-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DzB37YIC+JwEoQSML6myjeuKOTT9jj7/1aEcjI8XMhbhU4OEpZXTNyNKDu/pDjl1 q4wp2pWEAesun5e2HkGspg== 0000928816-02-000411.txt : 20020520 0000928816-02-000411.hdr.sgml : 20020520 20020520103347 ACCESSION NUMBER: 0000928816-02-000411 CONFORMED SUBMISSION TYPE: 425 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20020520 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM GLOBAL GROWTH FUND CENTRAL INDEX KEY: 0000081251 IRS NUMBER: 046145734 STATE OF INCORPORATION: MA FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 425 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQ CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6172921000 FORMER COMPANY: FORMER CONFORMED NAME: PUTNAM EQUITIES FUND INC DATE OF NAME CHANGE: 19790906 FORMER COMPANY: FORMER CONFORMED NAME: PUTNAM INTERNATIONAL EQUITIES FUND DATE OF NAME CHANGE: 19900722 FORMER COMPANY: FORMER CONFORMED NAME: PUTNAM INTERNATIONAL EQUITIES FUND INC /PRED/ DATE OF NAME CHANGE: 19821109 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM INVESTMENT FUNDS CENTRAL INDEX KEY: 0000932101 STATE OF INCORPORATION: MA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 425 SEC ACT: 1934 Act SEC FILE NUMBER: 811-07237 FILM NUMBER: 02657135 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQUARE STREET 2: MAIL STOP A 14 CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6172921562 MAIL ADDRESS: STREET 1: PUTNAM EQUITY FUNDS STREET 2: ONE POST OFFICE SQUARE MAILSTOP A 14 CITY: BOSTON STATE: MA ZIP: 02109 FORMER COMPANY: FORMER CONFORMED NAME: PUTNAM EQUITY FUNDS DATE OF NAME CHANGE: 19941028 425 1 ggf.txt PUTNAM GLOBAL GROWTH AND INCOME FUND Putnam 811-7237 Global Growth and Income Fund SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK 3-31-02 [SCALE LOGO OMITTED] FROM THE TRUSTEES [GRAPHIC OMITTED: PHOTO OF JOHN A. HILL AND GEORGE PUTNAM III] Dear Fellow Shareholder: The healthy gain posted by Putnam Global Growth and Income Fund for the semiannual period ended March 31, 2002, was indeed heartening, given the challenging global economic environment that was exacerbated by the September terrorist attacks and the implosion of Enron. On the following pages, your management team will provide you with a good understanding of what has been driving your fund's performance. This uncertain economic climate has also given Putnam pause and after several lengthy working sessions between Management and the Board of Trustees, your Trustees have agreed to recommend the mergers of several funds. The intent of the mergers is to provide shareholders with more focused products that will play a consistent role in a broad investment plan. Your fund has been proposed for merger into Putnam Global Growth Fund, which has a similar investment objective and strategy. For more details, see page 6. As you read this report, you may notice that we are now listing the team that manages your fund. We do this to reflect more accurately how your fund is managed as well as Putnam's firm belief in the value of team management. The individuals who comprise the management team are shown at the end of Management's discussion of performance. We know that Putnam Investments values its relationship with you and its other shareholders and appreciates your loyalty during these times of restructuring of staff and products in the pursuit of superior investment performance in the future. Respectfully yours, /S/ JOHN A. HILL /S/ GEORGE PUTNAM, III John A. Hill George Putnam, III Chairman of the Trustees President of the Funds May 8, 2002 REPORT FROM FUND MANAGEMENT This fund is managed by the Putnam Global Value Team Putnam Global Growth and Income Fund pursued its objective with satisfying results during the semiannual fiscal period ended March 31, 2002. As the world's economies began to emerge from recession, the portfolio's more economically sensitive, or cyclical, stocks produced encouraging returns. The fund's favorable performance is attributable to its value orientation, strategic weightings in industry sectors, and strong performance by individual holdings. The fund performed in line with its benchmark, the SSB World Primary Markets Value Index. Performance and index information begins on page 8. Although the fund slightly underperformed the average for its Lipper category, we believe its solid returns underscore the benefit of including a value-oriented global equity fund in your portfolio. Total return for 6 months ended 3/31/02 Class A Class B Class C Class M NAV POP NAV CDSC NAV CDSC NAV POP - ----------------------------------------------------------------------- 10.05% 3.76% 9.57% 4.57% 9.75% 8.74% 9.75% 5.89% - ----------------------------------------------------------------------- Past performance does not indicate future results. Performance information for longer periods and explanation of performance calculation methods begin on page 8. * FUND'S VALUE ORIENTATION WAS BENEFICIAL Against a backdrop of improving economic conditions in the United States and abroad, the fund's stock selection process and portfolio management strategy remained unchanged. As a reminder, although the fund invests globally, management does not make large country or sector bets. Our primary focus is on picking stocks of companies that we believe have the most compelling valuations and the greatest likelihood of outperforming. Because the fund emphasizes value stocks, the portfolio's volatility is often lower than that of the broad market. [GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY SECTORS] TOP INDUSTRY SECTORS* Banking 12.0% Oil and gas 10.8% Insurance 5.7% Pharmaceuticals 5.7% Retail 4.2% Footnote reads: *Based on net assets as of 3/31/02. Holdings will vary over time. As a rule, value stocks reflect investors' lowered expectations for a particular company or sector. Several industries experienced particularly severe declines following the events of September 11, 2001. For example, uncertainty regarding the safety of air travel caused shares of aerospace manufacturer Boeing to fall dramatically. In our opinion, the stock was too severely punished for what we considered to be a short-term concern. We established a position at a low valuation and the stock price has recovered significantly since then, making Boeing a major contributor during the period. We trimmed our position somewhat, and locked in profits. "Stock valuations in most foreign markets are now significantly lower than in the U.S. and earnings potential is often just as good abroad as it is at home." - -- Lewis Braham, Business Week, April 29, 2002 Our success with fund holding ACE, Ltd. illustrates how lowered expectations for the insurance industry translated into a rewarding investment. In the immediate aftermath of the September 11 tragedies, insurance stocks suffered as concerns about insurers' ability to pay exorbitant claims led many investors to sell their insurance holdings. Convinced that the insurers could remain solvent, we bought aggressively as stock prices fell. ACE has experienced a surge in business and increased pricing power. The net present value of the new business appears to exceed the amount of the claims against the insurers, ultimately adding value to the company. We locked in gains after selling a fair amount of our shares, and ACE was among the fund's top contributors during the semiannual period. * BASIC MATERIALS, ENERGY, HEALTH CARE BOOST RETURNS Historically, basic materials stocks are among the first to benefit as the economy recovers from recession. With the economy improving in recent months, the sector has lived up to its reputation, and the portfolio's somewhat higher exposure to these stocks proved rewarding. Pohang Iron and Steel Company (POSCO) of South Korea and UPM-Kymmene, a commercial paper manufacturer based in Scandinavia, were among the portfolio's best performers. The world's second-largest crude steel producer, POSCO manufacturers a variety of steel products including rolls, sheets, rods, plates, and customized products for the shipbuilding industry. The fund continues to hold shares of POSCO, which we believe remain somewhat undervalued. UPM-Kymmene's paper products, manufactured in Europe, the United States, and China, are widely used for magazines, newspapers, direct mail, labels, envelopes, and a variety of other packaging goods. As shares of the company gained in value, we took some profits. However, we believe the stock may appreciate further, and the portfolio still has a position. While these stocks, as well as others mentioned in this report, were viewed favorably at the end of the reporting period, all are subject to review in accordance with the fund's investment strategy and our opinion of them may change in the future. Fund Profile Putnam Global Growth and Income Fund seeks capital growth, with current income as a secondary goal, by investing in undervalued stocks across domestic and international markets. The fund is appropriate for investors seeking long-term growth of capital who can accept the additional risks involved in international investing. Our strategic overweighting in oil and gas stocks worked to the fund's advantage. Fund holdings Alberta Energy Corp. of Canada and ENI-Ente Nazionale Idrocarburi SpA of Italy experienced price gains as the nascent economic recovery boosted demand and prices for energy. Both companies explore for and produce oil and natural gas.