
innovative products and services. Interestingly, because of the
long-term growth potential in tech and telecom, media companies are now
garnering investor attention. 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 are benefiting from this trend include
Viacom, Inc., Nippon Television Network Corp., ProSieban Media, and Havas
Advertising.
Another industry focus that has undergone significant change is the
fund's telecommunications stake. This has been dramatically decreased,
particularly in Europe, where the prices being paid for third-generation
wireless licenses have questionable economics and traditional fixed-line
telecom services are experiencing significant pricing pressures.
* BUY, SELL, AND HOLD DECISIONS EXEMPLIFY VALUATION STRATEGY
During the semiannual period, we sold or reduced holdings in a number of
companies based on valuation. Issues such as Cable and Wireless, France
Telecom, and Telefonica had enjoyed considerable price appreciation
prior to the spring decline. Hence, the fund realized profits when we
sold all or part of these issues.
Our valuation criteria also led us to add or increase positions in such
financial holdings as American General, Bank of New York, Goldman Sachs,
American International Group, and Svenska Handelsbanken. We also added
Pfizer, Inc. and Schering-Plough Corp. in the pharmaceutical arena.
While these holdings, along with others discussed in this report, were
viewed favorably at the end of the period, all are subject to review in
accordance with the fund's investment strategy and may vary in the
future.
In the technology sector, we are emphasizing three areas: hardware
companies that can capitalize on the longer-term demand for storage
driven by growth in the Internet, software firms that enable companies
to develop Internet e-commerce abilities, and communications equipment
companies.
* VIEW IS CAUTIOUSLY OPTIMISTIC
We currently view equities worldwide in a generally positive light.
Every stock in your fund's portfolio is there because of our belief that
the issuing company's valuation is greater than its current stock price.
We acknowledge that these valuations will change because the investment
environment in six months or a year's time will not be precisely like
the one that we are experiencing at present. Consequently, we will
continue our ongoing efforts to understand the macro environment at both
the country and regional levels as well as the changing dynamics of
individual companies and to reflect the most current information in a
disciplined valuation framework.
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 8/31/00, there is no guarantee the fund will
continue to hold these securities in the future. International investing
includes 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
Global Equity Fund seeks capital appreciation by investing primarily in
common stocks of companies located in foreign companies and in the
United States.
TOTAL RETURN FOR PERIODS ENDED 8/31/00
Class A Class B Class C Class M
(inception dates) (7/1/94) (7/1/94) (2/1/99) (7/3/95)
NAV POP NAV CDSC NAV CDSC NAV POP
------------------------------------------------------------------------------
6 months -3.78% -9.32% -4.12% -8.92% -4.06% -5.02% -4.04% -7.39%
------------------------------------------------------------------------------
1 year 38.38 30.44 37.40 32.40 37.41 36.41 37.73 32.94
------------------------------------------------------------------------------
5 years 195.60 178.63 186.62 184.62 186.65 186.65 190.33 180.29
Annual average 24.21 22.75 23.44 23.27 23.44 23.44 23.76 22.89
------------------------------------------------------------------------------
Life of fund 260.43 239.65 247.44 247.44 246.96 246.96 252.83 240.45
Annual average 23.10 21.92 22.37 22.37 22.34 22.34 22.67 21.96
------------------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 8/31/00
Standard & Poor's MSCI EAFE MSCI All-Country
500 Index Index World Index
-----------------------------------------------------------------------
6 months 11.73% -3.59% 2.48%
-----------------------------------------------------------------------
1 year 16.32 9.55 13.16
-----------------------------------------------------------------------
5 years 193.58 61.73 110.02
Annual average 24.02 10.09 15.99
-----------------------------------------------------------------------
Life of fund 283.35 67.98 136.45
Annual average 24.33 8.77 14.96
-----------------------------------------------------------------------
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,
if 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.
PRICE AND DISTRIBUTION INFORMATION 6 MONTHS ENDED 8/31/00
Class A Class B Class C Class M
------------------------------------------------------------------------------
Distributions (number)* -- -- -- --
------------------------------------------------------------------------------
Share value: NAV POP NAV NAV NAV POP
------------------------------------------------------------------------------
2/29/00 $19.32 $20.50 $18.92 $19.20 $19.07 $19.76
------------------------------------------------------------------------------
8/31/00 18.59 19.72 18.14 18.42 18.30 18.96
------------------------------------------------------------------------------
*The fund did not make any distributions during the period.
