Putnam
International
Fund
SEMIANNUAL REPORT
February 28, 1998
[LOGO: BOSTON * LONDON * TOKYO]
The following report contains a list of your fund's portfolio holdings and
complete financial statements for the six months ended 2/28/98. Additional
details, including fund strategy, performance, and manager's outlook, will
be provided in the annual report, which will cover the 12 months ended
8/31/98.
Portfolio of investments owned
February 28, 1998 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (99.6%) *
NUMBER OF SHARES VALUE
Australia (1.4%)
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
10,164 Goodman Fielder Ltd. $ 17,537
1,000 Rio Tinto Ltd. 13,097
4,000 Westpac Banking Corp. 27,661
--------------
58,295
Austria (0.7%)
- ------------------------------------------------------------------------------------------------------------
200 VA Technolgies AG 27,622
Belgium (0.6%)
- ------------------------------------------------------------------------------------------------------------
100 Electrabel S.A. 24,273
Denmark (0.3%)
- ------------------------------------------------------------------------------------------------------------
200 Danisco A/S 12,531
Finland (1.0%)
- ------------------------------------------------------------------------------------------------------------
400 Oy Nokia AB Class A 40,058
France (8.2%)
- ------------------------------------------------------------------------------------------------------------
200 Cie Financiere de Paribas 11,414
200 Compagnie Generale des Eaux 31,477
600 Elf Aquitaine S.A. 68,310
100 L'OREAL 45,047
400 Lafarge Bearer 29,525
1,414 Michelin Corp. Class B 87,576
103 Societe Generale 15,534
400 Total Corp. ADR 22,125
200 Total Corp. Class B 21,948
--------------
332,956
Germany (10.3%)
- ------------------------------------------------------------------------------------------------------------
2,000 Bayer AG 84,298
100 Bayerische Motoren Werke (BMW) AG 100,826
1,000 Deutsche Bank AG 68,678
2,500 Deutsche Telekom AG 50,482
100 Mannesmann AG 60,055
800 Veba AG 53,664
--------------
418,003
Hong Kong (1.7%)
- ------------------------------------------------------------------------------------------------------------
6,000 Amoy Properties Ltd. 5,076
2,000 Dao Heng Holdings 5,735
1,000 Guoco Group Ltd. 2,545
2,000 Hong Kong and China Gas Co., Ltd. 3,591
3,000 Hutchison Whampoa Ltd. 21,215
4,000 Sun Hung Kai Properties Ltd. 29,966
--------------
68,128
Ireland (3.4%)
- ------------------------------------------------------------------------------------------------------------
4,261 Allied Irish Banks PLC 55,468
2,162 Bank of Ireland 41,411
1,024 CRH PLC 12,562
6,000 Greencore Group PLC 30,015
--------------
139,456
Italy (2.4%)
- ------------------------------------------------------------------------------------------------------------
12,800 Ente Nazionale Idrocarburi (ENI) SPA 74,863
5,000 Telecom Italia Mobile SPA 22,905
--------------
97,768
Japan (23.6%)
- ------------------------------------------------------------------------------------------------------------
3,000 Bridgestone Corp. 69,258
3,000 Canon, Inc. 68,782
2,000 Dai Nippon Printing Co., Ltd. 34,113
2,000 Fuji Photo Film Co. 78,540
1,000 Hirose Electric Co., Ltd. 52,757
1,000 Ito-Yokado Co., Ltd. 54,740
1,000 KAO Corp. 13,566
1,000 Kurita Water Industries Ltd. 14,597
1,000 Matsushita Electric Works Ltd. 9,996
7,000 Mitsui & Co. Ltd. 45,038
1,000 Murata Manufacturing Co., Ltd. 31,813
2,000 Omron Tateisi Electronics 32,368
1,000 Onward Kashiyama Co., Ltd. 14,280
1,000 Promise Co., Ltd. 56,010
1,000 Ricoh Co., Ltd. 10,710
1,000 Rohm Co., Ltd. 99,167
