Putnam
Global Growth
and Income
Fund
SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK
3-31-00
[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
year 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
Global Growth and Income 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
May 17, 2000
Report from the fund managers
Deborah F. Kuenstner
Hugh H. Mullin
George W. Stairs
During the first six months of Putnam Global Growth and Income Fund's
fiscal year 2000, the market's apparently insatiable appetite for
aggressive growth stocks was noteworthy. As rapid-growth stocks held
investors' attention, the typically modest inverse relationship between
growth and value investment styles was stretched to historic
proportions. In the United States and abroad, technology,
telecommunications, and Internet-related stocks commanded stunningly
high valuations. To an equal yet opposite degree, share prices for
stocks of fundamentally strong companies in more mature industries
underperformed. Dividend-paying value stocks were strongly out of favor
for much of the period, and the fund's performance reflects investors'
preference for growth.
Total return for 6 months ended 3/31/00
Class A Class B Class C Class M
NAV POP NAV CDSC NAV CDSC NAV POP
- ------------------------------------------------------------------------
6.03% -0.08% 5.58% 0.72% 5.79% 4.82% 5.70% 1.98%
- ------------------------------------------------------------------------
Past performance is not indicative of future results. Performance
information for longer periods and explanation of performance
calculation methods begin on page 8.
Three interest-rate increases in the United States during the period
added to the woes of old economy companies already struggling to keep
their valuations aloft. While share prices were low, we were able to add
many high-quality issues, including those not normally considered value
stocks, to the portfolio.
Although performance for the period was weaker than it has been in the
past, we believe our strategic purchases of fundamentally strong stocks
at deeply discounted prices will buttress the portfolio and reward those
shareholders having a long-term investment horizon. Furthermore, mergers
and acquisitions activity has heightened in Europe, many companies are
restructuring, even in Japan, and there are ongoing signs of recovery
from the Asian crisis, especially in emerging markets and Europe -- all
of which point toward a more favorable environment for the fund in
future.
[GRAPHIC OMITTED: horizontal bar chart TOP COUNTRY ALLOCATIONS]
TOP COUNTRY ALLOCATIONS*
United States 43.1%
Japan 13.2%
United Kingdom 13.0%
France 6.9%
Canada 4.6%
Footnote reads:
*Based on net assets as of 3/31/00. Holdings will vary over time.
* FUND STRATEGY LIGHTS WAY IN VOLATILE MARKETS
As global investors, we must be concerned with currency exchange rates,
governmental regulations, and a host of other variables unique to
foreign and domestic markets. While these are certainly important, the
overriding theme that drives our investment decisions is basic
fundamental analysis, or bottom-up stock picking. We target companies
throughout the world that are poised for positive change and seek to
purchase their stock when we believe their current prices are below
their true worth. We are careful to research the reasons why valuations
are low and invest only in those companies that we believe are
wrongfully undervalued. In other words, if we discover that a company
has severe troubles that warrant a low share price, we let the
opportunity pass.
Some examples of the kinds of positive changes we look for include new
management, restructuring, eliminating unprofitable lines of business,
and engaging in new initiatives for which the company is well suited.
Our expectation is that these companies will take the steps necessary to
improve value for their shareholders. However, on occasion, a weakened
company will fall prey to a stronger one, and required improvements will
be imposed upon it. Although we do not specifically target companies
ripe for takeover, we generally view this scenario as a positive event
that could boost performance for the fund.
Over the past six months, volatility in world markets has increased.
While fund management measured market turbulence in terms of the rich
investment opportunities it uncovered, we realize our shareholders may
have experienced a sense of uneasiness. We believe that your fund's
clearly defined value-investment mandate should provide a degree of
comfort as we face the months ahead. As a reminder, the fund's emphasis
on large, well-established companies eliminates the substantial risk
associated with smaller firms and firms that have no track record. In
addition, our global reach allows fund management to diversify across
world markets and to avoid particularly risky environments. Lastly the
value strategy -- buying promising stocks that are already cheap and
undergoing positive change -- provides strong upside potential with
reduced downside risk.
* OVERSEAS, TELECOMMUNICATIONS STOCKS WERE STRONG VALUE PLAYS
Telecommunications has been one of the leading sectors worldwide over
the past several years. In order to participate in the growth of this
desirable sector, your fund has been investing in telecom companies that
are undervalued and have favorable fundamental outlooks. We bought our
largest holding, BCE, Inc. of Canada because we were able to get it very
cheaply and it represented backdoor access to telecommunications
technology. BCE owns a 41% stake in Nortel Networks, a top
telecommunications equipment manufacturer. Since our purchase of BCE,
the company has taken great strides to improve itself and to unlock
shareholder value: Nortel bought Bay Networks; BCE sold 20% of its
telephone subsidiary to Ameritech; BCE bought the outstanding minority
shares in its own mobile telephone business; now BCE is spinning off
Nortel to its shareholders. This wide-ranging restructuring has boosted
share performance and BCE stock was up 150% over the six-month period.
"We think there is tremendous opportunity in the markets today for value
investors, and we're trying to take advantage of that. We're also firmly
committed to maintaining this style. That's what people expect of Putnam."
- - Hugh H. Mullin, portfolio manager
Telesp Celular, a Brazilian cellular telephone company, has strong
fundamentals and growth potential. Throughout Brazil, traditional,
fixed-line telephone service is notoriously unreliable. Consequently,
Brazilians are turning to their cellular phones as their primary
telephones. Telesp is the dominant service provider for Brazil's most
populated state, Sao Paulo, and Brazil's business capital, the city of
Sao Paulo. We particularly like the company's innovative CEO, whose
creative vision gave birth to the first prepaid calling card, an item
now popular around the world. The stock appreciated 117% over the recent
six-month period.
Favorable developments support global investing
Diversifying your portfolio with foreign stocks has always been a good idea.
The simple explanation is that world markets are not closely correlated;
therefore, when the U.S. market is doing poorly, other markets are likely
to be bettoff. The argument for foreign investing is all the more compelling
lately, given that around the world, developed countries are making changes
to embrace U.S.-style capitalism more fully.
In moves that are reminiscent of those taken by U.S. companies over the past 15
years, European and Japanese companies are restructuring, cutting out the fat,
and redefining their missions in order to become more competitive. Companies
that previously borrowed from banks now issue stocks and bonds to raise
capital. Savers are becoming investors, moving their assets from passbook
accounts to the stock market with hopes of achieving the kind of capital
appreciation U.S. investors have enjoyed for years. The demand for stocks
and investment opportunities is growing at a brisk rate. Since the introduction
of a common currency, the euro, by the European Economic and Monetary Union,
merger and acquisition activity has increased in Europe, creating stronger
companies with enhanced shareholder value.
Foreign markets are generally not as efficient as U.S. markets because
financial information is not as easy to obtain. As a result, there are many
mispriced securities among the market's offerings. Putnam's expert global
research team provides fund management with a distinct advantage in locating
these undervalued securities. In 1999, overseas markets provided higher returns
than U.S. markets for the first time since 1994. All signs point to a
continuation of this trend into the foreseeable future and thus, to the
benefits of global investing.
The fund also holds Cable and Wireless Plc., a telecommunications
company based in the United Kingdom. Cable and Wireless has been making
arrangements to sell its majority stake in Hong Kong Telecom to Pacific
Cyberworks, a Hong Kong based Internet company. We were gratified to
hear of the planned sale and we took some profits on Cable and Wireless
when its share price advanced. It was up 73% for the period. While these
holdings, as well as others discussed in this report, were viewed
favorably at the end of the period, all holdings are subject to review
and adjustment in accordance with the fund's investment strategy and may
well vary in the future.
