Putnam
Global
Growth and
Income Fund
SEMIANNUAL REPORT
March 31, 1996
[LOGO: BOSTON * LONDON * TOKYO]
From the Chairman
Dear Shareholder:
During the six months ended March 31, 1996, a strong stock market and
continued economic growth provided a generally hospitable investment
environment for Putnam Global Growth and Income Fund.
As the result of a shareholder meeting held in December, 1995, the fund
underwent a name change and a broadening of its strategy. Putnam
Management had recommended these changes in order to allow your fund to
take greater advantage of opportunities outside the utilities sector.
The fund continues to be managed in a value investing style, seeking to
provide both regular income and long-term growth potential. Our analysts
focus on established domestic and international companies, selecting
those that have undergone positive change. The stocks of these companies
also have attractive dividend yields and sell at low price-to-earnings
ratios -- otherwise known as bargain stocks.
In anticipation of changes to your fund, the Trustees elected Hugh
Mullin to replace Sheldon Simon as lead manager. Meanwhile, Sheldon has
taken on other portfolio management responsibilities at Putnam. While
Hugh manages the fund's domestic investments, Justin Scott manages the
fund's international portion. Hugh joined Putnam in 1986, Justin in
1988.
In accordance with our new policy for incubated fund reports, the
semiannual report that follows simply provides portfolio holdings and
financial statements. A detailed report from the fund managers will be
forthcoming with the annual report.
Respectfully yours,
/S/George Putnam
George Putnam
Chairman of the Trustees
May 15, 1996
<TABLE>
<CAPTION>
Portfolio of investments owned
March 31, 1996 (Unaudited)
COMMON STOCKS (97.4%)*
NUMBER OF SHARES VALUE
<S> <C> <C> <C>
Aerospace and Defense (0.7%)
- -----------------------------------------------------------------------------------------------
175 Lockheed Martin Corp. $13,278
Airlines (1.0%)
- -----------------------------------------------------------------------------------------------
240 K.L.M.-Royal Dutch Airlines (Netherlands) 8,343
1,000 Singapore Airlines Ltd. (Singapore) 10,366
----------
18,709
Alcoholic Beverages (1.1%)
- -----------------------------------------------------------------------------------------------
155 Anheuser-Busch Cos., Inc. 10,443
255 Brown Forman Corp. Class B 10,232
----------
20,675
Automotive (4.2%)
- -----------------------------------------------------------------------------------------------
70 Chrysler Corp. 4,358
305 Ford Motor Co. 10,484
355 General Motors Corp. 18,904
360 ITT Industries, Inc. + 9,180
4,000 Jardine International Motor Holdings Ltd. (Hong Kong) 5,327
1,000 Mitsubishi Motors Corp. (Japan) 8,526
50 Peugeot Citroen S A (France) + 7,621
195 TRW, Inc. 17,379
----------
81,779
Banks (11.8%)
- -----------------------------------------------------------------------------------------------
4,000 Allied Irish Banks PLC (Ireland) 20,197
10 Baer Holdings AG (Germany) 11,087
300 Banc One Corp. 10,688
2,000 Bank of Ireland (Ireland) 13,119
205 BankAmerica Corp. 15,888
265 Bankers Trust New York Corp. 18,782
1,700 Barclays Bank PLC (United Kingdom) 18,847
160 Comerica, Inc. 6,680
205 CoreStates Financial Corp. 8,687
560 Fleet Financial Group, Inc. 22,680
320 Keycorp 12,360
265 Morgan (J.P.) & Co., Inc. 21,995
400 National Australia Bank Ltd. (Australia) 3,572
305 National City Corp. 10,713
140 NationsBank Corp. 11,218
460 PNC Bank Corp. 14,145
1,000 United Overseas Bank Ltd. (Singapore) 10,082
----------
230,740
Basic Industrial Products (1.3%)
- -----------------------------------------------------------------------------------------------
205 General Signal Corp. $7,431
2,000 Mitsui Fudoscan Co. (Japan) 18,078
----------
25,509