* *It should be noted that the fund sold its shares of Alberta Energy Corp. during the period and no longer has a stake in the company. [GRAPHIC OMITTED: TOP 10 HOLDINGS] TOP 10 HOLDINGS Exxon Mobil Corp. United States Oil and gas Citigroup, Inc. United States Financial Total Fina Elf SA Class B France Oil and gas Bank of America Corp. United States Banking Wells Fargo & Co. United States Banking Philip Morris Companies, Inc. United States Tobacco General Electric Co. United States Conglomerates BP PLC United Kingdom Oil and gas Novartis AG Switzerland Pharmaceuticals U.S. Bancorp United States Banking Footnote reads: These holdings represent 16.8% of the fund's net assets as of 3/31/02. Portfolio holdings will vary over time. Your fund reaped substantial gains from the health-care sector over the semiannual period, primarily through stocks of foreign companies. In particular, the portfolio benefited from our sale of GlaxoSmithKline shares, which had become fairly valued, and our reallocation of the resulting assets into Switzerland-based Novartis. This well-diversified company makes a range of items from vision-care products, such as disposable contact lenses, to veterinary medicines. While Novartis produces many pharmaceutical products, its oncology and cardiovascular drugs bring in the lion's share of revenues. The company's consumer health-care division comprises well-known brand names, including Ex-Lax, Maalox, and Gerber. We continue to buy shares of Novartis and have worked to make it a core portfolio holding. * PORTFOLIO HAD SOME NEGATIVE CONTRIBUTORS As can be expected from any diversified portfolio, a handful of stocks failed to meet our expectations. Generally speaking, stocks in the U.S. health-care sector have suffered in recent months. Several widely used drugs lost their patent protection in 2001, and more are scheduled to come off patent this year. Meanwhile, the process of gaining approval for new drugs has slowed considerably due to the FDA's more stringent regulatory hurdles. These difficulties have put greater-than-expected pressure on the financial results of fund holdings Bristol-Myers Squibb, Merck & Company, and Schering-Plough. In addition, Schering-Plough came under increased scrutiny for its manufacturing process, which may have fallen short of the FDA's standards. We believe these troubles are likely to be short-lived and so we continue to hold shares in all three companies. Poor results from fund holding Tyco also detracted from overall performance during the period. This Bermuda-based conglomerate suffered when concerns were raised over its merger accounting methods and when the company announced its decision to break up into four discrete businesses. In our opinion, the company represents sound value and has strong long-term potential. We added to our position when share prices fell on negative sentiment. * DIVIDEND PAYOUT ELIMINATED In the past decade, dividend yields on international stocks have generally been in decline. There are several reasons for this, including increased capital investment on technology, research and development, and other measures companies have taken to become more competitive in the global economy. In addition, as economies in several important global regions have slowed in the past two years, many non-U.S. companies have either suspended or lowered dividend payments on their stocks. Since a fund's dividend reflects the dividend yield of the securities it holds, shareholders have seen a gradual decline in this fund's yield in response to these trends. During this period, dividend payments on holdings fell to a level where Putnam Management determined that it was no longer feasible for the fund to pay out a dividend. As of March 28, 2002, the dividend was eliminated and, as of that date, the fund's distribution yield and dividend distribution rate were reduced to zero. * MANAGERS SEE VALUE OPPORTUNITIES IN HEALTH CARE, FINANCIALS Our outlook for the second half of the fiscal year is one of cautious optimism. We anticipate that the economic recovery currently underway will progress at a modest pace and that inflationary pressures will remain low. In our opinion, the currently undervalued health-care sector offers some of the most attractive opportunities and potential to recover in time. If the economy continues to improve, as we expect it will, concerns about credit risk may begin to subside, brightening the outlook for the financial sector. We have confidence in U.S. and European financial stocks, but continue to avoid Japan's offerings, as the prospects for those stocks remain bleak. In our opinion, the capital goods and basic materials sectors may offer a bit more upside potential before they are fully valued. Finally, insurance companies remain attractive. In the months ahead, we will explore these and other sectors to identify the most attractive opportunities among those that meet the portfolio's investment criteria. As always, we continue to weigh the market's opportunities in pursuit of above-average portfolio returns and below-market volatility. 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 3/31/02, 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. This fund is managed by the Putnam Global Value Team. The members of the team are Colin Moore, Pamela Holding, Deborah Kuenstner, and Hugh Mullin. MERGER PROPOSED FOR PUTNAM GLOBAL GROWTH AND INCOME FUND After careful study and lengthy working sessions with Putnam Investment Management, your fund's Trustees have agreed to recommend the merger of Putnam Global Growth and Income Fund into Putnam Global Growth Fund. Completion of the merger is subject to a number of conditions, including the approval of shareholders. Proxy materials will be delivered within the next few months so you can submit your vote. Putnam Global Growth Fund is managed in the blend investment style, which has no bias toward either growth or value stocks. If the merger is approved, shareholders are expected to benefit from the more flexible approach provided by the blend style. In addition, shareholders are expected to benefit from potentially lower expenses provided by a larger asset base of the merged funds. We encourage you to vote on this important matter by returning your completed proxy material. Once a registration statement relating to a merger has been filed with the SEC and is effective, you may call 1-800-225-1581 or visit www.sec.gov for a free copy of the prospectus/proxy statement. Please read this important information carefully. A NOTE ABOUT DUPLICATE MAILINGS In response to investors' requests, the SEC has modified mailing regulations for proxy statements, semiannual and annual reports, and prospectuses. Putnam is now able to send a single copy of these materials to customers who share the same address. This change will automatically apply to all shareholders except those who notify us. If you would prefer to receive your own copy, please call Putnam at 1-800-225-1581. PERFORMANCE SUMMARY This section provides information about your fund's performance, which should always be considered in light of its investment strategy. TOTAL RETURN FOR PERIODS ENDED 3/31/02 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 - ------------------------------------------------------------------------------ 6 months 10.05% 3.76% 9.57% 4.57% 9.75% 8.74% 9.75% 5.89% - ------------------------------------------------------------------------------ 1 year -1.04 -6.73 -1.81 -6.72 -1.79 -2.77 -1.47 -4.90 - ------------------------------------------------------------------------------ 5 years 41.62 33.47 36.01 34.01 36.80 36.80 37.83 33.03 Annual average 7.21 5.94 6.34 6.03 6.47 6.47 6.63 5.87 - ------------------------------------------------------------------------------ Life of fund 109.38 97.31 96.45 96.45 98.93 98.93 100.47 93.56 Annual average 10.74 9.84 9.77 9.77 9.96 9.96 10.08 9.55 - ------------------------------------------------------------------------------ COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 3/31/02 SSB World Primary Markets MSCI Consumer Value Index* World Index* price index - ------------------------------------------------------------------------------ 6 months 10.09% 8.96% 0.22% - ------------------------------------------------------------------------------ 1 year 0.09 -4.24 1.30 - ------------------------------------------------------------------------------ 5 years 39.61 29.93 11.62 Annual average 6.90 5.38 2.22 - ------------------------------------------------------------------------------ Life of fund 100.70 78.51 18.91 Annual average 10.09 8.32 2.42 - ------------------------------------------------------------------------------ *The benchmark index for Putnam Global Growth and Income Fund has changed from the MSCI World Index to the SSB World Primary Markets Value Index. Putnam Investment Management has changed the benchmarks of several mutual funds to more accurately reflect the investment strategies of the funds. Past performance does not indicate future results. More recent returns may be less or more than those shown. Investment return and principal value will fluctuate and you may have a gain or a loss when you sell your shares. Performance assumes reinvestment of distributions and does not account for taxes. Returns at public offering price (POP) for class A and M shares reflect a sales charge of 5.75% and 3.50%, respectively. Class B share returns reflect the applicable contingent deferred sales charge (CDSC), which is 5% in the first year, declining to 1% in the sixth year, and is eliminated thereafter. Class C shares reflect a 1% CDSC the first year that is eliminated thereafter. Performance for class B, C, and M shares before their inception are derived from the historical performance of class A shares, adjusted for the applicable sales charge (or CDSC) and higher operating expenses for such shares. For a portion of the period this fund was sold on a limited basis with limited assets and expenses. Had expenses not been limited, returns would have been lower. PRICE AND DISTRIBUTION INFORMATION 6 MONTHS ENDED 3/31/02 Class A Class B Class C Class M - ------------------------------------------------------------------------------ Distributions (number) 1 -- -- -- - ------------------------------------------------------------------------------ Income $0.010 -- -- -- - ------------------------------------------------------------------------------ Capital gains -- -- -- -- - ------------------------------------------------------------------------------ Total $0.010 -- -- -- - ------------------------------------------------------------------------------ Share value: NAV POP NAV NAV NAV POP - ------------------------------------------------------------------------------ 9/30/01 $11.05 $11.72 $10.87 $10.98 $10.97 $11.37 - ------------------------------------------------------------------------------ 3/31/02 12.15 12.89 11.91 12.05 12.04 12.48 - ------------------------------------------------------------------------------ TERMS AND DEFINITIONS Total return shows how the value of the fund's shares changed over time, assuming you held the shares through the entire period and reinvested all distributions in the fund. Net asset value (NAV) is the price, or value, of one share of a mutual fund, without a sales charge. NAVs fluctuate with market conditions. The NAV is calculated by dividing the net value of all the fund's assets by the number of outstanding shares. 