Putnam
International
Voyager
Fund
ANNUAL REPORT
August 31, 1997
[LOGO: BOSTON * LONDON * TOKYO]
Fund highlights
* Putnam International Voyager Fund's class A shares were ranked in the top
14% by Lipper Analytical Services for the one-year period ended September
30, 1997. The fund ranked 54 out of 397 international funds ranked.*
* "The fund's investment approach is designed to deliver strong,
steady performance with lower risk. The management team's disciplined
approach and the fund's blend of growth and value aim to soften the impact
of short-term market ups and downs."
-- Justin Scott, fund manager
CONTENTS
4 Report from Putnam Management
9 Fund performance summary
14 Portfolio holdings
18 Financial statements
* Lipper is an industry research firm whose rankings are based on total
return performance, vary over time, and do not reflect the effects of
sales charges. Performance of other share classes will vary. The fund was
not ranked over longer periods. Past performance is not indicative of
future results.
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
[copyright] Karsh, Ottawa
Dear Shareholder:
Putnam International Voyager Fund successfully blended a well-diversified
selection of small and midsize stocks with consistent growth histories trading
at compelling prices from more than two dozen countries outside the United
States to deliver a double-digit total return during the fiscal year that
ended on August 31, 1997.
Following the lead taken by U.S. corporations a number of years ago, companies
headquartered elsewhere continue to restructure into leaner, more efficient,
and more profitable entities. This ongoing process provides a steady stream of
attractive investment opportunities.
I am pleased to announce that Omid Kamshad and Joshua Byrne have been named to
your fund's management team. Omid joined Putnam in January 1996 from Lombard
Odier International Investment Managers. He has 11 years of investment
experience. Joshua has been a member of Putnam's Global Equity Group since
1992. He has seven years of investment experience.
In the following report, your fund's managers discuss fiscal 1997 results and
look at prospects for the year ahead.
Respectfully yours,
/S/GEORGE PUTNAM
George Putnam
Chairman of the Trustees
October 15, 1997
Report from the Fund Managers
Justin M. Scott
Omid Kamshad
Joshua Byrne
Taking advantage of dramatic changes in international markets, Putnam
International Voyager Fund successfully fulfilled its mandate of finding
attractive small- and mid-capitalization companies throughout the world's
markets. For the year ended August 31, 1997, the fund's class A shares
provided a total return of 24.44% at net asset value (17.26% at public
offering price), far outpacing the 9.05% return of the benchmark Morgan
Stanley Capital International EAFE Index. For more performance information,
please turn to page 9.
*AN INVESTMENT STYLE FOR THE TIMES
Your fund's approach is based on the successful strategy developed for
Putnam's large-company international fund, Putnam International Growth Fund.
For both funds, management seeks to add value through a combination of
top-down selection of attractive markets and bottom-up selection of attractive
stocks. In particular, we search for companies with the dual attraction of
dependable earnings growth and undervalued stock prices.
Stocks of the small to midsize companies that your fund targets have their own
set of dynamics and can behave quite differently from larger stocks. That's
why your fund relies on a rigorous process of fundamental analysis, backed by
a comprehensive global research team. The analysts' mandate is to make an
accurate assessment of a company's future earnings power and to determine
whether or not its current stock price accurately reflects that future growth.
If it does not, the fund will more than likely buy the stock.
*FUND SEEKS OPPORTUNITIES AS SHAREHOLDER-VALUE CONCEPT MOVES OVERSEAS
Many overseas companies are embracing -- some for the first time -- the
concept of creating value for their shareholders. The companies are rebuilding
their businesses through aggressive corporate restructuring programs and
increasing their competitive positioning in order to attract global capital.
The pace of these changes not only varies by region but, more pointedly,
varies from company to company. Therefore, we believe our research and
analysis can position the fund to take advantage of solid opportunities within
its investment universe.
Over the fiscal year, we have tried to take advantage of this new
international business paradigm of creating value for shareholders on a
stock-by-stock basis. For example, Kuoni Reisen AG is a high-end, Swiss-based
travel and tour company catering to Europeans looking to travel outside the
Continent. Several years ago, the company offered a good product but was not
very cost conscious, and an ancillary business of arranging tours within
Europe was floundering. A new management was able to restructure the business
and turn around the nonprofitable units. As the company has realized its
value, we have taken profits and reduced the fund's position.
[GRAPHIC OMITTED: horizontal bar chart COUNTRY ALLOCATION]
COUNTRY ALLOCATION*
Switerland 15.7%
France 13.0%
Japan 8.9%
United Kingdom 7.5%
Netherlands 6.9%
Footnote reads:
*Based on net assets as of 8/31/97. Holdings will vary over time.
Another holding that benefited from this trend is the well-known Irish crystal
and ceramics manufacturer, Waterford Wedgwood. This company underwent a
management change several years ago and has been able to restructure
successfully. Most of the major development recently has been in the Wedgwood
china business. This company has also benefited from an increasing worldwide
demand for high-end products. While these stocks, along with others discussed
in this report, were viewed favorably at the end of the period, all portfolio
holdings are subject to review and adjustment in accordance with the fund's
investment strategy and may vary in the future.
*REGIONAL SHIFTS MIRROR MACRO DEVELOPMENTS
In terms of the world's major regions, a large portion of the fund's holdings
are in Continental Europe. The fund's U.K. positions were decreased; interest
rates have risen and the United Kingdom is further along in the business cycle
than the Continent. The fund remained underweighted in Japan relative to its
benchmark, as that country's nascent economic recovery showed signs of
faltering. Shareholders may also notice a reduction in the fund's weighting in
Asia (excluding Japan). Export growth has slowed in that region and much of
the Southeast Asian markets have spent the past few months mired in currency
devaluations.
