Putnam
Global
Equity
Fund
SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK
4-30-99
[LOGO: BOSTON * LONDON * TOKYO]
The following report contains a list of your fund's portfolio holdings and
complete financial statements for the six months ended 4/30/99. Additional
details, including fund strategy, performance, and managers' outlook, will
be provided in the annual report, which will cover the 12 months ended
10/31/99.
<TABLE>
<CAPTION>
Portfolio of investments owned
April 30, 1999 (Unaudited)
COMMON STOCKS (94.9%) (a)
NUMBER OF SHARES VALUE
<S> <C>
Australia (5.4%)
- --------------------------------------------------------------------------------------------------------------------------
9,200 Aristocrat Leisure Ltd. $ 58,911
5,000 Harvey Norman Holdings Ltd. 50,274
8,000 Telstra Corp. Ltd. 43,394
9,500 Westfield Holdings Ltd. 62,843
--------------
215,422
Canada (3.6%)
- --------------------------------------------------------------------------------------------------------------------------
2,300 Patheon, Inc. 10,094
300 QLT PhotoTherapeutics Inc. 14,438
1,700 Rogers Communications, Inc. 31,825
1,200 Shaw Communications, Inc. Class B (NON) 49,373
3,012 The Descartes Systems Group Inc. 19,013
550 TLC The Laser Center Inc. 20,195
--------------
144,938
Denmark (0.7%)
- --------------------------------------------------------------------------------------------------------------------------
420 Vestas Wind Systems AS 28,703
Finland (0.5%)
- --------------------------------------------------------------------------------------------------------------------------
600 JOT Automation Group Oyj 19,806
France (1.9%)
- --------------------------------------------------------------------------------------------------------------------------
400 Campagnie Generale de Geophysique S.A. 21,065
500 Coflexip S.A. 44,965
150 Global Graphics 9,379
--------------
75,409
Germany (6.6%)
- --------------------------------------------------------------------------------------------------------------------------
100 ADVA AG Optical Networking 7,607
160 ce Consumer Electronic AG (NON) 67,543
47 EM TV & Merchandising AG 44,505
70 Infomatec Integrated Information Systems AG 17,019
100 Intershop Communications AG 24,070
1,260 Kamps AG 43,325
300 Medion AG 61,734
--------------
265,803
Ireland (0.5%)
- --------------------------------------------------------------------------------------------------------------------------
1,318 CBT Group PLC ADR 20,429
Italy (1.6%)
- --------------------------------------------------------------------------------------------------------------------------
3,000 Class Editori 29,201
30,000 Seat Pagine Gialle SpA 37,453
--------------
66,654
Japan (17.2%)
- --------------------------------------------------------------------------------------------------------------------------
200 Avex, Inc. 18,436
400 Benesse Corp. 33,386
1,000 C TWO-NETWORK Co., Ltd. 87,987
1,000 CRC Research Institute, Inc. 13,324
3,000 Daiwa Securities Co. 18,352
100 Don Quijote Co. 23,297
700 Fast Retailing Co., Ltd. 36,018
300 Fuji Seal, Inc. 34,191
2,000 Gakken Credit Corp. 9,721
300 Hikari Tsushin, Inc. 62,851
300 Kadokawa Shoten Publishing Co., Ltd. 45,755
700 Komeri Co., Ltd. 14,079
2,000 MKC-STAT Corp. 28,492
200 Otsuka Kagu 25,140
1,000 Park24 Co., Ltd. 41,314
5 Round One Corp. 18,604
1,000 Saizeriya Co., Ltd. 54,136
2,700 Sanseido Co., Ltd. 26,971
1,100 Towa Corp. 29,498
1,000 Tsuruha Co., Ltd. 67,963
--------------
689,515
Norway (0.5%)
- --------------------------------------------------------------------------------------------------------------------------
600 Opticom ASA 21,171
Spain (1.1%)
- --------------------------------------------------------------------------------------------------------------------------
1,800 Marco Iberica Distrib Edicio 43,477
Sweden (0.5%)
- --------------------------------------------------------------------------------------------------------------------------
600 Icon Medialab International AB 22,040
Switzerland (1.3%)
- --------------------------------------------------------------------------------------------------------------------------
90 BT&T Telekommunikations und Technologie AG 28,238
6 Kudelski S.A. 23,433
--------------
51,671
United Kingdom (4.0%)
- --------------------------------------------------------------------------------------------------------------------------
1,600 ARM Holdings PLC (NON) 17,197
4,000 Logica PLC 38,616
18,000 Pace Micro Technology PLC 42,285
1,200 Psion PLC 17,570
2,000 RM PLC 17,377
600 Sage Group (The) PLC 20,273
700 Trinity PLC 6,442
--------------
159,760
United States (49.5%)
- --------------------------------------------------------------------------------------------------------------------------
