Putnam
International
Fund
SEMIANNUAL REPORT ON PORTFOLIO AND PERFORMANCE
2-29-00
[SCALE LOGO OMITTED]
The following report contains a list of your fund's portfolio holdings and
complete financial statements for the six months ended 2/29/00. Additional
details, including fund strategy, performance, and managers' outlook, will
be provided in the annual report, which will cover the 12 months ended
8/31/00.
<TABLE>
<CAPTION>
The fund's portfolio
February 29, 2000 (Unaudited)
COMMON STOCKS (100.3%) (a)
NUMBER OF SHARES VALUE
<S> <C> <C>
Australia (2.4%)
- --------------------------------------------------------------------------------------------------------------------------
2,000 AMP Ltd. $ 18,282
1,219 Broken Hill Proprietary Co., Ltd. 12,123
2,079 Coles Myer Ltd. 8,762
1,000 Commonwealth Bank of Australia 15,445
1,000 National Australia Bank, Ltd. 13,225
400 News Corp. Ltd. ADR 23,325
6,000 Pioneer International Ltd. 16,093
1,000 Rio Tinto Ltd. 14,399
5,085 Westpac Banking Corp. 32,682
--------------
154,336
Austria (0.2%)
- --------------------------------------------------------------------------------------------------------------------------
200 VA Technolgies AG 11,869
Belgium (0.2%)
- --------------------------------------------------------------------------------------------------------------------------
50 Electrabel S.A. 13,565
Canada (0.1%)
- --------------------------------------------------------------------------------------------------------------------------
386 Laurasia Resources Ltd. 4,738
Denmark (0.8%)
- --------------------------------------------------------------------------------------------------------------------------
400 Danisco A/S 12,214
300 GN Store Nord 20,075
200 Tele Danmark A/S 16,476
--------------
48,765
Finland (3.6%)
- --------------------------------------------------------------------------------------------------------------------------
900 Oy Nokia AB Class A 180,059
700 Sampo Insurance Co., Ltd. Class A 24,018
300 Sonera Group OYJ 23,225
--------------
227,302
France (12.6%)
- --------------------------------------------------------------------------------------------------------------------------
100 Alcatel Alsthom CGE S.A. 23,505
1,175 Aventis S.A. 60,984
400 Axa S.A. 50,451
619 Banque Nationale de Paris 49,058
50 Bouygues S.A. 41,801
200 Carrefour Supermarche S.A. 30,445
300 Coflexip S.A. 26,733
400 France Telecom S.A. 64,755
160 Groupe Danone 32,289
10 Havas Advertising S.A. 5,412
50 L'OREAL 33,344
200 Lafarge Coppee 14,981
314 Michelin Corp. Class B 9,842
10 Promodes 9,085
50 Publicis S.A. 25,564
600 Sanofi-Synthelabo S.A. (NON) 23,190
200 Schneider S.A. 12,951
213 Societe Generale 44,323
200 STMicroelectronics N.V. 39,820
40 Television Francaise I (TF1) 26,096
537 Total S.A. Class B 71,364
200 Total Fina S.A. ADR (NON) 13,425
750 Vivendi 88,435
--------------
797,853
Germany (7.8%)
- --------------------------------------------------------------------------------------------------------------------------
130 Allianz Versicherungs AG 45,509
200 BASF AG 9,153
1,000 Bayer AG 41,801
1,200 Bayerische Motoren Werke (BMW) AG 30,851
100 Bayerische Vereinsbank AG 5,470
71 Celanese AG (NON) 1,414
400 DaimlerChrysler AG 27,217
805 Deutsche Bank AG 68,000
1,200 Deutsche Telekom AG 100,787
40 SAP AG 25,129
500 Siemens AG 89,643
700 Veba (Vereinigte Elektrizitaets Bergwerks) AG 31,392
400 Volkswagon AG 16,121
--------------
492,487
Hong Kong (2.1%)
- --------------------------------------------------------------------------------------------------------------------------
11,000 Bank of East Asia, Ltd. 25,866
3,000 Cathay Pacific Airways 4,163