* DIVERSITY OF SECTORS ROUNDS PORTFOLIO
Your fund invests in a broad array of sectors. Financial stocks are well
represented in the fund, and although this sector has suffered under the
burden of interest-rate increases, we expect the turnaround in financial
stocks to be a hearty one because of their low valuations and continuing
strong business results. The fund owns shares in two of the three major
Japanese brokers, Nikko Securities and Nomura Securities, which have
successfully transitioned into what is now a deregulated brokerage
industry. Their large asset-management concerns will benefit as
investors transfer billions of dollars of assets from low-interest
postal savings accounts into equity investments. In addition, Nikko
Securities has linked up with Citigroup to form a global investment
banking venture.
Our U.S. holdings include the Federal National Mortgage Association, or
Fannie Mae. This government-backed company buys mortgages from lenders,
repackages them, and then sells them as fixed-income securities. In
doing so, Fannie Mae facilitates housing ownership for low- to
middle-income Americans. Interest rates and concerns in Washington over
the size and influence that Fannie Mae wields in the mortgage market
have brought the stock down to unusually low valuation levels. This
exceptional company can boast a 20-year track record of annual earnings
growth in the range of 13% to 14%. Others we have added include
Comerica, Wells-Fargo, Bank of New York, and Bank of America.
The fundamental outlook for energy stocks is greatly improved as a
result of the rebounding of both oil and natural gas prices. Despite
that recovery, the stocks still sell at attractively low and reasonable
valuations. Two of our largest holdings are Exxon Mobil Corp. and Total
Fina Elf. Both are consolidators of the global energy industry and are
leveraging strong oil prices with cost reductions made possible by their
recent mergers.
The pharmaceutical industry has experienced a number of mergers,
acquisitions, and restructurings that should lead to increased
efficiencies and greater profitability for years to come. Ordinarily,
pharmaceutical stocks are outside the reach of traditional value
investors, but their current valuation levels are particularly
attractive, especially in the United States, where we are seeing yields
substantially higher than the market and P/E ratios lower than the
market. The fund's holdings include Bristol-Myers Squibb,
Schering-Plough, Abbot Laboratories, and Merck. Several of our overseas
holdings have benefitted from restructuring or merger activity,
including Pharmacia & Upjohn, Inc., SmithKline Beecham, and Aventis.
Aventis, formed by the 1999 merger of Rhone-Poulenc and Hoechst, is one
of the fund's largest pharmaceutical holdings. The stock has risen 18%
since the merger -- a healthy advance for a stock from an out-of-favor
sector. We believe it has further appreciation potential because of
strong management, several promising drugs in the pipeline, and the
relocation of its research and development center to New Jersey, the
heart of the U.S. pharmaceutical industry.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
TOP 10 HOLDINGS
BCE, Inc.
Canada
Telecommunications
Aventis S.A.
France
Pharmaceuticals
Honda Motor Co., Ltd.
Japan
Automotive
Exxon Mobil, Corp.
United States
Oil and gas
Veba AG
Germany
Electric utilities
Total Fina Elf
France
Oil and gas
Diageo Plc.
United Kingdom
Beverages
ScottishPower Plc.
United Kingdom
Electric utilities
Akzo-Nobel
Netherlands
Chemicals
IBM Corp.
United States
Computers
These holdings represent 13.2% of the fund's net assets as of 3/31/00.
Portfolio holdings will vary over time.
* ENCOURAGING SIGNS FOR VALUE INVESTORS
Recent and extreme volatility in world markets would indicate that
investors are reevaluating their holdings and perhaps looking to lessen
their risk by directing some of their assets back into established
companies with strong track records. We are encouraged by improving
performance in world markets and recent gains for value stocks at home.
Inflation in the United States and abroad remains low by historical
standards. We believe the Federal Reserve Board may deliver more
interest-rate increases in the coming months, and if the economy begins
to moderate as we expect it will, these may foster renewed interest in
stocks we have been selectively adding to the portfolio, particularly
financials and pharmaceuticals. To value investors who may have
questioned the wisdom of their choices, we wish to affirm our
untarnished faith in the fund's disciplined value investment strategy
that focuses on fundamentals such as earnings, profits, and dividends to
shareholders. We believe our emphasis on undervalued companies engaging
in positive change will enable your fund to provide the benefits of
capital appreciation and income, with less volatility, over the long
term.
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 3/31/00, there is no guarantee the fund will
continue to hold these securities in the future. International investing
involves certain risks, such as currency fluctuations, economic
instability, and political developments.
PERFORMANCE SUMMARY
This section provides information about your fund's performance, which
should always be considered in light of its investment strategy. Putnam
Global Growth and Income Fund is designed for investors seeking capital
growth through investing primarily in stocks of companies in the United
States and worldwide.
<TABLE>
<CAPTION>
TOTAL RETURN FOR PERIODS ENDED 3/31/00
Class A Class B Class C Class M
(inception dates) (1/3/95) (11/5/97) (7/26/99) (11/5/97)
NAV POP NAV CDSC NAV CDSC NAV POP
<C> <S> <S> <S> <S> <S> <S> <S> <S>
- ----------------------------------------------------------------------------------------
6 months 6.03% -0.08% 5.58% 0.72% 5.79% 4.82% 5.70% 1.98%
- ----------------------------------------------------------------------------------------
1 year 11.74 5.28 10.91 5.91 11.20 10.19 11.10 7.23
- ----------------------------------------------------------------------------------------
5 years 125.33 112.27 115.31 113.31 117.46 117.46 117.95 110.38
Annual average 17.64 16.25 16.58 16.36 16.81 16.81 16.86 16.04
- ----------------------------------------------------------------------------------------
Life of fund 124.00 111.09 113.34 112.34 115.98 115.98 116.44 108.98
Annual average 16.64 15.32 15.56 15.45 15.83 15.83 15.88 15.10
- ----------------------------------------------------------------------------------------
</TABLE>
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 3/31/00
MSCI Consumer
World Index price index
- -------------------------------------------------------------------------
6 months 18.07% 2.03%
- -------------------------------------------------------------------------
1 year 21.87 3.69
- -------------------------------------------------------------------------
5 years 137.76 13.15
Annual average 18.90 2.50
- -------------------------------------------------------------------------
Life of fund 148.88 13.98
Annual average 18.97 2.52
- -------------------------------------------------------------------------
Past performance is no indication of future results. More recent returns
may be more or less than those shown. Returns for class A and class M
shares reflect the current maximum initial sales charges of 5.75% and
3.50%, respectively. Class B share returns for the 1-, 5-, and 10-year
(where available) and life-of-fund periods reflect the applicable
contingent deferred sales charge (CDSC), which is 5% in the first year,
declines to 1% in the sixth year, and is eliminated thereafter. Returns
shown for class B and class M shares for periods prior to their
inception are derived from the historical performance of class A shares,
adjusted to reflect both the initial sales charge or CDSC, if any,
currently applicable to each class and in the case of class B and class
M shares the higher operating expenses applicable to such shares. 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 which is currently 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 3/31/00
Class A Class B Class C Class M
<C> <S> <S> <S> <S>
- -----------------------------------------------------------------------------------
Distributions (number) 2 1 1 1
- -----------------------------------------------------------------------------------
Income $0.239 $0.203 $0.207 $0.212
- -----------------------------------------------------------------------------------
Capital gains
Long-term 0.432 0.432 0.432 0.432
- -----------------------------------------------------------------------------------
Short-term 0.507 0.507 0.507 0.507
- -----------------------------------------------------------------------------------
Total $1.178 $1.142 $1.146 $1.151
- -----------------------------------------------------------------------------------
Share value: NAV POP NAV NAV NAV POP
- -----------------------------------------------------------------------------------
9/30/99 $14.06 $14.92 $13.94 $14.06 $14.00 $14.51
- -----------------------------------------------------------------------------------
3/31/00 13.70 14.54 13.55 13.70 13.62 14.11
- -----------------------------------------------------------------------------------
</TABLE>
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) World Index is an unmanaged
list of global equity securities with all values expressed in U.S.
dollars. 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.
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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.