Broadcasting (0.3%)
- -----------------------------------------------------------------------------------------------
50 Societe Television Francaise 1 (France) 5,111
Building Products (1.6%)
- -----------------------------------------------------------------------------------------------
150 Lafarge Coppee (Bearer) (France) 9,926
1,000 Marui Co. (Japan) 21,735
----------
31,661
Building and Construction (1.9%)
- -----------------------------------------------------------------------------------------------
1,000 Nishimatsu Construction Co. (Japan) 11,381
1,000 Takasago Thermal Engineering (Japan) 16,231
1,000 Toda Construction Co. (Japan) 9,095
----------
36,707
Business Services (1.5%)
- -----------------------------------------------------------------------------------------------
1,000 Dai Nippon Printing Co. (Japan) 18,190
185 Dun & Bradstreet Corp. 11,216
----------
29,406
Chemicals (4.0%)
- -----------------------------------------------------------------------------------------------
100 Dow Chemical Co. 8,688
180 du Pont (E.I.) de Nemours & Co. 14,940
15 Hoechst AG (Germany) 5,310
1,000 KAO Corp. (Japan) 12,407
175 Lubrizol Corp. 5,163
1,000 Sekisui Chemical Co. (Japan) 13,060
130 Union Carbide Corp. 6,451
330 Witco Chemical Corp. 11,633
----------
77,652
Combined Utilities (0.6%)
- -----------------------------------------------------------------------------------------------
250 Veba AG (Germany) 12,140
Computers (0.7%)
- -----------------------------------------------------------------------------------------------
115 IBM Corp. 12,779
Conglomerates (2.6%)
- -----------------------------------------------------------------------------------------------
460 Corning, Inc. 16,100
125 Minnesota Mining & Manufacturing Co. 8,109
230 Tenneco Inc. 12,851
125 United Technologies Corp. 14,031
----------
51,091
Consumer Products (1.3%)
- -----------------------------------------------------------------------------------------------
150 Kimberly-Clark Corp. $11,175
100 Unilever N.V. (Netherlands) 13,622
----------
24,797
Containers (1.0%)
- -----------------------------------------------------------------------------------------------
330 Ball Corp. 10,230
255 Chesapeake Corp. 7,714
----------
17,944
Cosmetics (0.5%)
- -----------------------------------------------------------------------------------------------
125 Avon Products, Inc. 10,719
Electric Utilities (2.8%)
- -----------------------------------------------------------------------------------------------
100 Central & South West Corp. 2,850
180 Cinergy Corp. 5,400
400 East Midlands Electricity (United Kingdom) + 3,654
305 Edison International 5,223
3,500 Hong Kong Electric Holdings Ltd. (Hong Kong) 11,381
270 Northeast Utilities Co. 5,333
210 Potomac Electric Power Co. 5,486
175 Public Service Co. of Colorado 6,169
205 Public Service Enterprise Group, Inc. 5,638
105 Texas Utilities Co. 4,344
----------
55,478
Electronics and Electrical Equipment (5.8%)
- -----------------------------------------------------------------------------------------------
10 BBC Brown Boveri & Cie AG (Bearer) (Switzerland) 12,154
205 Eaton Corp. 12,351
125 Emerson Electric Co. 10,094
100 General Electric Co. 7,788
3,700 General Electric Co. PLC (United Kingdom) 20,680
100 Hitachi (Japan) 9,701
1,000 Nippondenso Co. (Japan) 20,149
140 Philips Electronics N.V. (Netherlands) 5,087
1,000 Sharp Corp. (Japan) 15,951
----------
113,955
Energy-Related (0.3%)
- -----------------------------------------------------------------------------------------------
50 VA Technolgies AG (Austria) 6,168
Environmental Control (0.8%)
- -----------------------------------------------------------------------------------------------
510 WMX Technologies, Inc. 16,193
Finance (2.7%)
- -----------------------------------------------------------------------------------------------