1,000 Sankyo Co., Ltd. 26,894
1,000 Sony Corp. 90,440
1,000 Tokyo Electron Ltd. 36,017
2,000 Toyota Motor Corp. 55,375
1,000 Yamanouchi Pharmaceutical Co., Ltd. 24,355
3,000 Yamato Transport Co., Ltd. 37,842
--------------
956,658
Netherlands (5.3%)
- ------------------------------------------------------------------------------------------------------------
2,876 ABN AMRO Holding N.V. 63,827
200 Akzo-Nobel N.V. 40,602
709 Internationale Nederlanden Groep (ING) 37,535
600 Philips Electronics N.V. 46,634
400 Vendex International N.V. 25,204
--------------
213,802
New Zealand (0.2%)
- ------------------------------------------------------------------------------------------------------------
1,500 Telecom Corp. of New Zealand Ltd. 7,189
Norway (0.3%)
- ------------------------------------------------------------------------------------------------------------
1,000 Christiana Bank & Trust 4,263
500 Saga Petroleum ASA Class B 7,458
--------------
11,721
Portugal (0.6%)
- ------------------------------------------------------------------------------------------------------------
500 Portugal Telecom S.A. 26,238
Spain (0.5%)
- ------------------------------------------------------------------------------------------------------------
400 Banco de Bilbao Vizcaya (BBV) 18,293
Sweden (5.8%)
- ------------------------------------------------------------------------------------------------------------
2,000 Astra AB 40,372
300 Electrolux AB 22,874
1,000 Pharmacia & Upjohn, Inc. ADS 40,497
1,000 Sandvik AB Class A 28,248
500 Skandia Forsakrings AB 28,248
1,300 Svenska Cellulosa AB (SCA) Class B 29,573
1,000 Telefonaktiebolaget LM Ericsson Class B 45,497
--------------
235,309
Switzerland (10.7%)
- ------------------------------------------------------------------------------------------------------------
40 ABB AG Besrer 54,645
30 Julius Baer Holdings AG 69,365
60 Nestle S.A. 105,328
55 Novartis AG 100,570
30 United Bank of Switzerland (UBS) Bearer 46,844
100 Zurich Insurance 54,645
--------------
431,397
United Kingdom (22.6%)
- ------------------------------------------------------------------------------------------------------------
8,195 B A T Industries PLC 81,685
7,050 British Petroleum Co. PLC 97,173
3,500 Burmah Castrol PLC 60,216
9,000 General Electric Co. PLC 58,769
3,289 HSBC Holdings PLC (75P) 100,946
800 HSBC Holdings PLC 23,146
3,000 Molins PLC 15,889
3,000 Rio Tinto PLC 40,462
8,012 Scottish Power PLC 68,263
9,000 Securicor Group PLC Class A 53,736
8,600 Shell Transportation & Trading 61,461
4,000 Smiths Industries PLC 59,805
5,000 Tomkins PLC 28,866
3,000 Unilever PLC 27,139
15,275 Vodafone Group PLC 135,678
--------------
913,234
--------------
Total Common Stocks (cost $3,266,340) $ 4,032,931
SHORT-TERM INVESTMENTS (0.8%) * (cost $33,010)
PRINCIPAL AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------
$33,000 Interest in $700,000,000 joint repurchase agreement
dated February 27, 1998, with Goldman, Sachs & Co.,
due March 2, 1998, with respect to various Treasury
obligations--maturity value of $33,016 for an effective
yield of 5.64% $ 33,010
- ------------------------------------------------------------------------------------------------------------
Total Investments (cost $3,299,350) *** $ 4,065,941
- ------------------------------------------------------------------------------------------------------------
* Percentages indicated are based on net assets of $4,050,789.
*** The aggregate identified cost on a tax basis is $3,299,696,
resulting in gross unrealized appreciation and depreciation of $881,008
and $114,763, respectively, or net unrealized appreciation of $766,245.
