Putnam
International
Voyager
Fund
SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK
2-29-00
[SCALE LOGO OMITTED]
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
[copyright] Karsh, Ottawa
Dear Shareholder:
The markets continued to provide their share of challenges and
opportunities as your fund closed its books on the first half of fiscal
2000. In the following report, the fund's managers discuss performance for
the period and prospects for the months ahead.
This is the last letter to you and the other shareholders of Putnam
International Voyager Fund that I will be signing. After more than 30
years as Chairman of the Trustees and President of the Putnam Funds, the
time has come for me to step aside. In June, John Hill will become
Chairman. John is currently an independent Trustee and has served on the
board for the past 14 years. In addition, my son, George Putnam, III, will
take on the role of President. I am confident that the leadership of the
funds will be in exceptionally strong hands.
I will become Chairman Emeritus, remain a Putnam shareholder, and stay in
close touch with the funds. It has been my privilege to serve you.
Respectfully yours,
/S/GEORGE PUTNAM
George Putnam
Chairman of the Trustees
April 19, 2000
Report from the Fund Managers
Joseph Joseph
Nigel Hart
Omid Kamshad
Joshua Byrne
Andrew Graham
A market rally of historic magnitude swept across the globe during the
first six months of Putnam International Voyager Fund's 2000 fiscal year.
Stocks of companies that represent what has come to be known as the "new
economy," many of which are in the technology and telecommunications
sectors of world markets, soared in value. As managers of your fund, we
recognized the enormous transitions taking place in the world's economy
and financial markets and we positioned the fund to benefit from these
changes. Your fund's return for the semiannual period, which ended
February 29, 2000, dramatically exceeded its performance benchmark, the
Morgan Stanley Capital International EAFE Index. More performance details
are found on page 6.
Total return for 6 months ended 2/29/00
Class A Class B Class C Class M
NAV POP NAV CDSC NAV CDSC NAV POP
- --------------------------------------------------------------------------
92.29% 81.28% 91.51% 86.51% 91.71% 90.71% 91.93% 85.23%
- --------------------------------------------------------------------------
Past performance is no guarantee of future results. Performance
information for longer periods and explanation of performance calculation
methods begin on page 6.
* INTERNATIONAL MARKETS MIRROR UNITED STATES
In any six-month review, we cite many factors influencing the performance
of financial markets and of your fund. In this report, we would like to
draw special attention to a single long-term, or secular, transition
occurring in world markets. The briefest way to describe it is as an
Americanization of world financial markets. Companies abroad are following
the practices of their U.S. competitors, and international stock exchanges
are attracting entrepreneurial companies that are issuing stock to finance
their growth -- just like their U.S. equivalents.
[GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY SECTORS]
TOP INDUSTRY SECTORS*
Electronics and
electrical equipment 10.4%
Telecommunications 10.0%
Broadcasting 6.8%
Insurance and
finance 6.8%
Computer service
and software 6.3%
Footnote reads:
*Based on net assets as of 2/29/00. Holdings will vary over time.
This trend was especially pronounced among the midsize and small companies
in which your fund invests -- companies with stock market capitalizations
of $2 billion or below. During the period, their performance largely
matched those of U.S. companies of similar size, suggesting that
geographic boundaries mattered far less than the fundamental business
outlook for each company and the sector in which it operated. And in this
period, at least, similar fortunes meant strong performance, as stocks in
the technology and telecommunications sectors around the world achieved
tremendous gains. Your fund had substantial exposure -- roughly 35% of
assets -- in these sectors.
Thanks to this strong rally, stocks of small and midsize international
companies have begun to be priced similarly to large-cap stocks. In the
United States, it has long been the case that small-cap stocks carried a
premium, but the opposite was true in international markets. Closing this
gap is a highly positive development and suggests that international
markets are functioning more like the Nasdaq market in the United States;
market innovations are allowing investment capital to flow to smaller,
dynamic, more entrepreneurial companies.
Amid these positive developments, though, one trend was less reassuring --
the narrow leadership of the technology and telecommunications sectors. We
believe that fund holdings in every sector have attractive upside
potential and anticipate that gains will be more balanced across sectors
as investors recognize the combination of solid earnings growth and
attractive valuations we have identified.
* "NEW ECONOMY" STOCKS RALLY AROUND THE WORLD
Investors showed tremendous confidence for companies in the "new economy."
The essence of the new economy concept is that new computer and
communications technologies, combined with new business practices, are
allowing companies to increase their earnings by a significant amount. One
fund holding reflecting this trend is Framtidsfabriken, a Scandinavian Web
design service. Led by a 27-year-old chief executive officer, this company
is expanding rapidly without spending extravagantly. The company held its
annual shareholder meeting in a McDonald's restaurant. In France, Havas
Advertising is achieving rapid growth by expanding its advertising
services to include Web-page design for French companies. While these
holdings as well as others mentioned in this report were viewed favorably
at the end of the reporting period, all holdings are subject to review and
may vary in the future.
International Voyager Fund's class A shares were ranked in the top 1% of the
international funds tracked by Lipper Analytical Services for the 3-year
period ended March 31, 2000. The fund was 1 out of 423 international funds
ranked.*
*Past performance is no guarantee of future results. Lipper is an industry
research firm whose rankings are based on total return performance, vary over
time, and do not reflect the effects of sales charges. Performance of other
share classes will vary. For the 1-year period, the fund ranked 8 out of 643
(top 2%) international funds. The fund was not ranked over longer periods.
Performance of other share classes will vary.
Zapf Creaton is a German toymaker that specializes in making computerized
dolls that are anatomically and physiologically accurate. These products
are successful with children and the company is earning attractive
profits. Another high-technology stock is ARM Holding in the United
Kingdom. This company specializes in designing computer chips used in
cellular telephones and a variety of wireless appliances. Not only are
these products part of the new economy, but so is the company's business
plan -- ARM does not own and operate costly manufacturing plants but
instead merely designs chips, a much more profitable activity.
* U.S. BUSINESS MODELS REVITALIZE ESTABLISHED COMPANIES
The influence of U.S. examples is not limited to new economy stocks. In
other sectors, U.S. business practices are having an influence as
companies experience a generational shift in management. For decades,
smaller companies in international markets tended to be run by families.
In the larger markets such as Germany, France, the United Kingdom, and
Japan, the lion's share of these companies had been founded or at least
reorganized in the wake of World War II and were involved in
capital-intensive manufacturing. Given these conditions, they were not
terribly attractive as business investments and the families who ran them
often did not show great concern for the interests of other shareholders.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
TOP 10 HOLDINGS
ProSieben Media AG
Germany
Broadcasting
Framtidsfabriken AB
Sweden
Business services
Kingston Communication (Hull)
United Kingdom
Telecommunications
Versatel Telecom Intl. N.V.
Netherlands
Telecommunications
Pace Micro Technology Plc.
United Kingdom
Electronics and electrical equipment
Fantastic Corp.
Switzerland
Computer service and software
ARM Holdings Plc.
United Kingdom
Electronics and electrical equipment
Perlos Oyj
Finland
Electronics and electrical equipment
Publicis S.A.
France
Advertising
CIR-Compagnie Industriali Riunite SpA
Italy
Automotive
Footnote reads:
These holdings represent 18.6% of the fund's net assets as of 2/29/00.
Portfolio holdings will vary over time.
As the founding families retired, they either sold the businesses to
professional managers or passed the companies on to their children who had
more up-to-date management training, typically in the United States. Under
new management, these companies are introducing more rigorous cost
controls and disclosing a much greater amount of financial information to
shareholders.