450 ABN AMRO Holding N.V.(Netherlands) $22,364
260 Beneficial Corp. 14,983
50 Credit Locale de France S.A. (France) 3,914
340 Federal National Mortgage Association 10,838
----------
52,099
Financial Services (0.5%)
- -----------------------------------------------------------------------------------------------
255 Norwest Corp. 9,371
Food (1.8%)
- -----------------------------------------------------------------------------------------------
200 General Mills, Inc. 11,675
330 Heinz (H.J.) Co. 10,931
355 Sara Lee Corp. 11,582
----------
34,188
Food and Beverages (2.3%)
- -----------------------------------------------------------------------------------------------
1,500 Argyll Group PLC (United Kingdom) 7,023
1,800 Guinness PLC (United Kingdom) 13,066
15 Nestle S.A. (Switzerland) 16,907
305 Whitman Corporation 7,396
----------
44,392
Gas Utilities (0.2%)
- -----------------------------------------------------------------------------------------------
150 Questar Corp. 4,950
Household Products (0.8%)
- -----------------------------------------------------------------------------------------------
100 Clorox Co. 8,613
900 Tate & Lyle PLC (United Kingdom) 6,691
----------
15,304
Insurance (6.1%)
- -----------------------------------------------------------------------------------------------
205 AON Corp. 10,609
200 Aegon N.V. (Netherlands) 9,432
165 Aetna Life & Casualty Co. 12,458
255 American General Corp. 8,798
90 CIGNA Corp. 10,283
300 Internationale Nederlanden Groep (Netherlands) 21,765
1,200 Jardine Matheson Holdings 9,360
135 Lincoln National Corp. 6,851
900 QBE Insurance Group Ltd. (Australia) 4,505
1,000 Tokio Marine & Fire Insurance Co. Ltd. (Japan) 12,966
800 USF&G Corp. 12,400
----------
119,427
Insurance and Finance (0.6%)
- -----------------------------------------------------------------------------------------------
600 Banco Totta & Accores S.A. (Portugal) 11,674
Machinery (0.5%)
- -----------------------------------------------------------------------------------------------
1,000 Daikin Industries Ltd. (Japan) $10,261
Medical Equipment and Supplies (1.1%)
- -----------------------------------------------------------------------------------------------
455 Baxter International, Inc. 20,589
Metals and Mining (0.7%)
- -----------------------------------------------------------------------------------------------
260 Freeport-McMoRan Copper & Gold Co., Inc. Class A 7,995
180 Freeport-McMoRan Copper & Gold Co., Inc. Class B 5,693
----------
13,688
Office Equipment (0.5%)
- -----------------------------------------------------------------------------------------------
80 Xerox Corp. 10,040
Office and Industrial (0.4%)
- -----------------------------------------------------------------------------------------------
4,000 Hang Lung Development Co. (Honk Kong) 7,628
Oil and Gas (6.0%)
- -----------------------------------------------------------------------------------------------
75 Atlantic Richfield Co. 8,925
110 British Petroleum PLC ADR (United Kingdom) 11,688
185 Exxon Corp. 15,101
510 Occidental Petroleum Corp. 13,643
500 Repsol S.A. (Spain) 18,839
110 Royal Dutch Petroleum Co. PLC ADR (Netherlands) 15,538
250 Societe Nationale Elf Aquitaine (France) 16,945
150 Texaco, Inc. 12,900
50 Total SA Class B (France) 3,374
----------
116,953
Paper (1.7%)
- -----------------------------------------------------------------------------------------------
1,000 Svenska Cellulosa AB (Sweden) 18,210
330 Weyerhaeuser Co. 15,221
----------
33,431
Pharmaceuticals and Biotechnology (3.4%)
- -----------------------------------------------------------------------------------------------
150 American Home Products Corp. 16,256
150 Bristol-Myers Squibb Co. 12,844
5 Ciba-Geigy AG (Switzerland) 6,253
390 Pharmacia & Upjohn, Inc. 15,551
