Putnam
Worldwide
Equity Fund*
ANNUAL REPORT ON PERFORMANCE AND OUTLOOK
10-31-99
*Formerly Putnam Global Equity Fund
[LOGO: BOSTON * LONDON * TOKYO]
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
[copyright] Karsh, Ottawa
Dear Shareholder:
The portfolio managers of Putnam Worldwide Equity Fund* strive to select
stocks representing innovative, fast-growing small and mid-capitalization
companies well positioned in the cutting-edge industries of today and
tomorrow. Through strong stock selection, and an exceptional market
environment, the fund achieved outstanding results for the year ended
October 31, 1999, on an absolute basis and relative to its benchmark
index, the Salomon Brothers Extended Market Index.
Total return for 12 months ended 10/31/99
NAV POP
- ----------------------------------------------------------------------------
188.69% 172.10%
- ----------------------------------------------------------------------------
Past performance is no indication of future results. Performance
information for longer periods begins on page 5.
* STOCK SELECTION IS BOTTOM-UP, RESEARCH-DRIVEN PROCESS
In order to evaluate thousands of growing companies located both inside
and outside the United States -- many of which are relatively unknown to
Wall Street -- the fund's managers employ a tightly disciplined selection
process. They rely on a bottom-up, research-driven approach to evaluate
individual companies and target those located in politically stable
industrialized countries that foster a business environment of
technological and managerial innovation.
Such an environment, they believe, is essential to the success of small,
growing companies. The stocks of companies chosen for the portfolio must
exhibit a minimum of 20% annual earnings-per-share growth and possess a
product or service that sets them apart from their competition. In
addition, the portfolio managers look for corporate managements that they
believe are able to promote rapid growth and have a significant ownership
stake in the company.
*The fund, formerly Putnam Global Equity Fund, assumed its new name on July 30,
1999.
Over the past year, the managers successfully pursued this strategy in an
especially favorable global market environment. As world growth improved,
investors recognized the superior growth rates of many of the companies
that the fund's managers track. Additionally, while the United States is
often viewed as the world's technological leader, smaller companies that
have filled niche roles in non-U.S. markets either are rapidly catching up
to the United States or in some cases, have even surpassed it. Your fund's
global mandate allows it to take advantage of these growth opportunities
wherever they may exist.
During the period, the fund benefited from solid weightings in industries
related to the astounding growth of the Internet such as networking
equipment, next-generation wireless technology, cable, and media. For
example, Bodysonic was a particularly strong holding for the fund. This
Japanese film distributor and producer offers a strong business model and
operates in a growing market with great potential. Bodysonic enlists
quality partners for production and distribution, thereby spreading and
limiting business risk. The new management has sold off unprofitable
businesses, set up a film subsidiary, and expanded by acquiring a South
Korean distributor. The low-budget horror films the company produces have
been popular with Japanese teenagers and the company has been successful
in setting up licensing agreements with mobile phone operators seeking to
organize online distribution businesses.
Bodysonic has soundly beat earnings estimates and the fund's managers
expect this company to offer at least 25% earnings growth in the coming
year, though of course, such performance cannot be guaranteed. While this
holding was viewed favorably at the end of the period, it and all other
portfolio holdings are subject to review and adjustment in accordance with
the fund's investment strategy and may vary in the future.
[GRAPHIC OMITTED: horizontal bar chart COUNTRY ALLOCATIONS]
COUNTRY ALLOCATIONS*
United States 56.1%
Japan 13.1%
United Kingdom 5.1%
Canada 4.7%
Germany 3.8%
Footnote reads:
*Based on net assets as of 10/31/99. Holdings will vary over time.
* EMPHASIS TO REMAIN ON SMALLER, AGGRESSIVELY GROWING COMPANIES
As the fund enters its second fiscal year, it has been strengthened by the
addition of Stephen P. Dexter to the management team. Steve joins Roland
Gillis, who has managed the fund since its inception. Before joining
Putnam, Steve was with Scudder Kemper Investments, Kemper Financial
Services, and Sears Investment Management. He has 16 years of investment
experience.
Roland and Steve will continue to emphasize smaller, aggressively growing
companies in the vanguard of the new electronic economy. While they do not
expect a repeat of this year's extraordinary results, they believe new
opportunities will continue to present themselves within the realm of
stocks available to your fund.
Respectfully yours,
/S/GEORGE PUTNAM
George Putnam
Chairman of the Trustees
December 15, 1999
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 10/31/99, there is no guarantee the fund will
continue to hold these securities in the future. International investing
involves certain risks, including economic instability, political
developments, and currency fluctuations. 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 Worldwide
Equity Fund is designed for investors seeking long-term capital appreciation
primarily through a globally diversified equity portfolio.
TOTAL RETURN FOR PERIODS ENDED 10/31/99
Salomon Bros.