The fund's portfolio
March 31, 2000 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (95.2%) (a)
NUMBER OF SHARES VALUE
<S> <C> <C> <C> <C>
Aerospace/Defense (1.5%)
- ----------------------------------------------------------------------------------------------------------------------------
11,095 Boeing Co. $ 420,917
56,470 British Aerospace PLC (United Kingdom) 318,347
7,720 Lockheed Martin Corp. 157,778
835 Raytheon Co. Class B 14,821
43,054 Rolls-Royce PLC (United Kingdom) 139,355
4,850 United Technologies Corp. 306,459
----------------
1,357,677
Airlines (0.4%)
- ----------------------------------------------------------------------------------------------------------------------------
13,815 Deutsche Lufthansa AG (Germany) 314,661
Automotive (4.0%)
- ----------------------------------------------------------------------------------------------------------------------------
7,270 Ford Motor Co. 333,966
85,000 Fuji Heavy Industries (Japan) 691,658
3,855 General Motors Corp. 319,242
29,000 Honda Motor Co., Ltd. (Japan) 1,201,133
22,446 Hyundai Motor Co., Ltd. (Japan) (NON) 132,431
7,966 Hyundai Motor Co., 144A (Japan) (NON) 46,999
15,552 Valeo S.A. (France) 764,144
----------------
3,489,573
Banking (9.9%)
- ----------------------------------------------------------------------------------------------------------------------------
2,471 AmSouth Bancorporation 36,911
45,453 Australia & New Zealand Banking Group Ltd. (Australia) 287,125
12,565 Bank of America Corp. 658,877
6,010 Bank of New York Company, Inc. 249,791
33,767 Bank of Nova Scotia (Canada) (NON) 676,878
9,211 Bank One Corp. 316,628
6,379 Banque Nationale de Paris (France) 502,585
4,870 Barclays PLC (United Kingdom) 128,896
5,850 Charter One Financial, Inc. 122,850
5,238 Chase Manhattan Corp. 456,688
6,070 Comerica, Inc. 254,181
19,513 DBS Group Holdings Ltd. (Singapore) (NON) 257,740
3,050 Federal Home Loan Mortgage Corp. 134,772
8,312 First Union Corp. 309,622
12,203 Firstar Corp. 279,906
11,020 FleetBoston Financial Corp. 402,230
19,382 HSBC Holdings PLC (United Kingdom) 226,515
4,680 Huntington Bancshares, Inc. 104,715
45,309 Istituto Bancario San Paolo di Torino (Italy) 619,195
26,180 National Bank of Canada (Canada) (NON) 383,884
40,850 Oversea-Chinese Banking Corp. Ltd. (Singapore) 253,074
5,087 PNC Bank Corp. 229,233
1,812 Societe Generale (France) 360,628
2,850 Summit Bancorp 74,813
6,120 Synovus Financial Corp. 115,515
3,575 U.S. Bancorp 78,203
4,080 Unidanmark AS (Denmark) 261,377
1,030 United Bank of Switzerland (UBS) AG (Switzerland) 270,369
5,951 Washington Mutual, Inc. 157,702
11,431 Wells Fargo Co. 467,957
----------------
8,678,860
Beverage (3.4%)
- ----------------------------------------------------------------------------------------------------------------------------
4,082 Anheuser-Busch Cos., Inc. 254,105
58,782 Bass PLC (United Kingdom) 738,586
149,651 Diageo PLC (United Kingdom) 1,122,484
98,804 Fomento Economico Mexicano, S.A. de C.V. (Mexico) 445,371
20,000 Kirin Brewery Co. Ltd. (Japan) 245,384
6,150 PepsiCo, Inc. 212,559
----------------
3,018,489
Building Products (0.7%)
- ----------------------------------------------------------------------------------------------------------------------------
39,000 Asahi Glass Co., Ltd. (Japan) 333,731
16,238 CRH PLC (Ireland) 290,762
----------------
624,493
Cable Television (0.2%)
- ----------------------------------------------------------------------------------------------------------------------------
4,365 Comcast Corp. Class A 189,332
Chemicals (5.6%)
- ----------------------------------------------------------------------------------------------------------------------------
2,800 Air Products & Chemicals, Inc. 79,625
24,387 Akzo-Nobel N.V. (Netherlands) 1,038,715
39,486 BOC Group PLC (United Kingdom) 771,555
1,421 Clariant AG (Switzerland) 534,326
3,090 Dow Chemical Co. 352,260
7,498 du Pont (E.I.) de Nemours & Co., Ltd. 396,457
4,975 Eastman Chemical Co. 226,363
6,486 Henkel KGaA (Germany) 353,065
3,282 Minnesota Mining & Manufacturing Co. 290,662
4,220 PPG Industries, Inc. 220,759
12,700 Rhodia SA (France) 226,803
94,000 Teijin Ltd. (Japan) 399,433
----------------
4,890,023
Computers (3.0%)
- ----------------------------------------------------------------------------------------------------------------------------
9,810 Compaq Computer Corp. 261,191
4,215 Hewlett-Packard Co. 558,751
8,769 IBM Corp. 1,034,742
1,425 Lexmark International Group, Inc. Class A 150,694
16,000 NEC Corp. (Japan) 473,576
3,115 Seagate Technology, Inc. (NON) 187,679
----------------
2,666,633
Conglomerates (2.4%)
- ----------------------------------------------------------------------------------------------------------------------------
18,652 Canadian Pacific, Ltd. (Canada) 417,006
121,506 Cookson Group PLC (United Kingdom) 351,683
5,149 Cooper Industries, Inc. 180,215
3,285 Honeywell International Inc. 173,078
17,600 Investor AB (Sweden) 274,600
19,500 Smiths Industries PLC (United Kingdom) 237,406
88,189 Tomkins PLC (United Kingdom) 281,233
3,400 Tyco International Ltd. 169,575
----------------
2,084,796
Consumer Finance (1.9%)
- ----------------------------------------------------------------------------------------------------------------------------
3,675 Aiful Corp. (Japan) 409,251
5,275 Household International, Inc. 196,823
2,900 MBNA Corp. 73,950
12,700 Promise Co., Ltd. (Japan) 981,313
----------------
1,661,337
Consumer Goods (0.8%)
- ----------------------------------------------------------------------------------------------------------------------------
5,635 Kimberly-Clark Corp. 315,560
31,000 Shiseido Co., Ltd. (Japan) 422,438
----------------
737,998
Electric Utilities (5.7%)
- ----------------------------------------------------------------------------------------------------------------------------
4,859 Dominion Resources, Inc. 186,768
4,463 Duke Energy Corp. 234,308
5,285 Edison International 87,533
11,455 Entergy Corp. 231,248
110,434 Hong Kong Electric Holdings Ltd. (Hong Kong) 333,295
45,979 Iberdola S.A. (Spain) 598,493
7,450 Pacific Gas & Electric Co. 156,450
7,690 Public Service Enterprise Group, Inc. 227,816
59,658 Scottish and Southern Energy PLC (United Kingdom) 487,378
129,944 Scottish Power PLC (United Kingdom) 1,050,717
476,000 Shandong International Power Development Co. Ltd. (China) 50,739
5,970 Texas Utilities Co. 177,234
22,930 Veba (Vereinigte Elektrizitaets Bergwerks) AG (Germany) 1,169,361
----------------
4,991,340
Electrical Equipment (2.0%)
- ----------------------------------------------------------------------------------------------------------------------------
6,446 Emerson Electric Co. 340,832
3,715 Rockwell International Corp. 155,333
6,798 Schneider S.A. (France) 433,022
186,243 Siebe PLC (United Kingdom) 826,009
----------------
1,755,196
Electronics (3.2%)
- ----------------------------------------------------------------------------------------------------------------------------
900 Hirose Electric Co. Ltd. (Japan) 127,391
10,000 Matsushita Electric Industrial Co. 299,893
3,908 Motorola, Inc. 556,402
3,417 Philips Electronics N.V. (Netherlands) 573,024
6,000 TDK Corp. (Japan) 819,381
41,000 Toshiba Corp. (Japan) 418,931
----------------
2,795,022
Energy (0.6%)
- ----------------------------------------------------------------------------------------------------------------------------
3,500 Halliburton Co. 143,500
4,830 Schlumberger Ltd. 369,495
877 Transocean Sedco Forex Inc. 45,001
----------------
557,996
Financial (2.3%)
- ----------------------------------------------------------------------------------------------------------------------------
54,846 Allied Zurich AG (United Kingdom) 601,351
15,600 Citigroup, Inc. 925,275
8,280 Fannie Mae 467,303
----------------
1,993,929
Food (1.1%)
- ----------------------------------------------------------------------------------------------------------------------------