155 Warner-Lambert Co. 16,004
----------
66,908
Photography (1.6%)
- -----------------------------------------------------------------------------------------------
280 Eastman Kodak Co. 19,880
255 Polaroid Corp. 11,475
----------
31,355
Publishing (1.2%)
- -----------------------------------------------------------------------------------------------
125 McGraw-Hill, Inc. $10,844
310 Times Mirror Co. Class A 12,206
----------
23,050
Railroads (1.5%)
- -----------------------------------------------------------------------------------------------
365 Canadian National Railway Co.(Canada) 6,296
125 Conrail, Inc. 8,953
75 Norfolk Southern Corp. 6,375
100 Union Pacific Corp. 6,863
----------
28,487
Retail (4.9%)
- -----------------------------------------------------------------------------------------------
270 Dayton Hudson Corporation 22,916
1,560 K mart Corp. 14,625
255 May Department Stores Co. 12,304
355 Melville Corporation 12,736
245 Penney (J.C.) Co., Inc. 12,189
280 Rite Aid Corp. 8,645
255 Sears, Roebuck & Co. 12,431
----------
95,846
Semiconductors (1.4%)
- -----------------------------------------------------------------------------------------------
180 Intel Corp. 10,238
200 SGS-Thomson Microelectronics ADR (France) + 7,250
185 Texas Instruments, Inc. 9,412
----------
26,900
Shipping (0.4%)
- -----------------------------------------------------------------------------------------------
3,000 Malaysia International Shipping Berhad (Malaysia) 8,468
Steel (0.3%)
- -----------------------------------------------------------------------------------------------
3,000 NatSteel Ltd. 5,900
Telecommunication (0.4%)
- -----------------------------------------------------------------------------------------------
200 Royal PTT N.V. ADR (Netherlands) 7,900
Telephone Services (3.6%)
- -----------------------------------------------------------------------------------------------
235 Bell Atlantic Corp. 14,511
240 GTE Corp. 10,530
260 NYNEX Corp. 12,968
220 SBC Communications, Inc. 11,578
280 Sprint Corp. 10,640
400 Tele Danmark A/S ADS (Denmark) 10,340
----------
70,567
Telephone Utilities (0.6%)
- -----------------------------------------------------------------------------------------------
6,000 Hong Kong Telecommunications Ltd. (Hong Kong) 11,986
Textiles (1.6%)
- -----------------------------------------------------------------------------------------------
50 Chargeurs S.A. (France) $12,792
3,000 Toray Industries Inc. (Japan) 19,366
----------
32,158
Tobacco (3.9%)
- -----------------------------------------------------------------------------------------------
255 American Brands, Inc. 10,806
1,600 B A T Industries PLC (United Kingdom) 11,797
340 Philip Morris Cos., Inc. 29,835
305 RJR Nabisco Holdings Corp. 9,226
100 Tabacalera S.A. (Spain) 4,670
405 Universal Corp. 10,176
----------
76,510
Trucking (0.5%)
- -----------------------------------------------------------------------------------------------
405 Ryder System, Inc. 11,036
Water Utilities (0.4%)
- -----------------------------------------------------------------------------------------------
800 North West Water Group PLC (United Kingdom) 7,540
----------
Total Investments (cost $1,810,713) *** $1,901,097
- -----------------------------------------------------------------------------------------------
* Percentages indicated are based on net assets of $1,952,260
+ Non-income-producing security
*** The aggregate identified cost on a tax basis is $1,810,713, resulting in gross unrealized
appreciation and depreciation of $121,029 and $30,645, respectively, or net unrealized
appreciation of $90,384.
ADR or ADS after the name of a foreign holding stands for American Depository Receipts, American
Depository Shares, respectively, representing ownership of foreign securities on deposit with a
domestic custodian bank.