*HIGHLIGHTING LEADING NICHE PLAYERS
Many international companies are leaders in a particular niche of a broader
industry. For example, the United States dominates technology, but there are
foreign firms that play an important role in areas within the rubric of
technology. In the semiconductor area, we targeted ASM Lithography (sold prior
to the end of the period) and BE Semiconductor of the Netherlands. In
Singapore, we owned stock in Venture Manufacturing, a maker of electronic
components and a major subcontractor to companies such as Hewlett Packard.
TOP 10 HOLDINGS
Scor (France)
Insurance and finance
BE Semiconductor Industries N.V. (the Netherlands)
Electronics and electrical equipment
Publicitas Holding S.A. (Switzerland)
Advertising
OMV AG (Austria)
Oil and gas
Smit International N.V. (the Netherlands)
Transportation
Avis Europe PLC 144A ADR (United Kingdom)
Automotive
SairGroup (Switzerland)
Transportation
National Bank of Canada (Canada)
Insurance and finance
Oerlikon-Buehrle Holding AG (Switzerland)
Conglomerates
Cae, Inc. (Canada)
Aerospace and defense
Footnote reads:
These holdings represent 20.30% of the fund's net assets as of 8/31/97.
Portfolio holdings will vary over time.
Another example is retailing. Many foreign firms are leaders in segments of
this industry, such as Circle K Japan Co. Ltd. The Japanese affiliate of the
Phoenix-based food store chain, The Circle K Corp., has embarked on an
aggressive expansion campaign in the past few years.
*POSITIVE OUTLOOK SEEN OVER NEAR TERM
Investors have enjoyed a particularly rewarding investment environment over
the past year in Europe. Barring any unforeseeable events, we see no reason
for our outlook for the region to change. Additionally we will be poised to
take advantage of any undervalued investments in the United Kingdom, should
opportunities present themselves. For Japan, investors may have to be more
patient, since the restructuring process in that country could move more
slowly than in Europe.
As markets become more competitive, successful stock picking will be even more
crucial than ever to the fund's success. Aiding us in our search for
undervalued companies is the fact that on a global basis small and midsize
stocks have underperformed larger stocks for some time. In this regard, we
will continue to search for small to midsize companies with reliable growth
potential whose stocks are selling at impressive valuations.
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 8/31/97, there is no guarantee the fund will continue to hold
these securities in the future. International investing has certain risks,
including currency fluctuations, economic instability and political
developments. The fund has all or a portion of its assets in small- to
medium-sized companies. Such investments increase the risk of greater price
fluctuations.
Performance summary
This section provides information about your fund's performance, which
should always be considered in light of its investment strategy. Putnam
International Voyager Fund is designed for investors seeking long-term
capital appreciation primarily through common stocks of
smaller-capitalization companies located outside the United States.
TOTAL RETURN FOR PERIODS ENDED 8/31/97
Class A Class B Class M
(inception date) (12/28/95) (10/30/96) (10/30/96)
NAV POP NAV CDSC NAV POP
- ------------------------------------------------------------------------------
1 year 24.44% 17.26% 23.63% 18.63% 23.85% 19.56%
- ------------------------------------------------------------------------------
Life of fund 38.64 30.65 37.08 33.08 37.48 32.66
Annual average 21.47 17.25 20.65 18.54 20.86 18.32
- ------------------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 8/31/97
MSCI Consumer
EAFE Index Price Index
- ------------------------------------------------------------------------------
1 year 9.05% 2.23%
- ------------------------------------------------------------------------------
Life of fund 10.89 4.76
Annual average 6.40 2.83
- ------------------------------------------------------------------------------
Returns for class A and class M shares reflect the current maximum initial
sales charges of 5.75% for class A shares and 3.50% for class M shares.
One-, five-, and ten-year (when available) and life-of-fund returns for
class B shares reflect the applicable contingent deferred sales charge
(CDSC), which is 5% in the first year, declines each year 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 costs
applicable to such shares. All returns assume reinvestment of
distributions at NAV and represent past performance; they do not guarantee
future results. Investment return and principal value will fluctuate so
that an investor's shares when redeemed may be worth more or less than
their original cost. Performance does not take into account any
adjustments for taxes on reinvested dividends. Performance data reflects
an expense limitation previously or currently in effect. Without the
expense limitation total returns would have been lower.
[GRAPHIC OMITTED: worm chart GROWTH OF A $10,000 INVESTMENT]
GROWTH OF A $10,000 INVESTMENT
Cumulative total return of a $10,000 investment since 12/28/95
Plot Points:
Date/year Fund at MSCI EAFE
POP Index CPI
12/28/95 9,425 10,000 10,000
2/28/96 9,778 10,075 10,091
5/31/96 10,554 10,393 10,202
8/31/96 10,499 10,168 10,248
11/30/96 11,164 10,743 10,333
2/28/97 11,642 10,401 10,398
5/31/97 12,628 11,177 10,430
8/31/97 13,065 11,089 10,476
Footnote reads:
Past performance is no assurance of future results. At the end of the
same time period, a $10,000 investment in the fund's class B shares
would have been valued at $13,708 and $13,308 with a redemption as
of 8/31/97; a $10,000 investment in the fund's class M shares would
have been valued at $13,748 ($13,266 at public offering price). See
first page of performance section for performance calculation method.