TOTAL RETURN FOR PERIODS ENDED 9/30/00 (most recent calendar quarter)
Class A Class B Class C Class M
(inception dates) (7/1/94) (7/1/94) (2/1/99) (7/3/95)
NAV POP NAV CDSC NAV CDSC NAV POP
------------------------------------------------------------------------------
6 months -11.74% -16.82% -12.05% -16.45% -11.98% -12.86% -11.91% -14.98%
------------------------------------------------------------------------------
1 year 27.57 20.27 26.65 21.65 26.83 25.83 27.04 22.60
------------------------------------------------------------------------------
5 years 167.76 152.36 159.42 157.42 159.58 159.58 162.99 153.70
Annual average 21.77 20.34 21.00 20.82 21.02 21.02 21.34 20.47
------------------------------------------------------------------------------
Life of fund 236.58 217.18 224.27 224.27 223.98 223.98 229.50 217.94
Annual average 21.43 20.28 20.71 20.71 20.69 20.69 21.02 20.33
------------------------------------------------------------------------------
Past performance is no assurance of future results. More recent returns
may be more or less than those shown. They do not take into account any
adjustment for taxes payable on reinvested distributions. Investment
returns and principal value will fluctuate so that an investor's shares
when sold may be worth more or less than their original cost. See first
page of performance section for performance calculation method.
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
Standard & Poor's 500 Index* is an unmanaged list of common stocks whose
performance assumes reinvestment of all distributions. It is frequently
used as a general measure of stock market performance.
Europe, Australasia, and Far East (EAFE)* component of Morgan Stanley
Capital International (MSCI) World Index is an unmanaged list of
approximately 1,045 equity securities originating in 18 countries listed
on the stock exchanges of Europe, Australasia, and the Far East, with
all values expressed in U.S. dollars. Performance figures reflect
changes in market prices and reinvestment of distributions net of
withholding taxes.
Morgan Stanley Capital International (MSCI) All-Country World Index* is
an unmanaged list of global equity securities, with all values expressed
in U.S. dollars.
*Securities indexes assume reinvestment of all distributions and interest
payments and do not take into 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
August 31, 2000 (Unaudited)
COMMON STOCKS (96.7%) (a)
NUMBER OF SHARES VALUE
<S> <C> <C>
Advertising and Marketing Services (1.2%)
-------------------------------------------------------------------------------------------------------------------
709,000 Havas Advertising SA (France) $ 16,768,536
58,000 Snyder Communications, Inc. 1,587,750
-------------
18,356,286
Airlines (0.5%)
-------------------------------------------------------------------------------------------------------------------
351,279 Deutsche Lufthansa AG (Germany) 7,789,809
Automotive (0.4%)
-------------------------------------------------------------------------------------------------------------------
190,100 Bayerische Motoren Werke (BMW) AG (Germany) 6,150,176
Banking (2.8%)
-------------------------------------------------------------------------------------------------------------------
477,200 Bank of New York Company, Inc. 25,023,175
59,599 Bayerische Vereinsbank AG (Germany) 3,482,882
458,900 Firstar Corp. 10,956,238
153,390 Svenska Handelsbanken AB, Class A (Sweden) 2,537,119
-------------
41,999,414
Broadcasting (2.7%)
-------------------------------------------------------------------------------------------------------------------
101,300 Infinity Broadcasting Corp., Class A (NON) 3,836,738
757,600 Mediaset SpA (Italy) 13,561,367
1,540 Nippon Television Network Corp. (Japan) 881,156
97,927 ProSieben Media AG (Germany) 14,535,265
97,770 Societe Television Francaise 1 (T.F.1) (France) 7,134,324
-------------
39,948,850
Chemicals (0.2%)
-------------------------------------------------------------------------------------------------------------------
68,687 Akzo-Nobel NV (Netherlands) 3,040,851
Communications Equipment (9.5%)
-------------------------------------------------------------------------------------------------------------------
100,500 Cabletron Systems, Inc. (NON) 3,762,469
596,900 Cisco Systems, Inc. (NON) 40,962,263
148,600 Extreme Networks, Inc. (NON) 13,829,088
125,400 Foundry Networks, Inc. (NON) 11,670,038
592,832 Nokia OYJ AB, Class A (Finland) 26,013,501
328,265 Nortel Networks Corp. (Canada) 26,774,650
179,500 QUALCOMM, Inc. (NON) 10,747,563
49,300 Redback Networks, Inc. (NON) 7,364,188
-------------
141,123,760
Computers (5.1%)
-------------------------------------------------------------------------------------------------------------------
197,800 Dell Computer Corp. (NON) 8,629,025
46,500 EMC Corp. (NON) 4,557,000
255,000 Fujitsu, Ltd. (Japan) 7,390,958
857,000 NEC Corp. (Japan) 24,517,869
240,400 Sun Microsystems, Inc. (NON) 30,515,775
-------------
75,610,627
Conglomerates (4.1%)