6,892 ConAgra, Inc. 124,918
5,939 Heinz (H.J.) Co. 207,123
9,995 Kellogg Co. 256,122
12,490 Sara Lee Corp. 224,820
5,100 SYSCO Corp. 182,006
----------------
994,989
Health Care Services (0.9%)
- ----------------------------------------------------------------------------------------------------------------------------
4,795 Baxter International, Inc. 300,587
3,635 CIGNA Corp. 275,351
8,868 Tenet Healthcare Corp. 203,964
----------------
779,902
Insurance (5.8%)
- ----------------------------------------------------------------------------------------------------------------------------
6,956 AGF (Assurances Generales de France) (France) 359,053
396 Allianz Versicherungs AG (Germany) 160,916
7,274 Allstate Corp. 173,212
5,240 American General Corp. 294,095
89,726 AMP Ltd. (Australia) 848,013
4,692 AON Corp. 151,317
7,171 Axa S.A. (France) 1,014,234
5,265 Hartford Financial Services Group 277,729
17,597 Internationale Nederlanden Groep (ING) (Netherlands) 951,171
7,055 Lincoln National Corp. 236,343
19,387 Manulife Financial Corp. (Canada) 284,946
20,800 Royal & Sun Alliance Insurance Group PLC (United Kingdom) 130,509
3,075 The Chubb Corp. 207,755
----------------
5,089,293
Investment Banking/Brokerage (2.0%)
- ----------------------------------------------------------------------------------------------------------------------------
2,925 Merrill Lynch & Co., Inc. 307,125
53,000 Nikko Securities Co. Ltd. (Japan) 804,552
13,000 Nomura Securities Co. Ltd. (Japan) 425,418
4,435 Paine Webber Group Inc. 195,140
----------------
1,732,235
Media (1.1%)
- ----------------------------------------------------------------------------------------------------------------------------
31,800 Carlton Communications PLC (United Kingdom) 385,129
13,885 Disney (Walt) Productions, Inc. 574,492
----------------
959,621
Metals (1.0%)
- ----------------------------------------------------------------------------------------------------------------------------
8,321 Freeport-McMoRan Copper & Gold Co., Inc. Class A (NON) 92,571
3,589 Freeport-McMoRan Copper & Gold Co., Inc. Class B (NON) 43,292
11,800 Pohang Iron & Steel Company, Ltd. ADR (South Korea) 324,500
18,719 SKF AB Class B, (Sweden) 415,372
----------------
875,735
Natural Gas Utilities (0.4%)
- ----------------------------------------------------------------------------------------------------------------------------
4,098 El Paso Energy Corp. 165,457
4,665 Williams Cos., Inc. 204,968
----------------
370,425
Oil & Gas (6.8%)
- ----------------------------------------------------------------------------------------------------------------------------
107,875 British Petroleum Co. PLC (United Kingdom) 985,221
5,915 Burlington Resources Inc. 218,855
4,315 Chevron, Inc. 398,868
2,795 Conoco, Inc. 68,827
5,708 Conoco, Inc. Class B 146,268
148,247 Ente Nazionale Idrocarburi (ENI) SpA (Italy) 740,442
15,240 Exxon Mobil Corp. 1,185,863
11,231 Royal Dutch Petroleum Co. PLC ADR (Netherlands) 646,484
2,250 Texaco, Inc. 120,656
9,663 Tosco Corp. 294,118
7,517 Total Fina Elf S.A. Class B, (France) 1,123,472
----------------
5,929,074
Paper & Forest Products (2.7%)
- ----------------------------------------------------------------------------------------------------------------------------
59,247 Abitibi-Consolidated Inc. (Canada) (NON) 570,312
4,195 International Paper Co. 179,336
251,139 Jefferson Smurfit Group PLC (Ireland) 583,911
37,350 Sappi Ltd. (South Africa) 289,730
15,306 Svenska Cellulosa AB (SCA) Class B, (Sweden) 360,865
2,745 Temple Inland, Inc. 136,735
4,115 Weyerhaeuser Co. 234,555
----------------
2,355,444
Pharmaceuticals (8.0%)
- ----------------------------------------------------------------------------------------------------------------------------
11,185 Abbott Laboratories 393,572
8,855 American Home Products Corp. 474,849
24,081 Aventis S.A. (France) 1,310,849
13,400 Bristol-Myers Squibb Co. 773,850
17,000 Eisai Co. Ltd. (Japan) 449,204
11,720 Merck & Co., Inc. 728,105
7,950 Monsanto Co. 409,425
311 Novartis AG ADR (Switzerland) 424,804
5,915 Pharmacia & Upjohn, Inc. 350,464
4,480 Schering-Plough Corp. 164,640
24,250 Smithkline Beecham PLC ADR (United Kingdom) 319,758
11,000 Yamanouchi Pharmaceutical Co., Ltd. (Japan) 603,888
14,664 Zeneca Group PLC (United Kingdom) 592,918
----------------
6,996,326
Photography/Imaging (1.5%)
- ----------------------------------------------------------------------------------------------------------------------------
14,000 Canon, Inc. (Japan) 608,577
4,220 Eastman Kodak Co. 229,199
14,000 Ricoh Co., Ltd. (Japan) 300,869
6,478 Xerox Corp. 168,428
----------------
1,307,073
Publishing (1.0%)
- ----------------------------------------------------------------------------------------------------------------------------
23,000 Dai Nippon Printing Co., Ltd. (Japan) 374,309
3,625 McGraw-Hill, Inc. 164,938
2,070 Times Mirror Co. Class A 192,381
6,736 Wolters Kluwer N.V. (Netherlands) 154,389
----------------
886,017
Railroads (0.7%)
- ----------------------------------------------------------------------------------------------------------------------------
11,701 Burlington Northern Santa Fe Corp. 258,885
13,495 Canadian National Railway Co. (Canada) (NON) 356,185
----------------
615,070
Real Estate (0.5%)
- ----------------------------------------------------------------------------------------------------------------------------
16,500 Canary Wharf 144A PLC (United Kingdom) (NON) 93,543
22,650 Canary Wharf Finance PLC (United Kingdom) (NON) 128,410
52,000 Henderson Land Development Co. Ltd. (Hong Kong) (R) 245,091
----------------
467,044
Regional Bells (3.0%)
- ----------------------------------------------------------------------------------------------------------------------------
10,856 Bell Atlantic Corp. 663,573
12,670 BellSouth Corp. 595,490
5,725 GTE Corp. 406,475
22,508 SBC Communications, Inc. 945,336
----------------
2,610,874
Retail (2.3%)
- ----------------------------------------------------------------------------------------------------------------------------
7,405 Albertsons, Inc. 229,555
3,105 CVS Corp. 116,632
3,650 Federated Department Stores, Inc. (NON) 152,388
10,370 K mart Corp. (NON) 100,459
3,745 Lowe's Cos., Inc. 218,614
22,000 Marui Co., Ltd. (Japan) 399,082
7,775 Rite Aid Corp. 42,763
3,261 Target Corp. 243,760
137,912 Tesco PLC (United Kingdom) 458,467
3,675 TJX Cos., Inc. (The) 81,539
----------------
2,043,259
Software (0.4%)
- ----------------------------------------------------------------------------------------------------------------------------
2,200 BMC Software, Inc. (NON) 108,625
4,500 Computer Associates International, Inc. 266,344
----------------
374,969
Technology Services (0.5%)
- ----------------------------------------------------------------------------------------------------------------------------
6,675 Electronic Data Systems Corp. 428,452
Telecommunications (7.2%)
- ----------------------------------------------------------------------------------------------------------------------------
16,358 AT&T Corp. 920,138
10,881 BCE, Inc. (Canada) (NON) 1,358,992
42,726 Cable & Wireless PLC (United Kingdom) 801,525
62,400 Carso Global Telecom (Mexico) 192,576
9,190 Hellenic Telecommunication Organization S.A. (Greece) 261,656
17,607 Mahanager Telephone GDR 144A (India) (NON) 237,695
55 Nippon Telegraph and Telephone Corp. (Japan) 875,745
43,344 Portugal Telecom S.A. (Portugal) 554,673
4,918 Sprint Corp. 309,834
54,500 Tecnost SpA (Italy) (NON) 205,588
10,078 Telesp Celular Participacoes S.A. ADR (Brazil) 571,297
----------------
6,289,719
Tobacco (0.5%)
- ----------------------------------------------------------------------------------------------------------------------------
46,089 BAT Industries PLC (United Kingdom) 253,402
10,232 Philip Morris Cos., Inc. 216,151
----------------
469,553
Waste Management (0.2%)