PRICE AND DISTRIBUTION INFORMATION
12 months ended 8/31/97
Class A Class B Class M
- ------------------------------------------------------------------------------
Distributions (number) 1 1 1
- ------------------------------------------------------------------------------
Income $0.068 $0.065 $0.065
- ------------------------------------------------------------------------------
Capital gains
- ------------------------------------------------------------------------------
Long term -- -- --
- ------------------------------------------------------------------------------
Short term 0.038 0.038 0.038
- ------------------------------------------------------------------------------
Total $0.106 $0.103 $0.103
- ------------------------------------------------------------------------------
Share value: NAV POP NAV NAV POP
- ------------------------------------------------------------------------------
8/31/96 $ 9.47 $10.05 -- -- --
- ------------------------------------------------------------------------------
10/30/96 -- -- $ 9.82 $ 9.82 $10.18
- ------------------------------------------------------------------------------
8/31/97 11.66 12.37 11.60 11.62 12.04
- ------------------------------------------------------------------------------
TOTAL RETURN FOR PERIODS ENDED 9/30/97
(most recent calendar quarter)
Class A Class B Class M
(inception date) (12/28/95) (10/30/96) (10/30/96)
NAV POP NAV CDSC NAV POP
- ------------------------------------------------------------------------------
1 year 27.90% 20.58% 27.00% 22.00% 27.34% 22.91%
- ------------------------------------------------------------------------------
Life of fund 46.25 37.82 44.52 40.52 44.93 39.85
Annual average 24.11 19.99 23.27 21.32 23.47 20.99
- ------------------------------------------------------------------------------
Performance data represent past results, do not reflect future
performance, and will differ for each share class. 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 M shares have a lower initial sales 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 maximum 5.75% 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 shares and assumes redemption at the end of the
period. Your fund's 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.
COMPARATIVE BENCHMARKS
Europe, Australia and the Far East (EAFE) component of the Morgan Stanley
Capital International World Index is an unmanaged list of international
equity securities, excluding U.S., with all values expressed in U.S.
dollars. Securities in the fund do not match those in the index and
performance of the fund will differ. It is not possible to invest directly
in an index.
Consumer Price Index (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
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Report of independent accountants
For the fiscal year ended August 31, 1997
To the Trustees and Shareholders of
Putnam International Voyager Fund
We have audited the accompanying statement of assets and liabilities of Putnam
International Voyager Fund (formerly Putnam Genesis Fund), including the
portfolio of investments owned, as of August 31, 1997, and the related
statement of operations for the year then ended, the statements of changes in
net assets and the financial highlights for each of the periods indicated
therein. These financial statements and financial highlights are the
responsibility of the fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of August 31, 1997, by correspondence with the custodian and brokers.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Putnam International Voyager Fund as of August 31, 1997, the results of its
operations for the year then ended, the changes in its net assets and the
financial highlights for each of the periods indicated therein, in conformity
with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
October 10, 1997
Portfolio of investments owned
August 31, 1997
<TABLE>
<CAPTION>
COMMON STOCKS (91.6%) *
NUMBER OF SHARES VALUE
<S> <C> <C> <C> <C>
Australia (1.2%)
- ------------------------------------------------------------------------------------------------------------
169,250 QBE Insurance Group Ltd. $ 913,691
Austria (4.6%)
- ------------------------------------------------------------------------------------------------------------
12,500 Boehler - Uddeholm AG 977,269
13,500 OMV AG 1,777,489
4,920 VA Technolgies AG 899,523
--------------
3,654,281
Brazil (0.7%)
- ------------------------------------------------------------------------------------------------------------
444,200 Centrais Electricas de Santa Catarina S.A. 541,112
Canada (5.2%)
- ------------------------------------------------------------------------------------------------------------
164,600 Cae, Inc. 1,263,052
21,400 Four Seasons Hotels, Inc. 754,350
100,018 National Bank of Canada 1,289,950
51,900 Tesma International, Inc. 777,808
--------------
4,085,160
China (0.2%)
- ------------------------------------------------------------------------------------------------------------
238,000 China Southern Airlines Co. Ltd. + 152,800
Finland (3.1%)
- ------------------------------------------------------------------------------------------------------------
17,700 Huhtamaki I Free 698,640
26,500 Orion-yhtyma 850,900
9,800 Sampo Insurance Co. A Shares 944,557
--------------
2,494,097
France (13.0%)
- ------------------------------------------------------------------------------------------------------------
18,100 Chargeurs S.A. 1,069,599
72,900 Compagnie des Machines Bull + 723,974
5,000 Equipments et Composants pour l'Automobile 778,070
18,300 Groupe Legris Industries S.A. 717,942
7,050 Imetal S.A. 981,353
9,700 M6 Metropole Television 955,351
18,536 Natexis Banque 1,095,364
7,800 NRJ S.A. 1,104,957
45,729 Scor 1,872,847
9,000 Sylea 797,768
2,430 Television Francaise 1 197,447
--------------
10,294,672
Germany (3.3%)
- ------------------------------------------------------------------------------------------------------------
14,090 Altana AG 1,054,025
