Putnam
International
Voyager
Fund
SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK
2-28-99
[LOGO: BOSTON * LONDON * TOKYO]
Fund highlights
* Putnam International Voyager Fund's class A shares were ranked in the
top 10% of the international funds ranked by Lipper for the 3-year period
ended March 31, 1999. The fund was 6th of the 332 international funds
ranked.*
* Morningstar gave the fund's class A shares a rating of 4 out of 5 stars
for 3-year performance as of March 31, 1999. Only 22.5% of the 918
international equity funds rated received 4 stars.+
CONTENTS
4 Report from Putnam Management
9 Fund performance summary
14 Portfolio holdings
19 Financial statements
*Past performance is not indicative of future results. 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. For the 1-year period, the fund ranked 28 out
of 558 international funds. The fund was not ranked over longer periods.
+Past performance is not indicative of future results. Morningstar
ratings reflect risk-adjusted performance through 3/31/99 and are subject
to change every month. Morningstar ratings are calculated from a fund's
3-, 5-, and 10-year returns (with fee adjustments) in excess of 90-day
Treasury bill returns and a risk factor that reflects performance below
90-day Treasury bill returns. Performance of other share classes will
vary. The fund was not ranked over longer periods.
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
[copyright] Karsh, Ottawa
Dear Shareholder:
Even in today's disordered international equities markets, opportunities
can be found by those who seek them out. Putnam International Voyager
Fund's management team has done an exemplary job of finding fortuitous
situations by focusing the search on the economies and industries in which
strength is most evident.
The strategy has paid off as the performance numbers found in this report
for the first half of fiscal 1999 and over the longer term clearly
demonstrate. Opportunities have presented themselves in such diverse
industries as retailing, advertising, financial services, and mobile
communications. The managers do not expect the current challenges to
disappear overnight but the team remains cautiously optimistic over
prospects for the fiscal year's second half.
I am pleased to announce the appointment of Joseph P. Joseph to your
fund's management team. Joe joined Putnam in 1994 and is now managing
director and head of Global Core Small Cap Equities. Joe was formerly with
Vert Independent Capital Research and Price Waterhouse and has 10 years of
investment experience.
Respectfully yours,
/S/GEORGE PUTNAM
George Putnam
Chairman of the Trustees
April 21, 1999
Report from the Fund Managers
Omid Kamshad
Joshua L. Byrne
Nigel P. Hart
Joseph P. Joseph
With one third of the world's economies either in recession or rapidly
declining, finding solid growth potential outside the United States has
become more of a challenge. Nevertheless, Putnam International Voyager
Fund has proved successful at making the most of what growth there is. By
investing heavily in small and midsize companies that are taking advantage
of strong pockets of demand, we have found businesses that are in many
cases undervalued by the marketplace and that are unlocking value for
shareholders through restructuring, consolidation, and growth.
This strategy has allowed the fund to post solid results relative to its
benchmark index as well as its peers (please see page 2). For the
semiannual period ended February 28, 1999, the fund had a total return of
15.57% at net asset value (8.96% at public offering price) compared to the
13.84% gain of the Morgan Stanley Capital International EAFE Index. For
performance over longer periods, please see page 9.
* TARGETING CONSUMER DEMAND IN EUROPE
In recent months, economic data have confirmed that core European
economies such as Germany are slowing. On the other hand, peripheral
countries such as Spain and Ireland are enjoying solid economic growth
and, thanks to the introduction of the euro in January, are maintaining
the same low interest rates as the core countries. The fund has taken
advantage of this dichotomy through investments in industries such as
retailing, media, and advertising, targeting companies that are benefiting
from strong consumer demand as well as those likely to gain from the
current wave of corporate consolidation and restructuring.
For example, the fund has significant holdings in Spanish retailers
Centros Comerciales Continente and Superdiplo. We also targeted French
advertising firms Havas Advertising and Publicis as well as media and
production companies TF1, NRJ, and EM TV & Merchandising of Germany. One
reason we expect consolidation in the European media industry is because
of the growth of the Internet. We believe European companies that have an
Internet strategy or are well positioned as content providers will
flourish with the expansion of e-commerce and entertainment. While these
holdings, along with others discussed in this report, were viewed
favorably at the end of the period, all are subject to review and
adjustment in accordance with the fund's investment strategy and may vary
in the future.
We have also invested in European companies that are already taking
advantage of consumer demand, even in industries dominated by larger, more
well-known companies. One example is Lindt & Spruengli of Switzerland, the
manufacturer and retailer of Lindt premium chocolates and Ghirardelli
chocolates of the United States. The management team that came in three
years ago has already expensed a major upgrade to its capital by
modernizing its plants and expanding its regional presence by buying
Ghirardelli. With the sales growth of premium chocolate at double-digit
rates in the United States, Lindt now has a significant share of that
growth.
* FUND BENEFITS FROM GROWTH OF ASSET MANAGEMENT SERVICES IN EUROPE
One of the fund's major investment themes for some time has been its focus
on the increasing importance of asset management across Europe. We are
seeing a definite change in the savings patterns of European citizens as a
result of concern about the viability of government-run pay-as-you-go
retirement schemes and the underfunding of corporate pension schemes.
Furthermore, fixed-income investments have long been the traditional
choice of European investors, but the relative attractiveness of equities
is encouraging many to diversify.