1,000 Cheung Kong Infrastructure Holdings Ltd. 13,299
3,000 Henderson Land Development Co. Ltd. (R) 12,760
10,000 Hong Kong and China Gas Co., Ltd. 11,693
4,154 Hong Kong Electric Holdings Ltd. 12,677
2,000 Hutchison Whampoa, Ltd. 31,353
2,048 Sun Hung Kai Properties Ltd. 18,487
--------------
130,298
Ireland (0.9%)
- --------------------------------------------------------------------------------------------------------------------------
1,211 Allied Irish Banks PLC 9,890
178 Bank of Ireland 1,043
1,028 CRH PLC 17,884
700 Elan Corp. PLC ADR (NON) 28,788
--------------
57,605
Italy (4.1%)
- --------------------------------------------------------------------------------------------------------------------------
1,400 Alleanza Assicurazioni SPA 13,409
3,000 Banca Intesa SPA 11,047
1,200 Banca Popolare di Milano 8,930
8,000 Ente Nazionale Idrocarburi (ENI) SPA 37,346
200 La Rinascente SPA 1,021
1,700 Mediaset SPA 41,405
8,000 Telecom Italia Mobile SPA 109,408
2,000 Telecom Italia SPA 35,200
--------------
257,766
Japan (27.6%)
- --------------------------------------------------------------------------------------------------------------------------
300 Advantest Corp. 54,312
1,000 Canon, Inc. 41,534
1,000 Chubu Electric Power, Inc. 14,187
2,000 Dai Nippon Printing Co., Ltd. 29,901
1 DDI Corp. 9,270
1,000 Eisai Co., Ltd. 23,584
3,000 Fuji Bank Ltd. (The) 23,339
1 Fuji Television Network, Inc. 22,176
2,000 Fujitsu Ltd. 66,346
2,000 Furukawa Electric Co., Ltd. (The) 30,519
3,000 Hitachi Ltd. ORD 40,871
1,000 Honda Motor Co., Ltd. 32,718
1,000 Ito-Yokado Co., Ltd. 58,166
1,000 KAO Corp. 26,493
300 Kojima Co., Ltd. 8,752
1,000 Kurita Water Industries Ltd. 19,858
400 Kyocera Corp. 67,691
3,000 Matsushita Electric Industrial Co. 87,249
3,000 Mitsubishi Bank Ltd. 36,672
2,000 Mitsubishi Trust and Banking Corp. 13,633
3,000 Mitsui Fudoscan Co., Ltd. 18,540
2,000 NEC Corp. 44,624
4,000 Nikko Securities Co., Ltd. 51,513
9 Nippon Telegraph and Telephone Corp. 124,330
30 Nippon Television Network Corp. 41,443
1,000 Nomura Securities Co. Ltd. 28,174
200 Promise Co., Ltd. 14,741
100 Rohm Co., Ltd. 32,400
2,000 Sharp Corp. 41,807
1,000 Shin-Etsu Chemical Co. 54,076
3,000 Shiseido Co., Ltd. 36,045
100 Softbank Corp. 145,415
500 Sony Corp. 147,687
1,000 Sumitomo Trust & Banking 11,788
1,000 Takeda Chemical Industries 56,348
1,000 Teijin Ltd. 3,917
2,500 Tokyo Electric Power Co. 54,531
5,000 Toshiba Corp. 40,762
1,000 Toyota Motor Corp. 39,898
1,000 Yamanouchi Pharmaceutical Co., Ltd. 47,714
--------------
1,743,024
Netherlands (4.6%)
- --------------------------------------------------------------------------------------------------------------------------
1,716 ABN AMRO Holding N.V. 35,658
900 Akzo-Nobel N.V. 34,803
100 ASM Lithography Holding N.V. (NON) 12,782
200 Heineken N.V. 10,139
1,434 Internationale Nederlanden Groep (ING) 72,791
600 Koninklijke Ahold N.V. 13,987
352 Philips Electronics N.V. 65,405
500 Royal Dutch Petroleum Co. 26,236
302 TNT Post Group N.V. 7,513
394 Vedior N.V. 3,732
404 Vendex International N.V. 6,993
--------------
290,039
New Zealand (0.3%)
- --------------------------------------------------------------------------------------------------------------------------
3,800 Telecom Corp. of New Zealand Ltd. 15,804
Norway (0.4%)
- --------------------------------------------------------------------------------------------------------------------------
600 Norsk Hydro ASA (NON) 22,428
50 Norske Skogindustrier ASA 1,528
100 Tomra Systems ASA 1,902
--------------
25,858
Portugal (0.4%)
- --------------------------------------------------------------------------------------------------------------------------