300 Allegiance Telecom, Inc. 13,800
753 American Tower Corp. Class A (NON) 15,954
940 Ames Department Stores, Inc. (NON) 32,841
367 Applied Micro Circuits Corp. 19,566
815 Aware, Inc. 45,283
1,100 Beyond.com Corp. (NON) 32,381
250 Catalina Marketing Corp. 21,359
659 Citadel Communications Corp. 18,452
73 CMG Information Services, Inc. 18,583
424 Concord Communications, Inc. 18,974
1,247 Concur Technologies, Inc. 45,048
288 Covad Communications Group 144A 27,648
400 Critical Path, Inc. 39,800
2,900 Cumulus Media Inc. Class A 46,944
500 Data Communication Systems Co., Ltd. 17,766
1,347 Eclipsys Corp. 29,634
1,900 Eidos PLC (NON) 72,606
450 Emulex Corp. 19,856
659 Entercom Communications Corp. 24,465
465 Entrust Technologies Inc. 11,451
847 Exchange Applications, Inc. 24,987
100 Extreme Networks, Inc. 5,544
1,800 Factory 2-U Stores, Inc. 32,175
3,300 GaSonics International Corp. 39,600
447 Genesis Microchip Inc. 9,275
649 Global Crossing Ltd. 35,046
700 Harmonic Lightwaves, Inc. 31,938
612 Healtheon Corp. 27,693
282 Heftel Broadcasting Corp. Class A 15,334
100 Hi/Fn, Inc. 5,400
900 I2 Technologies, Inc. 30,488
659 Infinity Broadcating Corp. Class A 18,246
100 Informatica Corp. 2,825
1,000 Insituform Technologies, Inc. 19,063
450 Intraware, Inc. 13,781
235 Intuit, Inc. 20,239
367 ISS Group, Inc. 19,474
376 Jabil Circuit, Inc. 17,508
300 JDS Fitel Inc. 18,103
471 Lamar Advertising Co. 15,837
18 Legato Systems, Inc. 728
282 Linens 'N Things, Inc. 12,902
400 Macromedia, Inc. 16,575
100 Marimba, Inc. 6,075
565 MEDE AMERICA Corp. 14,690
941 Medquist, Inc. 32,229
941 Metromedia Fiber Network, Inc. Class A 79,279
300 MKS Instruments, Inc. 4,088
100 Mpath Interactive, Inc. 3,938
705 Multex.com Inc. 30,315
1,791 Nanometrics, Inc. 13,433
172 Net Perceptions, Inc. 4,537
100 NetGravity, Inc. 4,044
471 Network Appliance, Inc. 23,697
61 New Era of Networks, Inc. 2,291
282 NEXTLINK Communications, Inc. Class A 20,657
350 Optical Coating Laboratory, Inc. 21,569
753 Outdoor Systems, Inc. 18,966
494 Peregrine Systems, Inc. 11,115
1,176 Pinnacle Holdings Inc. 24,108
1,800 Province Healthcare Co. 40,050
100 Proxicom, Inc. 2,244
424 QLogic Corp. 29,654
612 Qwest Communications International, Inc. 52,288
471 Rational Software Corp. 13,953
84 RealNetworks, Inc. 18,606
1,800 RehabCare Group, Inc. 29,925
100 Rhythms Netconnections, Inc. 8,250
4,800 Seat Pagine Gialle SpA 5,904
450 Security First Technologies Corp. 53,578
291 Sepracor, Inc. 24,590
565 SFX Entertainment, Inc. Class A 34,889
706 Sipex Corp. 9,884
741 SportsLine USA, Inc. 29,640
2,000 Spyglass, Inc. 36,125
600 Sunrise Assisted Living, Inc. 24,000
300 TMP Worldwide Inc. 20,175
942 TSI International Software, Ltd. 14,837
900 Tuesday Morning Corp. 17,550
348 Univision Communications Inc. Class A 20,141
621 USWeb Corp. 13,934
518 VeriSign, Inc. 59,570
300 VERITAS Software Corp. 21,300
771 Verity, Inc. 26,985
100 Vignette Corp. 9,500
200 Whittman-Hart, Inc. 5,650
550 Whole Foods Market, Inc. 21,450
1,967 Zoran Corp. 21,268
--------------
1,986,143
--------------
Total Common Stocks (cost $2,873,614) $ 3,810,941
SHORT-TERM INVESTMENTS (4.4%) (a) (cost $176,000)
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------
$176,000 Interest in $292,698,000 joint repurchase agreement
dated April 30, 1999 with Warburg Securities due
May 3, 1999 with respect to various U.S. Treasury
obligations -- maturity value of $176,071 for an
effective yield of 4.87% $ 176,000
- --------------------------------------------------------------------------------------------------------------------------
Total Investments (cost $3,049,614) (b) $ 3,986,941
- --------------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $4,014,623.
(b) The aggregate identified cost on a tax basis is $3,052,200, resulting in gross unrealized appreciation and
depreciation of $1,082,950 and $148,209, respectively, or net unrealized appreciation of $934,741.
(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 Depository Receipts, representing ownership of
foreign securities on deposit with a domestic custodian bank.
The fund had the following industry group concentration greater than 10% at April 30, 1999 (as a percentage of
net assets):
Computer services and software 20.6%
Electronics and electrical equipment 13.6
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
April 30, 1999 (Unaudited)
<S> <C>
Assets
- -----------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $3,049,614) (Note 1) $3,986,941
- -----------------------------------------------------------------------------------------------
Dividends and interest receivable 2,065
- -----------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 1,163