[GRAPHIC OMITTED: horizontal bar chart TOP COUNTRY ALLOCATIONS]
TOP COUNTRY ALLOCATIONS*
France 13.5%
Switzerland 13.0%
Italy 9.7%
United Kingdom 9.4%
Japan 8.4%
Footnote reads:
*Based on net assets as of 2/28/99. Holdings will vary over time.
We have focused on firms that not only have profitable, high-growth asset
management businesses but also have solid banking operations that make
them relatively undervalued relative to larger European banking companies.
This is evident in the Italian Popolare banks the fund holds as well as
Swiss firms Bank Julius Baer, Verwaltungs-und Privat-Bank and Bank
Sarasin. For example, Banca Popolare di Brescia has been very aggressive
in developing an asset management business but also has relatively
high-quality commercial banking interests in northern Italy that investors
often ignore when valuing the company.
* FUND TAPS GLOBAL GROWTH POTENTIAL OF MOBILE COMMUNICATIONS
The worldwide growth of mobile communications remains astounding and makes
us confident about the long-term trends in mobile telephony. The number of
cellular subscribers in Western Europe grew by 67% to 92 million in the
past year, and in the emerging markets, these rates are growing
exponentially.
The fund holds a variety of telecommunications companies from around the
world. We continue to focus on companies such as Irish firm ESAT Telecom
Group, Bouygues of France, and BCE Mobile Communications of Canada.
Additionally we have positions in Telesp Cellular of Brazil and Finland's
Helsinki Telephone Corp.
* JAPANESE, ASIAN PROSPECTS STILL UNCLEAR
We are more positive on Japanese stocks than we were six months ago but
are keeping the fund underweighted in Japan relative to its benchmark.
From a macroeconomic view, the Japanese economy is still in dire straits,
but from the standpoint of individual companies, we have seen some
incremental improvement. Japanese companies are beginning to take small
but significant steps toward much needed restructuring and consolidation.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
TOP 10 HOLDINGS
Esat Telecom Group PLC (Ireland)
Telecommunications
Banca Popolare di Brescia SpA (Italy)
Insurance and finance
Publicis S.A. (France)
Advertising
AEM SpA 144A (Italy)
Utilities
Bouygues S. A. (France)
Telecommunications
Julius Baer Holdings AG (Switzerland)
Insurance and finance
Securicor Group PLC (United Kingdom)
Conglomerates
ARM Holdings PLC (United Kingdom)
Electronics and electrical equipment
Publicitas Holding S.A. (Switzerland)
Advertising
Helsingin Puhelin Oyj (Helsinki Telephone Corp.) Class E (Finland)
Telecommunications
Footnote reads:
These holdings represent 19.3% of the fund's net assets as of 2/28/99.
Portfolio holdings will vary over time.
We have identified companies that could benefit from consolidation as well
as those in industries that are growing despite the country's economic
woes. For example, the fund owns stock in two Coca-Cola bottlers in Japan.
The Japanese market is Coke's largest outside the United States, but there
are too many distributors and as a result the company has become
dissatisfied with distribution in Japan. Consolidation will be forced upon
the industry and we believe the fund holds two undervalued companies that
could stand to benefit. On the services side, the fund also owns
information technology services company INES Corporation and consumer
finance company Aiful Corp. Should Japanese consumers start to spend more,
we also believe companies such as Nippon Broadcasting and furniture
retailer Otsuka Kagu will be among the beneficiaries.
Elsewhere in Asia, the fund continues to hold stakes in two of Singapore's
major banks. Although it will be some time before we see true economic
growth in Singapore and the rest of Asia, we believe these banks will
begin to curtail their loan loss provisioning in the near future and will
be able to play an important role in the revitalization of the region's
economy. More importantly their payout ratios -- that is, their dividends
as a percentage of profits -- have been on the rise. This is significant
because it shows that while their profits have fallen, the dividends have
remained steady, indicating optimism about being able to pay future
dividends as well as about the future economic environment of the region.
* OUTLOOK IS CAUTIOUSLY OPTIMISTIC BUT CHALLENGES AWAIT
The companies represented in the fund have demonstrated their ability to
prosper despite the slowing of the global economy. Assuming that
conditions in Japan do not deteriorate further and that China's economic
growth stabilizes rather than falls, we see no reason why our current
approach should change.
On the other hand, we will remain mindful of any upward surprise in world
economic growth. The presence of excess capacity in so many
commodity-related and basic industries has pushed down the pricing power
of these companies to such a degree that any positive change in growth
could be explosive for the profitability and earnings growth of these
firms. Since we have already begun to identify those undervalued companies
that could benefit from an uptick in global demand, we believe your fund
is well positioned to benefit from any such developments.
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 2/28/99, there is no guarantee the fund will
continue to hold these securities in the future.
International investing includes certain risks not present with U.S.
investments. This fund invests all or a portion of its assets in small to
midsize 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 capital
appreciation through common stocks of smaller-capitalization companies
located outside the United States.