-------------------------------------------------------------------------------------------------------------------
162,200 General Electric Co. 9,519,113
823,284 Investor AB, Class B (Sweden) 11,696,979
310,000 Sumitomo Corp. (Japan) 2,704,249
667,200 Tyco International, Ltd. 38,030,400
-------------
61,950,741
Construction (0.6%)
-------------------------------------------------------------------------------------------------------------------
125,300 Lafarge Coppee (France) 9,287,978
Consumer Cyclicals (0.6%)
-------------------------------------------------------------------------------------------------------------------
80,000 Sony Corp. (Japan) 8,929,744
Consumer Goods (1.7%)
-------------------------------------------------------------------------------------------------------------------
444,200 Kimberly-Clark Corp. 25,985,700
Electric Utilities (1.1%)
-------------------------------------------------------------------------------------------------------------------
273,070 Iberdrola SA (Spain) 3,143,025
254,000 Korea Electric Power Corp. ADR (South Korea) 4,286,250
1,233,700 Scottish Power PLC (United Kingdom) 9,421,335
-------------
16,850,610
Electrical Equipment (1.5%)
-------------------------------------------------------------------------------------------------------------------
54,480 ABB, Ltd. (Switzerland) 6,097,807
482,000 Furukawa Electric Co., Ltd. (The) (Japan) 15,507,551
-------------
21,605,358
Electronics (8.1%)
-------------------------------------------------------------------------------------------------------------------
70,100 Applied Micro Circuits Corp. (NON) 14,225,919
705,756 Intel Corp. 52,843,481
150,600 LSI Logic Corp. (NON) 5,412,188
57,600 PMC-Sierra, Inc. (NON) 13,593,600
31,000 Rohm Co., Ltd. (Japan) 8,825,157
5,915 Swatch Group AG (The), Class B (Switzerland) 8,402,953
71,000 Tokyo Electron, Ltd. (Japan) 9,976,362
80,800 Xilinx, Inc. (NON) 7,181,100
-------------
120,460,760
Energy (1.8%)
-------------------------------------------------------------------------------------------------------------------
315,200 Schlumberger, Ltd. 26,890,500
Engineering & Construction (0.3%)
-------------------------------------------------------------------------------------------------------------------
73,580 Bouygues SA (France) 4,626,902
Entertainment (3.0%)
-------------------------------------------------------------------------------------------------------------------
653,292 Viacom, Inc., Class B (NON) 43,974,718
Financial (5.3%)
-------------------------------------------------------------------------------------------------------------------
395,300 Allied Zurich PLC (United Kingdom) 4,850,154
358,734 American Express Co. 21,210,148
691,239 Citigroup, Inc. 40,351,057
16,350 Groupe Bruxelles Lambert SA (Belgium) 4,250,575
376,600 Sun Life Financial Services of Canada, Inc. (Canada) (NON) 7,918,741
-------------
78,580,675
Food (0.5%)
-------------------------------------------------------------------------------------------------------------------
3,195 Nestle S.A. (Switzerland) 6,884,416
Insurance (5.4%)
-------------------------------------------------------------------------------------------------------------------
20,761 Allianz AG (Germany) 7,011,903
214,700 American General Corp. 15,632,844
204,000 American International Group, Inc. 18,181,500
436,616 Internationale Nederlanden Groep (ING) (Netherlands) 29,260,048
18,816 Zurich Allied AG (Switzerland) 9,687,724
-------------
79,774,019
Investment Banking/Brokerage (2.5%)
-------------------------------------------------------------------------------------------------------------------
42,900 Goldman Sachs Group, Inc. (The) 5,493,881
69,400 Merrill Lynch & Co., Inc. 10,063,000
67,500 Morgan Stanley, Dean Witter, Discover and Co. 7,260,469
1,424,000 Nikko Securities Co., Ltd. (Japan) 13,744,452
-------------
36,561,802
Lodging/Tourism (0.3%)
-------------------------------------------------------------------------------------------------------------------
56,200 Four Seasons Hotels, Inc. (Canada) 4,233,202
Machinery (0.2%)
-------------------------------------------------------------------------------------------------------------------
50,700 Fuji Machine Manufacturing Co., Ltd. (Japan) 2,363,559
30,460 Sandvik AB (Sweden) 665,298
-------------
3,028,857
Media (2.4%)
-------------------------------------------------------------------------------------------------------------------
1,205,876 AT&T Corp.-Liberty Media Group, Class A (NON) 25,775,600
867,347 Carlton Communications PLC (United Kingdom) 9,462,322
-------------
35,237,922
Natural Gas Utilities (0.3%)
-------------------------------------------------------------------------------------------------------------------
72,400 Coastal Corp. 4,986,550
Oil & Gas (5.7%)
-------------------------------------------------------------------------------------------------------------------
455,500 BP Amoco PLC ADR (United Kingdom) 25,166,375
175,200 Royal Dutch Petroleum Co. PLC ADR (Netherlands) 10,720,050
2,275,175 Shell Transport & Trading Co. PLC (United Kingdom) 19,459,681