An example of a holding that is less capital intensive and more attractive
as a business is Saatchi and Saatchi, a British advertising company. This
company issued publicly traded stock in the 1980s and was merged in the
early 1990s with a competing firm. In the past couple of years, Saatchi
and Saatchi management realized the company could serve clients better and
provide more shareholder value by spinning itself off into an independent
unit once again, a restructuring that was recently completed.
Another example of this trend is Banca Populare di Brescia, or BiPop, a
regional Italian bank. In Italy, as in other countries, the financial
sector is ripe for consolidation, and the best-managed banks are likely to
achieve attractive growth. We believe BiPop is one of the strongest
Italian banks. It has been a leader in introducing new profitable products
and branching out into new lines of business such as mutual fund
distribution.
In Denmark, the fund owns Vestas Wind Systems, which specializes in making
advanced windmills. This stock has performed well during the period as
Europe continues to focus on developing alternative energy sources.
In Japan, some of the most attractive changes have occurred in retailing.
Historically inefficiency and high costs have burdened the Japanese retail
market. Two companies trying to change that are Sundrug and Tsuruha. They
are bringing to Japan the advantages of discount pricing to which U.S.
consumers are well accustomed.
* ACCELERATING GLOBAL ECONOMIC GROWTH SUPPORTS SMALLER COMPANIES
One last bit of favorable news for your fund is the improving global
economy. In most markets, the smaller companies that your fund favors are
the first to feel the benefits of accelerating business activity. We have
strategic underweights only in Japan, where our investment discipline has
prompted us to take profits on stocks that have appreciated strongly, and
in the United Kingdom, where we are avoiding exporting companies
temporarily penalized by an overvalued currency. With many new companies
issuing stock in the market and attractive valuations in many sectors, we
are optimistic in our search for undervalued stocks of growing companies.
The views expressed here are exclusively those of Putnam Management. They
are not meant as investment advice. Although the described holdings were
viewed favorably as of 2/29/00, there is no guarantee the fund will
continue to hold these securities in the future. International investing
includes certain risks, such as currency fluctuations, economic
instability, and political developments. This fund invests all or a
portion of its assets in small to midsize companies. Such investments
increase the risk of greater price fluctuations.
Performance summary
This section provides information about your fund's performance, which should
always be considered in light of its investment strategy. Putnam International
Voyager Fund is designed for investors seeking capital appreciation through
common stocks of smaller-capitalization companies located outside the United
States.
<TABLE>
<CAPTION>
TOTAL RETURN FOR PERIODS ENDED 2/29/00
Class A Class B Class C Class M
(inception dates) (12/28/95) (10/30/96) (7/26/99) (10/30/96)
NAV POP NAV CDSC NAV CDSC NAV POP
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6 months 92.29% 81.28% 91.51% 86.51% 91.71% 90.71% 91.93% 85.23%
- ----------------------------------------------------------------------------------------------
1 year 139.57 125.74 137.57 132.57 138.02 137.02 138.35 130.02
- ----------------------------------------------------------------------------------------------
Life of fund 329.04 304.31 315.97 313.97 316.19 316.19 320.05 305.33
Annual average 41.80 39.80 40.75 40.59 40.77 40.77 41.08 39.88
- ----------------------------------------------------------------------------------------------
</TABLE>
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 2/29/00
MSCI Consumer
EAFE Index price index
- -------------------------------------------------------------------------
6 months 13.63% 1.67%
- -------------------------------------------------------------------------
1 year 25.45 3.16
- -------------------------------------------------------------------------
Life of fund 58.14 10.32
Annual average 11.63 2.39
- -------------------------------------------------------------------------
Past performance is no assurance of future results. More recent returns
may be more or less than those shown. Recent returns were achieved during
favorable market conditions. Returns for class A and class M shares
reflect the current maximum initial sales charges of 5.75% and 3.50%,
respectively. Class B share returns for the 1-year and life-of-fund
periods reflect the applicable contingent deferred sales charge (CDSC),
which is 5% in the first year, declines to 1% in the sixth year, and is
eliminated thereafter. Returns shown for class B and class M shares for
periods prior to their inception are derived from the historical
performance of class A shares, adjusted to reflect both the initial sales
charge or CDSC, if any, currently applicable to each class and in the case
of class B and class M shares the higher operating expenses applicable to
such shares. For class C shares, returns for periods prior to their
inception are derived from the historical performance of class A shares,
adjusted to reflect both the CDSC currently applicable to class C shares,
which is 1% for the first year and is eliminated thereafter, and the
higher operating expenses applicable to class C shares. All returns assume
reinvestment of distributions at NAV. Investment return and principal
value will fluctuate so that an investor's shares when redeemed may be
worth more or less than their original cost. Performance data reflect an
expense limitation previously in effect. Without the expense limitation,
total returns would have been lower. For a portion of these periods the
fund was offered on a limited basis and had limited assets.
<TABLE>
<CAPTION>
PRICE AND DISTRIBUTION INFORMATION 6 MONTHS ENDED 2/29/00
Class A Class B Class C Class M
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Distributions (number) 1 1 1 1
- -----------------------------------------------------------------------------------
Income $0.172 $0.093 $0.150 $0.119
- -----------------------------------------------------------------------------------
Capital gains
Long-term 0.085 0.085 0.085 0.085
- -----------------------------------------------------------------------------------
Short-term 0.447 0.447 0.447 0.447
- -----------------------------------------------------------------------------------
Total $0.704 $0.625 $0.682 $0.651
- -----------------------------------------------------------------------------------
Share value: NAV POP NAV NAV NAV POP
- -----------------------------------------------------------------------------------
8/31/99 $17.28 $18.33 $17.07 $17.27 $17.15 $17.77
- -----------------------------------------------------------------------------------
2/29/00 32.27 34.24 31.84 32.18 32.03 33.19
- -----------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
TOTAL RETURN FOR PERIODS ENDED 03/31/00 (most recent calendar quarter)
Class A Class B Class C Class M
(inception dates) (12/28/95) (10/30/96) (7/26/99) (10/30/96)
NAV POP NAV CDSC NAV CDSC NAV POP
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6 months 77.12% 66.97% 76.45% 71.45% 76.58% 75.58% 76.72% 70.58%
- ----------------------------------------------------------------------------------------------
1year 121.84 109.05 120.15 115.15 120.44 119.44 120.81 113.04
- ----------------------------------------------------------------------------------------------
Life of fund 302.72 279.50 290.24 288.24 290.45 290.45 294.22 280.40
Annual average 38.68 36.76 37.66 37.49 37.68 37.68 37.99 36.84
- ----------------------------------------------------------------------------------------------
</TABLE>
Past performance is no assurance of future results. More recent returns
may be more or less than those shown. They do not take into account any
adjustment for taxes payable on reinvested distributions. Investment
returns and principal value will fluctuate so that an investor's shares
when sold may be worth more or less than their original cost. See first
page of performance section for performance calculation method.
Terms and definitions
Total return shows how the value of the fund's shares changed over time,
assuming you held the shares through the entire period and reinvested all
distributions in the fund.
Class A shares are generally subject to an initial sales charge.
Class B shares may be subject to a sales charge upon redemption.
Class C shares are not subject to an initial sales charge and are subject
to a contingent deferred sales charge only if the shares are redeemed
during the first year.
Class M shares have a lower initial sales charge and a higher 12b-1 fee
than class A shares and no sales charge on redemption.
Net asset value (NAV) is the value of all your fund's assets, minus any
liabilities, divided by the number of outstanding shares, not including
any initial or contingent deferred sales charge.
Public offering price (POP) is the price of a mutual fund share plus the
maximum sales charge levied at the time of purchase. POP performance
figures shown here assume the 5.75% maximum sales charge for class A
shares and 3.50% for class M shares.