TOTAL RETURN FOR PERIODS ENDED 2/28/99
Class A Class B Class M
(inception date) (12/28/95) (10/30/96) (10/30/96)
NAV POP NAV CDSC NAV POP
- ------------------------------------------------------------------------------
6 months 15.57% 8.96% 15.14% 10.14% 15.28% 11.21%
- ------------------------------------------------------------------------------
1 year 15.85 9.21 15.05 10.05 15.28 11.21
- ------------------------------------------------------------------------------
Life of fund 79.09 68.76 75.10 72.10 76.24 70.06
Annual average 20.18 17.95 19.33 18.68 19.57 18.23
- ------------------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 2/28/99
MSCI Consumer
EAFE Index price index
- ------------------------------------------------------------------------------
6 months 13.84% 0.80%
- ------------------------------------------------------------------------------
1 year 4.95 1.73
- ------------------------------------------------------------------------------
Life of fund 26.06 7.30
Annual average 7.60 2.25
- ------------------------------------------------------------------------------
Past performance is no assurance of future results. More recent returns
may be more or less than those shown. Returns for class A and class M
shares reflect the current maximum initial sales charges of 5.75% and
3.50% respectively. Class B share returns for the 1-, 5-, and 10-year
(where available) and life-of-fund periods reflect the applicable
contingent deferred sales charge (CDSC), which is 5% in the first year,
declines to 1% in the sixth year, and is eliminated thereafter. Returns
shown for class B and class M shares for periods prior to their inception
are derived from the historical performance of class A shares, adjusted to
reflect both the initial sales charge or CDSC, if any, currently
applicable to each class and in the case of class B and class M shares,
the higher operating expenses applicable to such shares. All returns
assume reinvestment of distributions at NAV. Investment return and
principal value will fluctuate so that an investor's shares when redeemed
may be worth more or less than their original cost.
PRICE AND DISTRIBUTION INFORMATION
6 months ended 2/28/99
Class A Class B Class M
- ------------------------------------------------------------------------------
Distributions (number) 1 1 1
- ------------------------------------------------------------------------------
Income $0.135 $0.058 $0.082
- ------------------------------------------------------------------------------
Capital gains
- ------------------------------------------------------------------------------
Long-term 0.249 0.249 0.249
- ------------------------------------------------------------------------------
Short-term 0.022 0.022 0.022
- ------------------------------------------------------------------------------
Total $0.406 $0.329 $0.353
- ------------------------------------------------------------------------------
Share value: NAV POP NAV NAV POP
- ------------------------------------------------------------------------------
8/31/98 $12.37 $13.12 $12.25 $12.30 $12.75
- ------------------------------------------------------------------------------
2/28/99 13.87 14.72 13.76 13.81 14.31
- ------------------------------------------------------------------------------
TOTAL RETURN FOR PERIODS ENDED 3/31/99
(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
- ------------------------------------------------------------------------------
6 months 22.81% 15.75% 22.36% 17.36% 22.46% 18.13%
- ------------------------------------------------------------------------------
1 year 8.80 2.56 7.93 2.93 8.25 4.47
- ------------------------------------------------------------------------------
Life of fund 81.54 71.08 77.26 74.26 78.53 72.28
Annual average 20.07 17.91 19.20 18.57 19.46 18.16
- ------------------------------------------------------------------------------
Past performance is no assurance of future results. More recent returns
may be more or less than those shown. They do not take into account any
adjustment for taxes payable on reinvested distributions. Investment
returns and principal value will fluctuate so that an investor's shares
when sold may be worth more or less than their original cost.
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 charge and a higher 12b-1 fee
than class A shares and no sales charge on redemption.
Net asset value (NAV) is the value of all your fund's assets, minus any
liabilities, divided by the number of outstanding shares, not including
any initial or contingent deferred sales charge.
Public offering price (POP) is the price of a mutual fund share plus the
maximum sales charge levied at the time of purchase. POP performance
figures shown here assume the 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
Morgan Stanley Capital International (MSCI) EAFE Index* is an unmanaged
list of equity securities from Europe, Australasia and the Far East, with
all values expressed in U.S. dollars.
Consumer price index (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
*Securities indexes assume reinvestment of all distributions and interest
payments and do not take in account brokerage fees or taxes. Securities in
the fund do not match those in the indexes and performance of the fund
will differ. It is not possible to invest directly in an index.
PUTNAM GROWTH FUNDS
Asia Pacific Growth Fund
Capital Appreciation Fund [DBL. DAGGER]
Capital Opportunities 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 [DBL. DAGGER]
OTC & Emerging Growth Fund
Research Fund
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
Global Growth and Income Fund
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
Global Governmental Income Trust
High Quality Bond Fund +
High Yield Advantage Fund [DBL. DAGGER]
High Yield Total Return Fund
High Yield Trust [DBL. DAGGER]
High Yield Trust II
Income Fund
Intermediate U.S. Government
Income Fund
Money Market Fund **
Preferred Income Fund
Strategic 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
LIFESTAGE SM 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 Putnam Diversified Income Trust II
+ Formerly Putnam Federal Income Trust
[DBL. DAGGER] Closed to new investors. Some exceptions may apply.
Contact Putnam for details.
[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.