200,684 TotalFinaElf SA, Class B (France) 29,805,283
-------------
85,151,389
Pharmaceuticals (10.6%)
-------------------------------------------------------------------------------------------------------------------
435,300 American Home Products Corp. 23,587,819
344,799 Aventis SA (France) 25,895,640
78,800 Elan Corp. PLC ADR (Ireland) (NON) 4,595,025
71,044 Elan Corp. PLC (Ireland) (NON) 4,199,070
300 Fujisawa Pharmaceutical Co. (Japan) 10,215
38,300 Lilly (Eli) & Co. 2,795,900
766,825 Pfizer, Inc. 33,165,181
595,871 Pharmacia Corp. 34,895,695
147,440 Sanofi-Synthelabo SA (France) 7,194,352
365,600 Schering-Plough Corp. 14,669,700
116,000 Takeda Chemical Industries (Japan) 6,865,772
-------------
157,874,369
Real Estate (1.0%)
-------------------------------------------------------------------------------------------------------------------
915,000 Cheung Kong Infrastructure Holdings (Hong Kong) 11,908,105
308,000 Sun Hung Kai Properties, Ltd. (Hong Kong) 2,932,261
-------------
14,840,366
Restaurants (1.4%)
-------------------------------------------------------------------------------------------------------------------
1,692,930 Granada Compass PLC (United Kingdom) (NON) 20,894,618
Retail (2.6%)
-------------------------------------------------------------------------------------------------------------------
563,500 Bulgari SpA (Italy) 6,335,611
30 Circle K Japan Co. , Ltd. (Japan) 1,078
60,038 Gucci Group NV (Netherlands) 6,172,657
88,053 Metro AG (Germany) 3,349,592
335,300 RadioShack Corp. 19,782,700
1,105,803 Tesco PLC (United Kingdom) 3,486,426
-------------
39,128,064
Software (6.9%)
-------------------------------------------------------------------------------------------------------------------
147,400 Amdocs, Ltd. (NON) 10,529,888
81,100 I2 Technologies, Inc. (NON) 13,721,106
208,249 Microsoft Corp. (NON) 14,538,383
732,600 Misys PLC (United Kingdom) 8,509,135
218,800 Oracle Corp. (NON) 19,897,125
71,129 SAP AG (Germany) 18,080,764
150,000 VERITAS Software Corp. (NON) 18,084,375
-------------
103,360,776
Technology (1.5%)
-------------------------------------------------------------------------------------------------------------------
473,704 Koninklijke Philips Electronics NV (Netherlands) 23,072,341
Telecommunications (4.0%)
-------------------------------------------------------------------------------------------------------------------
63,571 BCE, Inc. (Canada) 1,422,942
239 NTT DoCoMo, Inc. (Japan) (NON) 6,321,921
309,700 Sprint Corp. (PCS Group) (NON) 15,543,069
5 Telesp Participacoes S.A. (Brazil) 88
8,987,154 Vodafone Group PLC (United Kingdom) 36,374,827
-------------
59,662,847
Telephone (0.3%)
-------------------------------------------------------------------------------------------------------------------
4 KDD Corp. (Japan) 341
224,668 Telefonica S.A. (Spain) (NON) 4,313,194
-------------
4,313,535
Tobacco (0.6%)
-------------------------------------------------------------------------------------------------------------------
2,997 Cie Finance Richemont AG (Switzerland) 8,485,938
--------------
Total Common Stocks (cost $1,171,217,597) $1,440,654,470
<CAPTION>
UNITS (2.2%) (a)
NUMBER OF UNITS VALUE
<S> <C> <C>
-------------------------------------------------------------------------------------------------------------------
17,308 Hon Hai Precision Industry 144A Structured Note
(issued by UBS AG) 3.70%, 2001 (Taiwan) $ 177,494
221,800 Hon Hai Precision Industry 144A Structured Note
(issued by UBS AG) 3.15%, 2000 (Taiwan) 2,245,725
34,480 Nippon Television Network Corp., Call Warrants
(issued by Lehman Brothers Finance S.A.,
Exp. 8/6/01) (Japan) (NON) 19,760,143
2,302,700 Taiwan Semiconductor Manufacturing Co., 144A Structured
Note (issued by UBS AG Warburg Dillon Read) 3.0%, 2000
(Taiwan) 9,968,388
--------------
Total Units (cost $29,455,382) $ 32,151,750
<CAPTION>
SHORT-TERM INVESTMENTS (1.8%) (a) (cost $26,260,000)
PRINCIPAL AMOUNT VALUE
<S> <C> <C>
-------------------------------------------------------------------------------------------------------------------
$ 26,260,000 Interest in $750,000,000 joint repurchase agreement dated
August 31, 2000 with Goldman Sachs & Co. due
September 1, 2000 with respect to various U.S. Treasury
obligations -- maturity value of $26,264,836 for an effective
yield of 6.63%. $ 26,260,000
-------------------------------------------------------------------------------------------------------------------
Total Investments (cost $1,226,932,979) (b) $1,499,066,220
-------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $1,489,450,420.
(b) The aggregate identified cost on a tax basis is 1,246,010,574,
resulting in gross unrealized appreciation and depreciation of
$281,974,407 and $28,918,761, respectively, or net unrealized
appreciation of $253,055,646.
(NON) Non-income-producing security.
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 after the name of a foreign holding stands for American
Depositary Receipts, representing ownership of foreign securities on
deposit with a domestic custodian bank.