490 Banco Comercial Portugues, S.A. 2,572
500 Electricidade de Portugal S.A. 10,018
1,000 Portugal Telecom S.A. 14,275
--------------
26,865
Singapore (1.0%)
- --------------------------------------------------------------------------------------------------------------------------
2,326 DBS Group Holdings Ltd. 28,741
2,000 Keppel Land Ltd. 2,286
2,100 Oversea-Chinese Banking Corp. 13,279
3,168 United Overseas Bank Ltd. 20,032
--------------
64,338
Spain (2.5%)
- --------------------------------------------------------------------------------------------------------------------------
1,008 Banco Santander Central Hispano S.A. 10,624
2,950 Iberdola S.A. 37,151
700 Repsol S.A. 13,294
200 Superdiplo S.A. (NON) 3,246
3,206 Telfonica S.A. (NON) 92,493
--------------
156,808
Sweden (4.0%)
- --------------------------------------------------------------------------------------------------------------------------
100 Arkivator AB 4,764
400 Electrolux AB 7,558
100 Hennes & Mauritz AB, Class B 3,315
2,600 Investor AB 38,111
300 Pharmacia & Upjohn, Inc. 14,274
200 Sandvik AB, Class A 5,440
550 Skandia Forsakrings AB 22,611
400 Svenska Cellulosa AB (SCA), Class B 9,780
500 Svenska Handelsbanken 5,869
1,400 Telefonaktiebolaget LM Ericsson, Class B 134,511
200 Volvo AB, Class B 4,730
--------------
250,963
Switzerland (5.5%)
- --------------------------------------------------------------------------------------------------------------------------
162 ABB AG (NON) 17,321
4 Ares-Serono Group Class B 13,011
20 Cie Finance Richemont 46,383
30 Clariant AG 11,313
200 Credit Suisse Group 31,986
4 Julius Baer Holdings AG 12,337
30 Nestle S.A. 50,834
43 Novartis AG ADR 55,016
2 Roche Holdings AG 21,661
100 Swatch Group AG (The) 21,806
60 Swisscom AG ADR (NON) 19,661
200 United Bank of Switzerland (UBS) AG 48,852
--------------
350,181
United Kingdom (19.2%)
- --------------------------------------------------------------------------------------------------------------------------
1,000 Aegis Group PLC 3,376
2,097 Allied Zurich PLC 17,594
1,000 Anglian Water PLC 7,036
456 AstraZeneca Group PLC 15,170
1,000 Barclays PLC 24,102
2,000 Bass PLC 21,211
1,097 BAT Industries PLC 4,513
444 BG PLC 1,937
500 British Airways PLC 2,361
13,014 British Petroleum Co. PLC 100,200
4,300 British Telecommunications PLC ADR 75,113
916 Burmah Castrol PLC 14,713
3,000 Cable & Wireless Communications (NON) 50,935
1,500 Carlton Communications PLC 16,963
3,010 Diageo PLC 22,986
800 Dixons Group PLC 17,184
3,000 EMI Group PLC 31,959
2,000 Glaxo Wellcome PLC 47,950
4,021 Granada Group PLC 40,518
3,702 HSBC Holdings PLC 42,456
2,329 HSBC Holdings PLC 27,128
500 Kingfisher Leisure PLC 3,771
800 Lloyds TSB Group PLC 7,366
1,400 Marks & Spencer PLC 5,030
500 Misys PLC 7,502
700 Molins PLC 967
500 Next PLC 4,146
500 Orange PLC ADR (NON) 21,002
1,300 Peninsular and Oriental Steam Navigation Co. 14,650
909 Royal & Sun Alliance Insurance Group PLC 4,967
303 Royal PTT 38,671
6,012 Scottish Power PLC 45,673
5,000 Securicor Group PLC 13,346
5,700 Shell Transportation & Trading 39,206
5,000 Siebe PLC 22,941
2,705 Smithkline Beecham PLC ADR 30,312
4,000 Smiths Industries PLC 48,709
8,000 Tesco PLC 21,669
5,000 Tomkins PLC 13,839
42,909 Vodafone Group PLC 240,755
1,850 WPP Group PLC 35,691
200 Zeneca Group PLC 6,505
--------------
1,212,123
- --------------------------------------------------------------------------------------------------------------------------
Total Investments (cost $4,620,547) (b) $ 6,332,587
- --------------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $6,315,218.