Contingent deferred sales charge (CDSC) is a charge applied at the time of
the redemption of class B or C shares and assumes redemption at the end of
the period. Your fund's class B CDSC declines from a 5% maximum during the
first year to 1% during the sixth year. After the sixth year, the CDSC no
longer applies. The CDSC for class C shares is 1% for one year after
purchase.
Comparative benchmarks
Morgan Stanley Capital International (MSCI) EAFE Index is an unmanaged
list of equity securities from Europe, Australasia and the Far East, with
all values expressed in U.S. dollar. Securities indexes assume
reinvestment of all distributions and interest payments and do not take in
account brokerage fees or taxes. Securities in the fund do not match those
in the indexes and performance of the fund will differ. It is not possible
to invest directly in an index.
Consumer price index (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
Welcome to www.putnaminv.com
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VISIT PUTNAM'S SITE ON THE WORLD WIDE WEB FOR:
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New features will be added to the site regularly. So be sure to bookmark us at
http://www.putnaminv.com
A guide to the financial statements
These sections of the report 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.
<TABLE>
<CAPTION>
The fund's portfolio
February 29, 2000 (Unaudited)
COMMON STOCKS (93.8%) (a)
NUMBER OF SHARES VALUE
<S> <C> <C>
Australia (0.5%)
- --------------------------------------------------------------------------------------------------------------------------
429,397 Aristocrat Leisure Ltd. $ 4,736,807
1,967,763 CSR Ltd. 4,317,075
--------------
9,053,882
Canada (0.7%)
- --------------------------------------------------------------------------------------------------------------------------
306,763 Clearnet Communications, Inc. Class A (NON) 12,900,754
Denmark (1.6%)
- --------------------------------------------------------------------------------------------------------------------------
101,781 Vestas Wind Systems A/S (NON) 28,764,023
9,070 Vestas Wind Systems A/S 144A (NON) 2,563,246
--------------
31,327,269
Finland (5.9%)
- --------------------------------------------------------------------------------------------------------------------------
144,490 Comptel Oyj 17,609,813
34,200 Comptel Oyj 144A 4,168,147
94,900 F-Secure Oyj (NON) 6,237,018
181,056 Finnlines Oyj 5,319,715
203,031 Helsingin Puhelin Oyj (Helsinki Telephone Corp.) Class E 21,781,470
538,999 KCI Konecranes International Plc 16,930,632
722,306 Perlos Oyj 32,043,192
69,391 Perlos Oyj 144A 3,078,348
377,795 Teleste Oyj 6,937,638
--------------
114,105,973
France (8.0%)
- --------------------------------------------------------------------------------------------------------------------------
35,005 Bouygues S.A. 29,264,968
111,157 CNP Assurances 2,879,211
9,760 Expand 641,447
55,770 Havas Advertising S.A. 30,184,955
71,400 ILOG S.A. (NON) 4,388,915
58,719 Ipsos (NON) 8,155,250
21,390 NRJ S.A. 14,399,047
61,731 Publicis S.A. 31,561,733
57,388 Sidel S.A. 4,714,568
24,157 Societe Generale d'Enterprises S.A. 1,020,296
193,900 Societe Generale d'Enterprises 144A 8,058,387
28,377 Societe Television Francaise I 18,512,800
--------------
153,781,577
Germany (7.2%)
- --------------------------------------------------------------------------------------------------------------------------
8,100 Biodata Inform 2,192,022
143,897 EM TV & Merchandising AG 14,324,874
33,013 Freenet.de (NON) 6,438,846
44,255 Freenet.de 144A (NON) 8,631,482
255,334 GfK AG (NON) 16,410,891
30,162 Intershop Communications AG (NON) 15,741,849
22,589 PrimaCom AG (NON) 2,019,485
283,698 ProSieben Media AG 40,580,729
255,050 Stinnes AG (NON) 4,609,659
172,721 Stinnes AG 144A 3,121,682
186,798 Tecis Holdings (NON) 13,359,980
219,913 Zapf Creaton AG (NON) 11,318,070
--------------
138,749,569
Hong Kong (2.2%)
- --------------------------------------------------------------------------------------------------------------------------
121,900 China.com Corp. Class A (NON) 14,978,463
4,922,852 Esprit Holdings, Ltd. 4,712,649
1,516,000 Johnson Electric Holdings, Ltd. 9,983,552
3,292,000 Li & Fung, Ltd. 12,817,239
--------------
42,491,903
India (1.2%)
- --------------------------------------------------------------------------------------------------------------------------
135,000 Pentamedia Graphics 5,363,550
53,687 Pentamedia Graphics, Ltd. GDR 3,180,955
115,100 Software Solution Integrated 144A 14,924,971
--------------
23,469,476
Ireland (1.5%)
- --------------------------------------------------------------------------------------------------------------------------
3,026,589 Fyffes Plc 9,945,674
1,691,120 Independent News & Media Plc 17,815,696
251,075 Irish Life & Permanent Plc 1,958,298
--------------
29,719,668
Israel (--%)
- --------------------------------------------------------------------------------------------------------------------------
38,900 Advanced Vision Technology (NON) 733,139
Italy (5.1%)
- --------------------------------------------------------------------------------------------------------------------------
1,038,534 ACEA SpA (NON) 23,808,787
168,069 Banca Popolare di Brescia SpA (PIK)(RES) 19,013,448
66,600 Bulgari SpA 611,505
1,464,455 Buzzi Unicem SpA 5,449,274
5,492,417 CIR-Compagnie Industriali Riunite SpA 31,425,853
20,267 Tiscali SpA (NON) 18,863,297
--------------
99,172,164
Japan (9.9%)
- --------------------------------------------------------------------------------------------------------------------------
135,220 Aiful Corp. 28,400,747
13,300 Benesse Corp. 2,659,275
42,900 C TWO-NETWORK Co., Ltd. 7,953,831
31,000 Colin Corp. 3,578,115
108,600 Disco Corp. 24,773,789
841,317 Fujitec Co., Ltd. 7,355,693
101,300 KDD Corp. 9,436,745
438,000 Mitsumi Electric Co., Ltd. 16,758,884
1,718,000 Nikko Securities Co., Ltd. 22,124,930
112,000 Nippon Broadcasting System 14,953,013
2,081,000 Nippon Sanso Corp. 4,444,561
180,300 Nissin Co., Ltd. 9,405,817
269,900 Sundrug Co., Ltd. 14,840,453
117,800 Taiyo Ink Manufacturing 11,776,788
85,900 Tsuruha Co., Ltd. 12,491,139
--------------
190,953,780
Luxembourg (0.2%)
- --------------------------------------------------------------------------------------------------------------------------
73,268 SBS Broadcasting S.A. (NON) 4,160,294
Mexico (2.3%)
- --------------------------------------------------------------------------------------------------------------------------
1,668,895 Corporacion Interamericana de Entretenimiento S.A. Class B (NON) 8,164,430