- -----------------------------------------------------------------------------------------------
Receivable for securities sold 213,380
- -----------------------------------------------------------------------------------------------
Total assets 4,203,549
Liabilities
- -----------------------------------------------------------------------------------------------
Payable to subcustodian (Note 2) 6,090
- -----------------------------------------------------------------------------------------------
Payable for securities purchased 169,691
- -----------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 381
- -----------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 548
- -----------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 215
- -----------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 13
- -----------------------------------------------------------------------------------------------
Payable for auditing expense 8,305
- -----------------------------------------------------------------------------------------------
Payable for legal expense 1,440
- -----------------------------------------------------------------------------------------------
Other accrued expenses 2,243
- -----------------------------------------------------------------------------------------------
Total liabilities 188,926
- -----------------------------------------------------------------------------------------------
Net assets $4,014,623
Represented by
- -----------------------------------------------------------------------------------------------
Paid-in capital (Notes 1, 4 and 5) $2,671,961
- -----------------------------------------------------------------------------------------------
Accumulated net investment loss (Note 1) (9,687)
- -----------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and
foreign currency transactions (Note 1) 414,898
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and
assets and liabilities in foreign currencies 937,451
- -----------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $4,014,623
Computation of net asset value and offering price
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per share
($4,014,623 divided by 293,557 shares) $13.68
- -----------------------------------------------------------------------------------------------
Offering price per share (100/94.25 of $13.68)* $14.51
- -----------------------------------------------------------------------------------------------
* On single retail sales of less than $50,000. On sales of $50,000 or more and on group
sales the offering price is reduced.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
Six months ended April 30, 1999 (Unaudited)
<S> <C>
Investment income:
- -----------------------------------------------------------------------------------------------
Dividends (net of foreign tax of $895) $ 9,300
- -----------------------------------------------------------------------------------------------
Interest 190
- -----------------------------------------------------------------------------------------------
Total investment income 9,490
Expenses:
- -----------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 11,716
- -----------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 2,691
- -----------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 1,199
- -----------------------------------------------------------------------------------------------
Administrative services (Note 2) 20
- -----------------------------------------------------------------------------------------------
Reports to shareholders 2,124
- -----------------------------------------------------------------------------------------------
Registration fees 128
- -----------------------------------------------------------------------------------------------
Auditing 12,963
- -----------------------------------------------------------------------------------------------
Legal 1,915
- -----------------------------------------------------------------------------------------------
Postage 14
- -----------------------------------------------------------------------------------------------
Other 5
- -----------------------------------------------------------------------------------------------
Fees waived and reimbursed by manager (Note 2) (11,540)
- -----------------------------------------------------------------------------------------------
Total expenses 21,235
- -----------------------------------------------------------------------------------------------
Expense reduction (Note 2) (2,058)
- -----------------------------------------------------------------------------------------------
Net expenses 19,177