Extended Consumer
NAV POP Market Index price index
- ------------------------------------------------------------------------
1 year 188.69% 172.10% 17.46% 2.69%
- ------------------------------------------------------------------------
Life of fund (5/6/98) 167.29 151.89 0.08 3.51
Annual average 93.45 85.89 0.05 2.32
- ------------------------------------------------------------------------
Past performance is no assurance of future results. More recent returns
may be more or less than those shown. 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. Performance data reflects an expense limitation
currently in effect. Without it, total returns would have been lower.
PRICE AND DISTRIBUTION INFORMATION
12 MONTHS ENDED 10/31/99
- ------------------------------------------------------------------------
Distributions*
- ------------------------------------------------------------------------
Share value: NAV POP
- ------------------------------------------------------------------------
10/31/98 $7.87 $8.35
- ------------------------------------------------------------------------
10/31/99 22.72 24.11
- ------------------------------------------------------------------------
*The fund made no distributions during the period.
TOTAL RETURN FOR PERIODS ENDED 9/30/99 (most recent calendar quarter)
NAV POP
- ------------------------------------------------------------------------
1 year 152.41% 137.87%
- ------------------------------------------------------------------------
Life of fund (5/6/98) 128.35 115.19
Annual average 80.36 72.87
- ------------------------------------------------------------------------
Past performance is no assurance of future results. More recent returns
may be more or less than those shown. Returns for class A shares reflect
the current maximum initial sales charge of 5.75%. 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. Performance data reflects an
expense limitation currently in effect. Without it, total returns would
have been lower.
The fund is offered on a limited basis and has limited assets.
[GRAPHIC OMITTED: worm chart GROWTH OF A $10,000 INVESTMENT]
GROWTH OF A $10,000 INVESTMENT
Cumulative total return of a $10,000 investment since 5/6/98
Salomon Bros.
Fund's shares Extended Market Consumer price
Date at POP Index index
5/6/98 9,425 10,000 10,000
10/31/98 8,725 7,276 10,159
10/31/99 $25,189 $10,008 $10,351
Footnote reads:
Past performance is no assurance of future results. See first page of
performance section for performance calculation method.
Terms and definitions
Total return shows how the value of the fund's shares changed over time,
assuming you held the shares through the entire period and reinvested all
distributions in the fund.
Net asset value (NAV) is the value of all your fund's assets, minus any
liabilities, divided by the number of outstanding shares, not including
any initial or contingent deferred sales charge.
Public offering price (POP) is the price of a mutual fund share plus the
maximum sales charge levied at the time of purchase. POP performance
figures shown here assume the 5.75% maximum sales charge.
Comparative benchmarks
Salomon Brothers Extended Market Index is an unmanaged list of global
equity securities, with all values expressed in U.S. dollars. The index
assumes reinvestment of all distributions and interest payments and does
not take in account brokerage fees or taxes. Securities in the fund do not
match those in the index and performance of the fund will differ. It is
not possible to invest directly in an index.
Consumer price index (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
A guide to the financial statements
These sections of the report, preceded by the Report of independent
accountants, constitute the fund's financial statements.
The fund's portfolio lists all the fund's investments and their values as
of the last day of the reporting period. Holdings are organized by asset
type and industry sector, country, or state to show areas of concentration
and diversification.
Statement of assets and liabilities shows how the fund's net assets and
share price are determined. All investment and noninvestment assets are
added together. Any unpaid expenses and other liabilities are subtracted
from this total. The result is divided by the number of shares to
determine the net asset value per share, which is calculated separately
for each class of shares. (For funds with preferred shares, the amount
subtracted from total assets includes the net assets allocated to
remarketed preferred shares.)
Statement of operations shows the fund's net investment gain or loss for
the reporting period. This is determined by adding up all the fund's
earnings -- from dividends and interest income -- and subtracting its
operating expenses. This statement also lists any net gain or loss the
fund realized on the sales of its holdings and -- for holdings that remain
in the portfolio -- any change in unrealized gains or losses over the
period.
Statement of changes in net assets shows how the fund's net assets were
affected by distributions to shareholders and by changes in the number of
the fund's shares. It lists distributions and their sources (net
investment income or realized capital gains) over the current reporting
period and the most recent fiscal year-end. The distributions listed here
may not match the sources listed in the Statement of operations because
the distributions are determined on a tax basis and may be paid in a
different period from the one in which they were earned.
Financial highlights provide an overview of the fund's investment results,
per-share distributions, expense ratios, net investment income ratios and
portfolio turnover in one summary table, reflecting the five most recent
reporting periods. In a semiannual report, the highlight table also
includes the current reporting period. For open-end funds, a separate
table is provided for each share class.