3,894,975 Grupo Financiero Bancomer, S.A. de C.V. (NON) 16,620,834
1,407,564 TV Azteca, S.A. de C.V. 19,617,923
--------------
44,403,187
Netherlands (4.0%)
- --------------------------------------------------------------------------------------------------------------------------
333,323 Buhrmann N.V. 8,810,985
25,500 Draka Holding N.V. 2,007,396
204,464 Endemol Entertainment Holdings N.V. 18,615,282
810,722 Ispat International N.V. 10,184,695
633,207 Versatel Telecom Intl. N.V. (NON) 38,494,458
--------------
78,112,816
Norway (0.1%)
- --------------------------------------------------------------------------------------------------------------------------
480,300 Stepstone ASA (NON) 1,838,029
Portugal (0.9%)
- --------------------------------------------------------------------------------------------------------------------------
111,646 PT Multimedia Servicos (NON) 14,254,364
29,971 PT Multimedia Servicos 144A (NON) 3,826,537
--------------
18,080,901
Singapore (1.9%)
- --------------------------------------------------------------------------------------------------------------------------
1,384,084 Overseas Union Bank, Ltd. 6,142,385
63,300 St Assembly Test Service, Ltd. 3,038,400
1,788,000 Venture Manufacturing, Ltd. 26,864,601
--------------
36,045,386
South Korea (1.1%)
- --------------------------------------------------------------------------------------------------------------------------
77,400 Cheil Communications, Inc. (NON) 9,787,072
63,800 Daum Communications Corp. (NON) 10,380,405
--------------
20,167,477
Spain (1.4%)
- --------------------------------------------------------------------------------------------------------------------------
167,399 Abengoa S.A. 5,290,570
320,202 TPI Paginas Amarillas S.A. 144A (NON) 21,972,742
--------------
27,263,312
Sweden (7.0%)
- --------------------------------------------------------------------------------------------------------------------------
336,657 Arkivator AB 16,037,895
99,571 Cell Network AB (NON) 4,036,477
465,500 Connova Group (NON) 6,210,292
196,673 Effnet Group AB (NON) 16,463,740
115,343 Enea Data AB 22,428,246
164,698 Framtidsfabriken AB (NON) 38,852,764
1,600 Framtidsfabriken AB 144A (NON) 377,445
75,447 HiQ International AB (NON) 7,300,709
594,994 Sapa AB 11,242,500
142,616 Telelogic AB (NON) 12,248,866
--------------
135,198,934
Switzerland (7.5%)
- --------------------------------------------------------------------------------------------------------------------------
8,737 Ares-Serono Group Class B 28,419,854
2,373 Ascom Holding AG 9,462,840
82,148 Fantastic Corp. (NON) 37,157,348
7,658 Fantastic Corp. 144A (NON) 3,463,882
9,267 Hilti AG 7,368,496
2,136 HPI Holdings (NON) 3,506,174
11,497 Kuehne & Nagel Intl. AG 9,903,446
823 Lindt & Spuengli AG 1,982,517
22,295 Logitech International (NON) 14,732,616
12,005 Publicitas Holding S.A. 12,691,269
14,560 Tecan AG (NON) 10,787,784
1,399 Verwaltungs-und Privat-Bank AG 5,519,818
--------------
144,996,044
Taiwan (1.7%)
- --------------------------------------------------------------------------------------------------------------------------
222,073 Ase Test Ltd. 6,662,190
41,380 GigaMedia Ltd. 2,899,186
818,357 Winbond Electronics Corp. GDR 19,845,157
96,200 Winbond Electronics Corp. GDR 144A 2,332,850
--------------
31,739,383
United Kingdom (21.2%)
- --------------------------------------------------------------------------------------------------------------------------
4,975,137 Aegis Group Plc 16,795,901
238,100 Aegis Group Plc 144A 803,818
2,280,547 Anite Group Plc 10,679,621
430,286 ARM Holdings Plc (NON) 32,450,600
453,057 Capital Radio Plc 11,262,886
680,613 Carpetright Plc 4,106,348
2,062,700 Chloride Group Plc 5,017,056
3,390,584 Cordiant Communications Group 18,103,251
1,025,879 D.F.S. Furniture Co. Plc 4,585,373
283,405 Easynet Group Plc (NON) 10,742,637
2,730,812 Freepages Group Plc (NON) 13,068,525
1,695,100 Hit Entertainment Plc 11,244,412
2,903,798 Iceland Group Plc 12,658,074
219,101 Independent Energy Holdings Plc (NON) 10,381,444
609,000 Informa Group Plc 7,694,837
874,025 Interactive Investor International (NON) 4,458,805
170,017 Jazztel Plc (NON) 20,019,502
182,882 Kewill Systems Plc 7,346,743
1,795,423 Kingston Communication (Hull) (NON) 38,848,968
504,844 Kingston Communication (Hull) Plc 144A (NON) 10,923,703
1,911,160 Matalan Plc 17,356,295
103,801 MG Plc (NON) 625,034
165,478 MG Plc 144A (NON) 996,420
160,595 MIH Ltd. (NON) 11,382,171
788,971 Newmedia Spark Plc (NON) 1,806,846
235,690 Oxford Glycosciences Plc (NON) 8,673,397
2,158,604 Pace Micro Technology Plc 37,928,453
1,290,209 Premier Farnell Plc 8,967,023
98,963 Redstone Telecom Plc (NON) 1,513,786
2,773,656 Saatchi & Saatchi Plc 18,026,631
6,165,453 Securicor Group Plc 16,456,741
822,100 Taylor Nelson Sofres Plc 3,979,672
97,200 Ted Baker Plc 605,627
1,628,412 Trinity Plc 18,054,873
1,119,426 Viridian Group Plc 12,507,056
--------------
410,072,529
United States (0.7%)
- --------------------------------------------------------------------------------------------------------------------------
124,502 IMPSAT Fiber Networks, Inc. (NON) 4,567,667
144,274 VIA NET.WORKS, Inc. (NON) 9,522,084
--------------
14,089,751
--------------
Total Common Stocks (cost $1,206,452,948) $1,812,627,197
SHORT-TERM INVESTMENTS (7.7%) (a)
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------
$ 69,622,000 Interest in $700,000,000 joint repurchase agreement
dated February 29, 2000 with S.B.C. Warburg, Inc.
due March 1, 2000 with respect to various U.S. Treasury
obligations -- maturity value of $69,633,159 for an
effective yield of 5.77% $ 69,622,000
80,000,000 Interest in $1,000,000,000 joint tri-party repurchase agreement
dated February 29, 2000 with Goldman Sachs & Co.
due March 1, 2000 with respect to various U.S. Treasury
obligations -- maturity value of $80,012,822 for an
effective yield of 5.77% 80,000,000
--------------
Total Short-Term Investments (cost $149,622,000) $ 149,622,000
- --------------------------------------------------------------------------------------------------------------------------
Total Investments (cost $1,356,074,948) (b) $1,962,249,197
- --------------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $1,933,200,344.
(b) The aggregate identified cost on a tax basis is $1,363,033,345, resulting in gross unrealized appreciation and
depreciation of $636,341,804 and $37,125,952, respectively, or net unrealized appreciation of $599,215,852.
(NON) Non-income-producing security.
(REL) Banca Popolare di Brescia is involved in a joint venture with Putnam Investments.
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.