ADR or ADS after the name of a foreign holding stands for American
Depository Receipts or American Depository Shares, respectively,
representing ownership of foreign securities on deposit with a domestic
custodian bank.
The fund had the following industry concentrations greater than
10% at February 28, 1998 (as a percentage of net assets):
Insurance and Finance 19.2%
Electronics and Electrical Equipment 11.6
Oil and Gas 10.3
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
February 28, 1998 (Unaudited)
<S> <C>
Assets
- ---------------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $3,299,350) (Note 1) $ 4,065,941
- ---------------------------------------------------------------------------------------------------
Dividends and other receivables 3,493
- ---------------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 100
- ---------------------------------------------------------------------------------------------------
Receivable for securities sold 11,182
- ---------------------------------------------------------------------------------------------------
Unamortized organization expenses (Note 1) 3,483
- ---------------------------------------------------------------------------------------------------
Total assets $ 4,084,199
Liabilities
- ---------------------------------------------------------------------------------------------------
Payable to subcustiodian (Note 2) 4,474
- ---------------------------------------------------------------------------------------------------
Payable for securities purchased 7,244
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 3,085
- ---------------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 290
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 777
- ---------------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 7
- ---------------------------------------------------------------------------------------------------
Payable for organization expenses (Note 1) 3,662
- ---------------------------------------------------------------------------------------------------
Other accrued expenses 13,871
- ---------------------------------------------------------------------------------------------------
Total liabilities 33,410
- ---------------------------------------------------------------------------------------------------
Net assets $ 4,050,789
Represented by
- ---------------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) 3,316,718
- ---------------------------------------------------------------------------------------------------
Distributions in excess of net investment income (Note 1) (9,873)
- ---------------------------------------------------------------------------------------------------
Distributions in excess of net realized gain on investments
and foreign currency transactions (Note 1) (22,642)
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and assets
and liabilities in foreign currencies 766,586
- ---------------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $ 4,050,789
Computation of net asset value and offering price
- ---------------------------------------------------------------------------------------------------
Net asset value and redemption price per share ($4,050,789
divided by 388,847 shares) $10.42
- ---------------------------------------------------------------------------------------------------
Offering price per share (100/94.25 of $10.42)* $11.06
- ---------------------------------------------------------------------------------------------------
* 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 February 28, 1998 (Unaudited)
<S> <C>
Investment income:
- --------------------------------------------------------------------------------------------------
Dividends (net of foreign tax of $1,733) $ 14,287
- --------------------------------------------------------------------------------------------------
Interest 248
- --------------------------------------------------------------------------------------------------
Total investment income 14,535
Expenses:
- --------------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 14,987
- --------------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 3,793
- --------------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 1,204
- --------------------------------------------------------------------------------------------------
Administrative services (Note 2) 20
- --------------------------------------------------------------------------------------------------
Amortization of organization expense (Note 1) 34
- --------------------------------------------------------------------------------------------------
Reports to shareholders 3,044
- --------------------------------------------------------------------------------------------------
Registration fees 16
- --------------------------------------------------------------------------------------------------
Auditing 9,755
- --------------------------------------------------------------------------------------------------
Legal 2,112
- --------------------------------------------------------------------------------------------------
Postage 4
- --------------------------------------------------------------------------------------------------
Fees waived by Manager (Note 2) (7,790)
- --------------------------------------------------------------------------------------------------
Total expenses 27,179
- --------------------------------------------------------------------------------------------------
Expense reduction (Note 2) (3,328)
- --------------------------------------------------------------------------------------------------
Net expenses 23,851
- --------------------------------------------------------------------------------------------------
Net investment loss (9,316)
- --------------------------------------------------------------------------------------------------
Net realized loss on investments (Notes 1 and 3) (21,760)
- --------------------------------------------------------------------------------------------------
Net realized loss on foreign currency transactions (Note 1) (294)
- --------------------------------------------------------------------------------------------------
Net unrealized appreciation of assets and liabilities in
foreign currencies during the period 98
- --------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments during the period 418,546