Report of independent accountants
For the fiscal year ended October 31, 1999
To the Trustees of Putnam Investment Funds and
Shareholders of Putnam Worldwide Equity Fund
(a series of Putnam Investment Funds)
In our opinion, the accompanying statement of assets and liabilities,
including the fund's portfolio and the related statements of operations
and of changes in net assets and the financial highlights present fairly,
in all material respects, the financial position of Putnam Worldwide
Equity Fund (formerly known as Putnam Global Equity Fund) (the "fund") at
October 31, 1999, and the results of its operations, the changes in its
net assets and the financial highlights for the periods indicated, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the fund's management; our
responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these financial statements
in accordance with generally accepted auditing standards, which require
that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of investments owned at October
31, 1999 by correspondence with the custodian, provide a reasonable basis
for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 9, 1999
<TABLE>
<CAPTION>
The fund's portfolio
October 31, 1999
COMMON STOCKS (95.9%) (a)
NUMBER OF SHARES VALUE
<S> <C> <C>
Australia (2.0%)
- --------------------------------------------------------------------------------------------------------------------------
15,000 ERG Ltd. $ 58,994
3,500 Flight Centre Ltd. 31,050
7,500 Solution 6 Holdings Ltd. (NON) 32,838
8,000 Sonic Healthcare Ltd. 31,056
-------------
153,938
Bermuda (1.0%)
- --------------------------------------------------------------------------------------------------------------------------
2,204 Global Crossing Ltd. (NON) 76,314
Canada (4.7%)
- --------------------------------------------------------------------------------------------------------------------------
3,000 BCE Emergis, Inc. 78,325
1,061 Celestica, Inc. (NON) 58,431
2,300 Certicom Corp. 29,555
2,000 Clearnet Communications, Inc. Class A 44,000
1,600 Microcell Telecommunications, Inc. 30,400
500 Optimal Robotics Corp. 11,938
1,320 QLT PhotoTherapeutics Inc. 55,935
4,100 Wi-LAN, Inc. 53,661
-------------
362,245
Denmark (1.2%)
- --------------------------------------------------------------------------------------------------------------------------
800 Navision Software AS 31,771
500 Vestas Wind Systems AS (NON) 65,598
-------------
97,369
France (2.1%)
- --------------------------------------------------------------------------------------------------------------------------
250 Alten (NON) 27,378
200 Avenir Telecom (NON) 18,656
100 Europstat (NON) 14,440
260 Havas Advertising SA 73,032
100 Jet Multimedia 19,921
100 Prosodie SA 12,395
-------------
165,822
Germany (3.8%)
- --------------------------------------------------------------------------------------------------------------------------
300 ADVA AG Optical Networking (NON) 32,569
500 AIXTRON AG 55,599
500 ce Consumer Electronic AG 45,638
700 EM TV & Merchandising AG 34,677
700 EM TV & Merchandising AG Rights 7
1,500 GfK AG (NON) 42,450
200 Intershop Communications AG (NON) 25,085
769 Kamps AG 43,120
700 Steag Hamatach AG (NON) 17,412
-------------
296,557
Greece (1.3%)
- --------------------------------------------------------------------------------------------------------------------------
700 Data Information Systems S.A. 15,652
100 Delta Informatics S.A. 10,997
420 Dorian Bank S.A. 14,264
300 Dorian Bank S.A. Rights 3,837
500 Lambrakis Press S.A. 34,697
720 Tiletypos S.A. 17,959
600 Tiletypos S.A. Rights 3,454
-------------
100,860
Hong Kong (0.3%)
- --------------------------------------------------------------------------------------------------------------------------
428 China.com Corp. 22,631
Ireland (0.3%)
- --------------------------------------------------------------------------------------------------------------------------
1,220 CBT Group PLC ADR 25,163
Italy (0.4%)
- --------------------------------------------------------------------------------------------------------------------------
400 Tiscali SpA (NON) 27,615
Japan (13.1%)
- --------------------------------------------------------------------------------------------------------------------------
350 Avex, Inc. 73,939
300 Benesse Corp. 64,240
3,000 BODYSONIC Co., Ltd. (NON) 89,303
600 Capcom Co., Ltd. 29,326
100 C TWO-NETWORK Co., Ltd. 25,447
200 Fast Retailing Co., Ltd. 48,012
1,000 Fuji Electronics Co., Ltd. 18,053
3 Japan Telecom Co., Ltd. 103,130
300 Konami Co., Ltd. 29,095
1,000 Matsuya Foods Co., Ltd. 68,946
2 Net One Systems Co., Ltd. 36,106
1,000 Pasona Softbank, Inc. (NON) 65,297
3 Round One Corp. 40,330
500 Sundrug Co. Ltd. 34,281
200 Toyo Seimitsu Co., Ltd. 24,409
200 Trans Cosmos Inc. 25,447
500 Trend Micro Inc. 99,385
600 Tsuruha Co., Ltd. 72,018
500 Watami Food Service Co., Ltd. 34,809
2,000 YOKOWO CO., LTD. 34,281
-------------
1,015,854
Singapore (0.2%)
- --------------------------------------------------------------------------------------------------------------------------
1,300 Chartered Semiconductor Manufacturing (NON) 2,616
5,000 DelGro Corp. Ltd. 17,304
-------------
19,920
South Korea (0.6%)
- --------------------------------------------------------------------------------------------------------------------------
5,500 First Technology Co. Ltd. 45,026
Spain (0.4%)
- --------------------------------------------------------------------------------------------------------------------------
1,500 TPI Paginas Amarillas 144A 32,806