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<TABLE>
<CAPTION>
Portfolio of investments owned
February 28, 1999 (Unaudited)
COMMON STOCKS (97.7%) (a)
NUMBER OF SHARES VALUE
<S> <C> <C> <C>
Brazil (0.3%)
- --------------------------------------------------------------------------------------------------------------------------
38,200 Telesp Cellular Participacoes S.A. ADR (NON) $ 802,200
Canada (2.8%)
- --------------------------------------------------------------------------------------------------------------------------
96,555 BCE Mobile Communications, Inc. (NON) 2,750,308
56,034 Four Seasons Hotels, Inc. (NON) 1,970,989
64,200 Laurasia Resources Ltd. (NON) 1,838,791
--------------
6,560,088
Denmark (1.2%)
- --------------------------------------------------------------------------------------------------------------------------
18,100 Sydbank AS 729,969
13,300 Vestas Wind Systems A/S (NON) 788,803
22,650 Vestas Wind Systems A/S 144A (NON) 1,343,337
--------------
2,862,109
Estonia (0.3%)
- --------------------------------------------------------------------------------------------------------------------------
30,900 Estonian Telekom GDR 144A 638,858
Finland (5.1%)
- --------------------------------------------------------------------------------------------------------------------------
56,377 Helsingin Puhelin Oyj (Helsinki Telephone Corp.) Class E 3,521,348
17,800 Helsingin Puhelin Oyj (Helsinki Telephone Corp.) 144A 1,111,801
59,522 Huhtamaki I Free (NON) 1,992,655
32,441 KCI Konecranes International PLC 1,054,242
95,825 Sampo Insurance Co., Ltd. Class A (NON) 3,177,381
187,926 Sponda Oyj 144A (NON) 1,066,149
27,600 Sponda Oyj 144A 156,581
--------------
12,080,157
France (13.5%)
- --------------------------------------------------------------------------------------------------------------------------
17,653 Bouygues S. A. 4,404,642
47,046 Chargeurs S.A. 2,176,687
14,100 CNP Assurances (NON) 378,218
15,600 CNP Assurances 144A (NON) 418,454
13,281 Havas Advertising S.A. 2,604,202
20,446 ISIS Holdings 1,145,311
16,900 M6 Metropole Television 2,904,258
11,466 NRJ S.A. 2,526,189
28,715 Publicis S.A. 4,839,764
34,317 Scor 1,771,099
30,700 Sidel S.A. 2,167,806
19,709 SPIR Communication 1,172,417
16,308 Television Francaise I (TF1) 2,928,278
19,050 Union des Assurances Federales 2,413,330
--------------
31,850,655
Germany (5.4%)
- --------------------------------------------------------------------------------------------------------------------------
6,872 AIXTRON AG 1,612,452
20,920 Axa Colonia Konzern AG 1,866,683
2,560 EM TV & Merchandising AG 2,481,684
17,600 Hawesko Holding AG 814,303
6,273 Hawesko Holding AG (NON) 290,234
5,095 Intershop Communications AG (NON) 812,475
13,271 Kamps AG (NON) 1,537,954
10,400 Kamps AG 144A (NON) 1,205,232
13,400 Medion AG (NON) 2,094,648
4,000 PrimaCom AG (NON) 130,870
--------------
12,846,535
Hong Kong (2.8%)
- --------------------------------------------------------------------------------------------------------------------------
645,000 Asia Satellite Telecommunications Holdings Ltd. 1,040,725
1,063,000 Cathay Pacific Airways (NON) 1,186,905
698,000 Johnson Electric Holdings Ltd. 1,847,038
575,000 Li & Fung Ltd. 1,039,112
62,600 Peak International Ltd. 379,513
358,000 VTech Holdings, Ltd. 1,116,006
--------------
6,609,299
Ireland (4.5%)
- --------------------------------------------------------------------------------------------------------------------------
152,075 Esat Telecom Group PLC (NON) 7,147,525
443,810 Greencore Group PLC 1,745,377
181,829 Irish Life PLC 1,834,774
--------------
10,727,676
Italy (9.7%)
- --------------------------------------------------------------------------------------------------------------------------
1,942,633 AEM SpA 144A (NON) 4,515,410
134,500 Banca Popolare Commercio de Industria SpA 3,067,020
70,441 Banca Popolare di Bergamo SpA 1,846,828
171,500 Banca Popolare di Brescia SpA 5,270,991
62,400 Banca Popolare Santa Venera (NON) 811,130
279,800 Class Editori (NON) 2,237,733
28,774 Ericsson SpA 1,087,222
29,414 Industrie Natuzzi SpA ADR 568,058
335,300 SONDEL -- Societa Nordelettrica SpA 1,252,152
486,000 Unicem SpA 2,221,817
--------------
22,878,361
Japan (8.4%)
- --------------------------------------------------------------------------------------------------------------------------
17,600 Aiful Corp. 1,184,672
104,000 Chukyo Coca-Cola Bottling Co., Ltd. 1,109,916
44,800 Disco Corp. 1,505,882
174,000 INES Corp. 1,864,286
46,300 Kita Kyushu Coca-Cola Bottling 1,750,840
110,000 Matsushita-Kotobuki Electronics Industries, Ltd. 2,976,471
134,000 Mitsumi Electric Company, Ltd. 2,257,731
715,000 Nikko Securities Co. Ltd. 2,253,151
36,000 Nippon Broadcasting System 1,179,832
15,000 Otsuka Kagu 1,255,462
39,000 Taiyo Ink Manufacturing 2,621,849
--------------
19,960,092
Netherlands (4.7%)
- --------------------------------------------------------------------------------------------------------------------------
60,040 ASM Lithography Holding N.V. (NON) 2,476,945