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. Class A shares are generally subject to an initial sales charge and no sales charge on redemption (except on certain redemptions of shares bought without 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 (except on certain redemptions of shares bought without an initial sales charge). COMPARATIVE BENCHMARKS The Salomon Smith Barney World Primary Markets Value Index* is an unmanaged index of mostly large- and some small-capitalization stocks from developed countries chosen for their value orientation. The Morgan Stanley Capital International (MSCI) World Index* is an unmanaged index of developed and emerging markets. Consumer price index (CPI) is a commonly used measure of inflation; it does not represent an investment return. Lipper Inc. is a third-party industry ranking entity that ranks funds (without sales charges) with similar current investment styles or objectives as determined by Lipper. *Indexes assume reinvestment of all distributions and do not account for fees. Securities and performance of a fund and an index will differ. You cannot invest directly in an index. A GUIDE TO THE FINANCIAL STATEMENTS These sections of the report, as well as the accompanying Notes, 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. This is done by first adding up all the fund's earnings -- from dividends and interest income -- and subtracting its operating expenses to determine net investment income (or loss). Then, any net gain or loss the fund realized on the sales of its holdings -- as well as any unrealized gains or losses over the period -- is added to or subtracted from the net investment result to determine the fund's net gain or loss for the fiscal 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, 2002 (Unaudited) COMMON STOCKS (96.0%) (a) NUMBER OF SHARES VALUE Aerospace and Defense (1.2%) - ------------------------------------------------------------------------------------------------------------------- 141,087 BAE Systems PLC (United Kingdom) $ 672,947 26,800 Boeing Co. (The) 1,293,100 ------------- 1,966,047 Automotive (2.7%) - ------------------------------------------------------------------------------------------------------------------- 21,600 Bayerische Motoren Werke (BMW) AG (Germany) 860,966 34,512 Ford Motor Co. 569,103 18,100 Honda Motor Co., Ltd. (Japan) 760,826 16,300 Peugeot SA (France) 804,674 51,700 Toyota Motor Corp. (Japan) 1,490,408 ------------- 4,485,977 Banking (12.0%) - ------------------------------------------------------------------------------------------------------------------- 44,000 Allied Irish Banks PLC (Ireland) 541,113 39,348 Bank of America Corp. 2,676,451 40,600 Bank of New York Company, Inc. (The) 1,706,012 20,798 Bank One Corp. 868,940 28,300 BNP Paribas SA (France) 1,429,161 17,139 Comerica, Inc. 1,072,387 46,000 Danske Bank A/S (Denmark) 718,159 4,992 M&T Bank Corp. 401,207 39,200 National Bank of Canada (Canada) 797,417 37,900 Royal Bank of Scotland Group PLC (United Kingdom) 975,633 61,669 Sanpaolo IMI SpA (Italy) 725,058 18,700 Societe Generale (France) 1,182,485 34,000 Standard Chartered PLC (United Kingdom) 371,057 31,500 Toronto-Dominion Bank (Canada) 861,945 89,545 U.S. Bancorp 2,021,031 11,600 Wachovia Corp. 430,128 22,300 Washington Mutual, Inc. 738,799 48,600 Wells Fargo & Co. 2,400,840 ------------- 19,917,823 Basic Materials (0.5%) - ------------------------------------------------------------------------------------------------------------------- 5,000 Compagnie de Saint Gobain (France) 815,943 Beverage (3.3%) - ------------------------------------------------------------------------------------------------------------------- 25,327 Anheuser-Busch Companies, Inc. 1,322,069 28,528 Coca-Cola Co. (The) 1,490,873 61,400 Diageo PLC (United Kingdom) 802,528 75,300 Six Continents PLC (United Kingdom) 800,875 136,000 South African Breweries PLC (United Kingdom) 949,789 ------------- 5,366,134 Broadcasting (0.6%) - ------------------------------------------------------------------------------------------------------------------- 469,940 Granada PLC (United Kingdom) 916,668 Cable Television (0.5%) - ------------------------------------------------------------------------------------------------------------------- 23,750 Comcast Corp. Class A (NON) 755,250 Chemicals (1.5%) - ------------------------------------------------------------------------------------------------------------------- 26,800 Dow Chemical Co. (The) 876,896 19,335 Eastman Chemical Co. 943,355 149,400 Imperial Chemicals Industries PLC (United Kingdom) 727,488 ------------- 2,547,739 Commercial and Consumer Services (1.0%) - ------------------------------------------------------------------------------------------------------------------- 15,000 Adecco SA (Switzerland) 952,388 255,300 Hays PLC (United Kingdom) 656,111 ------------- 1,608,499 Communications Equipment (0.6%) - ------------------------------------------------------------------------------------------------------------------- 238,600 Telefonaktiebolaget LM Ericsson AB Class B (Sweden) 1,009,328 Computers (1.7%) - ------------------------------------------------------------------------------------------------------------------- 98,500 Compaq Computer Corp. 1,029,325 50,841 Hewlett-Packard Co. 912,088 19,800 NCR Corp. (NON) 886,050 ------------- 2,827,463 Conglomerates (2.8%) - ------------------------------------------------------------------------------------------------------------------- 60,100 General Electric Co. 2,250,745 62,100 Smiths Group PLC (United Kingdom) 717,070 50,904 Tyco International, Ltd. (Bermuda) 1,645,217 ------------- 4,613,032 Construction (1.0%) - ------------------------------------------------------------------------------------------------------------------- 3,500 Holcim, Ltd. Class B (Switzerland) 793,136 9,020 Lafarge (France) 806,393 ------------- 1,599,529 Consumer Cyclicals (0.9%) - ------------------------------------------------------------------------------------------------------------------- 31,400 Cie Financier Richemont AG (Switzerland) 723,696 61,000 Matsushita Electric Industrial Co. (Japan) 743,914 ------------- 1,467,610 Consumer Finance (1.5%) - ------------------------------------------------------------------------------------------------------------------- 19,000 Acom Co., Ltd. (Japan) 1,149,951 33,400 MBNA Corp. 1,288,238 ------------- 2,438,189 Consumer Goods (0.4%) - ------------------------------------------------------------------------------------------------------------------- 36,000 KAO Corp. (Japan) 671,044 Electric Utilities (4.1%) - ------------------------------------------------------------------------------------------------------------------- 18,783 E.On AG (Germany) 951,825 40,300 Endesa SA (Spain) 599,302 18,759 Entergy Corp. 814,328 25,900 FirstEnergy Corp. 895,622 50,400 PG&E Corp. (NON) 1,187,424 16,340 Progress Energy, Inc. 817,654 34,300 Reliant Energy, Inc. 884,597 5,500 RWE AG (Germany) 206,275 40,000 Scottish and Southern Energy PLC (United Kingdom) 387,274 ------------- 6,744,301 Electronics (2.3%) - ------------------------------------------------------------------------------------------------------------------- 22,000 Fuji Soft ABC, Inc. (Japan) 722,210 41,000 Motorola, Inc. 582,200 4,780 Samsung Electronics Co., Ltd. (South Korea) 1,287,948 316,800 Taiwan Semiconductor Manufacturing Co. (Taiwan) (NON) 860,058 265,000 United Microelectronics Corp. (Taiwan) (NON) 401,366 ------------- 3,853,782 Energy (0.5%) - ------------------------------------------------------------------------------------------------------------------- 13,500 Schlumberger, Ltd. 794,070 Financial (3.8%) - ------------------------------------------------------------------------------------------------------------------- 80,989 Citigroup, Inc. 4,010,575 12,687 Fannie Mae 1,013,438 143,900 Sampo OYJ Class A (Finland) 1,229,994 ------------- 6,254,007 Food (1.3%) - ------------------------------------------------------------------------------------------------------------------- 18,700 Kraft Foods, Inc. Class A 722,755 6,364 Nestle SA (Switzerland) 1,415,652 ------------- 2,138,407 Health Care Services (1.9%) - ------------------------------------------------------------------------------------------------------------------- 17,762 Anthem, Inc. (NON) 1,022,558 12,500 CIGNA Corp. 1,267,375 19,300 HCA, Inc. 850,744 ------------- 3,140,677 Insurance (5.7%) - ------------------------------------------------------------------------------------------------------------------- 18,400 ACE, Ltd. (Bermuda) 767,280 3,991 Allianz AG (Germany) 943,338 21,675 American International Group, Inc. 1,563,635 16,050 Converium Holding AG (Switzerland) (NON) 820,972 37,649 Fortis (Belgium) (NON) 837,684 39,796 ING Groep NV (Netherlands) 1,082,954 6,256 Muenchener Rueckversicherungs-Gesellschaft AG (Germany) 1,555,098 4,350 Swiss Re (Switzerland) 400,382 3,210 Swiss Re 144A (Switzerland) 295,454 12,900 Travelers Property Casualty Corp. Class A (NON) 258,000 10,337 XL Capital, Ltd. Class A (Bermuda) 964,959 ------------- 9,489,756 Investment Banking/Brokerage (3.5%) - ------------------------------------------------------------------------------------------------------------------- 20,400 Credit Suisse Group (Switzerland) 773,509 49,800 JPMorgan Chase & Co. 1,775,370 13,500 Merrill Lynch & Company, Inc. 747,630 25,350 Morgan Stanley Dean Witter & Co. 1,452,809 14,000 Orix Corp. (Japan) 1,050,185 ------------- 5,799,503 Lodging/Tourism (0.5%) - ------------------------------------------------------------------------------------------------------------------- 22,390 Accor SA (France) 898,314 Machinery (1.0%) - ------------------------------------------------------------------------------------------------------------------- 18,180 Ingersoll-Rand Co. Class A (Bermuda) 909,364 15,200 Parker-Hannifin Corp. 758,480 ------------- 1,667,844 Media (1.9%) - ------------------------------------------------------------------------------------------------------------------- 45,300 AOL Time Warner, Inc. (NON) 1,071,345 26,700 USA Networks, Inc. (NON) 848,259 49,925 Walt Disney Co. (The) 1,152,269 ------------- 3,071,873 Metals (1.5%) - ------------------------------------------------------------------------------------------------------------------- 139,200 BHP Billiton, Ltd. (Australia) 846,759 8,920 Pohang Iron & Steel Co., Ltd. (South Korea) 927,766 35,100 Rio Tinto, Ltd. (Australia) 705,910 ------------- 2,480,435 Natural Gas Utilities (1.1%) - ------------------------------------------------------------------------------------------------------------------- 30,100 Dynegy, Inc. Class A 872,900 32,177 NiSource, Inc. 738,462 82,700 Snam Rete