- ----------------------------------------------------------------------------------------------------------------------------
12,585 Waste Management, Inc. 172,257
----------------
Total Common Stocks (cost $79,083,004) $ 83,554,686
CONVERTIBLE PREFERRED STOCKS (0.1%) (a) (cost $151,801)
NUMBER OF SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------------
2,893 K mart Financing I $3.875 cum. cv. pfd. $ 121,506
UNITS (0.1%) (a) (cost $52,626)
NUMBER OF UNITS VALUE
- ----------------------------------------------------------------------------------------------------------------------------
500 Pohang Iron & Steel Structured Note (issued by UBS AG),
zero %, 2001 (South Korea) $ 50,909
SHORT-TERM INVESTMENTS (3.5%) (a)
PRINCIPAL AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------------------
$ 40,000 U.S. Treasury Notes 5.64, April 27, 2000 (SEG) $ 39,693
3,019,000 Interest in $556,447,000 joint repurchase agreement dated
March 31, 2000 with Morgan Stanley & Co., Inc. due
April 3, 2000, with respect to various U.S. Treasury
obligations -- maturity value of $3,020,515 for an
effective yield of 6.02% 3,019,000
----------------
Total Short-Term Investments (cost $3,058,693) $ 3,058,693
- ----------------------------------------------------------------------------------------------------------------------------
Total Investments (cost $82,346,124) (b) $ 86,785,794
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Percentages indicated are based on net assets of $87,783,253.
(b) The aggregate identified cost on a tax basis is $82,847,120,
resulting in gross unrealized appreciation and depreciation of
$10,213,628 and $6,274,954 respectively, or net unrealized appreciation
of $3,938,674.
(NON) Non-income-producing security.
(SEG) A portion of this security was pledged and segregated with the
custodian to cover margin requirements for futures contracts at March
31, 2000.
(R) Real Estate Investment Trust.
144A after the name of a security represents those exempt from
registration under Rule 144A of the Securities Act of 1933. These
securities may be resold in transactions exempt from registration,
normally to qualified institutional buyers.
ADR or GDR after the name of a foreign holding stands for American
Depository Receipts, or Global Depository Receipts, representing
ownership of foreign securities on deposit with a domestic custodian
bank.
DIVERSIFICATION BY COUNTRY
Distribution of investments by country of issue at March 31, 2000:
(as percentage of Market Value)
Australia 1.3%
Canada 4.7
France 7.0
Germany 2.3
Ireland 1.0
Italy 1.8
Japan 13.3
Netherlands 3.9
Sweden 1.2
Switzerland 1.4
United Kingdom 13.2
United States 43.6
Others 5.3
---------
Total 100.0%
- -----------------------------------------------------------------------
Forward Currency Contracts to Buy at March 31, 2000 (Unaudited)
(aggregate face value $634,791)
Unrealized
Market Aggregate Face Delivery Appreciation
Value Value Date (Depreciation)
- -----------------------------------------------------------------------
Euro Dollars $169,892 $172,540 6/16/00 $ (2,648)
Japan Yen 480,915 462,251 6/08/00 18,664
- -----------------------------------------------------------------------
$ 16,016
- -----------------------------------------------------------------------
Forward Currency Contracts to Sell at March 31, 2000 (Unaudited)
Market Aggregate Face Delivery Unrealized
Value Value Date Depreciation
- -----------------------------------------------------------------------
Japan Yen $512,186 $487,877 09/06/00 $(24,309)
- -----------------------------------------------------------------------
Futures Contracts Outstanding at March 31, 2000 (Unaudited)
Unrealized
Aggregate Face Expiration Appreciation/
Total Value Value Date (Depreciation)
- -----------------------------------------------------------------------
DAX Index
(Long) $181,569 $186,023 Jun-00 $ (4,454)
Topix IDX
(Long) 499,658 493,341 Jun-00 6,317
- -----------------------------------------------------------------------
$ 1,863
- -----------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
<TABLE>
<CAPTION>
Statement of assets and liabilities
March 31, 2000 (Unaudited)
Assets
- ----------------------------------------------------------------------------------------------
<S> <C>
Investments in securities, at value
(identified cost $82,346,124) (Note 1) $86,785,794
- ----------------------------------------------------------------------------------------------
Dividends, interest and other receivables 244,822
- ----------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 597,751
- ----------------------------------------------------------------------------------------------
Receivable for securities sold 842,939
- ----------------------------------------------------------------------------------------------
Receivable for open forward currency contracts 18,664
- ----------------------------------------------------------------------------------------------
Total assets 88,489,970
Liabilities
- ----------------------------------------------------------------------------------------------
Payable to subcustodian (Note 2) 4,557
- ----------------------------------------------------------------------------------------------
Payable for securities purchased 184,290
- ----------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 189,825
- ----------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 156,602
- ----------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 43,270
- ----------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 6,311
- ----------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 1,143
- ----------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 60,889
- ----------------------------------------------------------------------------------------------
Payable for open forward contracts 26,957
- ----------------------------------------------------------------------------------------------
Payable for variation margin 3,459
- ----------------------------------------------------------------------------------------------
Other accrued expenses 29,414
- ----------------------------------------------------------------------------------------------
Total liabilities 706,717
- ----------------------------------------------------------------------------------------------
Net assets $87,783,253
Represented by
- ----------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $82,867,583
- ----------------------------------------------------------------------------------------------
Distributions in excess of net investment income (Note 1) (683,884)
- ----------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign
currency transactions (Note 1) 1,165,146
- ----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and assets and
liabilities in foreign currencies 4,434,408
- ----------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $87,783,253
Computation of net asset value and offering price
- ----------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($48,294,631 divided by 3,526,083 shares) $13.70
- ----------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $13.70)* $14.54
- ----------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($35,084,136 divided by 2,589,445 shares)** $13.55
- ----------------------------------------------------------------------------------------------
Net asset value and offering price per class C share
($1,595,021 divided by 116,468 shares)** $13.70
- ----------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($2,809,465 divided by 206,280 shares) $13.62
- ----------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $13.62)* $14.11
- ----------------------------------------------------------------------------------------------
* On single retail sales of less than $50,000. On sales of $50,000
or more and on group sales, the offering price is reduced.
** Redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of these financial statements.
<TABLE>
<CAPTION>
Statement of operations
Six months ended March 31, 2000 (Unaudited)
Investment income:
- ----------------------------------------------------------------------------------------------
<S> <C>
Dividends (net of foreign tax of $44,956) $ 725,816
- ----------------------------------------------------------------------------------------------
Interest 77,099
- ----------------------------------------------------------------------------------------------
Total investment income 802,915
Expenses:
- ----------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 301,258
- ----------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 154,511
- ----------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 6,301
- ----------------------------------------------------------------------------------------------
Administrative services (Note 2) 2,320
- ----------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 50,183
- ----------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 156,643
- ----------------------------------------------------------------------------------------------
Distribution fees -- Class C (Note 2) 4,319
- ----------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 10,996
- ----------------------------------------------------------------------------------------------
Reports to shareholders 8,270
- ----------------------------------------------------------------------------------------------
Amortization of organization expenses (Note 1) 804
- ----------------------------------------------------------------------------------------------
Auditing 19,528
- ----------------------------------------------------------------------------------------------
Legal 2,441
- ----------------------------------------------------------------------------------------------
Postage 8,001
- ----------------------------------------------------------------------------------------------
Other 7,731
- ----------------------------------------------------------------------------------------------
Total expenses 733,306
- ----------------------------------------------------------------------------------------------
Expense reduction (Note 2) (8,872)
- ----------------------------------------------------------------------------------------------
Net expenses 724,434
- ----------------------------------------------------------------------------------------------
Net investment income 78,481
- ----------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 1,204,287
- ----------------------------------------------------------------------------------------------
Net realized gain on futures contracts (Notes 1 and 3) 72,759
- ----------------------------------------------------------------------------------------------
Net realized loss on foreign currency transactions (Note 1) (8,580)
- ----------------------------------------------------------------------------------------------
Net unrealized depreciation of assets and liabilities in foreign
currencies during the period (28,005)
- ----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and futures during the period 3,301,428
- ----------------------------------------------------------------------------------------------
Net gain on investments 4,541,889
- ----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $4,620,370
- ----------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<TABLE>
<CAPTION>
Statement of changes in net assets
Six months ended Year ended
March 31 September 30
2000* 1999
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets
- -------------------------------------------------------------------------------------------------------
Operations:
- -------------------------------------------------------------------------------------------------------
Net investment income $ 78,481 $ 106,352
- -------------------------------------------------------------------------------------------------------
Net realized gain on investments and
foreign currency transactions 1,268,466 5,280,947
- -------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and
assets and liabilities in foreign currencies 3,273,423 5,551,131
- -------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 4,620,370 10,938,430
- -------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- -------------------------------------------------------------------------------------------------------
From net investment income
Class A (652,414) (178,962)
- -------------------------------------------------------------------------------------------------------
Class B (440,374) (51,905)
- -------------------------------------------------------------------------------------------------------
Class C (10,200) (168)
- -------------------------------------------------------------------------------------------------------
Class M (45,749) (6,805)
- -------------------------------------------------------------------------------------------------------
From net realized gain on investments
Class A (2,534,577) (572,711)
- -------------------------------------------------------------------------------------------------------
Class B (2,037,004) (442,734)
- -------------------------------------------------------------------------------------------------------
Class C (46,269) --
- -------------------------------------------------------------------------------------------------------
Class M (202,632) (48,134)
- -------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 21,717,988 17,588,405
- -------------------------------------------------------------------------------------------------------
Total increase in net assets 20,369,139 27,225,416
Net assets
- -------------------------------------------------------------------------------------------------------
Beginning of period 67,414,114 40,188,698
- -------------------------------------------------------------------------------------------------------
End of period (including distributions in excess of
net investment income and undistributed net investment
income of $683,884 and $386,372, respectively) $87,783,253 $67,414,114
- -------------------------------------------------------------------------------------------------------
* Unaudited
</TABLE>
The accompanying notes are an integral part of these financial statements.
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS A
- --------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share March 31 Jan. 3, 1995+
operating performance (Unaudited) Year ended September 30 to Sept. 30
- --------------------------------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $14.06 $11.39 $12.50 $10.77 $9.64 $8.50
- --------------------------------------------------------------------------------------------------------------------------
Investment operations
- --------------------------------------------------------------------------------------------------------------------------
Net investment income .04(d) .07(d) .16(a)(d) .14(a) .21(a) .27(a)
- --------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .78 2.98 (.87) 3.13 1.30 .87
- --------------------------------------------------------------------------------------------------------------------------
Total from
investment operations .82 3.05 (.71) 3.27 1.51 1.14
- --------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- --------------------------------------------------------------------------------------------------------------------------
From net
investment income (.24) (.09) (.09) (.23) (.36) --
- --------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.94) (.29) (.31) (1.31) (.02) --
- --------------------------------------------------------------------------------------------------------------------------
Total distributions (1.18) (.38) (.40) (1.54) (.38) --
- --------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $13.70 $14.06 $11.39 $12.50 $10.77 $9.64
- --------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- --------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 6.03* 27.06 (5.72) 33.88 16.14 13.41*
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $48,295 $36,082 $22,091 $2,885 $2,077 $1,771
- --------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .80* 1.69 1.70(a) 1.48(a) 1.27(a) .49(a)*
- --------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) .28* .53 1.14(a) 1.19(a) 2.03(a) 3.04(a)*
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 28.25* 68.46 62.96 103.92 222.89 21.68*
- --------------------------------------------------------------------------------------------------------------------------
Effective December 28, 1995, the fund expanded its investment flexibility
to include securities outside of the utilities sector. Information in the
table prior to December 28, 1995 may not reflect those that could have
been achieved under the fund's current investment policies.
+ Commencement of operations.
* Not annualized.
(a) Reflects an expense limitation during the period (Note 2). As a
result of such limitation, expenses of the fund for the period ended
September 30, 1998 reflect a reduction of $.05 per share for class A,
class B and class M. Expenses for the periods ended September 30, 1997,
September 30, 1996 and September 30, 1995, reflect a reduction of
approximately $.07, $.09 and $.20 per share for class A, respectively.
(b) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(c) Includes amounts paid through expense offset and brokerage service
arrangements (Note 2).
(d) Per share net investment income has been determined on the basis
of the weighted average number of shares outstanding during the period.
(e) Per share net investment income amounted to less than $0.01 per share.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS B
- -----------------------------------------------------------------------------
Six months
ended For the period
Per-share March 31 Year ended Nov. 3, 1997+
operating performance (Unaudited) Sept. 30 to Sept. 30
- -----------------------------------------------------------------------------
2000 1999 1998
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value,
beginning of period $13.94 $11.34 $12.01
- -----------------------------------------------------------------------------
Investment operations
- -----------------------------------------------------------------------------
Net investment income (d) (.01) (.03) .04(a)
- -----------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .76 2.95 (.35)
- -----------------------------------------------------------------------------
Total from
investment operations .75 2.92 (.31)
- -----------------------------------------------------------------------------
Less distributions:
- -----------------------------------------------------------------------------
From net
investment income (.20) (.03) (.05)
- -----------------------------------------------------------------------------
From net realized gain
on investments (.94) (.29) (.31)
- -----------------------------------------------------------------------------
Total distributions (1.14) (.32) (.36)
- -----------------------------------------------------------------------------
Net asset value,
end of period $13.55 $13.94 $11.34
- -----------------------------------------------------------------------------
Ratios and supplemental data
- -----------------------------------------------------------------------------
Total return at
net asset value (%)(b) 5.58* 26.08 (2.62)*
- -----------------------------------------------------------------------------
Net assets, end of period
(in thousands) $35,084 $28,105 $16,315
- -----------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) 1.18* 2.44 2.24(a)*
- -----------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) (.10)* (.23) .39(a)*
- -----------------------------------------------------------------------------
Portfolio turnover (%) 28.25* 68.46 62.96
- -----------------------------------------------------------------------------
Effective December 28, 1995, the fund expanded its investment flexibility
to include securities outside of the utilities sector. Information in the
table prior to December 28, 1995 may not reflect those that could have
been achieved under the fund's current investment policies.
+ Commencement of operations.
* Not annualized.
(a) Reflects an expense limitation during the period (Note 2). As a
result of such limitation, expenses of the fund for the period ended
September 30, 1998 reflect a reduction of $.05 per share for class A,
class B and class M. Expenses for the periods ended September 30, 1997,
September 30, 1996 and September 30, 1995, reflect a reduction of
approximately $.07, $.09 and $.20 per share for class A, respectively.
(b) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(c) Includes amounts paid through expense offset and brokerage service
arrangements (Note 2).