Sweden (2.1%)
- --------------------------------------------------------------------------------------------------------------------------
700 Framtidsfabriken AB (NON) 28,261
1,784 HiQ Intl. AB 51,135
200 Icon Medialab International AB (NON) 10,660
800 Modern Times Group MTG AB (NON) 25,955
83 Net Insight AB (NON) 2,683
2,300 Softronic AB 44,324
-------------
163,018
Switzerland (1.0%)
- --------------------------------------------------------------------------------------------------------------------------
500 Fantastic Corp. (NON) 35,309
100 Micronas Semiconductor Holding AG (NON) 19,195
400 New Venturetec Ltd. (NON) 22,706
-------------
77,210
Taiwan (0.2%)
- --------------------------------------------------------------------------------------------------------------------------
10,000 Team Young Advanced Ceramics Co., Ltd. 19,766
United Kingdom (5.1%)
- --------------------------------------------------------------------------------------------------------------------------
3,468 ARM Holdings PLC (NON) 98,514
800 Autonomy Corp. PLC (NON) 16,864
1,200 Eidos PLC (NON) 83,938
2,000 F.I. Group PLC 17,129
5,000 Future Network PLC (NON) 58,441
1,244 Matalan PLC (NON) 28,017
1,900 Nestor Healthcare Group PLC 18,592
3,000 Photo-Me Intl. PLC 73,532
-------------
395,027
United States (56.1%)
- --------------------------------------------------------------------------------------------------------------------------
400 About.com, Inc. (NON) 18,900
2,300 Acme Communications, Inc. (NON) 82,800
2,700 Act Manufacturing, Inc. (NON) 72,056
350 Agile Software Corp. (NON) 34,300
100 Akamai Technologies, Inc. (NON) 14,519
280 Allegiance Telecom, Inc. (NON) 19,320
2,000 Ames Department Stores, Inc. (NON) 63,375
210 AnswerThink Consulting Group, Inc. (NON) 30,765
570 Applied Micro Circuits Corp. (NON) 44,353
200 Ariba, Inc. (NON) 31,000
700 Aware, Inc. (NON) 22,269
30 Beyond.com Corp. (NON) 278
705 BroadVision, Inc. (NON) 51,906
800 Citadel Communications Corp. (NON) 38,650
600 CMG Information Services, Inc. (NON) 65,663
1,200 Computer Services, Inc. (NON) 24,284
1,100 Covad Communications Group 144A (NON) 52,800
200 Crossroads Systems, Inc. (NON) 14,225
1,610 Cumulus Media Inc. Class A (NON) 57,759
155 DoubleClick, Inc. (NON) 21,700
500 E.piphany, Inc. (NON) 43,000
1,000 Emulex Corp. (NON) 155,938
400 EMusic.com, Inc. (NON) 5,475
600 Engage Technologies, Inc. (NON) 21,225
1,445 Entercom Communications Corp. (NON) 71,979
900 E-Tek Dynamics, Inc. (NON) 59,963
1,000 Exchange Applications, Inc. (NON) 27,250
200 Extreme Networks, Inc. (NON) 16,063
1,900 Factory 2-U Stores, Inc. (NON) 48,450
500 Flextronics International Ltd. (NON) 35,500
2,000 Global TeleSystems Group, Inc. (NON) 47,875
20,000 Hanover Direct, Inc. (NON) 53,750
20 Harmonic Lightwaves, Inc. (NON) 1,188
400 I2 Technologies, Inc. (NON) 31,575
1,000 Informatica Corp. (NON) 72,250
100 Intertrust Technologies Corp. (NON) 5,450
100 Interwoven, Inc. (NON) 7,838
1,000 Jabil Circuit, Inc. (NON) 52,250
600 JDS Uniphase Corp. (NON) 100,168
411 Juniper Networks, Inc. (NON) 113,276
100 Keynote Systems, Inc. (NON) 4,538
1,000 Lamar Advertising Co. (NON) 54,000
800 Lightbridge, Inc. (NON) 13,300
4,100 LTX Corp. (NON) 64,831
990 Lycos, Inc. (NON) 52,841
1,600 Macromedia, Inc. (NON) 103,100
1,320 Metromedia Fiber Network, Inc. Class A (NON) 43,638
100 Mission Critical Software, Inc. (NON) 5,888
4,200 Nanometrics, Inc. (NON) 50,663
2,400 Netegrity, Inc. (NON) 64,800
800 NEXTLINK Communications, Inc. Class A (NON) 47,850
587 NTL Inc. (NON) 44,245
770 Optical Coating Laboratory, Inc. 82,294
445 Phone.com, Inc. (NON) 91,448
2,100 Pinnacle Holdings Inc. (NON) 50,400
1,100 Portal Software, Inc. (NON) 71,913
100 Predictive Systems, Inc. (NON) 4,350
710 Proxicom, Inc. (NON) 54,493
800 QLogic Corp. (NON) 83,300
520 Quest Software, Inc. (NON) 38,350
1,200 Radio One, Inc. (NON) 59,850
470 RealNetworks, Inc. (NON) 51,553
345 Reback Networks Inc. (NON) 39,848
3,000 Renal Care Group, Inc. (NON) 55,875
800 RF Micro Devices, Inc. (NON) 41,300
1,200 Salem Communications Corp. Class A (NON) 29,850
400 Sapient Corp. (NON) 51,150
400 Sepracor, Inc. (NON) 33,275
1,501 SFX Entertainment, Inc. Class A (NON) 52,424
1,500 Silicon Image, Inc. (NON) 66,281
1,220 Silknet Software, Inc. (NON) 97,600
90 SilverStream Software, Inc. (NON) 4,691
800 Software.com, Inc. (NON) 53,850
100 Spanish Broadcasting System, Inc. Class A (NON) 2,663
3,000 Spectrian Corp. (NON) 100,500
1,200 Tuesday Morning Corp. (NON) 27,600
1,400 USWeb Corp. (NON) 54,250
740 Verio Inc. (NON) 27,611
980 VeriSign, Inc. (NON) 121,030
900 VERITAS Software Corp. (NON) 97,088
720 Verity, Inc. (NON) 49,590
750 VerticalNet, Inc. (NON) 42,000
1,220 Viant Corp. (NON) 121,390
700 Vignette Corp. (NON) 110,600
400 Vitria Technology, Inc. (NON) 26,375
1,000 WestWood One, Inc. (NON) 46,125
800 Whittman-Hart, Inc. (NON) 30,750
2,960 Zoran Corp. (NON) 85,470
1,300 Zygo Corp. (NON) 21,531
-------------
4,359,747
-------------
Total Common Stocks (cost $5,031,702) $ 7,456,888
SHORT-TERM INVESTMENTS (4.1%) (a) (cost $318,000)
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------
$318,000 Interest in $462,305,000 joint repurchase agreement
dated October 29, 1999 with Warburg Securities
due November 1, 1999 with respect to various
U.S. Treasury obligations -- maturity value
of $318,138 for an effect yield of 5.22% $ 318,000
- --------------------------------------------------------------------------------------------------------------------------
Total Investments (cost $5,349,702) (b) $7,774,888