GDR after the name of a foreign holding stands for Global 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 February 29, 2000 (as a percentage of
net assets):
Electronics and electrical equipment 10.4%
Telecommunications 10.0
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
February 29, 2000 (Unaudited)
<S> <C>
Assets
- -----------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $1,356,074,948) (Note 1) $1,962,249,197
- -----------------------------------------------------------------------------------------------
Foreign currency 957,651
- -----------------------------------------------------------------------------------------------
Dividends and interest receivable 499,721
- -----------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 57,434,615
- -----------------------------------------------------------------------------------------------
Receivable for securities sold 56,373,053
- -----------------------------------------------------------------------------------------------
Unamortized organization expenses (Note 1) 550
- -----------------------------------------------------------------------------------------------
Total assets 2,077,514,787
Liabilities
- -----------------------------------------------------------------------------------------------
Payable to subcustodian (Note 2) 1,747,248
- -----------------------------------------------------------------------------------------------
Payable for securities purchased 136,463,663
- -----------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 1,779,596
- -----------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 2,745,047
- -----------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 348,316
- -----------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 9,618
- -----------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 1,761
- -----------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 912,546
- -----------------------------------------------------------------------------------------------
Other accrued expenses 306,648
- -----------------------------------------------------------------------------------------------
Total liabilities 144,314,443
- -----------------------------------------------------------------------------------------------
Net assets $1,933,200,344
Represented by
- -----------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $1,243,558,152
- -----------------------------------------------------------------------------------------------
Distributions in excess of net investment income (Note 1) (11,655,371)
- -----------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign
currency transactions (Note 1) 92,616,279
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and assets and
liabilities in foreign currencies 608,681,284
- -----------------------------------------------------------------------------------------------
Total- Representing net assets applicable to
capital shares outstanding $1,933,200,344
Computation of net asset value and offering price
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($1,022,166,292 divided by 31,676,262 shares) $32.27
- -----------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $32.27)* $34.24
- -----------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($747,138,826 divided by 23,463,750 shares)** $31.84
- -----------------------------------------------------------------------------------------------
Net asset value and offering price per class C share
($90,174,605 divided by 2,802,604 shares)** $32.18
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($68,026,309 divided by 2,123,823 shares) $32.03
- -----------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $32.03)* $33.19
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per class Y share
($5,694,312 divided by 176,383 shares) $32.28
- -----------------------------------------------------------------------------------------------
* On single retail sales of less than $50,000. On sales of $50,000 or more and on group
sales, the offering price is reduced.
** Redemption price per share is equal to net asset value less any applicable contingent
deferred sales charge.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
Six months ended February 29, 2000 (Unaudited)
<S> <C>
Investment income:
- -----------------------------------------------------------------------------------------------
Dividends (net of foreign tax of $185,472) $ 1,697,282
- -----------------------------------------------------------------------------------------------
Interest 1,164,330
- -----------------------------------------------------------------------------------------------
Total investment income 2,861,612
Expenses:
- -----------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 4,039,294
- -----------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 1,036,988
- -----------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 10,179
- -----------------------------------------------------------------------------------------------
Administrative services (Note 2) 5,120
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 565,340
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 1,694,433
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class C (Note 2) 119,768
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 135,042
- -----------------------------------------------------------------------------------------------
Amortization of organization expenses (Note 1) 477
- -----------------------------------------------------------------------------------------------
Reports to shareholders 35,981
- -----------------------------------------------------------------------------------------------
Registration fees 244,254
- -----------------------------------------------------------------------------------------------
Auditing 17,981
- -----------------------------------------------------------------------------------------------
Legal 3,760
- -----------------------------------------------------------------------------------------------
Postage 53,744
- -----------------------------------------------------------------------------------------------
Other 83,966
- -----------------------------------------------------------------------------------------------
Total expenses 8,046,327
- -----------------------------------------------------------------------------------------------
Expense reduction (Note 2) (184,549)
- -----------------------------------------------------------------------------------------------
Net expenses 7,861,778
- -----------------------------------------------------------------------------------------------
Net investment loss (5,000,166)
- -----------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 100,160,682
- -----------------------------------------------------------------------------------------------
Net realized loss on foreign currency transactions (Note 1) (1,654,634)
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of assets and liabilities in
foreign currencies during the period 2,184,247
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments during the period 518,697,744
- -----------------------------------------------------------------------------------------------
Net gain on investments 619,388,039
- -----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $614,387,873
- -----------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
Six months ended Year ended
February 29 August 31
2000* 1999
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets
- ---------------------------------------------------------------------------------------------------------------
Operations:
- ---------------------------------------------------------------------------------------------------------------
Net investment loss $ (5,000,166) $ (1,047,373)
- ---------------------------------------------------------------------------------------------------------------
Net realized gain on investments and
foreign currency transactions 98,506,048 13,685,837
- ---------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and
asset and liabilities in foreign currencies 520,881,991 85,664,534
- ---------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 614,387,873 98,302,998
- ---------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ---------------------------------------------------------------------------------------------------------------
From net investment income
Class A (3,150,180) (436,394)
- ---------------------------------------------------------------------------------------------------------------
Class B (1,327,193) (152,883)
- ---------------------------------------------------------------------------------------------------------------
Class C (125,403) --
- ---------------------------------------------------------------------------------------------------------------
Class M (189,594) (24,395)
- ---------------------------------------------------------------------------------------------------------------
In excess of net investment income
Class A -- (634,481)
- ---------------------------------------------------------------------------------------------------------------
Class B -- (222,278)
- ---------------------------------------------------------------------------------------------------------------
Class M -- (35,469)
- ---------------------------------------------------------------------------------------------------------------
From net realized gain on investments
Class A (9,743,581) (2,149,683)
- ---------------------------------------------------------------------------------------------------------------
Class B (7,592,112) (1,752,907)
- ---------------------------------------------------------------------------------------------------------------
Class C (444,764) --
- ---------------------------------------------------------------------------------------------------------------
Class M (847,596) (197,843)
- ---------------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 932,562,215 139,594,386
- ---------------------------------------------------------------------------------------------------------------
Total increase in net assets 1,523,529,665 232,291,051
Net assets
- ---------------------------------------------------------------------------------------------------------------
Beginning of period 409,670,679 177,379,628
- ---------------------------------------------------------------------------------------------------------------
End of period (including distributions in
excess of net investment income of
$11,655,371 and $1,862,835, respectively) $1,933,200,344 $409,670,679
- ---------------------------------------------------------------------------------------------------------------
* Unaudited
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS A
- ----------------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share February 29 Dec. 28, 1995+
operating performance (Unaudited) Year ended August 31 to August 31
- ----------------------------------------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $17.28 $12.37 $11.66 $9.47 $8.50
- ----------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (a) (.10) (.01) .05 .02(d) .04(d)
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 15.79 5.33 1.25 2.28 .93
- ----------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 15.69 5.32 1.30 2.30 .97
- ----------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ----------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.17) (.06) (.04) (.07) --
- ----------------------------------------------------------------------------------------------------------------------------------
In excess of net
investment income -- (.08) -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.53) (.27) (.55) (.04) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total distributions (.70) (.41) (.59) (.11) --
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $32.27 $17.28 $12.37 $11.66 $9.47
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ----------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 92.29* 43.98 11.77 24.44 11.41*
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $1,022,166 $216,735 $95,404 $40,687 $2,429
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .78* 1.78 1.92 2.10(d) 1.26*(d)
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average net assets (%) (.42)* (.07) .35 .15(d) .44*(d)
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 71.23* 106.76 89.50 126.65 55.87*
- ----------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding
during the period.
(b) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
(c) The ratio of expense to average net assets includes amounts paid through expense offset and brokerage service
arrangements (Note 2).
(d) Reflects an expense limitation in effect during the period. As a result of such limitation, expense for class A reflect a
reduction of approximately $0.08 per share for the year ended August 31, 1996. Expenses for the period ended August 31, 1997
reflect a reduction of $0.02, $0.01, and $0.02 for class A, class B, and class M, respectively.
(e) Distributions from net investment income amounted to less than $0.01 per share for class M.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS B
- ----------------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share February 29 Oct. 30, 1996+
operating performance (Unaudited) Year ended August 31 to August 31
- ----------------------------------------------------------------------------------------------------------------------------------
2000 1999 1998 1997
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $17.07 $12.25 $11.60 $9.82
- ----------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (a) (.18) (.12) (.05) (.06)(d)
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 15.57 5.27 1.25 1.94
- ----------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 15.39 5.15 1.20 1.88
- ----------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ----------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.09) (.02) -- (.06)
- ----------------------------------------------------------------------------------------------------------------------------------
In excess of net
investment income -- (.04) -- --
- ----------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.53) (.27) (.55) (.04)
- ----------------------------------------------------------------------------------------------------------------------------------
Total distributions (.62) (.33) (.55) (.10)
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $31.84 $17.07 $12.25 $11.60
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ----------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 91.51* 42.84 10.94 19.35*
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $747,139 $171,524 $73,176 $34,463
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) 1.15* 2.53 2.67 2.39*(d)
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average net assets (%) (.79)* (.83) (.43) (.50)*(d)
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 71.23* 106.76 89.50 126.65
- ----------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding
during the period.