DIVERSIFICATION BY COUNTRY
Distribution of investments by country of issue at August 31, 2000:
(as percentage of Market Value)
Canada 2.7%
Finland 1.7
France 6.8
Germany 4.1
Hong Kong 1.0
Italy 1.3
Japan 7.3
Netherlands 4.9
Sweden 1.0
Switzerland 2.7
United Kingdom 9.3
United States 56.1
Other 1.1
-----
Total 100.0%
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
August 31, 2000 (Unaudited)
<S> <C>
Assets
-------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $1,226,932,979) (Note 1) $1,499,066,220
-------------------------------------------------------------------------------------------
Cash 7,456,164
-------------------------------------------------------------------------------------------
Dividends receivable 1,687,090
-------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 7,781,051
-------------------------------------------------------------------------------------------
Receivable for securities sold 33,402,263
-------------------------------------------------------------------------------------------
Total assets 1,549,392,788
Liabilities
-------------------------------------------------------------------------------------------
Payable for subcustodian (Note 2) 3,482
-------------------------------------------------------------------------------------------
Payable for securities purchased 52,275,951
-------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 1,276,079
-------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 2,241,310
-------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 329,830
-------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 28,277
-------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 2,856
-------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 992,874
-------------------------------------------------------------------------------------------
Payable for closed forward currency contracts 2,665,808
-------------------------------------------------------------------------------------------
Other accrued expenses 125,901
-------------------------------------------------------------------------------------------
Total liabilities 59,942,368
-------------------------------------------------------------------------------------------
Net assets $1,489,450,420
Represented by
-------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $1,055,701,405
-------------------------------------------------------------------------------------------
Accumulated net investment loss (Note 1) (3,139,508)
-------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and
foreign currency transactions (Note 1) 164,841,352
-------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and
assets and liabilities in foreign currencies 272,047,171
-------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $1,489,450,420
Computation of net asset value and offering price
-------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($717,571,609 divided by 38,593,272 shares) $18.59
-------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $18.59)* $19.72
-------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($668,977,447 divided by 36,871,616 shares)** $18.14
-------------------------------------------------------------------------------------------
Net asset value and offering price per class C share
($41,769,230 divided by 2,267,176 shares)** $18.42
-------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($61,132,134 divided by 3,339,684 shares) $18.30
-------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $18.30)* $18.96
-------------------------------------------------------------------------------------------
* 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 August 31, 2000 (Unaudited)
<S> <C>
Investment income:
-------------------------------------------------------------------------------------------
Dividends (net of foreign tax of $846,090) $ 22,819,339
-------------------------------------------------------------------------------------------
Interest 548,285
-------------------------------------------------------------------------------------------
Total investment income 23,367,624
Expenses:
-------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 4,443,658
-------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 1,140,592
-------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 19,841
-------------------------------------------------------------------------------------------
Administrative services (Note 2) 8,591
-------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 983,969
-------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 3,461,881
-------------------------------------------------------------------------------------------
Distribution fees -- Class C (Note 2) 171,305
-------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 222,519
-------------------------------------------------------------------------------------------
Other 242,503
-------------------------------------------------------------------------------------------
Total expenses 10,694,859
-------------------------------------------------------------------------------------------
Expense reduction (Note 2) (480,042)
-------------------------------------------------------------------------------------------
Net expenses 10,214,817
-------------------------------------------------------------------------------------------
Net investment income 13,152,807
-------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 69,262,325
-------------------------------------------------------------------------------------------
Net realized loss on foreign currency transactions (Note 1) (2,681,003)
-------------------------------------------------------------------------------------------
Net unrealized depreciation of assets and liabilities in
foreign currencies during the period (68,410)
-------------------------------------------------------------------------------------------
Net unrealized depreciation of investments during the period (135,668,207)
-------------------------------------------------------------------------------------------
Net loss on investments (69,155,295)
-------------------------------------------------------------------------------------------
Net decrease in net assets resulting from operations $ (56,002,488)
-------------------------------------------------------------------------------------------
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
August 31 February 29
2000* 2000
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets
--------------------------------------------------------------------------------------------------
Operations:
--------------------------------------------------------------------------------------------------
Net investment income (loss) $ 13,152,807 $ (4,876,785)
--------------------------------------------------------------------------------------------------
Net realized gain on investments and
foreign currency transactions 66,581,322 206,823,139
--------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments
and assets and liabilities in foreign currencies (135,736,617) 296,532,744
--------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations (56,002,488) 498,479,098
--------------------------------------------------------------------------------------------------
Distributions to shareholders:
--------------------------------------------------------------------------------------------------
In excess of net investment income
Class A -- (7,131,495)
--------------------------------------------------------------------------------------------------
Class B -- (5,510,486)
--------------------------------------------------------------------------------------------------
Class C -- (199,314)
--------------------------------------------------------------------------------------------------
Class M -- (545,209)
--------------------------------------------------------------------------------------------------
From net realized gain on investments
Class A -- (62,683,472)
--------------------------------------------------------------------------------------------------
Class B -- (75,005,590)
--------------------------------------------------------------------------------------------------
Class C -- (1,906,687)
--------------------------------------------------------------------------------------------------
Class M -- (6,154,919)
--------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 127,748,593 368,846,631
--------------------------------------------------------------------------------------------------
Total increase in net assets 71,746,105 708,188,557
Net assets