- --------------------------------------------------------------------------------------------------
Net gain on investments 396,590
- --------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $387,274
- --------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
Six months ended Year ended
February 28 August 31
1998* 1997
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets
- ----------------------------------------------------------------------------------------------------------------------
Operations:
- ----------------------------------------------------------------------------------------------------------------------
Net investment income (loss) $ (9,316) $ 25,722
- ----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments and foreign
currency transactions (22,054) 36,743
- ----------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and assets
and liabilities in foreign currencies 418,644 396,071
- ----------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 387,274 458,536
- ----------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ----------------------------------------------------------------------------------------------------------------------
From net investment income (24,480) (31,476)
- ----------------------------------------------------------------------------------------------------------------------
From net realized gain on investments (35,574) (48,509)
- ----------------------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 59,917 141,025
- ----------------------------------------------------------------------------------------------------------------------
Total increase in net assets 387,137 519,576
Net assets
- ----------------------------------------------------------------------------------------------------------------------
Beginning of period 3,663,652 3,144,076
- ----------------------------------------------------------------------------------------------------------------------
End of period (including distributions in excess and
undistributed net investment income of $9,873 and
$23,923, respectively) $ 4,050,789 $3,663,652
- ----------------------------------------------------------------------------------------------------------------------
* Unaudited
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share February 28 Year ended Dec. 28, 1995+
operating performance (Unaudited) August 31 to August 31
- ------------------------------------------------------------------------------------------------------------------------------------
1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value,
beginning of period $9.58 $8.58 $8.50
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.02) .07 .08
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 1.01 1.15 --
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations .99 1.22 .08
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.06) (.09) --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.09) (.13) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.15) (.22) --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $10.42 $9.58 $8.58
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and suplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 10.59* 14.43 0.94*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $4,051 $3,664 $3,144
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%) (b) (c) .72* 1.45 .98*
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) (c) (.25)* .74 .96 *
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 14.16* 76.09 48.18*
- ------------------------------------------------------------------------------------------------------------------------------------
Average commission
rate paid $.0336 $.0413 $.0538
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total investment return 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,
expenses for the fund for the period ended February 28, 1998, August 31, 1997, and August 31, 1996,
reflect a reduction of $0.02, $0.03, and $0.05 per share, respectively.
</TABLE>
Notes to financial statements
February 28, 1998 (Unaudited)
Note 1
Significant accounting policies
Putnam International 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 objective of the fund is to seek long-term capital appreciation by
investing primarily in equity securities of issues which have a principle
place of business located outside of the United States or whose securities are
principally traded on foreign markets.
The following is a summary of significant accounting policies 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 in 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 gains and losses are included with the
net realized and unrealized gain or loss on investments. Net realized gains
and losses on foreign currency transactions represent net 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) Line of credit The fund has entered into a committed line of credit with
certain banks. This line of credit agreement includes restrictions that the
fund maintain an asset coverage ratio of at least 300% and borrowings must not
exceed prospectus limitations. For the six months ended February 28, 1998, the
fund had no borrowings against the line of credit.
G) Federal taxes It is the policy of the fund to distribute all of its taxable
income within the prescribed time and otherwise comply with the provisions of
the Internal Revenue Code applicable to regulated investment companies. It is
also the intention of the fund to distribute an amount sufficient to avoid
imposition of any excise tax under Section 4982 of the Internal Revenue Code
of 1986, as amended. Therefore, no provision has been made for federal taxes
on income, capital gains or unrealized appreciation on securities held nor for
excise tax on income and capital gains.
H) Distributions to shareholders Distributions to shareholders from net
investment income are recorded by the fund on the ex-dividend date. Capital
gain distributions, if any, are recorded on the ex-dividend date and paid at
least annually. The amount and character of income and gains to be distributed
are determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. Reclassifications are made to the
fund's capital accounts to reflect income and gains available for distribution
(or available capital loss carryovers) under income tax regulations.