- --------------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $7,774,014.
(b) The aggregate identified cost on a tax basis is $5,378,054, resulting in gross unrealized appreciation and
depreciation of $2,449,547 and $52,713, respectively, or net unrealized appreciation of $2,396,834.
(NON) Non-income-producing security.
144A after the name of a security represents those exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional
buyers.
ADR after the name of a foreign holding stands for American Depositary Receipts representing ownership of foreign
securities on deposit with a domestic custodian bank.
The fund had the following industry group concentrations greater than 10% at October 31, 1999 (as a percentage of net
assets):
Computer services and software 35.8%
Electronics and electrical equipment 15.8
- -------------------------------------------------------------------------------
Forward Currency Contracts to Sell at October 31, 1999
Aggregate Face Delivery Unrealized
Market Value Value Date Depreciation
- -------------------------------------------------------------------------------
Japanese Yen $266,071 $249,895 2/25/00 $(16,176)
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
October 31, 1999
<S> <C>
Assets
- -----------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $5,349,702) (Note 1) $7,774,888
- -----------------------------------------------------------------------------------------------
Foreign currency (cost $84,876) 85,774
- -----------------------------------------------------------------------------------------------
Dividends,interest and other receivables 2,852
- -----------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 12,094
- -----------------------------------------------------------------------------------------------
Receivable for securities sold 254,743
- -----------------------------------------------------------------------------------------------
Receivable from Manager (Note 2) 7,518
- -----------------------------------------------------------------------------------------------
Total assets 8,137,869
Liabilities
- -----------------------------------------------------------------------------------------------
Payable to subcustodian (Note 2) 25,415
- -----------------------------------------------------------------------------------------------
Payable for securities purchased 298,866
- -----------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 956
- -----------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 4,525
- -----------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 510
- -----------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 3
- -----------------------------------------------------------------------------------------------
Payable for open forward currency contracts 16,176
- -----------------------------------------------------------------------------------------------
Payable for closed forward currency contracts 16,322
- -----------------------------------------------------------------------------------------------
Other accrued expenses 1,082
- -----------------------------------------------------------------------------------------------
Total liabilities 363,855
- -----------------------------------------------------------------------------------------------
Net assets $7,774,014
Represented by
- -----------------------------------------------------------------------------------------------
Paid-in capital (Notes 1, 4 and 5) $3,586,796
- -----------------------------------------------------------------------------------------------
Undistributed net investment income (Note 1) 16,177
- -----------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and
foreign currency transactions (Note 1) 1,760,762
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and
assets and liabilities in foreign currencies 2,410,279
- -----------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $7,774,014
Computation of net asset value and offering price
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per share
($7,774,014 divided by 342,201 shares) $22.72
- -----------------------------------------------------------------------------------------------
Offering price per share (100/94.25 of $22.72)* $24.11
- -----------------------------------------------------------------------------------------------
* 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
Year ended October 31, 1999
<S> <C>
Investment income:
- -----------------------------------------------------------------------------------------------
Dividends (net of foreign tax of $1,992) $ 15,951
- -----------------------------------------------------------------------------------------------
Interest 4,829
- -----------------------------------------------------------------------------------------------
Total investment income 20,780
Expenses:
- -----------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 33,130
- -----------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 7,003
- -----------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 2,411
- -----------------------------------------------------------------------------------------------
Administrative services (Note 2) 40
- -----------------------------------------------------------------------------------------------
Reports to shareholders 8,244
- -----------------------------------------------------------------------------------------------
Registration fees 380