--------------------------------------------------------------------------------------------------
Beginning of period 1,417,704,315 709,515,758
--------------------------------------------------------------------------------------------------
End of period (including accumulated net investment
loss and distributions in excess of net investment income
of $3,139,508 and $16,292,315, respectively) $1,489,450,420 $1,417,704,315
--------------------------------------------------------------------------------------------------
* 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 August 31 Year ended Year ended
operating performance (Unaudited) Feb. 29 Year ended February 28 Feb. 29
------------------------------------------------------------------------------------------------------------------
2000 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $19.32 $13.62 $13.18 $11.85 $11.02 $8.83
------------------------------------------------------------------------------------------------------------------
Investment operations
------------------------------------------------------------------------------------------------------------------
Net investment income (loss) .20(c) (.02)(c) .02(c) .03(c) .06(c) .06
------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.93) 8.37 1.66 3.06 1.77 2.60
------------------------------------------------------------------------------------------------------------------
Total from
investment operations (.73) 8.35 1.68 3.09 1.83 2.66
------------------------------------------------------------------------------------------------------------------
Less distributions:
------------------------------------------------------------------------------------------------------------------
From net
investment income -- -- -- (.05) (.12) (.08)
------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- (2.38) (1.24) (1.66) (.83) (.39)
------------------------------------------------------------------------------------------------------------------
In excess of net
investment income -- (.27) -- (.05) (.05) --
------------------------------------------------------------------------------------------------------------------
Total distributions -- (2.65) (1.24) (1.76) (1.00) (.47)
------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $18.59 $19.32 $13.62 $13.18 $11.85 $11.02
------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) (3.78)* 63.14 13.08 27.74 16.92 30.58
------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $717,572 $623,649 $302,556 $270,536 $199,305 $142,513
------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .56* 1.20 1.26 1.37 1.43 1.56
------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average net assets (%) 1.10* (.14) .17 .20 .48 .60
------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 106.51* 209.44 241.46 97.77 82.07 72.00
------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(b) Includes amounts paid through brokerage service and expense offset
arrangements (Note 2).
(c) Per share net investment income (loss) has been determined on the
basis of the weighted average number of shares outstanding during the
period.
(d) Net investment income (loss) was less than $0.01 per share
(e) Ratio of net investment income (loss) to average net assets was
less than 0.01%.
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
CLASS B
------------------------------------------------------------------------------------------------------------------
Six months
ended
Per-share August 31 Year ended Year ended
operating performance (Unaudited) Feb. 29 Year ended February 28 Feb. 29
------------------------------------------------------------------------------------------------------------------
2000 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $18.92 $13.40 $13.07 $11.77 $10.97 $8.80
------------------------------------------------------------------------------------------------------------------
Investment operations
------------------------------------------------------------------------------------------------------------------
Net investment income (loss) .14(c) (.13)(c) (.07)(c) (.06)(c) (.01)(c) .01
------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.92) 8.21 1.64 3.05 1.76 2.60
------------------------------------------------------------------------------------------------------------------
Total from
investment operations (.78) 8.08 1.57 2.99 1.75 2.61
------------------------------------------------------------------------------------------------------------------
Less distributions:
------------------------------------------------------------------------------------------------------------------
From net
investment income -- -- -- (.01) (.09) (.05)
------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- (2.38) (1.24) (1.66) (.83) (.39)
------------------------------------------------------------------------------------------------------------------
In excess of net
investment income -- (.18) -- (.02) (.03) --
------------------------------------------------------------------------------------------------------------------
Total distributions -- (2.56) (1.24) (1.69) (.95) (.44)
------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $18.14 $18.92 $13.40 $13.07 $11.77 $10.97
------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) (4.12)* 62.03 12.33 26.98 16.19 30.05
------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $668,977 $709,891 $377,386 $333,642 $232,117 $150,679
------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .91* 1.88 1.92 2.00 2.02 2.09
------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average net assets (%) .78* (.81) (.49) (.44) (.12) .05
------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 106.51* 209.44 241.46 97.77 82.07 72.00
------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(b) Includes amounts paid through brokerage service and expense offset
arrangements (Note 2).
(c) Per share net investment income (loss) has been determined on the
basis of the weighted average number of shares outstanding during the
period.
(d) Net investment income (loss) was less than $0.01 per share.
(e) Ratio of net investment income (loss) to average net assets was
less than 0.01%.
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
CLASS C
---------------------------------------------------------------------------
Six months
ended For the period
Per-share August 31 Year ended Feb. 1, 1999+
operating performance (Unaudited) Feb. 29 to Feb. 28
---------------------------------------------------------------------------
2000 2000 1999
---------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value,
beginning of period $19.20 $13.63 $14.15
---------------------------------------------------------------------------
Investment operations
---------------------------------------------------------------------------
Net investment income (loss)(c) .14 (.13) --(d)
---------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.92) 8.33 (.52)
---------------------------------------------------------------------------
Total from
investment operations (.78) 8.20 (.52)
---------------------------------------------------------------------------
Less distributions:
---------------------------------------------------------------------------
From net
investment income -- -- --
---------------------------------------------------------------------------
From net realized gain
on investments -- (2.38) --
---------------------------------------------------------------------------
In excess of net
investment income -- (.25) --
---------------------------------------------------------------------------
Total distributions -- (2.63) --
---------------------------------------------------------------------------
Net asset value,
end of period $18.42 $19.20 $13.63
---------------------------------------------------------------------------
Ratios and supplemental data
---------------------------------------------------------------------------
Total return at
net asset value (%)(a) (4.06)* 61.94 (3.68)*
---------------------------------------------------------------------------
Net assets, end of period
(in thousands) $41,769 $25,539 $190
---------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .91* 1.88 .15*
---------------------------------------------------------------------------
Ratio of net investment income (loss)
to average net assets (%) .76* (1.04) (.05)*
---------------------------------------------------------------------------
Portfolio turnover (%) 106.51* 209.44 241.46
---------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(b) Includes amounts paid through brokerage service and expense offset
arrangements (Note 2).