51,800 Beter Bed Holding N.V. 1,734,712
42,100 Gucci Group N.V. 2,947,000
64,771 Nutreco Holding NV 2,632,879
9,078 Nutreco Holding NV 144A 369,012
28,300 United Pan-Europe Communications NV 1,058,401
--------------
11,218,949
New Zealand (1.5%)
- --------------------------------------------------------------------------------------------------------------------------
1,025,202 Fletcher Challenge Building 1,579,616
815,000 Restaurant Brands New Zealand Ltd. (NON) 600,201
339,600 Warehouse Group Ltd. (The) 1,277,086
--------------
3,456,903
Portugal (1.9%)
- --------------------------------------------------------------------------------------------------------------------------
46,900 Brisa-Auto Estradas de Portugal, S.A. (NON) 2,421,024
34,400 Cimpor-Cimentos de Portugal, SGPS, S.A. 962,534
68,500 Semapa -- Sociedade de Investimento e Gestao SGPS S.A. 1,130,385
--------------
4,513,943
Singapore (2.9%)
- --------------------------------------------------------------------------------------------------------------------------
3,976,500 Courts Ltd. 1,189,255
29,000 GP Batteries International Ltd. 50,523
1,563,800 Keppel Bank 2,451,951
378,000 Overseas Union Bank Ltd. 1,382,927
445,000 Venture Manufacturing Ltd. 1,873,548
--------------
6,948,204
Spain (6.8%)
- --------------------------------------------------------------------------------------------------------------------------
45,022 Banco Pastor S.A. 2,452,534
55,712 Cementos Portland, S.A. 2,117,346
79,408 Centros Comerciales Continente, S.A. 2,287,494
20,748 CF Alba Spain S. A. 3,005,564
108,427 Inmobiliaria Metropolitana Vasco Central S.A. 2,800,943
92,630 Superdiplo S.A. (NON) 2,326,540
76,500 Transportes Akzar S.A. (NON) 1,032,337
--------------
16,022,758
Sweden (1.7%)
- --------------------------------------------------------------------------------------------------------------------------
67,675 Seco Tools AB Class B 1,618,027
112,712 Sparbanken Sverige AB Class A (NON) 2,349,535
--------------
3,967,562
Switzerland (13.0%)
- --------------------------------------------------------------------------------------------------------------------------
2,755 Banque Cantonale Vaudoise 831,151
1,102 Banque Cantonale Vaudoise 317,210
884 Bank Sarasin & Cie (NON) 1,602,602
6,649 Edipresse S.A. 1,619,463
2,630 Forbo Holding AG 1,073,692
3,586 Georg Fischer AG 1,178,626
3,597 Hilti AG 2,327,148
1,380 Julius Baer Holdings AG 4,202,449
3,597 Kuehne & Nagel Intl. AG 2,663,154
591 Kuoni Reisen AG 2,412,746
1,250 Lindt & Spruengli AG (NON) 3,184,414
7,713 Publicitas Holding S.A. 3,575,775
8,128 Sika Finanz AG 2,097,802
785 Verwaltungs-und Privat-Bank AG 2,661,569
1,899 Zellweger Luwa AG 1,135,300
--------------
30,883,101
Taiwan (0.8%)
- --------------------------------------------------------------------------------------------------------------------------
137,600 Winbond Electronics 144A GDR 1,843,840
United Kingdom (9.4%)
- --------------------------------------------------------------------------------------------------------------------------
1,351,513 Aegis Group PLC 2,598,473
298,100 Aegis Group PLC 144A 573,139
178,700 Anglian Water PLC 2,090,086
104,795 ARM Holdings PLC (NON) 4,017,068
466,761 Avis Europe PLC 144A ADR 1,907,003
814,200 Electronics Boutique PLC 1,017,519
568,300 Independent Insurance Group, Inc. 1,957,640
422,480 Securicor Group PLC (NON) 4,076,615
232,864 Viridian Group PLC 2,667,839
169,000 WPP Group PLC (NON) 1,337,616
--------------
22,242,998
United States (1.0%)
- --------------------------------------------------------------------------------------------------------------------------
90,500 Mettler -- Toledo International Inc. (NON) 2,313,406
--------------
Total Common Stocks (cost $199,555,889) $ 231,227,694
SHORT-TERM INVESTMENTS (3.6%) (a) (cost $8,424,000)
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------
$8,424,000 Interest in $310,913,000 joint repurchase agreement
dated February 26, 1999 with Warburg Securities
due March 1, 1999 with respect to various U.S.
Treasury obligations -- maturity value of
$8,427,327 for an effective yield of 4.74% $ 8,424,000
- --------------------------------------------------------------------------------------------------------------------------
Total Investments (cost $207,979,889) (b) $ 239,651,694
- --------------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $236,606,788.
(b) The aggregate identified cost on a tax basis is $208,823,808, resulting in gross unrealized appreciation and
depreciation of $43,837,775 and $13,009,889, respectively, or net unrealized appreciation of $30,827,886.
(NON) Non-income-producing security.
144A after the name of a security represents those exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified
institutional buyers.
ADR or GDR after the name of a foreign holding stands for American Depository Receipts or Global Depository
Shares, respectively, representing ownership of foreign securities on deposit with a domestic custodian bank.