(b) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
(c) The ratio of expense to average net assets includes amounts paid through expense offset and brokerage service
arrangements (Note 2).
(d) Reflects an expense limitation in effect during the period. As a result of such limitation, expense for class A reflect a
reduction of approximately $0.08 per share for the year ended August 31, 1996. Expenses for the period ended August 31, 1997
reflect a reduction of $0.02, $0.01, and $0.02 for class A, class B, and class M, respectively.
(e) Distributions from net investment income amounted to less than $0.01 per share for class M.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS C
- ----------------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share February 29 July 26, 1999+
operating performance (Unaudited) to August 31
- ----------------------------------------------------------------------------------------------------------------------------------
2000 1999
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value,
beginning of period $17.27 $16.21
- ----------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (a) (.19) (.01)
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 15.78 1.07
- ----------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 15.59 1.06
- ----------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ----------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.15) --
- ----------------------------------------------------------------------------------------------------------------------------------
In excess of net
investment income -- --
- ----------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.53) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total distributions (.68) --
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $32.18 $17.27
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ----------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 91.71* 6.54*
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $90,175 $2,711
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) 1.15* .26*
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average net assets (%) (.83)* (.14)*
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 71.23* 106.76
- ----------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding
during the period.
(b) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
(c) The ratio of expense to average net assets includes amounts paid through expense offset and brokerage service
arrangements (Note 2).
(d) Reflects an expense limitation in effect during the period. As a result of such limitation, expense for class A reflect a
reduction of approximately $0.08 per share for the year ended August 31, 1996. Expenses for the period ended August 31, 1997
reflect a reduction of $0.02, $0.01, and $0.02 for class A, class B, and class M, respectively.
(e) Distributions from net investment income amounted to less than $0.01 per share for class M.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS M
- ----------------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share February 29 Oct. 30, 1996+
operating performance (Unaudited) Year ended August 31 to August 31
- ----------------------------------------------------------------------------------------------------------------------------------
2000 1999 1998 1997
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $17.15 $12.30 $11.62 $9.82
- ----------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (a) (.15) (.08) (.02) (.03)(d)
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 15.68 5.28 1.25 1.93
- ----------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 15.53 5.20 1.23 1.90
- ----------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ----------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.12) (.03) --(e) (.06)
- ----------------------------------------------------------------------------------------------------------------------------------
In excess of net
investment income -- (.05) -- --
- ----------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.53) (.27) (.55) (.04)
- ----------------------------------------------------------------------------------------------------------------------------------
Total distributions (.65) (.35) (.55) (.10)
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $32.03 $17.15 $12.30 $11.62
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ----------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 91.93* 43.17 11.20 19.56*
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $68,026 $18,701 $8,799 $4,086
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) 1.03* 2.28 2.42 2.18*(d)
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average net assets (%) (.66)* (.58) (.18) (.26)*(d)
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 71.23* 106.76 89.50 126.65
- ----------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding
during the period.
(b) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
(c) The ratio of expense to average net assets includes amounts paid through expense offset and brokerage service
arrangements (Note 2).
(d) Reflects an expense limitation in effect during the period. As a result of such limitation, expense for class A reflect a
reduction of approximately $0.08 per share for the year ended August 31, 1996. Expenses for the period ended August 31, 1997
reflect a reduction of $0.02, $0.01, and $0.02 for class A, class B, and class M, respectively.
(e) Distributions from net investment income amounted to less than $0.01 per share for class M.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS Y
- ----------------------------------------------------------------------------------------------------------------------------------
For the period
Feb. 1, 2000+
Per-share to February 29
operating performance (Unaudited)
- ----------------------------------------------------------------------------------------------------------------------------------
2000
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Net asset value,
beginning of period $26.48
- ----------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (a) (.01)
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 5.81
- ----------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 5.80
- ----------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ----------------------------------------------------------------------------------------------------------------------------------
From net
investment income --
- ----------------------------------------------------------------------------------------------------------------------------------
In excess of net
investment income --
- ----------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments --
- ----------------------------------------------------------------------------------------------------------------------------------
Total distributions --
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $32.28
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ----------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 21.90*
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $5,694
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .10*
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average net assets (%) (.06)*
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 71.23*
- ----------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding
during the period.
(b) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
(c) The ratio of expense to average net assets includes amounts paid through expense offset and brokerage service
arrangements (Note 2).
(d) Reflects an expense limitation in effect during the period. As a result of such limitation, expense for class A reflect a
reduction of approximately $0.08 per share for the year ended August 31, 1996. Expenses for the period ended August 31, 1997
reflect a reduction of $0.02, $0.01, and $0.02 for class A, class B, and class M, respectively.
(e) Distributions from net investment income amounted to less than $0.01 per share for class M.
</TABLE>
Notes to financial statements
February 29, 2000 (Unaudited)
Note 1
Significant accounting policies
Putnam International Voyager Fund (the "fund") is one of a series of
Putnam Investment Funds (the "trust") which is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-ended
management investment company. The fund seeks long-term capital
appreciation by investing primarily in equity securities of small- and
mid-capitalization companies whose principle place of business is located
outside of the United States or whose securities are principally traded on
foreign markets.
The fund offers class A, class B, class C, class M and class Y shares. The
fund began offering class Y shares on February 1, 2000. Class A shares are
sold with a maximum front-end sales charge of 5.75%. Class B shares, which
convert to class A shares after approximately eight years, do not pay a
front-end sales charge but pay a higher ongoing distribution fee than
class A shares, and are subject to a contingent deferred sales charge, if
those shares are redeemed within six years of purchase. Class C shares are
subject to the same fees and expenses as class B shares, except that class
C shares have a one-year 1.00% contingent deferred sales charge and do not
convert to class A shares. Class M shares are sold with a maximum front
end sales charge of 3.50% and pay an ongoing distribution fee that is
higher than class A shares but lower than class B and class C shares.
Class Y shares, which are sold at net asset value, are generally subject
to the same expenses as class A, class B, class C and class M shares, but
do not bear a distribution fee. Class Y shares are sold to defined
contribution plans that invest at least $150 million in a combination of
Putnam funds and other accounts managed by affiliates of Putnam Investment
Management, Inc. ("Putnam Management"), the fund's Manager, a wholly-owned
subsidiary of Putnam Investments, Inc.
Expenses of the fund are borne pro-rata by the holders of each class of
shares, except that each class bears expenses unique to that class
(including the distribution fees applicable to such class). Each class
votes as a class only with respect to its own distribution plan or other
matters on which a class vote is required by law or determined by the
Trustees. Shares of each class would receive their pro-rata share of the
net assets of the fund, if that fund were liquidated. In addition, the
Trustees declare separate dividends on each class of shares.
The following is a summary of significant accounting policies consistently
followed by the fund in the preparation of its financial statements. The
preparation of financial statements is in conformity with generally
accepted accounting principles and requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities
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 principal exchange, or if no sales are
reported -- as in the case of some securities traded over-the-counter --
the last reported bid price. Short-term investments having remaining
maturities of 60 days or less are stated at amortized cost, which
approximates market value.
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 Management. 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) Line of credit The fund has entered into a committed line of credit
with certain banks. This line of credit agreement includes restrictions
that the fund maintain an asset coverage ratio of at least 300% and
borrowings must not exceed prospectus limitations. For the six months
ended February 29, 2000, the fund had no borrowings against the line of
credit.