(c) Per share net investment income (loss) has been determined on the
basis of the weighted average number of shares outstanding during the
period.
(d) Net investment income (loss) was less than $0.01 per share.
(e) Ratio of net investment income (loss) to average net assets was
less than 0.01%.
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
CLASS M
------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share August 31 Year ended July 3, 1995+
operating performance (Unaudited) Feb. 29 Year ended February 28 to Feb. 29
------------------------------------------------------------------------------------------------------------------
2000 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $19.07 $13.48 $13.11 $11.80 $11.01 $9.76
------------------------------------------------------------------------------------------------------------------
Investment operations
------------------------------------------------------------------------------------------------------------------
Net investment income (loss)(c) .16 (.09) (.03) (.03) .01 --(d)
------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.93) 8.27 1.64 3.07 1.78 1.72
------------------------------------------------------------------------------------------------------------------
Total from
investment operations (.77) 8.18 1.61 3.04 1.79 1.72
------------------------------------------------------------------------------------------------------------------
Less distributions:
------------------------------------------------------------------------------------------------------------------
From net
investment income -- -- -- (.03) (.12) (.08)
------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- (2.38) (1.24) (1.66) (.83) (.39)
------------------------------------------------------------------------------------------------------------------
In excess of net
investment income -- (.21) -- (.04) (.05) --
------------------------------------------------------------------------------------------------------------------
Total distributions -- (2.59) (1.24) (1.73) (1.00) (.47)
------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $18.30 $19.07 $13.48 $13.11 $11.80 $11.01
------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) (4.04)* 62.48 12.61 27.36 16.51 17.95*
------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $61,132 $58,625 $29,384 $25,145 $14,791 $3,901
------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .79* 1.63 1.67 1.75 1.77 1.23*
------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average net assets (%) .88* (.56) (.25) (.22) .05 --(e)
------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 106.51* 209.44 241.46 97.77 82.07 72.00
------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(b) Includes amounts paid through brokerage service and expense offset
arrangements (Note 2).
(c) Per share net investment income (loss) has been determined on the
basis of the weighted average number of shares outstanding during the
period.
(d) Net investment income (loss) was less than $0.01 per share.
(e) Ratio of net investment income (loss) to average net assets was
less than 0.01%.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
August 31, 2000 (Unaudited)
Note 1
Significant accounting policies
Putnam Global Equity 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 common stocks of companies located in foreign
countries and in the United States.
The fund offers class A, class B, class C and class M shares. 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.
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.
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 Investment Management, Inc. ("Putnam Management"), the fund's
manager, a wholly-owned subsidiary of Putnam Investments, Inc.. 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 "market 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 six months
ended August 31, 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. 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: 0.70% of the
first $500 million of average net assets, 0.60% of the next $500
million, 0.55% of the next $500 million, 0.50% of the next $5 billion,
0.475% of the next $5 billion, 0.455% of the next $5 billion, 0.44% of
the next $5 billion, and 0.43% thereafter.
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.
Under the subcustodian contract between the subcustodian bank and PFTC,
the subcustodian bank has a lien on the securities of the fund to the
extent permitted by the fund's investment restrictions to cover any
advances made by the subcustodian bank for the settlement of securities
purchased by the fund. At August 31, 2000, the payable to the
subcustodian bank represents the amount due for cash advance for the
settlement of a security purchased.
For the six months ended August 31, 2000, fund expenses were reduced by
$480,042 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 $1,627
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
0.65%, 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
currently limit payment by the fund to an annual rate of 0.75% of the
average net assets attributable to class M shares. The Trustees
currently limit payment by the fund to an annual rate of 0.50% of the
average net assets attributable to class A for shares outstanding as of
July 1, 1995 (except for class A shares for which Putnam Mutual Funds is
dealer of record) and 0.25% of such average net asset value of shares
acquired after that date (including shares acquired through reinvestment
distributions).
For the six months ended August 31, 2000, Putnam Retail Management,
Inc., acting as underwriter received net commissions of $263,134 and
$17,931 from the sale of class A and class M shares, respectively, and
received $239,152 and $12,950 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 August 31, 2000, Putnam Retail
Management, Inc., acting as underwriter received $23,991 on class A
redemptions.