Gas SpA 144A (Italy) (NON) 221,442 ------------- 1,832,804 Office Equipment & Supplies (0.5%) - ------------------------------------------------------------------------------------------------------------------- 22,000 Canon, Inc. (Japan) 816,844 Oil & Gas (10.8%) - ------------------------------------------------------------------------------------------------------------------- 187,100 BG Group PLC (United Kingdom) 811,167 240,500 BP PLC (United Kingdom) 2,140,149 60,800 ENI SpA (Italy) 890,900 116,102 Exxon Mobil Corp. 5,088,751 10,600 PanCanadian Energy Corp. (Canada) 315,236 33,023 Petroleo Brasileiro SA ADR (Brazil) 874,119 30,400 Royal Dutch Petroleum Co. (Netherlands) 1,663,809 217,600 Shell Transport & Trading Co. PLC (United Kingdom) 1,620,353 108,300 Statoil ASA (Norway) 858,609 5,700 Technip-Coflexip SA (France) 784,012 18,088 TotalFinaElf SA Class B (France) 2,792,415 ------------- 17,839,520 Paper & Forest Products (1.1%) - ------------------------------------------------------------------------------------------------------------------- 27,600 Svenska Cellulosa AB SCA Class B (Sweden) 858,327 29,600 UPM-Kymmene OYJ (Finland) 1,012,031 ------------- 1,870,358 Pharmaceuticals (5.7%) - ------------------------------------------------------------------------------------------------------------------- 20,096 AstraZeneca PLC (United Kingdom) 997,724 21,655 Bristol-Myers Squibb Co. 876,811 18,397 Merck & Company, Inc. 1,059,299 52,500 Novartis AG (Switzerland) 2,065,589 19,000 Novo-Nordisk A/S (Denmark) 757,190 18,000 Pfizer, Inc. 715,320 15,200 Pharmacia Corp. 685,216 9,050 Sanofi-Synthelabo SA (France) 580,955 18,585 Schering-Plough Corp. 581,711 9,000 Takeda Chemical Industries, Ltd. (Japan) 364,727 11,900 Wyeth 781,235 ------------- 9,465,777 Railroads (0.5%) - ------------------------------------------------------------------------------------------------------------------- 26,900 Burlington Northern Santa Fe Corp. 811,842 Real Estate (0.4%) - ------------------------------------------------------------------------------------------------------------------- 17,216 Boston Properties, Inc. (R) 679,171 Regional Bells (2.1%) - ------------------------------------------------------------------------------------------------------------------- 31,500 BellSouth Corp. 1,161,090 42,543 SBC Communications, Inc. 1,592,810 15,600 Verizon Communications, Inc. 712,140 ------------- 3,466,040 Restaurants (0.4%) - ------------------------------------------------------------------------------------------------------------------- 24,456 McDonald's Corp. 678,654 Retail (3.8%) - ------------------------------------------------------------------------------------------------------------------- 238,800 Dixons Group PLC (United Kingdom) 889,109 31,600 JC Penney Company, Inc. 654,436 36,000 Kroger Co. (NON) 797,760 40,800 Limited, Inc. (The) 730,320 22,200 Office Depot, Inc. (NON) 440,670 304,800 Rite Aid Corp. (NON) 1,054,608 38,800 Staples, Inc. (NON) 774,836 180,000 Tesco PLC (United Kingdom) 617,644 9,700 TJX Companies, Inc. (The) 388,097 ------------- 6,347,480 Software (1.4%) - ------------------------------------------------------------------------------------------------------------------- 41,393 BMC Software, Inc. (NON) 805,094 43,200 Computer Associates International, Inc. 945,648 152,480 Misys PLC (United Kingdom) 636,649 ------------- 2,387,391 Technology Services (0.9%) - ------------------------------------------------------------------------------------------------------------------- 19,900 Convergys Corp. (NON) 588,443 42,700 KPMG Consulting, Inc. (NON) 862,540 ------------- 1,450,983 Telecommunications (3.7%) - ------------------------------------------------------------------------------------------------------------------- 18,500 Deutsche Telekom AG (Germany) 279,148 340 NTT DoCoMo, Inc. (Japan) 923,704 102,700 Portugal Telecom SGPS SA (Portugal) 764,074 39,300 Qwest Communications International, Inc. 323,046 45,970 Sprint Corp. (FON Group) 702,881 1,335 Swisscom AG (Switzerland) 403,366 20,100 TDC A/S (Denmark) 646,484 95,100 Telecom Italia SpA (Italy) 783,012 694,500 Vodafone Group PLC (United Kingdom) 1,283,006 ------------- 6,108,721 Telephone (0.4%) - ------------------------------------------------------------------------------------------------------------------- 63,900 Telefonica SA (Spain) (NON) 716,177 Tobacco (1.7%) - ------------------------------------------------------------------------------------------------------------------- 39,400 BAT Industries PLC (United Kingdom) 378,660 45,376 Philip Morris Companies, Inc. 2,389,945 ------------- 2,768,605 Waste Management (0.7%) - ------------------------------------------------------------------------------------------------------------------- 43,300 Waste Management, Inc. 1,179,925 Water Utilities (0.6%) - ------------------------------------------------------------------------------------------------------------------- 53,100 Severn Trent PLC (United Kingdom) 557,956 12,800 Vivendi Environnement (France) 397,444 ------------- 955,400 ------------- Total Common Stocks (cost $153,913,238) $ 158,714,936 CONVERTIBLE PREFERRED STOCKS (0.7%) (a) NUMBER OF SHARES VALUE - ------------------------------------------------------------------------------------------------------------------- 6,400 Ford Motor Company Capital Trust II $3.25 cum. cv. pfd. $ 358,272 29,900 General Motors Corp. zero % cv. pfd. 814,028 ------------- Total Convertible Preferred Stocks (cost $1,123,425) $ 1,172,300 UNITS (0.9%) (a) NUMBER OF UNITS VALUE - ------------------------------------------------------------------------------------------------------------------- 7,300 Fast Retailing Company, Ltd. 144A Structured Capped Warrants, 2002, (Issued by Salomon Smith Barney Holdings, Inc.) (Japan) $ 301,286 7,300 Fast Retailing Company, Ltd. 144A Structured Capped Warrants, 2002. (Issued by Salomon Smith Barney Holdings, Inc.) (Japan) 346,954 10,640 Korea Telecom Corp. 144A Structured Call Warrants, 2002, (Issued by UBS AG) (South Korea) 505,216 1,640 Samsung Electronics Company, Ltd. 144A Structured Capped Call Warrant, 2002 (Issued by Morgan Stanley & Co.) (South Korea) 402,932 ------------- Total Units (cost $1,394,426) $ 1,556,388 CONVERTIBLE BONDS AND NOTES (0.4%) (a) (cost $600,000) PRINCIPAL AMOUNT VALUE - ------------------------------------------------------------------------------------------------------------------- $ 600,000 Service Corp. International cv. sub. notes 6 3/4s, 2008 $ 612,240 SHORT-TERM INVESTMENTS (1.7%) (a) PRINCIPAL AMOUNT VALUE - ------------------------------------------------------------------------------------------------------------------- $ 968,896 Short-term investments held as collateral for loaned securities with yields ranging from 1.80% to 2.19% and due dates ranging from April 1, 2002 to May 13, 2002 (d) $ 968,000 95,000 US Treasury Bills zero %, June 13, 2002 94,684 1,732,000 Interest in $750,000,000 joint tri-party repurchase agreement dated March 28, 2002 with Goldman Sachs & Co., Inc. due April 1, 2002 with respect to various U.S. Government obligations -- maturity value of $1,732,369 for an effective yield of 1.92% 1,732,000 ------------- Total Short-Term Investments (cost $2,794,674) $ 2,794,684 - ------------------------------------------------------------------------------------------------------------------- Total Investments (cost $159,825,763) (b) $ 164,850,548 - ------------------------------------------------------------------------------------------------------------------- (a) Percentages indicated are based on net assets of $165,400,917. (b) The aggregate identified cost on a tax basis is $161,732,820, resulting in gross unrealized appreciation and depreciation of $12,224,628 and $9,106,900, respectively, or net unrealized appreciation of $3,117,728. (NON) Non-income-producing security. (R) Real Estate Investment Trust. (d) See footnote 1 to the financial statements. 144A after the name of a security represents those exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. ADR after the name of a foreign holding stands for American Depositary Receipts representing ownership of foreign securities on deposit with a custodian bank. DIVERSIFICATION BY COUNTRY Distribution of investments by country of issue at March 31, 2002: (as percentage of Market Value) Australia 0.9% Bermuda 2.6 Canada 1.2 Denmark 1.3 Finland 1.4 France 6.4 Germany 2.9 Italy 1.6 Japan 5.7 Netherlands 1.7 South Korea 1.9 Sweden 1.1 Switzerland 5.2 United Kingdom 10.9 United States 51.4 Other 3.8 ----- Total 100.0% The accompanying notes are an integral part of these financial statements.
STATEMENT OF ASSETS AND LIABILITIES March 31, 2002 (Unaudited) Assets - ------------------------------------------------------------------------------------------- Investments in securities, at value, including $669,856 of securities on loan (identified cost $159,825,763) (Note 1) $164,850,548 - ------------------------------------------------------------------------------------------- Cash 23,700 - ------------------------------------------------------------------------------------------- Dividends, interest and other receivables 499,223 - ------------------------------------------------------------------------------------------- Receivable for shares of the fund sold 1,046,844 - ------------------------------------------------------------------------------------------- Receivable for securities sold 1,643,489 - ------------------------------------------------------------------------------------------- Total assets 168,063,804 Liabilities - ------------------------------------------------------------------------------------------- Payable for securities repurchased 819,261 - ------------------------------------------------------------------------------------------- Payable for shares of the fund repurchased 324,515 - ------------------------------------------------------------------------------------------- Payable for compensation of Manager (Note 2) 304,973 - ------------------------------------------------------------------------------------------- Payable for investor servicing and custodian fees (Note 2) 70,892 - ------------------------------------------------------------------------------------------- Payable for compensation of Trustees (Note 2) 13,648 - ------------------------------------------------------------------------------------------- Payable for administrative services (Note 2) 2,322 - ------------------------------------------------------------------------------------------- Payable for distribution fees (Note 2) 108,714 - ------------------------------------------------------------------------------------------- Collateral on securities loaned, at value (Note 1) 968,000 - ------------------------------------------------------------------------------------------- Other accrued expenses 50,562 - ------------------------------------------------------------------------------------------- Total liabilities 2,662,887 - ------------------------------------------------------------------------------------------- Net assets $165,400,917 Represented by - ------------------------------------------------------------------------------------------- Paid-in capital (Notes 1 and 4) $174,474,769 - ------------------------------------------------------------------------------------------- Distributions in excess of net investment income (Note 1) (127,287) - ------------------------------------------------------------------------------------------- Accumulated net realized loss on investments and foreign currency transactions (Note 1) (13,968,250) - ------------------------------------------------------------------------------------------- Net unrealized appreciation of investments and assets and liabilities in foreign currencies 5,021,685 - ------------------------------------------------------------------------------------------- Total -- Representing net assets applicable to capital shares outstanding $165,400,917 Computation of net asset value and offering price - ------------------------------------------------------------------------------------------- Net asset value and redemption price per class A share ($111,208,900 divided by 9,154,501 shares) $12.15 - ------------------------------------------------------------------------------------------- Offering price per class A share (100/94.25 of $12.15)* $12.89 - ------------------------------------------------------------------------------------------- Net asset value and offering price per class B share ($45,036,067 divided by 3,780,831 shares)** $11.91 - ------------------------------------------------------------------------------------------- Net asset value and offering price per class C share ($6,077,104 divided by 504,295 shares)** $12.05 - ------------------------------------------------------------------------------------------- Net asset value and redemption price per class M share ($3,078,846 divided by 255,765 shares) $12.04 - ------------------------------------------------------------------------------------------- Offering price per class M share (100/96.50 of $12.04)* $12.48 - ------------------------------------------------------------------------------------------- * On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales, the offering price is reduced. ** Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. The accompanying notes are an integral part of these financial statements.
STATEMENT OF OPERATIONS Six months ended March 31, 2002 (Unaudited) Investment income: - ------------------------------------------------------------------------------------------- Dividends (net of foreign tax of $72,242) $ 1,205,026 - ------------------------------------------------------------------------------------------- Interest 51,096 - ------------------------------------------------------------------------------------------- Securities lending 1,764 - ------------------------------------------------------------------------------------------- Total investment income 1,257,886 Expenses: - ------------------------------------------------------------------------------------------- Compensation of Manager (Note 2) 580,791 - ------------------------------------------------------------------------------------------- Investor servicing and custodian fees (Note 2) 196,524 - ------------------------------------------------------------------------------------------- Compensation of Trustees (Note 2) 7,265 - ------------------------------------------------------------------------------------------- Administrative services (Note 2) 4,717 - ------------------------------------------------------------------------------------------- Distribution fees -- Class A (Note 2) 119,239 - ------------------------------------------------------------------------------------------- Distribution fees -- Class B (Note 2) 209,440 - ------------------------------------------------------------------------------------------- Distribution fees -- Class C (Note 2) 27,214 - ------------------------------------------------------------------------------------------- Distribution fees -- Class M (Note 2) 9,416 - ------------------------------------------------------------------------------------------- Other 103,129 - ------------------------------------------------------------------------------------------- Total expenses 1,257,735 - ------------------------------------------------------------------------------------------- Expense reduction (Note 2) (24,300) - ------------------------------------------------------------------------------------------- Net expenses 1,233,435 - ------------------------------------------------------------------------------------------- Net investment income 24,451 - ------------------------------------------------------------------------------------------- Net realized loss on investments (Notes 1 and 3) (6,898,232) - ------------------------------------------------------------------------------------------- Net realized gain on futures contracts (Note 1) 120,424 - ------------------------------------------------------------------------------------------- Net realized gain on foreign currency transactions (Note 1) 64,509 - ------------------------------------------------------------------------------------------- Net unrealized depreciation of assets and liabilities in foreign currencies during the period (71,956) - ------------------------------------------------------------------------------------------- Net unrealized appreciation of investments during the period 20,274,456 - ------------------------------------------------------------------------------------------- Net gain on investments 13,489,201 - ------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations $13,513,652 - ------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements.
STATEMENT OF CHANGES IN NET ASSETS Six months ended Year ended March 31 September 30 2002* 2001 - -------------------------------------------------------------------------------------------------- Increase in net assets - -------------------------------------------------------------------------------------------------- Operations: - -------------------------------------------------------------------------------------------------- Net investment income $ 24,451 $ 456,019 - -------------------------------------------------------------------------------------------------- Net realized loss on investments and foreign currency transactions (6,713,299) (6,141,633) - -------------------------------------------------------------------------------------------------- Net unrealized appreciation (depreciation) of investments and assets and liabilities in foreign currencies 20,202,500 (15,186,718) - -------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 13,513,652 (20,872,332) - -------------------------------------------------------------------------------------------------- Distributions to shareholders: (Note 1) - -------------------------------------------------------------------------------------------------- From net investment income Class A (82,910) (417,255) - -------------------------------------------------------------------------------------------------- Class B -- (71,273) - -------------------------------------------------------------------------------------------------- Class C -- (5,667) - -------------------------------------------------------------------------------------------------- Class M -- (6,340) - -------------------------------------------------------------------------------------------------- From net realized gain on investments Class A -- (2,880,004) - -------------------------------------------------------------------------------------------------- Class B -- (1,637,236) - -------------------------------------------------------------------------------------------------- Class C -- (121,194) - -------------------------------------------------------------------------------------------------- Class M -- (119,172) - -------------------------------------------------------------------------------------------------- Return of capital Class A -- (45,652) - -------------------------------------------------------------------------------------------------- Class B -- (12,483) - -------------------------------------------------------------------------------------------------- Class C -- (956) - -------------------------------------------------------------------------------------------------- Class M -- (1,002) - -------------------------------------------------------------------------------------------------- Increase from capital share transactions (Note 4) 28,283,448 44,211,474 - -------------------------------------------------------------------------------------------------- Total increase in net assets 41,714,190 18,020,908 Net assets - -------------------------------------------------------------------------------------------------- Beginning of period 123,686,727 105,665,819 - -------------------------------------------------------------------------------------------------- End of period (including distributions in excess of net investment income of $127,287 and $68,828, respectively) $165,400,917 $123,686,727 - -------------------------------------------------------------------------------------------------- * Unaudited The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS (For a common share outstanding throughout the period) CLASS A - ------------------------------------------------------------------------------------------------------------------ Six months ended Per-share March 31 operating performance (Unaudited) Year ended September 30 - ------------------------------------------------------------------------------------------------------------------ 2002 2001 2000 1999 1998 1997 - ------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $11.05 $13.56 $14.06 $11.39 $12.50 $10.77 - ------------------------------------------------------------------------------------------------------------------ Investment