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: 0.80% of the first $500 million of
average net assets, 0.70% of the next $500 million, 0.65% of the next $500
million, 0.60% of the next $5 billion, 0.575% of the next $5 billion, 0.555%
of the next $5 billion, 0.54% of the next $5 billion, and 0.53% thereafter.
Putnam Management has agreed to limit its compensation (and, to the extent
necessary, bear other expenses) through December 31, 1998, to the extent that
expenses of the fund (exclusive of brokerage commissions, interest, taxes,
deferred organizational and extraordinary expense, credits from Putnam
Fiduciary Trust Company (PFTC), a subsidiary of Putnam Investments, Inc. and
payments under the Trust's distribution plan) would exceed an annual rate of
1.45% of the fund's average net assets.
The fund reimburses Putnam Management an allocated amount for the compensation
and related expenses of certain officers of the fund and their staff who
provide administrative services to the fund. The aggregate amount of all such
reimbursements is determined annually by the Trustees.
Custodial functions for the fund's assets are provided by PFTC. Investor
servicing agent functions are provided by Putnam Investor Services, a division
of PFTC.
For the six months ended February 28, 1998, fund expenses were reduced by
$3,328 under expense offset arrangements with PFTC and brokerage service
arrangements. Investor servicing and custodian fees reported in the Statement
of operations exclude these credits. The fund could have invested a portion of
the assets utilized in connection with the expense offset arrangements in an
income producing asset if it had not entered into such arrangements.
Each Trustee of the fund receives an annual Trustee fee, of which $100 has
been allocated to the fund, 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 a distribution plan (the "Plan") pursuant to Rule 12b-1
under the Investment Company Act of 1940. 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 payment by the fund to
Putnam Mutual Funds Corp. at an annual rate of up to 0.35% of the fund's
average net assets. The fund is currently not making any payments pursuant to
the Plan.
For the six months ended February 28, 1998, Putnam Mutual Funds Corp., acting
as underwriter received no net commissions from the sales of shares of the
fund.
Note 3
Purchase and sales of securities
During the six months ended February 28, 1998, purchases and sales of
investment securities other than short-term investments aggregated $594,027
and $515,928, 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 February 28, 1998, there was an unlimited number of shares
of beneficial interest authorized. Transactions in capital
shares were as follows:
Six months ended
February 28, 1998
- ------------------------------------------------------------
Shares Amount
- ------------------------------------------------------------
Shares sold 773 $7,624
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 6,415 60,054
- ------------------------------------------------------------
7,188 67,678
Shares
repurchased (798) (7,761)
- ------------------------------------------------------------
Net increase 6,390 $59,917
- ------------------------------------------------------------
Year ended
August 31, 1997
- ------------------------------------------------------------
Shares Amount
- ------------------------------------------------------------
Shares sold 8,856 $80,064
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 9,185 79,985
- ------------------------------------------------------------
18,041 160,049
Shares
repurchased (2,035) (19,024)
- ------------------------------------------------------------
Net increase 16,006 $141,025
- ------------------------------------------------------------
Putnam Investments, Inc., owned 367,771 shares of the fund
(94.58% of shares outstanding) valued at $3,832,174.
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
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John H. Mullin III
Robert E. Patterson
Donald S. Perkins
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
John D. Hughes
Senior Vice President and Treasurer
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Ian C. Ferguson
Vice President
John J. Morgan, Jr.
Vice President
Brett C. Browchuk
Vice President
Justin M. Scott
Vice President and Fund Manager
Seung Minn
Vice President and Fund Manager
William N. Shiebler
Vice President
John R. Verani
Vice President
Beverly Marcus
Clerk and Assistant Treasurer
This report is for the information of shareholders of Putnam International
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.
41230 4/98