- -----------------------------------------------------------------------------------------------
Auditing 41,564
- -----------------------------------------------------------------------------------------------
Legal 3,532
- -----------------------------------------------------------------------------------------------
Postage 66
- -----------------------------------------------------------------------------------------------
Other 148
- -----------------------------------------------------------------------------------------------
Fees waived and reimbursed by manager (Note 2) (36,471)
- -----------------------------------------------------------------------------------------------
Total expenses 60,047
- -----------------------------------------------------------------------------------------------
Expense reduction (Note 2) (5,951)
- -----------------------------------------------------------------------------------------------
Net expenses 54,096
- -----------------------------------------------------------------------------------------------
Net investment loss (33,316)
- -----------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 2,078,813
- -----------------------------------------------------------------------------------------------
Net realized loss on foreign currency transactions (Note 1) (10,667)
- -----------------------------------------------------------------------------------------------
Net unrealized depreciation of assets and liabilities in
foreign currencies during the year (15,893)
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments during the year 2,322,322
- -----------------------------------------------------------------------------------------------
Net gain on investments 4,374,575
- -----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $4,341,259
- -----------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
For the period
May 6, 1998
(commencement
Year ended of operations)
October 31 to October 31
1999 1998
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets
- ---------------------------------------------------------------------------------------------------------------
Operations:
- ---------------------------------------------------------------------------------------------------------------
Net investment loss $ (33,316) $ (6,037)
- ---------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments and
foreign currency transactions 2,068,146 (253,631)
- ---------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and
assets and liabilities in foreign currencies 2,306,429 103,850
- ---------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations 4,341,259 (155,818)
- ---------------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 1,471,049 117,524
- ---------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 5,812,308 (38,294)
Net assets
- ---------------------------------------------------------------------------------------------------------------
Beginning of year (Note 5) 1,961,706 2,000,000
- ---------------------------------------------------------------------------------------------------------------
End of year (including undistributed net investment
income of $16,177 and $--, respectively) $7,774,014 $1,961,706
- ---------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
- ------------------------------------------------------------------------------------------------------------------------------------
For the period
Per-share Year ended May 6, 1998+
operating performance October 31 to October 31
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value,
beginning of period $7.87 $8.50
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment loss (a)(d) (.12) (.02)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 14.97 (.61)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 14.85 (.63)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $22.72 $7.87
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 188.69 (7.41)*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $7,774 $1,962
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c)(d) 1.45 .71*
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%)(d) (.80) (.29)*
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 312.75 150.43*
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Per share net investment income 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) 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, expenses for the fund reflect a
reduction of $.13 and $.10 per share for the periods ended October 31, 1999 and October 31, 1998, respectively. (Note 2)
</TABLE>
Notes to financial statements
October 31, 1999
Note 1
Significant accounting policies
Putnam Worldwide Equity Fund (formerly known as Global Equity Fund) (the
"fund") is a series of Putnam Investment Funds ("the trust") which is
registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company. The fund seeks
long-term capital appreciation by investing primarily in common stocks of
companies located in a number of foreign countries and in the United
States.
The following is a summary of significant accounting policies consistently
followed by the fund in the preparation of its financial statements. The
preparation of financial statements is in conformity with generally
accepted accounting principles and requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities
of the financial statements and the reported amounts of increases and
decreases in net assets from operations during the reporting period.
Actual results could differ from those estimates.