(b) The aggregate identified cost on a tax basis is $4,690,894 resulting in gross unrealized appreciation and
depreciation of $2,043,361 and $401,668, respectively, or net unrealized appreciation of $1,641,693.
(NON) Non-income-producing security.
(R) Real Estate Investment Trust.
ADR after the name of a foreign holding stands for American Depositary Receipts, representing ownership of
foreign securities on deposit with a domestic custodian bank.
The fund had the following industry group concentrations greater than 10% at February 29, 2000 (as a percentage of
net assets):
Telecommunications 19.4%
Insurance and finance 17.1
Electronics and electrical equipment 13.6
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
February 29, 2000 (Unaudited)
<S> <C>
Assets
- -----------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $4,620,547) (Note 1) $6,332,587
- -----------------------------------------------------------------------------------------------
Dividends and interest receivable 9,791
- -----------------------------------------------------------------------------------------------
Receivable for securities sold 75,915
- -----------------------------------------------------------------------------------------------
Receivable from Manager (Note 2) 3,149
- -----------------------------------------------------------------------------------------------
Unamortized organization expenses (Note 1) 602
- -----------------------------------------------------------------------------------------------
Total assets 6,422,044
Liabilities
- -----------------------------------------------------------------------------------------------
Payable to subcustodian (Note 2) 6,745
- -----------------------------------------------------------------------------------------------
Payable for securities purchased 63,841
- -----------------------------------------------------------------------------------------------
Payable for compensation of manager (Note 2) 12,499
- -----------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 1,130
- -----------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 1,790
- -----------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 7
- -----------------------------------------------------------------------------------------------
Other accrued expenses 20,814
- -----------------------------------------------------------------------------------------------
Total liabilities 106,826
- -----------------------------------------------------------------------------------------------
Net assets $6,315,218
Represented by
- -----------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $4,323,783
- -----------------------------------------------------------------------------------------------
Distributions in excess of net investment income (Note 1) (92,660)
- -----------------------------------------------------------------------------------------------
Accumulated net realized gain on investments
and foreign currency transactions (Note 1) 372,454
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and assets
and liabilities in foreign currencies 1,711,641
- -----------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $6,315,218
Computation of net asset value and offering price
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per share
($6,315,218 divided by 472,871 shares) $13.36
- -----------------------------------------------------------------------------------------------
Offering price per share (100/94.25 of $13.36)* $14.18
- -----------------------------------------------------------------------------------------------
* On single retail sales of less than $50,000. On sales of $50,000 or more and on group
sales, the offering price is reduced.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
Six months ended February 29, 2000 (Unaudited)
<S> <C>
Investment income:
- -----------------------------------------------------------------------------------------------
Dividends (net of foreign tax of $2,866) $ 25,570
- -----------------------------------------------------------------------------------------------
Interest 697
- -----------------------------------------------------------------------------------------------
Total investment income 26,267
Expenses:
- -----------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 23,472
- -----------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 4,372
- -----------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 1,165
- -----------------------------------------------------------------------------------------------
Administrative services (Note 2) 20
- -----------------------------------------------------------------------------------------------
Amortization of organization expenses 370
- -----------------------------------------------------------------------------------------------
Registration fees 131
- -----------------------------------------------------------------------------------------------
Reports to shareholders 2,924
- -----------------------------------------------------------------------------------------------
Auditing 15,773
- -----------------------------------------------------------------------------------------------
Legal 2,166
- -----------------------------------------------------------------------------------------------