operations: - ------------------------------------------------------------------------------------------------------------------ Net investment income .02(a) .08(a) .11(a) .07(a) .16(a)(d) .14(d) - ------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments 1.09 (1.93) .59 2.98 (.87) 3.13 - ------------------------------------------------------------------------------------------------------------------ Total from investment operations 1.11 (1.85) .70 3.05 (.71) 3.27 - ------------------------------------------------------------------------------------------------------------------ Less distributions: - ------------------------------------------------------------------------------------------------------------------ From net investment income (.01) (.08) (.26) (.09) (.09) (.23) - ------------------------------------------------------------------------------------------------------------------ From net realized gain on investments -- (.57) (.94) (.29) (.31) (1.31) - ------------------------------------------------------------------------------------------------------------------ Return of capital -- (.01) -- -- -- -- - ------------------------------------------------------------------------------------------------------------------ Total distributions (.01) (.66) (1.20) (.38) (.40) (1.54) - ------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $12.15 $11.05 $13.56 $14.06 $11.39 $12.50 - ------------------------------------------------------------------------------------------------------------------ Total return at net asset value (%)(b) 10.05* (14.31) 5.10 27.06 (5.72) 33.88 - ------------------------------------------------------------------------------------------------------------------ Ratios and supplemental data - ------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $111,209 $78,624 $63,055 $36,082 $22,091 $2,885 - ------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets (%)(c) .74* 1.50 1.59 1.69 1.70(d) 1.48(d) - ------------------------------------------------------------------------------------------------------------------ Ratio of net investment income to average net assets (%) .15* .65 .77 .53 1.14(d) 1.19(d) - ------------------------------------------------------------------------------------------------------------------ Portfolio turnover (%) 46.11* 139.38 68.22 68.46 62.96 103.92 - ------------------------------------------------------------------------------------------------------------------ * Not annualized. (a) Per share net investment income has been determined on the basis of the weighted average number of shares outstanding during the period. (b) Total return assumes dividend reinvestment and does not reflect the effect of sales charges. (c) Includes amounts paid through expense offset and brokerage service arrangements (Note 2). (d) Reflects an expense limitation during the period. As a result of such limitation, expenses of the fund for the period ended September 30, 1998 and September 30, 1997, reflect a reduction of approximately 0.40% and 0.58% per share respectively. The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS (For a common share outstanding throughout the period) CLASS B - ----------------------------------------------------------------------------------------------------- Six months ended For the period Per-share March 31 Nov. 3, 1997+ operating performance (Unaudited) Year ended September 30 to Sept. 30 - ----------------------------------------------------------------------------------------------------- 2002 2001 2000 1999 1998 - ----------------------------------------------------------------------------------------------------- Net asset value, beginning of period $10.87 $13.38 $13.94 $11.34 $12.01 - ----------------------------------------------------------------------------------------------------- Investment operations: - ----------------------------------------------------------------------------------------------------- Net investment income (loss)(a) (.03) (.01) --(e) (.03) .04(d) - ----------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 1.07 (1.90) .58 2.95 (.35) - ----------------------------------------------------------------------------------------------------- Total from investment operations 1.04 (1.91) .58 2.92 (.31) - ----------------------------------------------------------------------------------------------------- Less distributions: - ----------------------------------------------------------------------------------------------------- From net investment income -- (.03) (.20) (.03) (.05) - ----------------------------------------------------------------------------------------------------- From net realized gain on investments -- (.57) (.94) (.29) (.31) - ----------------------------------------------------------------------------------------------------- Return of capital -- --(e) -- -- -- - ----------------------------------------------------------------------------------------------------- Total distributions -- (.60) (1.14) (.32) (.36) - ----------------------------------------------------------------------------------------------------- Net asset value, end of period $11.91 $10.87 $13.38 $13.94 $11.34 - ----------------------------------------------------------------------------------------------------- Total return at net asset value (%)(b) 9.57* (14.89) 4.26 26.08 (2.62)* - ----------------------------------------------------------------------------------------------------- Ratios and supplemental data - ----------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $45,036 $38,875 $37,356 $28,105 $16,315 - ----------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(c) 1.11* 2.25 2.34 2.44 2.24(d)* - ----------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average net assets (%) (.24)* (.11) .01 (.23) .39(d)* - ----------------------------------------------------------------------------------------------------- Portfolio turnover (%) 46.11* 139.38 68.22 68.46 62.96 - ----------------------------------------------------------------------------------------------------- + Commencement of operations. * Not annualized. (a) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding during the period. (b) Total return assumes dividend reinvestment and does not reflect the effect of sales charges. (c) Includes amounts paid through expense offset and brokerage service arrangements (Note 2). (d) Reflects an expense limitation during the period. As a result of such limitation, expenses of the fund for the period ended September 30, 1998 reflect a reduction of 0.40% per share. (e) Amount represents less than $0.01 per share. The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS (For a common share outstanding throughout the period) CLASS C - ---------------------------------------------------------------------------------------- Six months ended For the period Per-share March 31 Year ended July 26, 1999+ operating performance (Unaudited) September 30 to Sept. 30 - ---------------------------------------------------------------------------------------- 2002 2001 2000 1999 - ---------------------------------------------------------------------------------------- Net asset value, beginning of period $10.98 $13.53 $14.06 $14.56 - ---------------------------------------------------------------------------------------- Investment operations: - ---------------------------------------------------------------------------------------- Net investment income (loss)(a) (.03) (.01) .01 (.01) - ---------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 1.10 (1.93) .61 (.48) - ---------------------------------------------------------------------------------------- Total from investment operations 1.07 (1.94) .62 (.49) - ---------------------------------------------------------------------------------------- Less distributions: - ---------------------------------------------------------------------------------------- From net investment income -- (.03) (.21) (.01) - ---------------------------------------------------------------------------------------- From net realized gain on investments -- (.57) (.94) -- - ---------------------------------------------------------------------------------------- Return of capital -- (.01) -- -- - ---------------------------------------------------------------------------------------- Total distributions -- (.61) (1.15) (.01) - ---------------------------------------------------------------------------------------- Net asset value, end of period $12.05 $10.98 $13.53 $14.06 - ---------------------------------------------------------------------------------------- Total return at net asset value (%)(b) 9.75* (15.01) 4.48 (3.40)* - ---------------------------------------------------------------------------------------- Ratios and supplemental data - ---------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $6,077 $4,124 $2,392 $515 - ---------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(c) 1.11* 2.25 2.34 .44* - ---------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average net assets (%) (.22)* (.07) .09 (.10)* - ---------------------------------------------------------------------------------------- Portfolio turnover (%) 46.11* 139.38 68.22 68.46 - ---------------------------------------------------------------------------------------- + Commencement of operations. * Not annualized. (a) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding during the period. (b) Total return assumes dividend reinvestment and does not reflect the effect of sales charges. (c) Includes amounts paid through expense offset and brokerage service arrangements (Note 2). The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS (For a common share outstanding throughout the period) CLASS M - ----------------------------------------------------------------------------------------------------- Six months ended For the period Per-share March 31 Nov. 3, 1997+ operating performance (Unaudited) Year ended September 30 to Sept. 30 - ----------------------------------------------------------------------------------------------------- 2002 2001 2000 1999 1998 - ----------------------------------------------------------------------------------------------------- Net asset value, beginning of period $10.97 $13.46 $14.00 $11.35 $12.01 - ----------------------------------------------------------------------------------------------------- Investment operations: - ----------------------------------------------------------------------------------------------------- Net