<CAPTION>
- --------------------------------------------------------------------------------------------
Forward Currency Contracts to Sell at March 31, 1996
(Aggregate Face Value $195,117)
Unrealized
Market Aggregate Face Delivery Appreciation/
Value Value Date (Depreciation)
- --------------------------------------------------------------------------------------------
British Pounds $ 39,308 $ 39,523 5/31/96 $ 215
Japanese Yen 124,462 126,968 7/17/96 2,506
French Franc 28,645 28,626 5/31/96 (19)
- --------------------------------------------------------------------------------------------
$2,702
- --------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
March 31,1996 (Unaudited)
- ---------------------------------------------------------------------------------
<S> <C>
Assets
- ---------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $1,810,713 (Note 1) $1,901,097
- ---------------------------------------------------------------------------------
Cash 53,256
- ---------------------------------------------------------------------------------
Dividends, interest and other receivables 6,288
- ---------------------------------------------------------------------------------
Receivable for securities sold 2,267
- ---------------------------------------------------------------------------------
Receivable for open forward currency contracts 2,721
- ---------------------------------------------------------------------------------
Receivable for closed forward currency contracts 78
- ---------------------------------------------------------------------------------
Receivable from manager (Note 2) 1,828
- ---------------------------------------------------------------------------------
Unamortized organization expenses (Note 1) 5,055
- ---------------------------------------------------------------------------------
Total assets 1,972,590
Liabilities
- ---------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 3,784
- ---------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 80
- ---------------------------------------------------------------------------------
Payable for administrative services (Note 2) 10
- ---------------------------------------------------------------------------------
Payable for organizational expenses (Note 1) 6,425
- ---------------------------------------------------------------------------------
Payable for open forward currency contracts 19
- ---------------------------------------------------------------------------------
Other accrued expenses 10,012
- ---------------------------------------------------------------------------------
Total liabilities 20,330
- ---------------------------------------------------------------------------------
Net assets $1,952,260
Represented by
- ---------------------------------------------------------------------------------
Paid-in-capital (Notes 1 and 4) $1,633,025
- ---------------------------------------------------------------------------------
Undistributed net investment income (Note 1) 3,117
- ---------------------------------------------------------------------------------
Accumulated net realized gain on investments
(Note 1) 223,032
- ---------------------------------------------------------------------------------
Net unrealized appreciation of investments and assets and
liabilities in foreign currencies 93,086
- ---------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $1,952,260
Computation of net asset value and offering price
- ---------------------------------------------------------------------------------
Net asset value per share ($1,952,260 divided by 191,383 shares) $10.20
- ---------------------------------------------------------------------------------
Offering price per share (100/94.25 of $10.20)* $10.82
- ---------------------------------------------------------------------------------
* On single retail sales of less than $50,000. On sales of $50,000 or more and on
group sales the offering price is reduced.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
Six months ended March 31,1996 (Unaudited)
- ---------------------------------------------------------------------------------
<S> <C>
Investment Income
- ---------------------------------------------------------------------------------
Dividends (net of foreign tax of $921) $24,915
- ---------------------------------------------------------------------------------
Interest 332
- ---------------------------------------------------------------------------------
Total investment income 25,247
Expenses:
- ---------------------------------------------------------------------------------
Compensation of Manager (Note 2) 7,388
- ---------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 4,570
- ---------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 785
- ---------------------------------------------------------------------------------
Reports to shareholders 299
- ---------------------------------------------------------------------------------
Auditing 8,158
- ---------------------------------------------------------------------------------
Legal 332
- ---------------------------------------------------------------------------------
Postage 37
- ---------------------------------------------------------------------------------
Registration fees 169
- ---------------------------------------------------------------------------------
Administrative services (Note 2) 20
- ---------------------------------------------------------------------------------
Amortization of organization expense (Note 1) 577
- ---------------------------------------------------------------------------------
Other expenses 13
- ---------------------------------------------------------------------------------
Fees waived by manager (Note 2) (11,841)
- ---------------------------------------------------------------------------------
Total expenses 10,507
- ---------------------------------------------------------------------------------
Expense reduction (Note 2) (4,036)
- ---------------------------------------------------------------------------------
Net expenses 6,471
- ---------------------------------------------------------------------------------
Net investment income 18,776
- ---------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 232,876
- ---------------------------------------------------------------------------------
Net realized gain on forward currency contracts and
foreign currency translation (Note 1) 159