Postage 16
- -----------------------------------------------------------------------------------------------
Fees waived by Manager (Note 2) (7,496)
- -----------------------------------------------------------------------------------------------
Total expenses 42,913
- -----------------------------------------------------------------------------------------------
Expense reduction (Note 2) (769)
- -----------------------------------------------------------------------------------------------
Net expenses 42,144
- -----------------------------------------------------------------------------------------------
Net investment loss (15,877)
- -----------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 509,442
- -----------------------------------------------------------------------------------------------
Net realized loss on foreign currency transactions (Note 1) (249)
- -----------------------------------------------------------------------------------------------
Net unrealized depreciation of assets and liabilities in
foreign currencies during the period (412)
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments during the period 548,872
- -----------------------------------------------------------------------------------------------
Net gain on investments 1,057,653
- -----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $1,041,776
- -----------------------------------------------------------------------------------------------
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 income (loss) $ (15,877) $ 10,418
- ---------------------------------------------------------------------------------------------------------------
Net realized gain on investments and
foreign currency transactions 509,193 424,534
- ---------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and
assets and liabilities in foreign currencies 548,460 791,087
- ---------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 1,041,776 1,226,039
- ---------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ---------------------------------------------------------------------------------------------------------------
From net investment income (112,228) (21,375)
- ---------------------------------------------------------------------------------------------------------------
From net realized gain on investments (532,441) (150,404)
- ---------------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 528,154 477,478
- ---------------------------------------------------------------------------------------------------------------
Total increase in net assets 925,261 1,531,738
Net assets
- ---------------------------------------------------------------------------------------------------------------
Beginning of period 5,389,957 3,858,219
- ---------------------------------------------------------------------------------------------------------------
End of period (including distributions in excess of net
investment income and undistributed net investment
income of $92,660 and $35,445, respectively) $6,315,218 $5,389,957
- ---------------------------------------------------------------------------------------------------------------
* Unaudited
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
- ----------------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share February 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 $12.45 $9.92 $9.58 $8.58 $8.50
- ----------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (d) (.04)(a) .03(a) .04 .07 .08
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 2.45 2.95 .45 1.15 --
- ----------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 2.41 2.98 .49 1.22 .08
- ----------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ----------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.26) (.06) (.06) (.09) --
- ----------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (1.24) (.39) (.09) (.13) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total distributions (1.50) (.45) (.15) (.22) --
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $13.36 $12.45 $9.92 $9.58 $8.58
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios and suplemental data
- ----------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 19.78* 30.76 5.29 14.43 .94*
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $6,315 $5,390 $3,858 $3,664 $3,144
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c)(d) .72* 1.49 1.47 1.45 .98*
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)(d) (.27)* .23 .40 .74 .96*
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 21.78* 55.80 38.61 76.09 48.18*
- ----------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Per share net investment income has been determined on the basis of weighted average number of shares outstanding during
the period.
(b) Total return does not reflect the effect of sales charges.
(c) Includes amounts paid through expense offset and brokerage service arrangements (Note 2).
(d) Reflects an expense limitation in effect during the period (Note 2). As a result of such limitation, expenses for the fund for
the period ended February 29, 2000, August 31, 1999, August 31, 1998, August 31, 1997, and August 31, 1996, reflect a
reduction of $0.02, $0.05, $0.04, $0.03, and $0.05 per share, respectively.