investment income (loss)(a) (.01) .01 .03 --(e) .07(d) - ----------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 1.08 (1.89) .58 2.98 (.36) - ----------------------------------------------------------------------------------------------------- Total from investment operations 1.07 (1.88) .61 2.98 (.29) - ----------------------------------------------------------------------------------------------------- Less distributions: - ----------------------------------------------------------------------------------------------------- From net investment income -- (.03) (.21) (.04) (.06) - ----------------------------------------------------------------------------------------------------- From net realized gain on investments -- (.57) (.94) (.29) (.31) - ----------------------------------------------------------------------------------------------------- Return of capital -- (.01) -- -- -- - ----------------------------------------------------------------------------------------------------- Total distributions -- (.61) (1.15) (.33) (.37) - ----------------------------------------------------------------------------------------------------- Net asset value, end of period $12.04 $10.97 $13.46 $14.00 $11.35 - ----------------------------------------------------------------------------------------------------- Total return at net asset value (%)(b) 9.75* (14.61) 4.46 26.57 (2.48)* - ----------------------------------------------------------------------------------------------------- Ratios and supplemental data - ----------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $3,079 $2,064 $2,862 $2,712 $1,783 - ----------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(c) .99* 2.00 2.09 2.19 2.02(d)* - ----------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets (%) (.10)* .08 .24 .03 .62(d)* - ----------------------------------------------------------------------------------------------------- Portfolio turnover (%) 46.11* 139.38 68.22 68.46 62.96 - ----------------------------------------------------------------------------------------------------- + Commencement of operations. * Not annualized. (a) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding during the period. (b) Total return assumes dividend reinvestment and does not reflect the effect of sales charges. (c) Includes amounts paid through expense offset and brokerage service arrangements (Note 2). (d) Reflects an expense limitation during the period. As a result of such limitation, expenses of the fund for the period ended September 30, 1998 reflect a reduction of 0.40% per share. (e) Amount represents less than $0.01 per share. The accompanying notes are an integral part of these financial statements.
NOTES TO FINANCIAL STATEMENTS March 31, 2002 (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 shares but lower than class B and class C shares. Expenses of the fund are borne pro-rata by the holders of each class of shares, except that each class bears expenses unique to that class (including the distribution fees applicable to such class). Each class votes as a class only with respect to its own distribution plan or other matters on which a class vote is required by law or determined by the Trustees. Shares of each class would receive their pro-rata share of the net assets of the fund, if that fund were liquidated. In addition, the Trustees declare separate dividends on each class of shares. The following is a summary of significant accounting policies consistently followed by the fund in the preparation of its financial statements. The preparation of financial statements is in conformity with accounting principles generally accepted in the United States of America and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities in 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. Securities quoted in foreign currencies are translated into U.S. dollars at the current exchange rate. Short-term investments having remaining maturities of 60 days or less are stated at amortized cost, which approximates market value. Other investments, including restricted securities, are stated at fair value following procedures approved by the Trustees. B) Joint trading account The fund may transfer uninvested cash balances, including cash collateral received under security lending arrangements, into a joint trading account along with the cash of other registered investment companies and certain other accounts managed by Putnam Investment Management, LLC ("Putnam Management"), the fund's manager, an indirect wholly-owned subsidiary of Putnam, LLC. 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. Non-cash dividends, if any, are recorded at the fair market value of the securities received. E) Foreign currency translation The accounting records of the fund are maintained in U.S. dollars. The market value of foreign securities, currency holdings, and other assets and liabilities are recorded in the books and records of the fund after translation to U.S. dollars based on the exchange rates on that day. The cost of each security is determined using historical exchange rates. Income and withholding taxes are translated at prevailing exchange rates when accrued or incurred. The fund does not isolate that portion of realized or unrealized gains or losses resulting from changes in the foreign exchange rate on investments from fluctuations arising from changes in the market prices of the securities. Such gains and losses are included with the net realized and unrealized gain or loss on investments. Net realized gains and losses on foreign currency transactions represent net realized exchange gains or losses on closed forward currency contracts, disposition of foreign currencies and the difference between the amount of investment income and foreign withholding taxes recorded on the fund's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized appreciation and depreciation of assets and liabilities in foreign currencies arise from changes in the value of open forward currency contracts and assets and liabilities other than investments at the period end, resulting from changes in the exchange rate. Investments in foreign securities involve certain risks, including those related to economic instability, unfavorable political developments, and currency fluctuations, not present with domestic investments. F) Forward currency contracts The fund may engage in forward currency contracts, which are agreements between two parties to buy and sell currencies at a set price on a future date. These contracts are used 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. The Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the futures contract. Such receipts or payments are known as "variation margin." 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) Security lending The fund may lend securities, through its agent Citibank N.A., to qualified borrowers in order to earn additional income. The loans are collateralized by cash and/or securities in an amount at least equal to the market value of the securities loaned. The market value of securities loaned is determined daily and any additional required collateral is allocated to the fund on the next business day. The risk of borrower default will be borne by Citibank N.A., the fund will bear the risk of loss with respect to the investment of the cash collateral. Income from securities lending is included in investment income on the Statement of operations. At March 31, 2002, the value of securities loaned amounted to $669,856. The fund received cash collateral of $968,000 which is pooled with collateral of other Putnam funds into 35 issuers of high grade short-term investments. I) 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 maintains an asset coverage ratio of at least 300% and borrowings must not exceed prospectus limitations. For the six months ended March 31, 2002, the fund had no borrowings against the line of credit. J) Federal taxes It is the policy of the fund to distribute all of its taxable income within the prescribed time and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. It is also the intention of the fund to distribute an amount sufficient to avoid imposition of any excise tax under Section 4982 of the Internal Revenue Code of 1986, as amended. Therefore, no provision has been made for federal taxes on income, capital gains or unrealized appreciation on securities held nor for excise tax on income and capital gains. At September 30, 2001, the fund had a capital loss carryover of approximately $2,908,000 available to the extent allowed by tax law to offset future net capital gain, if any, which will expire on September 30, 2009. K) Distributions to shareholders Distributions to shareholders from net investment income are recorded by the fund on the ex-dividend date. Distributions from capital gains, 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. L) Expenses of the trust Expenses directly charged or attributable to any fund will be paid from the assets of that fund. Generally, expenses of the trust will be allocated among and charged to the assets of each fund on a basis that the Trustees deem fair and equitable, which may be based on the relative assets of each fund or the nature of the services performed and relative applicability to each fund. Note 2 Management fee, administrative services and other transactions Compensation of Putnam Management, for management and investment advisory services is paid quarterly based on the average net assets of the fund. Such fee is based on the following annual rates: 0.80% of the first $500 million of average net assets, 0.70% of the next $500 million, 0.65% of the next $500 million, 0.60% of the next $5 billion, 0.575% of the next $5 billion, 0.555% of the next $5 billion, 0.54% of the next $5 billion, and 0.53% thereafter. The fund reimburses Putnam Management an allocated amount for the compensation and related expenses of certain officers of the fund and their staff who provide administrative services to the fund. The aggregate amount of all such reimbursements is determined annually by the Trustees. Custodial functions for the fund's assets are provided by Putnam Fiduciary Trust Company (PFTC), a wholly-owned subsidiary of Putnam, LLC. Investor servicing agent functions are provided by Putnam Investor Services, a division of PFTC. The fund has entered into an arrangement with PFTC whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the fund's expenses. The fund also reduced expenses through