- ---------------------------------------------------------------------------------
Net unrealized appreciation on forward currency contracts
and foreign currency translation during the period 2,742
- ---------------------------------------------------------------------------------
Net unrealized depreciation of investments during the period (78,579)
- ---------------------------------------------------------------------------------
Net gain on investments 157,198
- ---------------------------------------------------------------------------------
Net increase in net assets resulting from operations $175,974
- ---------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
- ----------------------------------------------------------------------------------------------------
For the period
January 3,1995
(commencement of
Six months ended operations) to
March 31 September 30,
1996* 1995
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets
- ----------------------------------------------------------------------------------------------------
Operations:
- ----------------------------------------------------------------------------------------------------
Net investment income $18,776 $49,705
- ----------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments and
foreign currency transactions 233,035 (6,302)
- ----------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of
investment transactions and assets and liabilities
in foreign currencies (75,837) 168,923
- ----------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 175,974 212,326
- ----------------------------------------------------------------------------------------------------
Distributions to shareholders from:
- ----------------------------------------------------------------------------------------------------
Net investment income (66,094) --
Net realized gain on investments (3,672) --
- ----------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 74,941 1,538,785
- ----------------------------------------------------------------------------------------------------
Total increase in net assets 181,149 1,751,111
- ----------------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------
Beginning of period 1,771,111 20,000
- ----------------------------------------------------------------------------------------------------
End of period (including undistributed net investment
income of $3,117 and $50,435 respectively) $1,952,260 $1,771,111
- ----------------------------------------------------------------------------------------------------
* Unaudited
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
- ----------------------------------------------------------------------------------------------------
For the Period
January 3,1995
(commencement of
Six months ended operations) to
March 31 September 30
1996*+ 1995
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value,
beginning of period $9.64 $8.50
- ----------------------------------------------------------------------------------------------------
Investment operations
- ----------------------------------------------------------------------------------------------------
Net investment income .10(a) .27(a)
- ----------------------------------------------------------------------------------------------------
Net realized and unrealized gain on
investments .84 .87
- ----------------------------------------------------------------------------------------------------
Total from investment operations .94 1.14
- ----------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ----------------------------------------------------------------------------------------------------
From net investment income (.36) --
- ----------------------------------------------------------------------------------------------------
From net realized gain on investments (.02) --
- ----------------------------------------------------------------------------------------------------
Total distributions (.38) --
- ----------------------------------------------------------------------------------------------------
Net asset value, end of period $10.20 $9.64
- ----------------------------------------------------------------------------------------------------
Total investment return at
net asset value (%) (b) 10.00(d) 13.41(d)
- ----------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $1,952 $1,771
- ----------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets (%) .57(a)(c)(d) .49(a)(c)(d)
- ----------------------------------------------------------------------------------------------------
Ratio of net investment income to
average net assets (%) 1.02(a)(d) 3.04(a)(d)
- ----------------------------------------------------------------------------------------------------
Portfolio turnover (%) 220.76(d) 21.68(d)
- ----------------------------------------------------------------------------------------------------
Average commission rate paid (e) $.0362(d) --
- ----------------------------------------------------------------------------------------------------
* Unaudited
+ Effective December 28, 1995, the fund expanded its investment flexibility to include securities outside
of the utilities sector. Information in the table prior to December 28, 1995, may not reflect those that
could have been achieved under the fund's current investment policies. (Note 1).
(a) Reflects an expense limitation during the period (See Note 2). As a result of such limitation, expenses
of the fund for the periods ended March 31, 1996 and September 30, 1995 reflect a reduction of approximately
$.06 and $.20 per share, respectively.
(b) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(c) The ratio of expenses to average net assets includes amounts paid through expense offset arrangements. (See note 2).
(d) Not annualized.
(e) Average commission rate paid is presented for fiscal periods beginning September 1, 1995 in conformance with
requirements issued by the SEC.
</TABLE>
Notes to financial statements
March 31, 1996 (Unaudited)
Note 1
Significant accounting policies
The fund is a series of Putnam Investment Funds (the "Trust") which is
registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company. The primary
objective of the fund is to seek capital growth and the secondary
objective is to seek current income. The fund will invest primarily in
common stocks that offer potential for capital growth and may invest in
stocks that offer potential for current income.