</TABLE>
Notes to financial statements
February 29, 2000 (Unaudited)
Note 1
Significant accounting policies
Putnam International Fund (the "fund") is one of a series of Putnam
Investment Funds (the "trust") which is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end management
investment company. The objective of the fund is to seek long-term capital
appreciation by investing mostly in common stocks of companies outside the
United States.
The following is a summary of significant accounting policies consistently
followed by the fund in the preparation of its financial statements. The
preparation of financial statements is in conformity with generally
accepted accounting principles and requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities
of the financial statements and the reported amounts of increases and
decreases in net assets from operations during the reporting period.
Actual results could differ from those estimates.
A) Security valuation Investments for which market quotations are readily
available are stated at market value, which is determined using the last
reported sale price, or if no sales are reported -- as in the case of some
securities traded over-the-counter -- the last reported bid price.
Short-term investments having remaining maturities of 60 days or less are
stated at amortized cost, which approximates market value.
B) Joint trading account Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the fund may transfer uninvested cash
balances into a joint trading account along with the cash of other
registered investment companies and certain other accounts managed by
Putnam Investment Management, Inc. ("Putnam Management"), the fund's
manager, a wholly-owned subsidiary of Putnam Investments, Inc. These
balances may be invested in one or more repurchase agreements and/or
short-term money market instruments.
C) Repurchase agreements The fund, or any joint trading account, through
its custodian, receives delivery of the underlying securities, the market
value of which at the time of purchase is required to be in an amount at
least equal to the resale price, including accrued interest. Collateral
for certain tri-party repurchase agreements is held at the counterparty's
custodian in a segregated account for the benefit of the fund and the
counterparty. Putnam Management is responsible for determining that the
value of these underlying securities is at all times at least equal to the
resale price, including accrued interest.
D) Security transactions and related investment income Security
transactions are accounted for on the trade date (date the order to buy or
sell is executed). Gains or losses on securities sold are determined on
the identified cost basis.
Interest income is recorded on the accrual basis. Dividend income is
recorded on the ex-dividend date except that certain dividends from
foreign securities are recorded as soon as the fund is informed of the
ex-dividend date.
E) Foreign currency translation The accounting records of the fund are
maintained in U.S. dollars. The market value of foreign securities,
currency holdings, and other assets and liabilities are recorded in the
books and records of the fund after translation to U.S. dollars based on
the exchange rates on that day. The cost of each security is determined
using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when accrued or incurred. The fund
does not isolate that portion of realized or unrealized gains or losses
resulting from changes in the foreign exchange rate on investments from
fluctuations arising from changes in the market prices of the securities.
Such gains and losses are included with the net realized and unrealized
gain or loss on investments. Net realized gains and losses on foreign
currency transactions represent net realized exchange gains or losses on
closed forward currency contracts, disposition of foreign currencies and
the difference between the amount of investment income and foreign
withholding taxes recorded on the fund's books and the U.S. dollar
equivalent amounts actually received or paid. Net unrealized appreciation
and depreciation of assets and liabilities in foreign currencies arise
from changes in the value of open forward currency contracts and assets
and liabilities other than investments at the period end, resulting from
changes in the exchange rate. Investments in foreign securities involve
certain risks, including those related to economic instability,
unfavorable political developments, and currency fluctuations, not present
with domestic investments.
F) 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. The fund will
reimburse Putnam Management for the payment of these expenses.
Note 2
Management fee, administrative
services and other transactions
Compensation of Putnam Management, for management and investment advisory
services is paid quarterly based on the average net assets of the fund.
Such fee is based on the following annual rates: 0.80% of the first $500
million of average net assets, 0.70% of the next $500 million, 0.65% of
the next $500 million, 0.60% of the next $5 billion, 0.575% of the next $5
billion, 0.555% of the next $5 billion, 0.54% of the next $5 billion, and
0.53% thereafter.
Putnam Management has agreed to limit its compensation (and, to the extent
necessary, bear other expenses) through August 31, 2000, to the extent
that expenses of the fund (exclusive of brokerage commissions, interest,
taxes, deferred organizational and extraordinary expense, credits from
Putnam Fiduciary Trust Company (PFTC), a wholly-owned subsidiary of Putnam
Investments, Inc., and payments under the Trust's distribution plan) would
exceed an annual rate of 1.45% of the fund's average net assets.