brokerage service arrangements. For the six months ended, March 31, 2002 the fund's expenses were reduced by $24,300 under these arrangements. Each independent Trustee of the fund receives an annual Trustee fee, of which $716 has been allocated to the fund, and an additional fee for each Trustees meeting attended. Trustees receive additional fees for attendance at certain committee meetings. The fund has adopted a Trustee Fee Deferral Plan (the "Deferral Plan") which allows the Trustees to defer the receipt of all or a portion of Trustees Fees payable on or after July 1, 1995. The deferred fees remain invested in certain Putnam funds until distribution in accordance with the Deferral Plan. The fund has adopted an unfunded noncontributory defined benefit pension plan (the "Pension Plan") covering all Trustees of the fund who have served as a Trustee for at least five years. Benefits under the Pension Plan are equal to 50% of the Trustee's average total retainer and meeting fees for the three years preceding retirement. Pension expense for the fund is included in Compensation of Trustees in the Statement of operations. Accrued pension liability is included in Payable for compensation of Trustees in the Statement of assets and liabilities. The fund has adopted distribution plans (the "Plans") with respect to its class A, class B, class C and class M shares pursuant to Rule 12b-1 under the Investment Company Act of 1940. The purpose of the Plans is to compensate Putnam Retail Management, a wholly-owned subsidiary of Putnam, LLC and Putnam Retail Management GP, 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 Retail Management at an annual rate up to 0.35%, 1.00%, 1.00% and 1.00% of the average net assets attributable to class A, class B, class C and class M shares, respectively. The Trustees have approved payment by the fund at an annual rate of 0.25%, 1.00%, 1.00% and 0.75% of the average net assets attributable to class A, class B, class C and class M shares, respectively. For the six months ended March 31, 2002, Putnam Retail Management, acting as underwriter received net commissions of no monies and $284 from the sale of class A and class M shares, respectively, and received $33,382 and $350 in contingent deferred sales charges from redemptions of class B and class C shares, respectively. A deferred sales charge of up to 1.00% and 0.65% is assessed on certain redemptions of class A and class M shares, respectively. For the six months ended March 31, 2002, Putnam Retail Management, acting as underwriter received no monies on class A and class M redemptions, respectively. Note 3 Purchases and sales of securities During the six months ended March 31, 2002, cost of purchases and proceeds from sales of investment securities other than short-term investments aggregated $99,794,351 and $67,155,713, respectively. There were no purchases and sales of U.S. government obligations. Note 4 Capital shares At March 31, 2002, there was an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows: Six months ended March 31, 2002 - --------------------------------------------------------------------------- Class A Shares Amount - --------------------------------------------------------------------------- Shares sold 4,511,734 $ 52,313,716 - --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 6,676 77,783 - --------------------------------------------------------------------------- 4,518,410 52,391,499 Shares repurchased (2,479,844) (28,766,557) - --------------------------------------------------------------------------- Net increase 2,038,566 $ 23,624,942 - --------------------------------------------------------------------------- Year ended September 30, 2001 - --------------------------------------------------------------------------- Class A Shares Amount - --------------------------------------------------------------------------- Shares sold 6,293,589 $ 80,732,105 - --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 254,600 3,250,286 - --------------------------------------------------------------------------- 6,548,189 83,982,391 Shares repurchased (4,082,143) (52,059,556) - --------------------------------------------------------------------------- Net increase 2,466,046 $ 31,922,835 - --------------------------------------------------------------------------- Six months ended March 31, 2002 - --------------------------------------------------------------------------- Class B Shares Amount - --------------------------------------------------------------------------- Shares sold 695,255 $ 7,951,405 - --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions -- -- - --------------------------------------------------------------------------- 695,255 7,951,405 Shares repurchased (489,199) (5,566,261) - --------------------------------------------------------------------------- Net increase 206,056 $ 2,385,144 - --------------------------------------------------------------------------- Year ended September 30, 2001 - --------------------------------------------------------------------------- Class B Shares Amount - --------------------------------------------------------------------------- Shares sold 1,374,503 $17,306,493 - --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 127,341 1,612,132 - --------------------------------------------------------------------------- 1,501,844 18,918,625 Shares repurchased (719,247) (8,916,193) - --------------------------------------------------------------------------- Net increase 782,597 $10,002,432 - --------------------------------------------------------------------------- Six months ended March 31, 2002 - --------------------------------------------------------------------------- Class C Shares Amount - --------------------------------------------------------------------------- Shares sold 432,182 $ 5,041,199 - --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions -- -- - --------------------------------------------------------------------------- 432,182 5,041,199 Shares repurchased (303,338) (3,568,869) - --------------------------------------------------------------------------- Net increase 128,844 $ 1,472,330 - --------------------------------------------------------------------------- Year ended September 30, 2001 - --------------------------------------------------------------------------- Class C Shares Amount - --------------------------------------------------------------------------- Shares sold 315,208 $ 4,075,649 - --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 9,395 120,345 - --------------------------------------------------------------------------- 324,603 4,195,994 Shares repurchased (125,970) (1,606,107) - --------------------------------------------------------------------------- Net increase 198,633 $ 2,589,887 - --------------------------------------------------------------------------- Six months ended March 31, 2002 - --------------------------------------------------------------------------- Class M Shares Amount - --------------------------------------------------------------------------- Shares sold 98,335 $1,156,427 - --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions -- -- - --------------------------------------------------------------------------- 98,335 1,156,427 Shares repurchased (30,733) (355,395) - --------------------------------------------------------------------------- Net increase 67,602 $ 801,032 - --------------------------------------------------------------------------- Year ended September 30, 2001 - --------------------------------------------------------------------------- Class M Shares Amount - --------------------------------------------------------------------------- Shares sold 47,545 $ 615,172 - --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 9,797 124,918 - --------------------------------------------------------------------------- 57,342 740,090 Shares repurchased (81,739) (1,043,770) - --------------------------------------------------------------------------- Net decrease (24,397) $ (303,680) - --------------------------------------------------------------------------- Note 5 Actions by Trustees In April 2002, the Trustees approved the merger of Putnam Global Growth and Income Fund into Putnam Global Growth Fund. The transaction is currently scheduled to occur in September 2002. It is subject to a number of conditions and there is no guarantee it will occur. FUND INFORMATION ABOUT PUTNAM INVESTMENTS One of the largest mutual fund families in the United States, Putnam Investments has a heritage of investment leadership dating back to Judge Samuel Putnam, whose Prudent Man Rule has defined fiduciary tradition and practice since 1830. Founded 65 years ago, Putnam Investments was built around the concept that a balance between risk and reward is the hallmark of a well-rounded financial program. We presently manage over 100 mutual funds in growth, value, blend, fixed income, and international. INVESTMENT MANAGER Putnam Investment Management, LLC One Post Office Square Boston, MA 02109 MARKETING SERVICES Putnam Retail Management One Post Office Square Boston, MA 02109 CUSTODIAN Putnam Fiduciary Trust Company LEGAL COUNSEL Ropes & Gray TRUSTEES John A. Hill, Chairman Jameson Adkins Baxter Charles B. Curtis 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, III President Charles E. Porter Executive Vice President and Treasurer Patricia C. Flaherty Senior Vice President Lawrence J. Lasser Vice President Gordon H. Silver Vice President Ian C. Ferguson Vice President Brett C. Browchuk Vice President Deborah F. Kuenstner Vice President Richard G. Leibovitch Vice President Richard A. Monaghan Vice President Michael T. Healy 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 and Putnam's Quarterly Ranking Summary. For more information or to request a prospectus, call toll free: 1-800-225-1581. The fund's Statement of Additional Information contains additional information about the fund's Trustees and is available without charge upon request by calling 1-800-225-1581. Visit www.putnaminvestments.com or call a representative at 1-800-225-1581. NOT FDIC INSURED, MAY LOSE VALUE, NO BANK GUARANTEE [LOGO OMITTED] PUTNAM INVESTMENTS The Putnam Funds One Post Office Square Boston, Massachusetts 02109 - --------------------- PRSRT STD U.S. POSTAGE PAID PUTNAM INVESTMENTS - --------------------- For account balances, economic forecasts, and the latest on Putnam funds, visit www.putnaminvestments.com SA063-79281 197/2HP/2HQ 5/02 -----END PRIVACY-ENHANCED MESSAGE-----