27,332 SKW Trostberg AG 906,033
29,850 Tarkett AG 676,160
--------------
2,636,218
Hong Kong (2.6%)
- ------------------------------------------------------------------------------------------------------------
108,000 Guoco Group Ltd. 419,512
276,000 Johnson Electric Holdings Ltd. 619,744
436,000 National Mutual Asia Ltd. 354,472
232,000 Smartone Telecommunications + 625,732
--------------
2,019,460
India (--%)
- ------------------------------------------------------------------------------------------------------------
6,900 MAA Leafin & Capital Ltd. + 20,051
Ireland (2.5%)
- ------------------------------------------------------------------------------------------------------------
135,501 Greencore Group PLC 639,359
18,100 Ryanair Holdings, PLC ADR + 497,750
593,800 Waterford Wedgwood PLC 810,594
--------------
1,947,703
Italy (2.6%)
- ------------------------------------------------------------------------------------------------------------
19,200 Gucci Group N.V. 1,168,800
89,400 Marzotto & Figli SPA 865,445
--------------
2,034,245
Japan (8.9%)
- ------------------------------------------------------------------------------------------------------------
74,000 Apic Yamada Corp. 1,201,656
46,000 Canon Sales Co., Inc. 929,908
40 Circle K Japan Co. Ltd. 2,002
34,000 Disco Corp. 1,109,859
29,000 Fuji Machine Manufacturing 997,100
60,000 Onward Kashiyama Co. Ltd. 919,635
80 Paris Miki, Inc. 1,551
2,700 Santen Pharmaceutical Co. Ltd. 46,976
21,500 Shinki Co. Ltd. 493,413
16,000 Taiyo Ink Manufacturing 536,868
47,000 Yamatake-Honeywell 813,836
--------------
7,052,804
Netherlands (6.9%)
- ------------------------------------------------------------------------------------------------------------
106,100 BE Semiconductor Industries N.V. + 1,843,488
34,300 Brunel International N.V. + 708,086
2,700 Brunel International N,V. 144A + 55,739
25,100 Samas Groep N.V. 1,122,684
63,600 Smit International N.V. 1,750,602
--------------
5,480,599
Norway (1.1%)
- ------------------------------------------------------------------------------------------------------------
30,000 Union Bank 905,570
Philippines (0.5%)
- ------------------------------------------------------------------------------------------------------------
2,714,000 Belle Corp. + 432,797
Poland (0.9%)
- ------------------------------------------------------------------------------------------------------------
9,500 Bank Handlowy 144A + 119,775
45,100 Bank Handlowy W Warszawie + 559,240
--------------
679,015
Portugal (1.4%)
- ------------------------------------------------------------------------------------------------------------
61,300 Banco Totta & Acores S.A. B Shares 1,098,579
Singapore (1.4%)
- ------------------------------------------------------------------------------------------------------------
171,000 Clipsal Industries (Holdings) Ltd. 564,300
151,000 Venture Manufacturing Ltd. 548,547
--------------
1,112,847
Spain (4.2%)
- ------------------------------------------------------------------------------------------------------------
9,100 Banco Pastor S.A. 637,530
20,000 Cementos Portland, S.A. 868,199
42,800 Centros Comerciales Continente, S.A. 892,542
196,800 Corp. Financiera Reunida, S.A. + 948,371
--------------
3,346,642
Sweden (4.1%)
- ------------------------------------------------------------------------------------------------------------
92,600 Avesta Sheffield AB 873,132
43,500 Seco Tools AB B Shares 1,233,246
54,400 Svedala Industri AB 1,170,470
--------------
3,276,848
Switzerland (15.7%)
- ------------------------------------------------------------------------------------------------------------
8,300 AGIE Charmilles Holding AG + 723,675
819 Julius Baer Holding AG 1,153,521
60 Baloise Holding Ltd. + 155,734
10,500 Ciba Specialty Chemicals AG + 904,930
573 Georg Fischer AG 790,901
1,600 Forbo Holding AG 662,106
277 Kuoni Reisen AG 1,137,911
11,150 Oerlikon-Buehrle Holding AG 1,286,251
8,303 Publicitas Holding S.A. 1,793,136
1,330 SairGroup + 1,572,629
370 SIG Schweizerische Industrie-Gesellschaft Holding AG 1,067,069
900 Sulzer Medica AG + 233,602
568 Verwaltungs-und Privat-Bank AG 978,667
--------------
12,460,132
United Kingdom (7.5%)
- ------------------------------------------------------------------------------------------------------------
709,809 Avis Europe PLC 144A ADR + 1,632,341
9,900 Cookson Group PLC 40,564
107,500 Electrocomponents PLC 803,454
186,500 IMI PLC 1,032,966
112,500 Molins PLC 1,088,608
41,300 Ramco Energy PLC ADR 758,888
143,900 Securicor Group PLC Class A 617,572
--------------
5,974,393
- ------------------------------------------------------------------------------------------------------------
Total Common Stocks (cost $71,388,390) $ 72,613,716
- ------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS (1.2%) * (cost $859,429)
NUMBER OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------
700 Hugo Boss AG 2.55% pfd. (Germany) $ 928,177
SHORT-TERM INVESTMENTS (6.6%) * (cost $5,195,402)
PRINCIPAL AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------
$ 5,193,000 Interest in $453,719,000 joint repurchase agreement
dated August 29, 1997, with SBC Warburg due
September 2, 1997, with respect to various U.S. Treasury
obligations -- maturity value of $5,196,202 for an
effective yield of 5.55% $ 5,195,402
- ------------------------------------------------------------------------------------------------------------
Total Investments (cost $77,443,221) *** $ 78,737,295
- ------------------------------------------------------------------------------------------------------------
* Percentages indicated are based on net assets of $79,235,358
*** The aggregate identified cost on a tax basis is $77,467,391,
resulting in gross unrealized appreciation and depreciation of
$4,633,253 and $3,363,349, respectively, or net unrealized appreciation
of $1,269,904.
+ 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
Depository Receipts, representing ownership of foreign securities on
deposit with a domestic custodian bank.