The fund had the following industry group concentrations greater than 10% at February 28, 1999 (as a
percentage of net assets):
Insurance and Finance 19.0%
Telecommunications 11.0
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
February 28, 1999 (Unaudited)
<S> <C>
Assets
- -----------------------------------------------------------------------------------------------
Investments in securities, at value (identified cost $207,979,889) (Note 1) $239,651,694
- -----------------------------------------------------------------------------------------------
Cash 1,101,766
- -----------------------------------------------------------------------------------------------
Dividends, interest and other receivables 457,148
- -----------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 1,940,067
- -----------------------------------------------------------------------------------------------
Receivable for securities sold 7,046,315
- -----------------------------------------------------------------------------------------------
Unamortized organization expenses (Note 1) 2,726
- -----------------------------------------------------------------------------------------------
Total assets 250,199,716
Liabilities
- -----------------------------------------------------------------------------------------------
Payable to subcustodian (Note 2) 996,714
- -----------------------------------------------------------------------------------------------
Payable for securities purchased 11,380,862
- -----------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 333,282
- -----------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 650,402
- -----------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 59,613
- -----------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 3,956
- -----------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 575
- -----------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 137,028
- -----------------------------------------------------------------------------------------------
Payable for organization expenses (Note 1) 55
- -----------------------------------------------------------------------------------------------
Other accrued expenses 30,441
- -----------------------------------------------------------------------------------------------
Total liabilities 13,592,928
- -----------------------------------------------------------------------------------------------
Net assets $236,606,788
Represented by
- -----------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $207,459,342
- -----------------------------------------------------------------------------------------------
Distributions in excess of net investment income (Note 1) (2,892,709)
- -----------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign
currency transactions (Note 1) 343,281
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and assets and
liabilities in foreign currencies 31,696,874
- -----------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $236,606,788
Computation of net asset value and offering price
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($126,359,105 divided by 9,112,757 shares) $13.87
- -----------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $13.87)* $14.72
- -----------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($98,894,038 divided by 7,189,364 shares)** $13.76
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($11,353,645 divided by 822,233 shares) $13.81
- -----------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $13.81)* $14.31
- -----------------------------------------------------------------------------------------------
* On single retail sales of less than $50,000. On sales of $50,000 or more and on group
sales, the offering price is reduced.
** Redemption price per share is equal to net asset value less any applicable contingent
deferred sales charge.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
Six months ended February 28, 1999 (Unaudited)
<S> <C>
Investment income:
- -----------------------------------------------------------------------------------------------
Dividends (net of foreign tax of $99,945) $ 638,528
- -----------------------------------------------------------------------------------------------
Interest 232,864
- -----------------------------------------------------------------------------------------------
Total investment income 871,392
Expenses:
- -----------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 1,193,052
- -----------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 241,358
- -----------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 7,759
- -----------------------------------------------------------------------------------------------
Administrative services (Note 2) 2,892
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 132,872
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 415,942
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 36,358
- -----------------------------------------------------------------------------------------------
Amortization of organization expenses (Note 1) 298
- -----------------------------------------------------------------------------------------------
Reports to shareholders 34,679
- -----------------------------------------------------------------------------------------------
Registration fees 7,586
- -----------------------------------------------------------------------------------------------
Auditing 10,360
- -----------------------------------------------------------------------------------------------
Legal 1,803
- -----------------------------------------------------------------------------------------------
Postage 16,300
- -----------------------------------------------------------------------------------------------
Other 39,898
- -----------------------------------------------------------------------------------------------
Total expenses 2,141,157
- -----------------------------------------------------------------------------------------------
Expense reduction (Note 2) (14,733)
- -----------------------------------------------------------------------------------------------
Net expenses 2,126,424
- -----------------------------------------------------------------------------------------------
Net investment loss (1,255,032)
- -----------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 340,094
- -----------------------------------------------------------------------------------------------
Net realized gain on foreign currency transactions (Note 1) 130,301
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of assets and liabilities in
foreign currencies during the period 110,743
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments during the period 29,451,372
- -----------------------------------------------------------------------------------------------
Net gain on investments 30,032,510
- -----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $28,777,478
- -----------------------------------------------------------------------------------------------
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
1999* 1998
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
Increase in net assets
- ---------------------------------------------------------------------------------------------------------------
Operations:
- ---------------------------------------------------------------------------------------------------------------
Net investment loss $ (1,255,032) $ (7,875)
- ---------------------------------------------------------------------------------------------------------------
Net realized gain on investments and
foreign currency transactions 470,395 3,792,073
- ---------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and
asset and liabilities in foreign currencies 29,562,115 937,264
- ---------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 28,777,478 4,721,462
- ---------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ---------------------------------------------------------------------------------------------------------------
From net investment income
Class A (1,070,875) (159,691)
- ---------------------------------------------------------------------------------------------------------------
Class B (375,161) --
- ---------------------------------------------------------------------------------------------------------------
Class M (59,864) (432)
- ---------------------------------------------------------------------------------------------------------------
From net realized gain on investments
Class A (2,149,683) (2,453,405)
- ---------------------------------------------------------------------------------------------------------------
Class B (1,752,907) (2,132,632)
- ---------------------------------------------------------------------------------------------------------------
Class M (197,843) (237,711)
- ---------------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 36,056,015 98,406,679
- ---------------------------------------------------------------------------------------------------------------
Total increase in net assets 59,227,160 98,144,270
Net assets
- ---------------------------------------------------------------------------------------------------------------
Beginning of period 177,379,628 79,235,358
- ---------------------------------------------------------------------------------------------------------------
End of period (including distributions in excess of
net investment income of $2,892,709 and
$131,777, respectively) $236,606,788 $177,379,628
- ---------------------------------------------------------------------------------------------------------------
* Unaudited
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS A
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share February 28 Dec. 28, 1995+
operating performance (Unaudited) Year ended August 31 to Aug. 31
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $12.37 $11.66 $9.47 $8.50
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (a) (.06) .05 .02(d) .04(d)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 1.97 1.25 2.28 .93
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 1.91 1.30 2.30 .97
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.14) (.04) (.07) --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.27) (.55) (.04) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.41) (.59) (.11) --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $13.87 $12.37 $11.66 $9.47
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 15.57* 11.77 24.44 11.41*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $126,359 $95,404 $40,687 $2,429
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .90* 1.92 2.10(d) 1.26*(d)
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) (.46)* .35 .15(d) .44*(d)
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 40.56* 89.50 126.65 55.87*
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Per share net investment income (loss) has been determined on the basis of the weighted
average number of shares outstanding during the period.