(d) Per share net investment income has been determined on the basis
of the weighted average number of shares outstanding during the period.
(e) Per share net investment income amounted to less than $0.01 per share.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS C
- -----------------------------------------------------------------------------
Six months
ended For the period
Per-share March 31 July 26, 1999+
operating performance (Unaudited) to Sept. 30
- -----------------------------------------------------------------------------
2000 1998
- -----------------------------------------------------------------------------
<S> <C> <C>
Net asset value,
beginning of period $14.06 $14.56
- -----------------------------------------------------------------------------
Investment operations
- -----------------------------------------------------------------------------
Net investment income (d) (.01) (.01)
- -----------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .80 (.48)
- -----------------------------------------------------------------------------
Total from
investment operations .79 (.49)
- -----------------------------------------------------------------------------
Less distributions:
- -----------------------------------------------------------------------------
From net
investment income (.21) (.01)
- -----------------------------------------------------------------------------
From net realized gain
on investments (.94) --
- -----------------------------------------------------------------------------
Total distributions (1.15) (.01)
- -----------------------------------------------------------------------------
Net asset value,
end of period $13.70 $14.06
- -----------------------------------------------------------------------------
Ratios and supplemental data
- -----------------------------------------------------------------------------
Total return at
net asset value (%)(b) 5.79* (3.40)*
- -----------------------------------------------------------------------------
Net assets, end of period
(in thousands) $1,595 $515
- -----------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) 1.18* .44*
- -----------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) (.06)* (.10)*
- -----------------------------------------------------------------------------
Portfolio turnover (%) 28.25* 68.46
- -----------------------------------------------------------------------------
Effective December 28, 1995, the fund expanded its investment flexibility
to include securities outside of the utilities sector. Information in the
table prior to December 28, 1995 may not reflect those that could have
been achieved under the fund's current investment policies.
+ Commencement of operations.
* Not annualized.
(a) Reflects an expense limitation during the period (Note 2). As a
result of such limitation, expenses of the fund for the period ended
September 30, 1998 reflect a reduction of $.05 per share for class A,
class B and class M. Expenses for the periods ended September 30, 1997,
September 30, 1996 and September 30, 1995, reflect a reduction of
approximately $.07, $.09 and $.20 per share for class A, respectively.
(b) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(c) Includes amounts paid through expense offset and brokerage service
arrangements (Note 2).
(d) Per share net investment income has been determined on the basis
of the weighted average number of shares outstanding during the period.
(e) Per share net investment income amounted to less than $0.01 per share.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS M
- -----------------------------------------------------------------------------
Six months
ended For the period
Per-share March 31 Year ended Nov. 3, 1997+
operating performance (Unaudited) Sept. 30 to Sept. 30
- -----------------------------------------------------------------------------
2000 1999 1998
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value,
beginning of period $14.00 $11.35 $12.01
- -----------------------------------------------------------------------------
Investment operations
- -----------------------------------------------------------------------------
Net investment income (d) --(e) --(e) .07(a)
- -----------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .77 2.98 (.36)
- -----------------------------------------------------------------------------
Total from
investment operations .77 2.98 (.29)
- -----------------------------------------------------------------------------
Less distributions:
- -----------------------------------------------------------------------------
From net
investment income (.21) (.04) (.06)
- -----------------------------------------------------------------------------
From net realized gain
on investments (.94) (.29) (.31)
- -----------------------------------------------------------------------------
Total distributions (1.15) (.33) (.37)
- -----------------------------------------------------------------------------
Net asset value,
end of period $13.62 $14.00 $11.35
- -----------------------------------------------------------------------------
Ratios and supplemental data
- -----------------------------------------------------------------------------
Total return at
net asset value (%)(b) 5.70* 26.57 (2.48)*
- -----------------------------------------------------------------------------
Net assets, end of period
(in thousands) $2,809 $2,712 $1,783
- -----------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) 1.06* 2.19 2.02(a)*
- -----------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) .01* .03 .62(a)*
- -----------------------------------------------------------------------------
Portfolio turnover (%) 28.25* 68.46 62.96
- -----------------------------------------------------------------------------
Effective December 28, 1995, the fund expanded its investment flexibility
to include securities outside of the utilities sector. Information in the
table prior to December 28, 1995 may not reflect those that could have
been achieved under the fund's current investment policies.
+ Commencement of operations.
* Not annualized.
(a) Reflects an expense limitation during the period (Note 2). As a
result of such limitation, expenses of the fund for the period ended
September 30, 1998 reflect a reduction of $.05 per share for class A,
class B and class M. Expenses for the periods ended September 30, 1997,
September 30, 1996 and September 30, 1995, reflect a reduction of
approximately $.07, $.09 and $.20 per share for class A, respectively.
(b) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(c) Includes amounts paid through expense offset and brokerage service
arrangements (Note 2).
(d) Per share net investment income has been determined on the basis
of the weighted average number of shares outstanding during the period.
(e) Per share net investment income amounted to less than $0.01 per share.
</TABLE>
Notes to financial statements
March 31, 2000 (Unaudited)
Note 1
Significant accounting policies
Putnam Global Growth and Income Fund (the "fund") is a series of Putnam
Investment Funds (the "trust") which is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end management
investment company. The objective of the fund is to seek capital growth
and current income as a secondary objective by investing primarily in
common stocks of companies worldwide.
The fund offers class A, class B, class C and class M shares. Class A
shares are sold with a maximum front-end sales charge of 5.75%. Class B
shares, which convert to class A shares after approximately eight years,
do not pay a front-end sales charge, but pay a higher ongoing
distribution fee than class A shares, and are subject to a contingent
deferred sales charge, if those shares are redeemed within six years of
purchase. Class 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 but
lower than class B and C 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. Other investments, including
restricted securities, are stated at fair value following procedures
approved by the Trustees.
B) Joint trading account Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the fund may transfer uninvested
cash balances into a joint trading account along with the cash of other
registered investment companies and certain other accounts managed by
Putnam Investment Management, Inc. ("Putnam Management"), the fund's
manager, a wholly-owned subsidiary of Putnam Investments, Inc. These
balances may be invested in one or more repurchase agreements and/or
short-term money market instruments.
C) Repurchase agreements The fund, or any joint trading account, through
its custodian, receives delivery of the underlying securities, the
market value of which at the time of purchase is required to be in an
amount at least equal to the resale price, including accrued interest.
Collateral for certain tri-party repurchase agreements is held at the
counterparty's custodian in a segregated account for the benefit of the
fund and the counterparty. Putnam Management is responsible for
determining that the value of these underlying securities is at all
times at least equal to the resale price, including accrued interest.
D) Security transactions and related investment income Security
transactions are accounted for on the trade date (date the order to buy
or sell is executed). Gains or losses on securities sold are determined
on the identified cost basis.
Interest income is recorded on the accrual basis. Dividend income is
recorded on the ex-dividend date except that certain dividends from
foreign securities are recorded as soon as the fund is informed of the
ex-dividend date.
E) Foreign currency translation The accounting records of the fund are
maintained in U.S. dollars. The market value of foreign securities,
currency holdings, and other assets and liabilities are recorded in the
books and records of the fund after translation to U.S. dollars based on
the exchange rates on that day. The cost of each security is determined
using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when accrued or incurred. The
fund does not isolate that portion of realized or unrealized gains or
losses resulting from changes in the foreign exchange rate on
investments from fluctuations arising from changes in the market prices
of the securities. Such gains and losses are included with the net
realized and unrealized gain or loss on investments. Net realized gains
and losses on foreign currency transactions represent net realized
exchange gains or losses on closed forward currency contracts,
disposition of foreign currencies and the difference between the amount
of investment income and foreign withholding taxes recorded on the
fund's books and the U.S. dollar equivalent amounts actually received or
paid. Net unrealized appreciation and depreciation of assets and
liabilities in foreign currencies arise from changes in the value of
open forward currency contracts and assets and liabilities other than
investments at the period end, resulting from changes in the exchange
rate.