The fund had the following industry group concentrations greater
than 10% at August 31, 1997 (as a percentage of net assets):
Insurance and Finance 17.6%
Building and Construction 10.8
Electronics and Electrical Equipment 10.4
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Forward Currency Contracts to Sell at August 31, 1997
Market Aggregate Face Delivery Unrealized
Value Value Date Depreciation
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
French Francs $3,681,496 $3,586,430 2/11/98 $(95,066)
- ----------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
August 31, 1997
<S> <C>
Assets
- ---------------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $77,443,221) (Note 1) $78,737,295
- ---------------------------------------------------------------------------------------------------
Cash 46,164
- ---------------------------------------------------------------------------------------------------
Dividends, interest and other receivables 41,905
- ---------------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 1,254,564
- ---------------------------------------------------------------------------------------------------
Receivable for securities sold 11,703
- ---------------------------------------------------------------------------------------------------
Unamortized organization expenses (Note 1) 3,270
- ---------------------------------------------------------------------------------------------------
Total assets 80,094,901
Liabilities
- ---------------------------------------------------------------------------------------------------
Payable for securities purchased 295,236
- ---------------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 34,333
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 287,151
- ---------------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 41,385
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 665
- ---------------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 852
- ---------------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 48,320
- ---------------------------------------------------------------------------------------------------
Payable for organization expenses (Note 1) 3,662
- ---------------------------------------------------------------------------------------------------
Payable for open forward currency contracts 95,066
- ---------------------------------------------------------------------------------------------------
Other accrued expenses 52,873
- ---------------------------------------------------------------------------------------------------
Total liabilities 859,543
- ---------------------------------------------------------------------------------------------------
Net assets $79,235,358
Represented by
- ---------------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $72,996,651
- ---------------------------------------------------------------------------------------------------
Undistributed net investment income (Note 1) 236,529
- ---------------------------------------------------------------------------------------------------
Accumulated net realized gain on investment and foreign
currency transactions (Note 1) 4,804,683
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and assets
and liabilities in foreign currencies 1,197,495
- ---------------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $79,235,358
Computation of net asset value and offering price
- ---------------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($40,686,875 divided by 3,488,959 shares) $11.66
- ---------------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $11.66)* $12.37
- ---------------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($34,462,574 divided by 2,970,646 shares)** $11.60
- ---------------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($4,085,909 divided by 351,551 shares) $11.62
- ---------------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $11.62)* $12.04
- ---------------------------------------------------------------------------------------------------
* On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales,
the offering price is reduced.
** Redemption price per share is equal to net asset value less any applicable contingent deferred
sales charge.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
Year ended August 31, 1997
<S> <C>
Investment income:
- --------------------------------------------------------------------------------------------------
Dividends (net of foreign tax of $76,551) $ 541,770
- --------------------------------------------------------------------------------------------------
Interest 180,909
- --------------------------------------------------------------------------------------------------
Total investment income 722,679
Expenses:
- --------------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 400,173
- --------------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 177,790
- --------------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 3,735
- --------------------------------------------------------------------------------------------------
Administrative services (Note 2) 3,494
- --------------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 45,045
- --------------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 131,534
- --------------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 12,546
- --------------------------------------------------------------------------------------------------
Amortization of organization expenses (Note 1) 236
- --------------------------------------------------------------------------------------------------
Reports to shareholders 19,493
- --------------------------------------------------------------------------------------------------
Registration fees 43,235
- --------------------------------------------------------------------------------------------------
Auditing 18,343
- --------------------------------------------------------------------------------------------------
Legal 5,763
- --------------------------------------------------------------------------------------------------
Postage 4,885
- --------------------------------------------------------------------------------------------------
Other 1,438
- --------------------------------------------------------------------------------------------------
Fees waived by Manager (Note 2) (61,415)
- --------------------------------------------------------------------------------------------------
Total expenses 806,295
- --------------------------------------------------------------------------------------------------
Expense reduction (Note 2) (28,558)
- --------------------------------------------------------------------------------------------------
Net expenses 777,737
- --------------------------------------------------------------------------------------------------
Net investment loss (55,058)
- --------------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 4,833,537
- --------------------------------------------------------------------------------------------------
Net realized gain on foreign currency transactions 317,456
- --------------------------------------------------------------------------------------------------
Net unrealized depreciation of assets and liabilities in
foreign currencies during the year (91,769)
- --------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments during the year 1,137,257
- --------------------------------------------------------------------------------------------------
Net gain on investments 6,196,481
- --------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $6,141,423
- --------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
For the period
Dec. 28, 1995
(commencement
Year ended of operations)
August 31 to August 31
1997 1996
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets
- ----------------------------------------------------------------------------------------------------------------------
Operations:
- ----------------------------------------------------------------------------------------------------------------------
Net investment income (loss) $ (55,058) $ 10,136
- ----------------------------------------------------------------------------------------------------------------------
Net realized gain on investments and foreign
currency transactions 5,150,993 75,275
- ----------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and assets
and liabilities in foreign currencies 1,045,488 152,007
- ----------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 6,141,423 237,418
- ----------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ----------------------------------------------------------------------------------------------------------------------
From net investment income
Class A (61,397) --
- ----------------------------------------------------------------------------------------------------------------------
Class B (25,675) --
- ----------------------------------------------------------------------------------------------------------------------
Class M (3,552) --
- ----------------------------------------------------------------------------------------------------------------------
From net realized gain on investments
Class A (33,131) --
- ----------------------------------------------------------------------------------------------------------------------
Class B (14,909) --
- ----------------------------------------------------------------------------------------------------------------------
Class M (1,855) --
- ----------------------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 70,805,726 191,310
- ----------------------------------------------------------------------------------------------------------------------
Total increase in net assets 76,806,630 428,728
Net assets
- ----------------------------------------------------------------------------------------------------------------------
Beginning of year (Note 5) 2,428,728 2,000,000
- ----------------------------------------------------------------------------------------------------------------------
End of year (including undistributed net investment
income of $236,529 and $62,896, respectively) $79,235,358 $2,428,728
- ----------------------------------------------------------------------------------------------------------------------
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
- ----------------------------------------------------------------------------------------------------------------------
For the Period
Per-share Year ended Dec. 28, 1995+
operating performance August 31 to Aug. 31
- ----------------------------------------------------------------------------------------------------------------------
1997 1996
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value,
beginning of period $9.47 $8.50
- ----------------------------------------------------------------------------------------------------------------------
Investment operations
- ----------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (c)(d) .02 .04
- ----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 2.28 .93
- ----------------------------------------------------------------------------------------------------------------------
Total from
investment operations 2.30 .97
- ----------------------------------------------------------------------------------------------------------------------
Less distributions:
- ----------------------------------------------------------------------------------------------------------------------
From net
investment income (.07) --
- ----------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.04) --
- ----------------------------------------------------------------------------------------------------------------------
Total distributions (.11) --
- ----------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $11.66 $9.47
- ----------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ----------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 24.44 11.41*
- ----------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $40,687 $2,429
- ----------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b)(c) 2.10 1.26*
- ----------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)(c) .15 .44*
- ----------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 126.65 55.87*
- ----------------------------------------------------------------------------------------------------------------------
Average commission
rate paid $.0194 $.0181
- ----------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) Includes amounts paid through expense offset and brokerage service arrangements (Note 2).