(b) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
(c) The ratio of expense to average net assets includes amounts paid through expense offset and
brokerage service arrangements (Note 2).
(d) Reflects an expense limitation in effect during the period. 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.
(e) Distributions from net investment income amounted to less than $0.01 per share for class M
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS B
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended Year For the period
Per-share February 28 ended Oct. 30, 1996+
operating performance (Unaudited) August 31 to August 31
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value,
beginning of period $12.25 $11.60 $9.82
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (a) (.11) (.05) (.06)(d)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 1.95 1.25 1.94
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 1.84 1.20 1.88
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.06) -- (.06)
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.27) (.55) (.04)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.33) (.55) (.10)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $13.76 $12.25 $11.60
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 15.14* 10.94 19.35*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $98,894 $73,176 $34,463
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) 1.28* 2.67 2.39*(d)
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) (.84)* (.43) (.50)*(d)
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 40.56* 89.50 126.65
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Per share net investment income (loss) has been determined on the basis of the weighted
average number of shares outstanding during the period.
(b) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
(c) The ratio of expense to average net assets includes amounts paid through expense offset and
brokerage service arrangements (Note 2).
(d) Reflects an expense limitation in effect during the period. 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.
(e) Distributions from net investment income amounted to less than $0.01 per share for class M
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS M
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended Year For the period
Per-share February 28 ended Oct. 30, 1996+
operating performance (Unaudited) August 31 to August 31
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value,
beginning of period $12.30 $11.62 $9.82
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (a) (.09) (.02) (.03)(d)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 1.95 1.25 1.93
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 1.86 1.23 1.90
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.08) --(e) (.06)
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.27) (.55) (.04)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.35) (.55) (.10)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $13.81 $12.30 $11.62
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 15.28* 11.20 19.56*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $11,354 $8,799 $4,086
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) 1.15* 2.42 2.18*(d)
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) (.71)* (.18) (.26)*(d)
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 40.56* 89.50 126.65
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Per share net investment income (loss) has been determined on the basis of the weighted
average number of shares outstanding during the period.
(b) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
(c) The ratio of expense to average net assets includes amounts paid through expense offset and
brokerage service arrangements (Note 2).
(d) Reflects an expense limitation in effect during the period. 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.
(e) Distributions from net investment income amounted to less than $0.01 per share for class M
</TABLE>
Notes to financial statements
February 28, 1999 (Unaudited)
Note 1
Significant accounting policies
Putnam International Voyager 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 a number of
different countries and under normal market conditions it will invest
primarily in at least three different countries other than the United
States.
The fund offers class A, class B and class M shares. Class A shares are
sold with a maximum front-end sales charge of 5.75%. Class B shares, which
convert to class A shares after approximately eight years, do not pay a
front-end sales charge, but pay a higher ongoing distribution fee than
class A shares, and are subject to a contingent deferred sales charge, if
those shares are redeemed within six years of purchase. Class 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. Collateral
for certain tri-party repurchase agreements is held at the counterparty's
custodian in a segregated account for the benefit of the fund and the
counterparty. Putnam Management is responsible for determining that the
value of these underlying securities is at all times at least equal to the
resale price, including accrued interest.
D) Security transactions and related investment income Security
transactions are accounted for on the trade date (date the order to buy or
sell is executed). 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, and other assets and liabilities are recorded in the
books and records of the fund after translation to U.S. dollars based on
the exchange rates on that day. The cost of each security is determined
using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when accrued or incurred. The fund
does not isolate that portion of realized or unrealized gains or losses
resulting from changes in the foreign exchange rate on investments from
fluctuations arising from changes in the market prices of the securities.
Such gains and losses are included with the net realized and unrealized
gain or loss on investments. Net realized gains and losses on foreign
currency transactions represent net 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, 1999, 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: 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.
The fund reimburses Putnam Management an allocated amount for the
compensation and related expenses of certain officers of the fund and
their staff who provide administrative services to the fund. The aggregate
amount of all such reimbursements is determined annually by the Trustees.
Custodial functions for the fund's assets are provided by Putnam Fiduciary
Trust Company (PFTC), a subsidiary of Putnam Investments, Inc. Investor
servicing agent functions are provided by Putnam Investor Services, a
division of PFTC.
As part of the subcustodian contract between the subcustodian bank and
PFTC, the subcustodian bank has a lien on the securities of the fund to
the extent permitted by the fund's investment restrictions to cover any
advances made by the subcustodian bank for the settlement of securities
purchased by the fund. At February 28, 1999, the payable to the
subcustodian bank represents the amount due for cash advance for the
settlement of a security purchased.