The following is a summary of significant accounting policies followed
by the trust in the preparation of its financial statements. The
preparation of financial statements is in conformity with generally
accepted accounting principles and requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities. Actual results could differ from those estimates.
A) Security valuation Investments for which market quotations are
readily available are stated at market value, which is determined using
the last reported sale price, or, if no sales are reported--as in the
case of some securities traded over-the-counter--the last reported bid
price, except that certain U.S. government obligations are stated at the
mean between the bid and asked prices. Market quotations are not
considered to be readily available for long term corporate bonds and
notes; such investments are stated at fair market value on the basis of
valuations furnished by a pricing service, approved by the Trustees.
Short-term investments having remaining maturities of 60 days or less
are stated at amortized cost, which approximates market value, and other
investments are stated at fair market value following procedures
approved by the Trustees.
B) Joint trading account Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the fund may transfer uninvested
cash balances into a joint trading account along with the cash of other
registered investment companies managed by Putnam Investment Management,
Inc. ("Putnam Management"), the fund's Manager, a wholly-owned
subsidiary of Putnam Investments, Inc. and certain other accounts. These
balances may be invested in one or more repurchase agreements and/or
short-term money market instruments.
C) Security transactions and related investment income Security
transactions are accounted for on the trade date (date the order to buy
or sell is executed). Interest income is recorded on the accrual basis.
Dividend income is recorded on the ex-dividend date except that certain
dividends from foreign securities are recorded as soon as the fund is
informed of the ex-dividend date. Discounts on zero coupon bonds,
original issue, stepped-coupon bonds and payment in kind bonds are
accreted according to the effective yield method.
D) Foreign currency translation The accounting records of the fund are
maintained in U.S. dollars. The market value of foreign securities,
currency holdings, 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 fluctuations are included with the net realized
and unrealized gain or loss on investments. Net realized gains and
losses on foreign currency transactions represent net 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
gains and losses on foreign currency transactions 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.
E) 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 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.
F) Federal taxes It is the policy of the fund to distribute all of its
taxable income within the prescribed time and otherwise comply with the
provisions of the Internal Revenue Code applicable to regulated
investment companies. It is also the intention of the fund to distribute
an amount sufficient to avoid imposition of any excise tax under Section
4982 of the Internal Revenue Code of 1986. Therefore, no provision has
been made for federal taxes on income, capital gains or unrealized
appreciation on securities held and for excise tax on income and capital
gains.
G) Distributions to shareholders Distributions to shareholders from net
investment income are recorded by the fund on the ex-dividend date.
Capital gain distributions, if any, are recorded on the ex-dividend date
and paid annually. The amount and character of income and gains to be
distributed are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles.
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.
H) Expenses of the trust Expenses directly charged or attributable to
any fund will be paid from the assets of that fund. Generally, expenses
of the trust will be allocated among and charged to the assets of each
fund on a basis that the Trustees deem fair and equitable, which may be
based on the relative assets of each fund or the nature of the services
performed and relative applicability to each fund.
I) Unamortized organization expenses Expenses incurred by the fund in
connection with its organization, its registration with the Securities
and Exchange Commission and with various states and the initial public
offering of its shares were $6,425. These expenses are being amortized
on projected net asset levels over a five-year period. The fund will
reimburse Putnam Management for the payment of these expenses.
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: .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, and by the amount of certain brokerage commissions
and fees (less expenses) received by affiliates of Putnam Management on
the fund's portfolio transactions.
Through July 31, 1996, Putnam Management has voluntarily agreed to limit
expenses to an annual rate of 1.45% of the fund's average net assets.
The fund's expenses subject to this limitation are exclusive of
brokerage, interest, taxes, amortization of deferred organization
expenses, extraordinary expenses and credits from Putnam Fiduciary Trust
Company ("PFTC"), a wholly-owned subsidiary of Putnam Investments, Inc.
if any.