G) Federal taxes It is the policy of the fund to distribute all of its
taxable income within the prescribed time and otherwise comply with the
provisions of the Internal Revenue Code applicable to regulated investment
companies. It is also the intention of the fund to distribute an amount
sufficient to avoid imposition of any excise tax under Section 4982 of the
Internal Revenue Code of 1986, as amended. Therefore, no provision has
been made for federal taxes on income, capital gains or unrealized
appreciation on securities held nor for excise tax on income and capital
gains.
H) Distributions to shareholders Distributions to shareholders from net
investment income are recorded by the fund on the ex-dividend date.
Capital gain distributions, if any, are recorded on the ex-dividend date
and paid at least annually. The amount and character of income and gains
to be distributed are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles.
Reclassifications are made to the fund's capital accounts to reflect
income and gains available for distribution (or available capital loss
carryovers) under income tax regulations.
I) Expenses of the trust Expenses directly charged or attributable to any
fund will be paid from the assets of that fund. Generally, expenses of the
trust will be allocated among and charged to the assets of each fund on a
basis that the Trustees deem fair and equitable, which may be based on the
relative assets of each fund or the nature of the services performed and
relative applicability to each fund.
J) Unamortized organization expenses Expenses incurred by the fund in
connection with its organization, its registration with the Securities and
Exchange Commission and with various states and the initial public
offering of its shares were $3,662. These expenses are being amortized on
projected net asset levels over a five-year period.
Note 2
Management fee, administrative
services and other transactions
Compensation of Putnam Management, for management and investment advisory
services is paid quarterly based on the average net assets of the fund.
Such fee is based on the following annual rates: 1.00% of the first $500
million of average net assets, 0.90% of the next $500 million, 0.85% of
the next $500 million, 0.80% of the next $5 billion, 0.775% of the next $5
billion, 0.755% of the next $5 billion, 0.74% of the next $5 billion and
0.73% thereafter.
The fund reimburses Putnam Management an allocated amount for the
compensation and related expenses of certain officers of the fund and
their staff who provide administrative services to the fund. The aggregate
amount of all such reimbursements is determined annually by the Trustees.
Custodial functions for the fund's assets are provided by Putnam Fiduciary
Trust Company (PFTC), a subsidiary of Putnam Investments, Inc. Investor
servicing agent functions are provided by Putnam Investor Services, a
division of PFTC.
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 February 29, 2000, the payable to the
subcustodian bank represents the amount due for cash advance for the
settlement of a security purchased.
For the six months ended February 29, 2000, fund expenses were reduced by
$184,549 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 $1,121
has been allocated to the fund, and an additional fee for each Trustees
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 distribution plans (the "Plans") with respect to its
class A, class B, class C and class M shares pursuant to Rule 12b-1 under
the Investment Company Act of 1940. The purpose of the Plans is to
compensate Putnam Mutual Funds Corp., a wholly-owned subsidiary of Putnam
Investments Inc., for services provided and expenses incurred by it in
distributing shares of the fund. The Plans provide for payments by the
fund to Putnam Mutual Funds Corp. at an annual rate up to 0.35%, 1.00%,
1.00% and 1.00% of the average net assets attributable to class A, class
B, class C and class M shares, respectively. The Trustees have approved
payment by the fund at an annual rate of 0.25%, 1.00%, 1.00%, and 0.75% of
the average net assets attributable to class A, class B, class C and class
M shares, respectively.
For the six months ended February 29, 2000, Putnam Mutual Funds Corp.,
acting as underwriter received net commissions of $687,006 and $37,422
from the sale of class A and class M shares, respectively, and received
$118,810 and $3,543 in contingent deferred sales charges from redemptions
of class B shares and class C shares, respectively. A deferred sales
charge of up to 1% is assessed on certain redemptions of class A shares.
For the six months ended February 29, 2000, Putnam Mutual Funds Corp.,
acting as underwriter received $9,351 on class A redemptions.
Note 3
Purchase and sales of securities
During the six months ended February 29, 2000, cost of purchases and
proceeds from sales of investment securities other than short-term
investments aggregated $1,405,282,540 and $607,763,256, respectively.
There were no purchases and sales of U.S. government obligations.
Note 4
Capital shares
At February 29, 2000, there was an unlimited number of shares of
beneficial interest authorized. Transactions in capital shares were as
follows:
Six months ended February 29, 2000
- -----------------------------------------------------------------------------
Class A Shares Amount
- -----------------------------------------------------------------------------
Shares sold 24,515,945 $677,824,799
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 2,954,687 11,254,318
- -----------------------------------------------------------------------------
27,470,632 689,079,117
Shares
repurchased (8,337,086) (197,340,018)
- -----------------------------------------------------------------------------
Net increase 19,133,546 $491,739,099
- -----------------------------------------------------------------------------
Year ended August 31, 1999
- -----------------------------------------------------------------------------
Class A Shares Amount
- -----------------------------------------------------------------------------
Shares sold 12,064,985 $177,319,379
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 231,682 3,062,832
- -----------------------------------------------------------------------------
12,296,667 180,382,211
Shares
repurchased (7,464,939) (109,402,485)
- -----------------------------------------------------------------------------
Net increase 4,831,728 $ 70,979,726
- -----------------------------------------------------------------------------
Six months ended February 29, 2000
- -----------------------------------------------------------------------------
Class B Shares Amount
- -----------------------------------------------------------------------------
Shares sold 15,315,838 $384,019,998
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 331,222 7,756,971
- -----------------------------------------------------------------------------
15,647,060 391,776,969
Shares
repurchased (2,231,723) (50,402,258)
- -----------------------------------------------------------------------------
Net increase 13,415,337 $341,374,711
- -----------------------------------------------------------------------------
Year ended August 31, 1999
- -----------------------------------------------------------------------------
Class B Shares Amount
- -----------------------------------------------------------------------------
Shares sold 6,320,324 $92,834,075
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 148,012 1,943,391
- -----------------------------------------------------------------------------
6,468,336 94,777,466
Shares
repurchased (2,393,661) (34,320,799)
- -----------------------------------------------------------------------------
Net increase 4,074,675 $60,456,667
- -----------------------------------------------------------------------------
Six months ended February 29, 2000
- -----------------------------------------------------------------------------
Class C Shares Amount
- -----------------------------------------------------------------------------
Shares sold 2,688,012 $70,752,044
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 18,797 444,558
- -----------------------------------------------------------------------------
2,706,809 71,196,602
Shares
repurchased (61,188) (1,737,962)
- -----------------------------------------------------------------------------
Net increase 2,645,621 $69,458,640
- -----------------------------------------------------------------------------
For the period July 26, 1999
(commencement of operations)
to August 31, 1999
- -----------------------------------------------------------------------------
Class C Shares Amount
- -----------------------------------------------------------------------------
Shares sold 156,983 $ 2,627,586
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- -----------------------------------------------------------------------------
156,983 2,627,586
Shares
repurchased -- --
- -----------------------------------------------------------------------------
Net increase 156,983 $ 2,627,586
- -----------------------------------------------------------------------------
Six months ended February 29, 2000
- -----------------------------------------------------------------------------
Class M Shares Amount
- -----------------------------------------------------------------------------
Shares sold 1,257,308 $30,450,926
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 42,330 996,443
- -----------------------------------------------------------------------------
1,299,638 31,447,369
Shares
repurchased (266,044) (6,894,678)
- -----------------------------------------------------------------------------
Net increase 1,033,594 $24,552,691
- -----------------------------------------------------------------------------
Year ended August 31, 1999
- -----------------------------------------------------------------------------
Class M Shares Amount
- -----------------------------------------------------------------------------
Shares sold 973,859 $14,189,696
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 18,823 248,090
- -----------------------------------------------------------------------------
992,682 14,437,786
Shares
repurchased (617,690) (8,907,379)
- -----------------------------------------------------------------------------
Net increase 374,992 $ 5,530,407
- -----------------------------------------------------------------------------
For the period February 1, 2000
(commencement of operations)
to February 29, 2000
- -----------------------------------------------------------------------------
Class Y Shares Amount
- -----------------------------------------------------------------------------
Shares sold 207,104 $6,422,068
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- -----------------------------------------------------------------------------
207,104 6,422,068
Shares
repurchased (30,721) (984,994)
- -----------------------------------------------------------------------------
Net increase 176,383 $5,437,074
- -----------------------------------------------------------------------------
Our commitment to quality service
* CHOOSE AWARD-WINNING SERVICE
Putnam Investments has won the DALBAR Service Award 8 times in the past 9
years. In 1997 and 1998, Putnam was the only company to win all three
DALBAR awards: for service to investors, to financial advisors, and to
variable annuity contract holders.*
* HELP YOUR INVESTMENTS GROW
Set up a systematic program for investing with as little as $25 a month
from a Putnam money market fund or from your checking or savings account.+
* SWITCH FUNDS EASILY
Within the same class of shares, you can move money from one account to
another without a service charge. (This privilege is subject to change or
termination.)