For the six months ended February 28, 1999, fund expenses were reduced by
$14,733 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 $790 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 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 to 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 six months ended February 28, 1999, Putnam Mutual Funds Corp.,
acting as underwriter received net commissions of $57,257 and $6,854 from
the sale of class A and class M shares, respectively and received $90,134
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 six months ended February 28, 1999, Putnam Mutual
Funds Corp., acting as underwriter received $10,292 on class A
redemption's.
Note 3
Purchases and sales of securities
During the six months ended February 28, 1999, purchases and sales of
investment securities other than short-term investments aggregated
$112,947,367 and $78,972,445 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, 1999, there was an unlimited number of shares of
beneficial interest authorized. Transactions in capital shares were as
follows:
Six months ended
February 28, 1999
- -----------------------------------------------------------------------------
Class A Shares Amount
- -----------------------------------------------------------------------------
Shares sold 3,705,018 $48,190,381
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 231,679 3,062,796
- -----------------------------------------------------------------------------
3,936,697 51,253,177
Shares
repurchased (2,534,928) (32,721,734)
- -----------------------------------------------------------------------------
Net increase 1,401,769 $18,531,443
- -----------------------------------------------------------------------------
Year ended
August 31, 1998
- -----------------------------------------------------------------------------
Class A Shares Amount
- -----------------------------------------------------------------------------
Shares sold 6,331,000 $82,848,055
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 224,603 2,461,648
- -----------------------------------------------------------------------------
6,555,603 85,309,703
Shares
repurchased (2,333,574) (30,360,221)
- -----------------------------------------------------------------------------
Net increase 4,222,029 $54,949,482
- -----------------------------------------------------------------------------
Six months ended
February 28, 1999
- -----------------------------------------------------------------------------
Class B Shares Amount
- -----------------------------------------------------------------------------
Shares sold 2,047,303 $26,769,605
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 148,008 1,943,351
- -----------------------------------------------------------------------------
2,195,311 28,712,956
Shares
repurchased (979,685) (12,626,026)
- -----------------------------------------------------------------------------
Net increase 1,215,626 $16,086,930
- -----------------------------------------------------------------------------
Year ended
August 31, 1998
- -----------------------------------------------------------------------------
Class B Shares Amount
- -----------------------------------------------------------------------------
Shares sold 4,028,457 $51,974,706
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 180,293 1,967,001
- -----------------------------------------------------------------------------
4,208,750 53,941,707
Shares
repurchased (1,205,658) (15,283,453)
- -----------------------------------------------------------------------------
Net increase 3,003,092 $38,658,254
- -----------------------------------------------------------------------------
Six months ended
February 28, 1999
- -----------------------------------------------------------------------------
Class M Shares Amount
- -----------------------------------------------------------------------------
Shares sold 362,061 $4,833,606
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 18,810 247,913
- -----------------------------------------------------------------------------
380,871 5,081,519
Shares
repurchased (273,875) (3,643,877)
- -----------------------------------------------------------------------------
Net increase 106,996 $1,437,642
- -----------------------------------------------------------------------------
Year ended
August 31, 1998
- -----------------------------------------------------------------------------
Class M Shares Amount
- -----------------------------------------------------------------------------
Shares sold 482,034 $6,367,558
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 21,553 235,566
- -----------------------------------------------------------------------------
503,587 6,603,124
Shares
repurchased (139,901) (1,804,181)
- -----------------------------------------------------------------------------
Net increase 363,686 $4,798,943
- -----------------------------------------------------------------------------
Our commitment to quality service
* CHOOSE AWARD-WINNING SERVICE
Putnam Investments has won the DALBAR Service Award 8 times in the past 9
years. In 1997 and 1998, Putnam was the only company to win all three
DALBAR awards: for service to investors, to financial advisors, and to
variable annuity contract holders.*
* HELP YOUR INVESTMENTS GROW
Set up a systematic program for investing with as little as $25 a month
from a Putnam money market fund or from your checking or savings account.+
* SWITCH FUNDS EASILY
Within the same class of shares, you can move money from one account to
another without a service charge. (This privilege is subject to change or
termination.)
* ACCESS YOUR MONEY QUICKLY
You can get checks sent regularly or redeem shares any business day at the
then-current net asset value, which may be more or less than the original
cost of the shares.
For details about any of these or other services, contact your financial
advisor or call the toll-free number shown below and speak with a helpful
Putnam representative. To learn more about Putnam, visit our Website.
www.putnaminv.com
To make an additional investment in this or any other Putnam fund, contact
your financial advisor or call our toll-free number.
1-800-225-1581
*DALBAR, Inc., an independent research firm, presents the awards to financial
services firms that provide consistently excellent service.
+Regular investing, of course, does not guarantee a profit or protect
against a loss in a declining market.
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
John A. Hill, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John H. Mullin III
Robert E. Patterson
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
Brett C. Browchuk
Vice President
John J. Morgan
Vice President
Omid Kamshad
Vice President and Fund Manager
Joshua L. Byrne
Vice President and Fund Manager
Nigel P. Hart
Vice President and Fund Manager
Joseph P. Joseph
Vice President and Fund Manager
Richard A. Monaghan
Vice President
John R. Verani
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.
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
www.putnaminv.com
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PUTNAM
INVESTMENTS
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