(c) Reflects an expense limitation in effect during the period (Note 2). As a result of such limitation, expense
for class A reflect a reduction of approximately $0.08 per share for the year ended August 31, 1996.
Expenses for the period ended August 31, 1997 reflect a reduction of $0.02, $0.01, and $0.02 for class A,
class B, and class M, respectively.
(d) Per share net investment income (loss) has been determined on the basis of the weighted average number of
shares outstanding during the period.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS B
- ---------------------------------------------------------------------------------------------------------
For the period
Per-share October 30,1996+
operating performance to August 31
- ---------------------------------------------------------------------------------------------------------
1997
- ---------------------------------------------------------------------------------------------------------
<S> <C>
Net asset value,
beginning of period $9.82
- ---------------------------------------------------------------------------------------------------------
Investment operations
- ---------------------------------------------------------------------------------------------------------
Net investment income (loss) (c)(d) (.06)
- ---------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 1.94
- ---------------------------------------------------------------------------------------------------------
Total from
investment operations 1.88
- ---------------------------------------------------------------------------------------------------------
Less distributions:
- ---------------------------------------------------------------------------------------------------------
From net
investment income (.06)
- ---------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.04)
- ---------------------------------------------------------------------------------------------------------
Total distributions (.10)
- ---------------------------------------------------------------------------------------------------------
Net asset value,
end of period $11.60
- ---------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ---------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 19.35*
- ---------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $34,463
- ---------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) 2.39*
- ---------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) (.50)*
- ---------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 126.65
- ---------------------------------------------------------------------------------------------------------
Average commission
rate paid $.0194
- ---------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) Includes amounts paid through expense offset and brokerage service arrangements (Note 2).
(c) Reflects an expense limitation in effect during the period (Note 2). As a result of such limitation, expense
for class A reflect a reduction of approximately $0.08 per share for the year ended August 31, 1996.
Expenses for the period ended August 31, 1997 reflect a reduction of $0.02, $0.01, and $0.02 for class A,
class B, and class M, respectively.
(d) Per share net investment income (loss) has been determined on the basis of the weighted average number of
shares outstanding during the period.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS M
- --------------------------------------------------------------------------------------------------------------
For the period
Per-share October 30, 1996+
operating performance to August 31
- --------------------------------------------------------------------------------------------------------------
1997
- --------------------------------------------------------------------------------------------------------------
<S> <C>
Net asset value,
beginning of period $9.82
- --------------------------------------------------------------------------------------------------------------
Investment operations
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) (c)(d) (.03)
- --------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 1.93
- --------------------------------------------------------------------------------------------------------------
Total from
investment operations 1.90
- --------------------------------------------------------------------------------------------------------------
Less distributions:
- --------------------------------------------------------------------------------------------------------------
From net
investment income (.06)
- --------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.04)
- --------------------------------------------------------------------------------------------------------------
Total distributions (.10)
- --------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $11.62
- --------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- --------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 19.56*
- --------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $4,086
- --------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) 2.18*
- --------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) (.26)*
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 126.65
- --------------------------------------------------------------------------------------------------------------
Average commission
rate paid $.0194
- --------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) Includes amounts paid through expense offset and brokerage service arrangements (Note 2).
(c) Reflects an expense limitation in effect during the period (Note 2). As a result of such limitation, expense
for class A reflect a reduction of approximately $0.08 per share for the year ended August 31, 1996.
Expenses for the period ended August 31, 1997 reflect a reduction of $0.02, $0.01, and $0.02 for class A,
class B, and class M, respectively.
(d) Per share net investment income (loss) has been determined on the basis of the weighted average number of
shares outstanding during the period.
</TABLE>
Notes to financial statements
August 31, 1997
Note 1
Significant accounting policies
Putnam International Voyager Fund formerly Putnam Genesis Fund (the "fund") is
one of a series of Putnam Investment Funds (the "trust") which is registered
under the Investment Company Act of 1940, as amended, as a diversified,
open-ended management investment company. The fund seeks long-term capital
appreciation by investing primarily in equity securities of small-and
mid-capitalization companies whose principle place of business is located
outside of the United States or whose securities are principally traded on
foreign markets.
The fund offers class A, class B and class M shares. The fund began offering
class B and M shares on October 30, 1996. 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 M shares are sold with a maximum front-end
sales charge of 3.50% and pay an ongoing distribution fee that is lower than
class B shares and higher than class A 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 the
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. Actual
results could differ from those estimates.
A) Security valuation Investments for which market quotations are readily
available are stated at market value, which is determined using the last
reported sale price, or if no sales are reported -- as in the case of some
securities traded over-the-counter -- the last reported bid price. Short-term
investments having remaining maturities of 60 days or less are stated at
amortized cost, which approximates market value following procedures approved
by the Trustees. Foreign securities quoted in foreign currencies are
translated into U.S. dollars at the current exchange rate.
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. Putnam Management is responsible
for determining that the value of these underlying securities is at all times
at least equal to the resale price, including accrued interest.
D) Security transactions and related investment income Security transactions
are accounted for on the trade date (date the order to buy or sell is
executed). Interest income is recorded on the accrual basis. Dividend income
is recorded on the ex-dividend date except that certain dividends from foreign
securities are recorded as soon as the fund is informed of the ex-dividend
date.
E) 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 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.