- -----------------------------------------------------------------------------------------------
Net investment loss (9,687)
- -----------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 672,209
- -----------------------------------------------------------------------------------------------
Net realized gain on foreign currency transactions (Note 1) 580
- -----------------------------------------------------------------------------------------------
Net unrealized depreciation of assets and
liabilities in foreign currencies during the period (862)
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments during the period 834,463
- -----------------------------------------------------------------------------------------------
Net gain on investments 1,506,390
- -----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $1,496,703
- -----------------------------------------------------------------------------------------------
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
Six months (commencement
ended of operations)
April 30 to October 31
1999* 1998
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets
- ---------------------------------------------------------------------------------------------------------------
Operations:
- ---------------------------------------------------------------------------------------------------------------
Net investment loss $ (9,687) $ (6,037)
- ---------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments and
foreign currency transactions 672,789 (253,631)
- ---------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and
assets and liabilities in foreign currencies 833,601 103,850
- ---------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations 1,496,703 (155,818)
- ---------------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 556,214 117,524
- ---------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 2,052,917 (38,294)
Net assets
- ---------------------------------------------------------------------------------------------------------------
Beginning of period (Note 5) 1,961,706 2,000,000
- ---------------------------------------------------------------------------------------------------------------
End of period (including accumulated net investment
loss of $9,687 and $0, respectively) $4,014,623 $1,961,706
- ---------------------------------------------------------------------------------------------------------------
* Unaudited
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share April 30 May 6, 1998+
operating performance (Unaudited) 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) (.04) (.02)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 5.85 (.61)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 5.81 (.63)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $13.68 $7.87
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 73.83* (7.41)*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $4,015 $1,962
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c)(d) .72* .71*
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%)(d) (.33)* (.29)*
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 149.66* 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 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 $.04 and $.10 per share for the periods ended April 30, 1999 and October 31, 1998,
respectively. (Note 2)
</TABLE>
Notes to financial statements
April 30, 1999 (Unaudited)
Note 1
Significant accounting policies
Putnam 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 traded in securities markets 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. 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.
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, and other investments 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). 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.
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 April 30, 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.
At October 31, 1998 the fund had a capital loss carryover of approximately
$255,000 available to offset future net capital gain, if any, which will
expire on October 31, 2006.
H) Distributions to shareholders Distributions to shareholders from net
investment income are recorded by the fund on the ex-dividend date.
Capital gain distributions, if any, are recorded on the ex-dividend date
and paid at least annually. The amount and character of income and gains
to be distributed are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles. These
differences include temporary and permanent differences of losses on wash
sale transactions, foreign currency gains and losses and realized and
unrealized gains and losses on passive foreign investment companies.