A) Security valuation Investments for which market quotations are readily
available are stated at market value, which is determined using the last
reported sales price on its principle exchange, or if no sales are
reported -- as in the case of some securities traded over-the-counter --
the last reported bid price. Securities quoted in foreign currencies are
translated into U.S. dollars at the current exchange rate. Short-term
investments having remaining maturities of 60 days or less are stated at
amortized cost, which approximates market value. Other investments,
including restricted securities, are stated at fair value following
procedures approved by the Trustees.
B) Joint trading account Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the fund may transfer uninvested cash
balances into a joint trading account along with the cash of other
registered investment companies and certain other accounts managed by
Putnam Investment Management, Inc. ("Putnam Management"), the fund's
manager, a wholly-owned subsidiary of Putnam Investments, Inc.. These
balances may be invested in one or more repurchase agreements and/or
short-term money market instruments.
C) Repurchase agreements The fund, or any joint trading account, through
its custodian, receives delivery of the underlying securities, the market
value of which at the time of purchase is required to be in an amount at
least equal to the resale price, including accrued interest. Collateral
for certain tri-party repurchase agreements is held at the counterparty's
custodian in a segregated account for the benefit of the fund and the
counterparty. Putnam Management is responsible for determining that the
value of these underlying securities is, at all times, at least equal to
the resale price, including accrued interest.
D) Security transactions and related investment income Security
transactions are accounted for on the trade date (date the order to buy or
sell is executed). Gains or losses on securities sold are determined on
the identified cost basis.
Interest income is recorded on the accrual basis. Dividend income is
recorded on the ex-dividend date except that certain dividends from
foreign securities are recorded as soon as the fund is informed of the
ex-dividend date.
E) Foreign currency translation The accounting records of the fund are
maintained in U.S. dollars. The market value of foreign securities,
currency holdings, and other assets and liabilities are recorded in the
books and records of the fund after translation to U.S. dollars based on
the exchange rates on that day. The cost of each security is determined
using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when accrued or incurred. The fund
does not isolate that portion of realized or unrealized gains or losses
resulting from changes in the foreign exchange rate on investments from
fluctuations arising from changes in the market prices of the securities.
Such gains and losses are included with the net realized and unrealized
gain or loss on investments. Net realized gains and losses on foreign
currency transactions represent net realized exchange gains or losses on
closed forward currency contracts, disposition of foreign currencies and
the difference between the amount of investment income and foreign
withholding taxes recorded on the fund's books and the U.S. dollar
equivalent amounts actually received or paid. Net unrealized appreciation
and depreciation of assets and liabilities in foreign currencies arise
from changes in the value of open forward currency contracts and assets
and liabilities other than investments at the period end, resulting from
changes in the exchange rate. Investments in foreign securities involve
certain risks, including those related to economic instability,
unfavorable political developments, and currency fluctuations, not present
with domestic investments.
F) Forward currency contracts The fund may engage in forward currency
contracts, which are agreements between two parties to buy and sell
currencies at a set price on a future date, to protect against a decline
in value relative to the U.S. dollar of the currencies in which its
portfolio securities are denominated or quoted (or an increase in the
value of a currency in which securities a fund intends to buy are
denominated, when a fund holds cash reserves and short-term investments).
The U.S. dollar value of forward currency contracts is determined using
current forward currency exchange rates supplied by a quotation service.
The market value of the contract will fluctuate with changes in currency
exchange rates. The contract is "marked to market" daily and the change in
market value is recorded as an unrealized gain or loss. When the contract
is closed, the fund records a realized gain or loss equal to the
difference between the value of the contract at the time it was opened and
the value at the time it was closed. The fund could be exposed to risk if
the value of the currency changes unfavorably, if the counterparties to
the contracts are unable to meet the terms of their contracts or if the
fund is unable to enter into a closing position.
G) 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 year ended
October 31, 1999, the fund had no borrowings against the line of credit.
H) Federal taxes It is the policy of the fund to distribute all of its
taxable income within the prescribed time and otherwise comply with the
provisions of the Internal Revenue Code applicable to regulated investment
companies. It is also the intention of the fund to distribute an amount
sufficient to avoid imposition of any excise tax under Section 4982 of the
Internal Revenue Code of 1986, as amended. Therefore, no provision has
been made for federal taxes on income, capital gains or unrealized
appreciation on securities held nor for excise tax on income and capital
gains.
I) Distributions to shareholders Distributions to shareholders from net
investment income are recorded by the fund on the ex-dividend date.
Capital gain distributions, if any, are recorded on the ex-dividend date
and paid at least annually. The amount and character of income and gains
to be distributed are determined in accordance with income tax
regulations, which may differ from generally accepted accounting
principles. These differences include temporary and permanent differences
of losses on wash sales transactions, foreign currency gains and losses
and unrealized gains and losses on certain futures contracts.
Reclassifications are made to the fund's capital accounts to reflect
income and gains available for distribution (or available capital loss
carryovers) under income tax regulations. For the year ended October 31,
1999, the fund reclassified $49,493 to increase undistributed net
investment income with a decrease to accumulated net realized gains of
$49,493. The calculation of net investment income per share in the
financial highlights table excludes these adjustments.