F) Forward currency contracts The fund may engage in forward currency
contracts, which are agreements between two parties to buy and sell
currencies at a set price on a future date, to protect against a decline
in value relative to the U.S. dollar of the currencies in which its
portfolio securities are denominated or quoted (or an increase in the
value of a currency in which securities a fund intends to buy are
denominated, when a fund holds cash reserves and short-term
investments). The U.S. dollar value of forward currency contracts is
determined using current forward currency exchange rates supplied by a
quotation service. The market value of the contract will fluctuate with
changes in currency exchange rates. The contract is "marked to market"
daily and the change in market value is recorded as an unrealized gain
or loss. When the contract is closed, the fund records a realized gain
or loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed. The fund
could be exposed to risk if the value of the currency changes
unfavorably, if the counterparties to the contracts are unable to meet
the terms of their contracts or if the fund is unable to enter into a
closing position.
G) Futures and options contracts The fund may use futures and options
contracts to hedge against changes in the values of securities the fund
owns or expects to purchase. The fund may also write options on
securities it owns or in which it may invest to increase its current
returns.
The potential risk to the fund is that the change in value of futures
and options contracts may not correspond to the change in value of the
hedged instruments. In addition, losses may arise from changes in the
value of the underlying instruments, if there is an illiquid secondary
market for the contracts, or if the counterparty to the contract is
unable to perform. When the contract is closed, the fund records a
realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was
closed. Realized gains and losses on purchased options are included in
realized gains and losses on investment securities.
Futures contracts are valued at the quoted daily settlement prices
established by the exchange on which they trade. Exchange traded options
are valued at the last sale price, or if no sales are reported, the last
bid price for purchased options and the last ask price for written
options. Options traded over-the-counter are valued using prices
supplied by dealers.
H) 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 March 31, 2000, the fund had no borrowings against the line of
credit.
I) 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.
J) 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.
K) 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.
L) 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 $6,425. The expenses have been fully
amortized over a five year period as of March 31, 2000.
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.
As part of the subcustodian contract between the subcustodian bank and
Putnam Fiduciary Trust Company (PFTC), a subsidiary of Putnam
Investments, Inc., 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 March 31, 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 March 31, 2000, fund expenses were reduced by
$8,872 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 $569
has been allocated to the fund, and an additional fee for each Trustee's
meeting attended. Trustees who are not interested persons of Putnam
Management and who serve on committees of the Trustees receive
additional fees for attendance at certain committee meetings.
The fund has adopted a Trustee Fee Deferral Plan (the "Deferral Plan")
which allows the Trustees to defer the receipt of all or a portion of
Trustees Fees payable on or after July 1, 1995. The deferred fees remain
invested in certain Putnam funds until distribution in accordance with
the Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension
plan (the "Pension Plan") covering all Trustees of the fund who have
served as Trustee for at least five years. Benefits under the Pension
Plan are equal to 50% of the Trustee's average total retainer and
meeting fees for the three years preceding retirement. Pension expense
for the fund is included in Compensation of Trustees in the Statement of
operations. Accrued pension liability is included in Payable for
compensation of Trustees in the Statement of assets and liabilities.
The fund has adopted distribution plans (the "Plans") with respect to
its class A, class B, 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 to an annual rate of 0.25%, 1.00%, 1.00%
and 0.75% of the average net assets attributable to class A, class B and
class M shares respectively.
For the six months ended March 31, 2000, Putnam Mutual Funds Corp.,
acting as underwriter received net commissions of $52,548 and $905 from
the sale of class A and class M shares, respectively and received
$31,607 and $228 in contingent deferred sales charges from redemptions
of class B 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 March 31, 2000, Putnam Mutual Funds Corp., acting as
underwriter received $8,101 from the redemption of class A shares.
Note 3
Purchases and sales
During the six months ended September 30, 1999, cost of purchases and
proceeds from sales of investment securities other than short-term
investments aggregated $33,909,447 and $20,222,738, respectively. There
were no purchases and sales of U.S. government obligations.
Note 4
Capital shares
At March 31, 2000, there were an unlimited number of shares of
beneficial interest authorized. Transactions in capital shares were as
follows:
Six months ended March 31, 2000
- ---------------------------------------------------------------------------
Class A Shares Amount
- ---------------------------------------------------------------------------
Shares sold 1,369,944 $18,319,851
- ---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 226,124 3,022,265
- ---------------------------------------------------------------------------
1,596,068 21,342,116
Shares
repurchased (637,144) (8,552,912)
- ---------------------------------------------------------------------------
Net increase 958,924 $12,789,204
- ---------------------------------------------------------------------------
Year ended September 30, 1999
- ---------------------------------------------------------------------------
Class A Shares Amount
- ---------------------------------------------------------------------------
Shares sold 1,343,321 $18,476,863
- ---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 57,493 737,033
- ---------------------------------------------------------------------------
1,400,814 19,213,896
Shares
repurchased (773,500) (10,587,836)
- ---------------------------------------------------------------------------
Net increase 627,314 $ 8,626,060
- ---------------------------------------------------------------------------
Six months ended March 31, 2000
- ---------------------------------------------------------------------------
Class B Shares Amount
- ---------------------------------------------------------------------------
Shares sold 793,745 $10,584,257
- ---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 176,171 2,334,280
- ---------------------------------------------------------------------------
969,916 12,918,537
Shares
repurchased (397,303) (5,246,081)
- ---------------------------------------------------------------------------
Net increase 572,613 $ 7,672,456
- ---------------------------------------------------------------------------
Year ended September 30, 1999
- ---------------------------------------------------------------------------
Class B Shares Amount
- ---------------------------------------------------------------------------
Shares sold 957,033 $13,040,713
- ---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 37,264 471,017
- ---------------------------------------------------------------------------
994,297 13,511,730
Shares
repurchased (416,456) (5,565,754)
- ---------------------------------------------------------------------------
Net increase 577,841 $ 7,945,976
- ---------------------------------------------------------------------------
Six months ended March 31, 2000
- ---------------------------------------------------------------------------
Class C Shares Amount
- ---------------------------------------------------------------------------
Shares sold 85,702 $ 1,133,247
- ---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 3,609 48,263
- ---------------------------------------------------------------------------
89,311 1,181,510
Shares
repurchased (9,476) (126,251)
- ---------------------------------------------------------------------------
Net increase 79,835 $ 1,055,259
- ---------------------------------------------------------------------------
For the period July 26, 1999
(commencement of operations)
to September 30, 1999
- ---------------------------------------------------------------------------
Class C Shares Amount
- ---------------------------------------------------------------------------
Shares sold 36,694 $ 534,135
- ---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 8 120
- ---------------------------------------------------------------------------
36,702 534,255
Shares
repurchased (69) (1,017)
- ---------------------------------------------------------------------------
Net increase 36,633 $ 533,238
- ---------------------------------------------------------------------------
Six months ended March 31, 2000
- ---------------------------------------------------------------------------
Class M Shares Amount
- ---------------------------------------------------------------------------
Shares sold 43,190 $ 594,326
- ---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 18,598 247,549
- ---------------------------------------------------------------------------
61,788 841,875
Shares
repurchased (49,252) (640,806)
- ---------------------------------------------------------------------------
Net increase 12,536 $ 201,069
- ---------------------------------------------------------------------------
Year ended September 30, 1999
- ---------------------------------------------------------------------------
Class M Shares Amount
- ---------------------------------------------------------------------------
Shares sold 77,602 $ 1,030,825
- ---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 4,326 54,810
- ---------------------------------------------------------------------------
81,928 1,085,635
Shares
repurchased (45,211) (602,504)
- ---------------------------------------------------------------------------
Net increase 36,717 $ 483,131
- ---------------------------------------------------------------------------
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
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
New Opportunities Fund
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
Stephen Oristaglio
Vice President
Thomas V. Reilly
Vice President
Deborah F. Kuenstner
Vice President and Fund Manager
Hugh H. Mullin
Vice President and Fund Manager
George W. Stairs
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 Global
Growth and Income 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