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 forward currency exchange rates
supplied by a quotation service. The market value of the contract will
fluctuate with changes in currency exchange rates. The contract is "marked to
market" daily and the change in market value is recorded as an unrealized gain
or loss. When the contract is closed, the fund records a realized gain or loss
equal to the difference between the value of the contract at the time it was
opened and the value at the time it was closed. The fund could be exposed to
risk if the value of the currency changes unfavorably, if the counterparties
to the contracts are unable to meet the terms of their contracts or if the
fund is unable to enter into a closing position.
G) Federal taxes It is the policy of the fund to distribute all of its taxable
income within the prescribed time and otherwise comply with the provisions of
the Internal Revenue Code applicable to regulated investment companies. It is
also the intention of the fund to distribute an amount sufficient to avoid
imposition of any excise tax under Section 4982 of the Internal Revenue Code
of 1986, as amended. Therefore, no provision has been made for federal taxes
on income, capital gains or unrealized appreciation on securities held nor for
excise tax on income and capital gains.
H) Distributions to shareholders Distributions to shareholders from net
investment income are recorded by the fund on the ex-dividend date. Capital
gain distributions, if any, are recorded on the ex-dividend date and paid at
least annually. The amount and character of income and gains to be distributed
are determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences include treatment
of organization expenses, realized gains and losses on forward foreign
currency contracts, and realized gains on passive foreign investment
companies. Reclassifications are made to the fund's capital accounts to
reflect income and gains available for distribution (or available capital loss
carryovers) under income tax regulations. For the year ended August 31, 1997,
the fund reclassified $319,315 to increase undistributed net investment income
and $19,517 to increase paid-in-capital, with a decrease to accumulated net
realized gains on investments of $338,832. The calculation of net investment
income per share in the financial highlights table excludes these adjustments.
I) 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.
J) 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 $3,662. 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: 1.20% of the first $500 million of
average net assets, 1.10% of the next $500 million, 1.05% of the next $500
million, 1.00% of the next $5 billion, 0.975% of the next $5 billion, 0.955%
of the next $5 billion, 0.94% of the next $5 billion, and 0.93% thereafter.
Putnam Management has agreed to limit its compensation (and, to the extent
necessary, bear other expenses) through November 30, 1997, to the extent that
expenses of the fund (exclusive of brokerage, interest, taxes, deferred
organizational and extraordinary expense, credits from Putnam Fiduciary Trust
Company (PFTC), a wholly-owned subsidiary of Putnam Investments, Inc. and
payments under the Trust's distribution plan) would exceed an annual rate of
1.85% of the fund's average net assets.
The fund reimburses Putnam Management for the compensation and related
expenses of certain officers of the fund and their staff who provide
administrative services to the fund. The aggregate amount of all such
reimbursements is determined annually by the Trustees.
Custodial functions for the fund's assets are provided by PFTC. Investor
servicing agent functions are provided by Putnam Investor Services, a division
of PFTC.
For the year ended August 31, 1997, fund expenses were reduced by $28,558
under expense offset arrangements with PFTC and brokerage service
arrangements. Investor servicing and custodian fees reported in the Statement
of operations exclude these credits. The fund could have invested a portion of
the assets utilized in connection with the expense offset arrangements in an
income producing asset if it had not entered into such arrangements.
Trustees of the fund receive an annual Trustees fee of $737 and an additional
fee for each Trustee's meeting attended. Trustees who are not interested
persons of Putnam Management and who serve on committees of the Trustees
receive additional fees for attendance at certain committee meetings.
The fund has adopted a Trustee Fee Deferral Plan (the "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 in the fund and are
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
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 and class M shares pursuant to Rule 12b-1 under the
Investment Company Act of 1940. The purpose of the Plans is to compensate
Putnam Mutual Funds Corp., a wholly-owned subsidiary of Putnam Investments
Inc., for services provided and expenses incurred by it in distributing shares
of the fund. The Plans provide for payments by the fund to Putnam Mutual Funds
Corp. at an annual rate up to 0.35%, 1.00% and 1.00% of the average net assets
attributable to class A, class B and class M shares, respectively. The
Trustees have approved payment by the fund at an annual rate of 0.25%, 1.00%
and 0.75% of the average net assets attributable to class A, class B and class
M shares respectively.
For the year ended August 31, 1997, Putnam Mutual Funds Corp., acting as
underwriter received net commissions of $100,075 and $7,722 from the sale of
class A and class M shares, respectively and $23,795 in contingent deferred
sales charges from redemptions of class B shares. A deferred sales charge of
up to 1% is assessed on certain redemptions of class A shares. For the year
ended August 31, 1997, Putnam Mutual Funds Corp., acting as underwriter
received no monies on class A redemptions.