Under the subcustodian contract between the subcustodian bank and PFTC,
the subcustodian bank has a lien on the securities of the fund to the
extent permitted by the fund's investment restrictions to cover any
advances made by the subcustodian bank for the settlement of securities
purchased by the fund. At February 29, 2000, the payable to the
subcustodian bank represents the amount due for cash advance for the
settlement of a security purchased.
The fund reimburses Putnam Management an allocated amount for the
compensation and related expenses of certain officers of the fund and
their staff who provide administrative services to the fund. The aggregate
amount of all such reimbursements is determined annually by the Trustees.
Custodial functions for the fund's assets are provided by PFTC. Investor
servicing agent functions are provided by Putnam Investor Services, a
division of PFTC.
For the six months ended February 29, 2000, fund expenses were reduced by
$769 under expense offset arrangements with PFTC. Investor servicing and
custodian fees reported in the Statement of operations exclude these
credits. The fund could have invested a portion of the assets utilized in
connection with the expense offset arrangements in an income producing
asset if it had not entered into such arrangements.
Each Trustee of the fund receives an annual Trustee fee, of which $100 has
been allocated to the fund, and an additional fee for each Trustee's
meeting attended. Trustees receive additional fees for attendance at
certain committee meetings.
The fund has adopted a Trustee Fee Deferral Plan (the "Deferral Plan")
which allows the Trustees to defer the receipt of all or a portion of
Trustees Fees payable on or after July 1, 1995. The deferred fees remain
invested in certain Putnam funds until distribution in accordance with the
Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension
plan (the "Pension Plan") covering all Trustees of the fund who have
served as Trustee for at least five years. Benefits under the Pension Plan
are equal to 50% of the Trustee's average total retainer and meeting fees
for the three years preceding retirement. Pension expense for the fund is
included in Compensation of Trustees in the Statement of operations.
Accrued pension liability is included in Payable for compensation of
Trustees in the Statement of assets and liabilities.
The fund has adopted a distribution plan (the "Plan") pursuant to Rule
12b-1 under the Investment Company Act of 1940. The purpose of the Plan is
to compensate Putnam Mutual Funds Corp., a wholly-owned subsidiary of
Putnam Investments, Inc., for services provided and expenses incurred by
it in distributing shares of the fund. The Plan provides for payment by
the fund to Putnam Mutual Funds Corp. at an annual rate of up to 0.35% of
the fund's average net assets. The fund is currently not making any
payments pursuant to the Plan.
During the six months ended February 29, 2000, Putnam Mutual Funds Corp.,
acting as underwriter, received no monies from net commissions from the
sale of shares of the fund.
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 $1,272,900 and $1,371,039, 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
- -----------------------------------------------------------------------------
Shares Amount
- -----------------------------------------------------------------------------
Shares sold 12,347 $171,122
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 49,781 644,669
- -----------------------------------------------------------------------------
62,128 815,791
Shares
repurchased (22,186) (287,637)
- -----------------------------------------------------------------------------
Net increase 39,942 $528,154
- -----------------------------------------------------------------------------
Year ended August 31, 1999
- -----------------------------------------------------------------------------
Shares Amount
- -----------------------------------------------------------------------------
Shares sold 30,481 $336,359
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 16,267 171,779
- -----------------------------------------------------------------------------
46,748 508,138
Shares
repurchased (2,688) (30,660)
- -----------------------------------------------------------------------------
Net increase 44,060 $477,478
- -----------------------------------------------------------------------------
At February 29, 2000, Putnam Investments Inc., owned 444,573 shares of the
fund (94.0% of shares outstanding), valued at $5,939,495.
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 Scott
Vice President and Fund Manager
Geir Lode
Vice President and Fund Manager
Omid Kamshad
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
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.
2AX 59721 4/00