Note 3
Purchases and sales of securities
During the six months ended August 31, 2000, cost of purchases and
proceeds from sales of investment securities other than short-term
investments aggregated $1,602,779,637 and $1,469,203,484, respectively.
There were no purchases and sales of U.S. government obligations.
Note 4
Capital shares
At August 31, 2000, there was an unlimited number of shares of
beneficial interest authorized. Transactions in capital shares were as
follows:
Six months ended August 31, 2000
---------------------------------------------------------------------------
Class A Shares Amount
---------------------------------------------------------------------------
Shares sold 12,891,286 $237,002,805
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
---------------------------------------------------------------------------
12,891,286 237,002,805
Shares
repurchased (6,575,672) (120,250,910)
---------------------------------------------------------------------------
Net increase 6,315,614 $116,751,895
---------------------------------------------------------------------------
Year ended February 29, 2000
---------------------------------------------------------------------------
Class A Shares Amount
---------------------------------------------------------------------------
Shares sold 12,675,186 $210,179,037
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 3,751,173 66,317,672
---------------------------------------------------------------------------
16,426,359 276,496,709
Shares
repurchased (6,360,750) (102,861,869)
---------------------------------------------------------------------------
Net increase 10,065,609 $173,634,840
---------------------------------------------------------------------------
Six months ended August 31, 2000
---------------------------------------------------------------------------
Class B Shares Amount
---------------------------------------------------------------------------
Shares sold 6,483,620 $117,274,541
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
---------------------------------------------------------------------------
6,483,620 117,274,541
Shares
repurchased (7,128,414) (128,171,739)
---------------------------------------------------------------------------
Net decrease (644,794) $(10,897,198)
---------------------------------------------------------------------------
Year ended February 29, 2000
---------------------------------------------------------------------------
Class B Shares Amount
---------------------------------------------------------------------------
Shares sold 14,489,703 $233,678,478
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 4,386,814 76,023,532
---------------------------------------------------------------------------
18,876,517 309,702,010
Shares
repurchased (9,514,225) (151,240,623)
---------------------------------------------------------------------------
Net increase 9,362,292 $158,461,387
---------------------------------------------------------------------------
Six months ended August 31, 2000
---------------------------------------------------------------------------
Class C Shares Amount
---------------------------------------------------------------------------
Shares sold 1,115,248 $20,386,415
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
---------------------------------------------------------------------------
1,115,248 20,386,415
Shares
repurchased (177,903) (3,218,037)
---------------------------------------------------------------------------
Net increase 937,345 $17,168,378
---------------------------------------------------------------------------
Year ended February 29, 2000
---------------------------------------------------------------------------
Class C Shares Amount
---------------------------------------------------------------------------
Shares sold 1,309,209 $21,775,089
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 110,915 1,951,003
---------------------------------------------------------------------------
1,420,124 23,726,092
Shares
repurchased (104,211) (1,793,768)
---------------------------------------------------------------------------
Net increase 1,315,913 $21,932,324
---------------------------------------------------------------------------
Six months ended August 31, 2000
---------------------------------------------------------------------------
Class M Shares Amount
---------------------------------------------------------------------------
Shares sold 839,425 $15,117,161
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
---------------------------------------------------------------------------
839,425 15,117,161
Shares
repurchased (574,258) (10,391,643)
---------------------------------------------------------------------------
Net increase 265,167 $ 4,725,518
---------------------------------------------------------------------------
Year ended February 29, 2000
---------------------------------------------------------------------------
Class M Shares Amount
---------------------------------------------------------------------------
Shares sold 955,414 $15,199,431
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 376,318 6,570,256
---------------------------------------------------------------------------
1,331,732 21,769,687
Shares
repurchased (436,643) (6,951,607)
---------------------------------------------------------------------------
Net increase 895,089 $14,818,080
---------------------------------------------------------------------------
Note 5
Change in independent accountants
(Unaudited)
Based on the recommendation of the Audit Committee of the fund, the
Board of Trustees has determined not to retain PricewaterhouseCoopers
LLP as this fund's independent accountant and voted to appoint KPMG LLP
for the fund's fiscal year ending February 28, 2001. During the two
previous fiscal years, PricewaterhouseCoopers LLP audit reports
contained no adverse opinion or disclaimer of opinion; nor were its
reports qualified or modified as to uncertainty, audit scope, or
accounting principle. Further, in connection with its audits for the two
previous fiscal years and through July 24, 2000, there were no
disagreements between the fund and PricewaterhouseCoopers LLP on any
matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure, which if not resolved to the
satisfaction of PricewaterhouseCoopers LLP would have caused it to make
reference to the disagreements in its report on the financial statements
for such years.
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
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
Vice President
Justin M. Scott
Vice President and Fund Manager
Paul C. Warren
Vice President and Fund Manager
Michael P. Stack
Vice President and Fund Manager
Omid Kamshad
Vice President and Fund Manager
Michael K. Arends
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 Global
Equity 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 and
Putnam's Quarterly Ranking 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.
Not FDIC Insured, May Lose Value, No Bank Guarantee
[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
64657/SA003 522/525/2AF 10/00