Note 3
Purchases and sales of securities
During the year ended August 31, 1997, purchases and sales of investment
securities other than short-term investments aggregated $104,655,973 and
$39,434,752, 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 August 31, 1997, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Year ended
August 31, 1997
- ------------------------------------------------------------
Class A Shares Amount
- ------------------------------------------------------------
Shares sold 5,364,541 $58,632,380
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 8,877 88,147
- ------------------------------------------------------------
5,373,418 58,720,527
Shares
repurchased (2,140,948) (23,963,526)
- ------------------------------------------------------------
Net increase 3,232,470 $34,757,001
- ------------------------------------------------------------
For the period
December 28, 1995
(commencement of
operations) to
August 31, 1996
- ------------------------------------------------------------
Class A Shares Amount
- ------------------------------------------------------------
Shares sold 21,574 $194,865
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- ------------------------------------------------------------
21,574 194,865
Shares
repurchased (379) (3,555)
- ------------------------------------------------------------
Net increase 21,195 $191,310
- ------------------------------------------------------------
For the period
October 30, 1996
(commencement of
operations) to
August 31, 1997
- ------------------------------------------------------------
Class B Shares Amount
- ------------------------------------------------------------
Shares sold 3,287,600 $35,748,997
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 3,637 36,113
- ------------------------------------------------------------
3,291,237 35,785,110
Shares
repurchased (320,591) (3,515,037)
- ------------------------------------------------------------
Net increase 2,970,646 $32,270,073
- ------------------------------------------------------------
For the period
October 30, 1996
(commencement of
operations) to
August 31, 1997
- ------------------------------------------------------------
Class M Shares Amount
- ------------------------------------------------------------
Shares sold 379,922 $4,076,595
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 570 5,665
- ------------------------------------------------------------
380,492 4,082,260
Shares
repurchased (28,941) (303,608)
- ------------------------------------------------------------
Net increase 351,551 $3,778,652
- ------------------------------------------------------------
Note 5
Initial capitalization and offering of shares
The fund was established as a Massachusetts business trust on October
31, 1994. During the period October 31, 1994 to December 28, 1995 the fund had
no operations other than those related to organizational matters, including
the initial capital contribution of $2,000,000, less $3,662 of initial
offering expenses, and the issuance of 235,294 shares to Putnam Mutual Funds
Corp., a wholly-owned subsidiary of Putnam Investments Inc., on December
28, 1995.
Federal tax information
(Unaudited)
Pursuant to section 852 of the Internal Revenue Code, the fund hereby
designates $87,320 (or if different, the amount necessary to offset net
capital gain earned by the fund) as capital gain dividends for its
taxable year ended August 31, 1997.
For the period, interest and dividends from foreign countries were
$598,548 or $.088 per share (for all share classes). Taxes paid to
foreign countries were $76,551 or $.011 per share (for all share classes).
The fund designated .37% of the distributions from net investment income as
qualifying for the dividends received deduction for corporations.
The Form 1099 you receive in January 1998 will show the tax status of all
distributions paid to your account in calendar 1997.
PUTNAM GROWTH FUNDS
Asia Pacific Growth Fund
Capital Appreciation Fund
Diversified Equity Trust
Europe Growth Fund
Global Growth Fund
Global Natural Resources Fund
Growth Opportunities Fund
Health Sciences Trust
International Growth Fund *
International New Opportunities Fund
Investors Fund
New Opportunities Fund +
OTC & Emerging Growth Fund [DBL. DAGGER]
Vista Fund
Voyager Fund
Voyager Fund II
PUTNAM GROWTH
AND INCOME FUNDS
Balanced Retirement Fund
Convertible Income-Growth Trust
Equity Income Fund
The George Putnam Fund of Boston
The Putnam Fund for Growth and Income
Growth and Income Fund II
International Growth and Income Fund
New Value Fund
Utilities Growth and Income Fund
PUTNAM INCOME FUNDS
American Government Income Fund
Diversified Income Trust
Diversified Income Trust II
Federal Income Trust
Global Governmental Income Trust
High Yield Advantage Fund
High Yield Total Return Fund
High Yield Trust +
Income Fund
Money Market Fund **
Intermediate U.S. Government
Income Fund
Preferred Income Fund
U.S. Government Income Trust
PUTNAM TAX-FREE
INCOME FUNDS
Municipal Income Fund
Tax Exempt Income Fund
Tax Exempt Money Market Fund**
Tax-Free High Yield Fund
Tax-Free Insured Fund
State tax-free income funds [SECTION MARK]
Arizona, California, Florida, Massachusetts, Michigan, Minnesota, New
Jersey, New York, Ohio and Pennsylvania
State tax-free money market funds [SECTION MARK]
California, New York
LIFESTAGESM FUNDS
Putnam Asset Allocation Funds--three investment portfolios that spread
your money across a variety of stocks, bonds, and money market
investments.
The three portfolios:
Asset Allocation: Balanced Portfolio
Asset Allocation: Conservative Portfolio
Asset Allocation: Growth Portfolio
* Formerly Overseas Growth Fund
+ Closed to new investors. Some exceptions may apply. Contact
Putnam for details.
[DBL. DAGGER] Formerly OTC Emerging Growth Fund
[SECTION MARK] Not available in all states.
** An investment in a money market fund is neither insured nor
guaranteed by the U.S. government. These funds are managed
to maintain a price of $1.00 per share, although there is
no assurance that this price will be maintained in the future.
Please call your financial advisor or Putnam at 1-800-225-1581
to obtain a prospectus for any Putnam fund. It contains more
complete information, including charges and expenses. Please
read it carefully before you invest or send money.
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
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
TRUSTEES
George Putnam, Chairman
William F. Pounds, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
John A. Hill
Ronald J. Jackson
Elizabeth T. Kennan
Lawrence J. Lasser
Robert E. Patterson
Donald S. Perkins
George Putnam, III
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
Ian C. Ferguson
Vice President
Brett C. Browchuk
Vice President
Justin M. Scott
Vice President and Fund Manager
Omid Kamshad
Vice President and Fund Manager
Joshua Byrne
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 International
Voyager Fund. It may also be used as sales literature when preceded or
accompanied by the current prospectus, which gives details of sales charges,
investment objectives, and operating policies of the fund, and the most recent
copy of Putnam's Quarterly Performance Summary. For more information or to
request a prospectus, call toll free: 1-800-225-1581. You can also learn more
at Putnam Investments' website: http://www.putnaminv.com.
Shares of mutual funds are not deposits or obligations of, or guaranteed or
endorsed by, any financial institution; are not insured by the Federal Deposit
Insurance Corporation (FDIC), the Federal Reserve Board, or any other agency;
and involve risk, including the possible loss of the principal amount
invested.
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PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
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Bulk Rate
U.S. Postage
PAID
Putnam
Investments
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36561-ANO11 2AZ/2CI/2CJ 10/97