Reclassifications are made to the fund's capital accounts to reflect
income and gains available for distribution (or available capital loss
carryovers) under income tax regulations.
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.
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, extraordinary expense, and 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.
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 April 30, 1999, the payable to the subcustodian
bank represents the amount due for 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 six months ended April 30, 1999, fund expenses were reduced by
$2,058 under expense offset arrangements with PFTC and brokerage service
arrangements. Investor servicing and custodian fees reported in the
Statement of operations exclude these credits. The fund could have
invested a portion of the assets utilized in connection with the expense
offset arrangements in an income producing asset if it had not entered
into such arrangements.
Each Trustee of the fund receives an annual Trustee fee, of which $100 has
been allocated to the fund, and an additional fee for each Trustee's
meeting attended. Trustees who are not interested persons of Putnam
Management and who serve on committees of the Trustees receive additional
fees for attendance at certain committee meetings.
The fund has adopted a Trustee Fee Deferral Plan (the "Deferral Plan")
which allows the Trustees to defer the receipt of all or a portion of
Trustees Fees payable on or after July 1, 1995. The deferred fees remain
in the fund and are invested in certain Putnam funds until distribution in
accordance with the Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension
plan (the "Pension Plan") covering all Trustees of the fund who have
served as Trustee for at least five years. Benefits under the Pension Plan
are equal to 50% of the Trustee's average total retainer and meeting fees
for the three years preceding retirement. Pension expense for the fund is
included in Compensation of Trustees in the Statement of operations.
Accrued pension liability is included in Payable for compensation of
Trustees in the Statement of assets and liabilities.
The fund has adopted a distribution plan (the "Plan") pursuant to Rule
12b-1 under the Investment Company Act of 1940. The purpose of the Plan is
to compensate Putnam Mutual Funds Corp., a wholly-owned subsidiary of
Putnam Investments, Inc., for services provided and expenses incurred by
it in distributing shares of the fund. The Plan provides for payment by
the fund to Putnam Mutual Funds Corp. at an annual rate of up to 0.35% of
the fund's average net assets. The fund is not currently making any
payments pursuant to the Plan.
For the six months ended April 30, 1999, Putnam Mutual Funds Corp., acting
as underwriter received no net commissions from the sale of shares of the
fund. A deferred sales charge of up to 1% is assessed on certain
redemptions of shares. For the six months ended April 30, 1999, Putnam
Mutual Funds Corp., acting as underwriter received no monies on
redemptions.
Note 3
Purchases and sales of securities
During the six months ended April 30, 1999, purchases and sales of
investment securities other than short-term investments aggregated
$4,713,895 and $4,288,183, 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 April 30, 1999, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Six months ended
April 30, 1999
- -----------------------------------------------------------------------------
Shares Amount
- -----------------------------------------------------------------------------
Shares sold 53,326 $665,655
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- -----------------------------------------------------------------------------
53,326 665,655
Shares
repurchased (8,986) (109,441)
- -----------------------------------------------------------------------------
Net increase 44,340 $556,214
- -----------------------------------------------------------------------------
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 trust was established as a Massachusetts business 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 Mutual Funds Corp., a wholly-owned subsidiary of Putnam
Investments, Inc. on May 5, 1998.
At April 30, 1999, Putnam Investments, Inc. owned 247,481 shares of the
fund (84.30% of shares outstanding), valued at $3,385,540.
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, Jr.
Vice President
Robert Swift
Vice President
Jack Chang
Vice President and Fund Manager
Roland Gillis
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 Global 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:
http://www.putnaminv.com.
Shares of mutual funds are not deposits or obligations of, or guaranteed
or endorsed by, any financial institution; are not insured by the Federal
Deposit Insurance Corporation (FDIC), the Federal Reserve Board, or any
other agency; and involve risk, including the possible loss of the
principal amount invested.
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