* ACCESS YOUR MONEY QUICKLY
You can get checks sent regularly or redeem shares any business day at the
then-current net asset value, which may be more or less than the original
cost of the shares.
For details about any of these or other services, contact your financial
advisor or call the toll-free number shown below and speak with a helpful
Putnam representative. To learn more about Putnam, visit our Web site.
www.putnaminv.com
To make an additional investment in this or any other Putnam fund, contact
your financial advisor or call our toll-free number.
1-800-225-1581
*DALBAR, Inc., an independent research firm, presents the awards to financial
services firms that provide consistently excellent service.
+Regular investing, of course, does not guarantee a profit or protect against
a loss in a declining market.
THE PUTNAM FAMILY OF FUNDS
The following is a complete list of Putnam's open-end mutual funds. Please call
your financial advisor or Putnam at 1-800-225-1581 to obtain a prospectus for
any Putnam fund. It contains more complete information, including charges and
expenses. Please read it carefully before you invest or send money.
GROWTH FUNDS
Asia Pacific Growth Fund
Capital Appreciation Fund [DBL. DAGGER]
Capital Opportunities Fund
Europe Growth Fund
Global Equity Fund
Global Growth Fund
Global Natural Resources Fund
Growth Opportunities Fund
Health Sciences Trust
International Growth Fund
International New Opportunities Fund
Investors Fund
New Century Growth Fund [DBL. DAGGER]
New Opportunities Fund [DBL. DAGGER]
OTC & Emerging Growth Fund
Research Fund
Tax Smart Equity Fund
Vista Fund
Voyager Fund
Voyager Fund II
GROWTH AND INCOME FUNDS
Balanced Retirement Fund
Convertible Income-Growth Trust
Equity Income Fund
The George Putnam Fund of Boston
Global Growth and Income Fund
The Putnam Fund for Growth and Income
Growth and Income Fund II
International Growth and Income Fund
New Value Fund
Small Cap Value Fund
Utilities Growth and Income Fund
INCOME FUNDS
American Government Income Fund
Diversified Income Trust
Global Governmental Income Trust
High Yield Advantage Fund [DBL. DAGGER]
High Yield Trust [DBL. DAGGER]
High Yield Trust II
Income Fund
Intermediate U.S. Government Income Fund
Money Market Fund **
Preferred Income Fund
Strategic Income Fund *
U.S. Government Income Trust
TAX-FREE INCOME FUNDS
Municipal Income Fund
Tax Exempt Income Fund
Tax Exempt Money Market Fund **
Tax-Free High Yield Fund
Tax-Free Insured Fund
State tax-free income funds [SECTION MARK]
Arizona, California, Florida, Massachusetts, Michigan, Minnesota, New Jersey,
New York, Ohio and Pennsylvania
State tax-free money market funds [SECTION MARK] **
California, New York
ASSET ALLOCATION FUNDS
Putnam Asset Allocation Funds--three investment portfolios that spread
your money across a variety of stocks, bonds, and money market investments.
The three portfolios:
Asset Allocation: Balanced Portfolio
Asset Allocation: Conservative Portfolio
Asset Allocation: Growth Portfolio
* Formerly Putnam Diversified Income Trust II
[DBL. DAGGER] Closed to new investors. Some exceptions may apply.
Contact Putnam for details.
[SECTION MARK] Not available in all states.
** An investment in a money market fund is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency.
Although the funds seek to preserve your investment at $1.00 per share, it
is possible to lose money by investing in the fund.
Check your account balances and current performance at www.putnaminv.com.
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
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
John J. Morgan, Jr.
Vice President
Justin M. Scott
Vice President
Joseph Joseph
Vice President and Fund Manager
Nigel Hart
Vice President and Fund Manager
Omid Kamshad
Vice President and Fund Manager
Joshua Byrne
Vice President and Fund Manager
Andrew Graham
Vice President and Fund Manager
Richard A. Monaghan
Vice President
Richard G. Leibovitch
Vice President
John R. Verani
Vice President
This report is for the information of shareholders of Putnam International
Voyager Fund. It may also be used as sales literature when preceded or
accompanied by the current prospectus, which gives details of sales
charges, investment objectives, and operating policies of the fund, and
the most recent copy of Putnam's Quarterly Performance Summary. For more
information or to request a prospectus, call toll free: 1-800-225-1581.
You can also learn more at Putnam Investments' 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.
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
- ---------------------
BULK RATE
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
- ---------------------
For account balances, economic forecasts, and the latest on Putnam funds, visit
www.putnaminv.com
SA011-59715 2AZ/2CI/2CJ 4/00
PUTNAM INVESTMENTS [SCALE LOGO OMITTED]
- --------------------------------------------------------------------------
Putnam International Voyager Fund
Supplement to Semiannual Report dated 2/29/00
The following information has been prepared to provide class Y
shareholders with a performance overview specific to their holdings. Class
Y shares are offered exclusively to defined contribution plans investing
$150 million or more in one or more of Putnam's funds or private accounts.
Performance of class Y shares, which incur neither a front-end load,
distribution fee, nor contingent deferred sales charge, will differ from
performance of class A, B, and M shares, which are discussed more
extensively in the semiannual report.
SEMIANNUAL RESULTS AT A GLANCE
- --------------------------------------------------------------------------
Total return
for periods ended 2/29/00 NAV
6 months 92.58%
1 year 140.17
Life of fund (since class A inception, 12/28/95) 333.79
Annual average 42.18
Share value: NAV
2/1/00 $26.97
2/29/00 $32.28
- --------------------------------------------------------------------------
Distributions: No. Income Capital gains Total
0 -- -- --
- --------------------------------------------------------------------------
Please note that past performance is no guarantee of future results.
Returns shown for class Y shares for periods prior to their inception are
derived from the historical performance of class A shares, adjusted to
reflect the initial sales charge currently applicable to class A shares.
These returns have not been adjusted to reflect differences in operating
expenses which, for class Y shares, are lower than the operating expenses
applicable to class A shares. All returns assume reinvestment of
distributions at net asset value. Performance data reflect an expense
limitation previously in effect. Without the expense limitation, total
returns would have been lower. Investment return and principal value will
fluctuate so your shares, when redeemed, may be worth more or less than
their original cost. See full report for information on comparative
benchmarks. If you have questions, please consult your fund prospectus or
call Putnam toll free at 1-800-752-9894.