The fund reimburses Putnam Management for the compensation and related
expenses of certain officers of the fund and their staff who provide
administrative services to the fund. The aggregate amount of all such
reimbursements is determined annually by the Trustees.
Trustees of the fund receive an annual Trustees fee of $100 and an
additional fee for each Trustee's meeting attended. Trustees who are not
interested persons of Putnam Management and who serve on committees of
the Trustees receive additional fees for attendance at certain committee
meetings.
The fund adopted a Trustee Fee Deferral Plan (the "Plan") which allows
the Trustees to defer the receipt of all or a portion of Trustees Fees
payable on or after July 1, 1995. The deferred fees remain in the fund
and are invested in the fund or in other Putnam funds until distribution
in accordance with the Plan.
Custodial functions for the fund's assets are provided by Putnam
Fiduciary Trust Company (PFTC), a wholly owned subsidiary of Putnam
Investments, Inc. Investor servicing agent functions are provided by
Putnam Investor Services, a division of PFTC.
For the period ended March 31, 1996, fund expenses were reduced by
$4,036 under expense offset arrangements with PFTC. Investor servicing
and custodian fees reported in the Statement of operations exclude these
credits. The fund could have invested the assets utilized in connection
with the expense offset arrangements in an income producing asset if it
had not entered into such arrangements.
The fund has adopted a distribution plan (the "Plan") pursuant to Rule
12b-1 under the Investment Company Act of 1940, although the fund is not
currently making any payments pursuant to the Plan. The purpose of the
Plan is to compensate Putnam Mutual Funds Corp., a wholly-owned
subsidiary of Putnam Investments, Inc., for services provided and
expenses incurred by it in distributing shares of the fund. The plan
provides for payments by the fund to Putnam Mutual Funds Corp. at an
annual rate of up to 0.35% of the fund's average net assets. During the
period October 31, 1995 to March 31, 1996, Putnam Mutual Funds Corp.,
acting as the underwriter, received no net commissions from the sale of
shares of the fund.
Note 3
Purchase and sales of securities
During the period ended March 31, 1996, purchases and sales of
investment securities other than short-term investments aggregated
$3,892,450 and $3,896,909, respectively. There were no purchases and
sales of U.S. government obligations. In determining the net gain or
loss on securities sold, the cost of securities has been determined on
the identified cost basis.
Note 4
Capital shares
At March 31, 1996, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Six months ended
March 31, 1996
- ----------------------------------------------------
Shares Amount
- ----------------------------------------------------
Shares sold 543 $ 5,997
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 7,267 69,766
- ----------------------------------------------------
Shares
repurchased (84) (822)
- ----------------------------------------------------
Net increase 7,726 $74,941
- ----------------------------------------------------
For the period
January 3, 1995
(commencement of
operations) to
September 30, 1995
- ----------------------------------------------------
Shares Amount
- ----------------------------------------------------
Shares sold 181,635 $1,541,857
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- ----------------------------------------------------
Shares
repurchased (331) (3,072)
- ----------------------------------------------------
Net increase 181,304 $1,538,785
- ----------------------------------------------------
Fund information
INVESTMENT MANAGER
Putnam Investment
Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
TRUSTEES
George Putnam, Chairman
William F. Pounds, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
John A. Hill
Elizabeth T. Kennan
Lawrence J. Lasser
Robert E. Patterson
Donald S. Perkins
George Putnam, III
Eli Shapiro
A.J.C. Smith
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
John D. Hughes
Senior Vice President and Treasurer
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Anthony W. Regan
Vice President
Peter Carman
Vice President
Brett C. Browchuk
Vice President
Gary N. Coburn
Vice President
Hugh H. Mullin
Vice President and Fund Manager
Justin M. Scott
Vice President and Fund Manager
William N. Shiebler
Vice President
John R. Verani
Vice President
Paul M. O'Neil
Vice President
Beverly Marcus
Clerk and Assistant Treasurer
This report is for the information of shareholders of Putnam Global
Growth and Income 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.
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.
24523-197 5/96