J) 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.
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 February 29, 2000, to the extent
that expenses of the fund (exclusive of brokerage commissions, interest,
taxes, deferred organizational and extraordinary expenses, or 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.
Under the subcustodian contract between the subcustodian bank and PFTC,
the subcustodian bank has a lien on the securities of the fund to the
extent permitted by the fund's investment restrictions to cover any
advances made by the subcustodian bank for the settlement of securities
purchased by the fund. At October 31, 1999, the payable to the
subcustodian bank represents the amount due for a cash advance for the
settlement of a security purchased.
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 year ended October 31, 1999, fund expenses were reduced by $5,951
under expense offset arrangements with PFTC. Investor servicing and
custodian fees reported in the Statement of operations exclude these
credits. The fund could have invested 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 receive additional fees for attendance at
certain committee meetings.
The fund has adopted a Trustee Fee Deferral Plan (the "Deferral Plan")
which allows the Trustees to defer the receipt of all or a portion of
Trustees Fees payable on or after July 1, 1995. The deferred fees remain
invested in certain Putnam funds until distribution in accordance with the
Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension
plan (the "Pension Plan") covering all Trustees of the fund who have
served as a Trustee for at least five years. Benefits under the Pension
Plan are equal to 50% of the Trustee's average total retainer and meeting
fees for the three years preceding retirement. Pension expense for the
fund is included in Compensation of Trustees in the Statement of
operations. Accrued pension liability is included in Payable for
compensation of Trustees in the Statement of assets and liabilities.
The fund has adopted 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 year ended October 31, 1999, Putnam Mutual Funds Corp., acting as
underwriter received no net commissions from the sale of shares. A
deferred sales charge of up to 1% is assessed on certain redemptions of
shares. For the year ended October 31, 1999, Putnam Mutual Funds Corp.,
acting as underwriter received no monies on redemptions.
Note 3
Purchases and sales of securities
During the year ended October 31, 1999, cost of purchases and proceeds
from sales of investment securities other than short-term investments
aggregated $13,902,997 and $12,725,801, respectively. There were no
purchases and sales of U.S. government obligations.
Note 4
Capital shares
At October 31, 1999, there were an unlimited number of shares of
beneficial interest authorized. Transactions in capital shares were as
follows:
Year ended October 31, 1999
- -----------------------------------------------------------------------------
Shares Amount
- -----------------------------------------------------------------------------
Shares sold 121,826 $1,939,193
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- -----------------------------------------------------------------------------
121,826 1,939,193
Shares
repurchased (28,842) (468,144)
- -----------------------------------------------------------------------------
Net increase 92,984 $1,471,049
- -----------------------------------------------------------------------------
For the period May 6, 1998
(commencement of operations)
to October 31, 1998
- -----------------------------------------------------------------------------
Shares Amount
- -----------------------------------------------------------------------------
Shares sold 22,931 $194,692
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- -----------------------------------------------------------------------------
22,931 194,692
Shares
repurchased (9,008) (77,168)
- -----------------------------------------------------------------------------
Net increase 13,923 $117,524
- -----------------------------------------------------------------------------
Note 5
Initial capitalization and
offering of shares
The fund was established as a Massachusetts trust on October 31, 1994.
During the period October 31, 1994 to May 6, 1998, the fund had no
operations other than those related to organizational matters, including
the initial capital contribution of $2,000,000 and the issuance of 235,294
shares to Putnam Investments, Inc. on May 5, 1998.
At October 31, 1999, Putnam Investments, Inc. owned 251,966 shares of the
fund (73.6% of shares outstanding), valued at $5,724,668.
Federal tax information
(Unaudited)
Pursuant to Section 852 of the Internal Revenue Code, as amended, the Fund
hereby designates $148,754 as capital gain, for its taxable year ended
October 31, 1999.
The fund has designated 100% of the distributions from net investment
income, as qualifying for the dividends received deduction for
corporations.
The Form 1099 you receive in January 2000 will show the tax status of all
distributions paid to your account in calendar 1999.
Fund information
WEB SITE
www.putnaminv.com
INVESTMENT MANAGER
Putnam Investment Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
INDEPENDENT
ACCOUNTANTS
PricewaterhouseCoopers LLP
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
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
Roland W. Gillis
Vice President and Fund Manager
Stephen P. Dexter
Vice President and Fund Manager
Richard A. Monaghan
Vice President
John R. Verani
Vice President
This report is for the information of shareholders of Putnam Worldwide
Equity Fund. It may also be used as sales literature when preceded or
accompanied by the current prospectus, which gives details of sales
charges, investment objectives, and operating policies of the fund, and
the most recent copy of Putnam's Quarterly Performance Summary. For more
information or to request a prospectus, call toll free: 1-800-225-1581.
You can also learn more at Putnam Investments' Web site: www.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.
56795 21H 12/99
