-----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, RT74IFyde2nbh2GQLqulgobSLjdd1soRXuiK/bKz8FRpLDF/a2riDyDIt/bm+b+d /6ab+pUtBjB4KHI2TZSGtg== 0000928816-00-000083.txt : 20000223 0000928816-00-000083.hdr.sgml : 20000223 ACCESSION NUMBER: 0000928816-00-000083 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000222 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM INTERNATIONAL GROWTH FUND /MA/ CENTRAL INDEX KEY: 0000868648 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 046661045 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-06190 FILM NUMBER: 549982 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQ CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6172921471 FORMER COMPANY: FORMER CONFORMED NAME: PUTNAM OVERSEAS GROWTH FUND DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: PUTNAM INTERNATIONAL GROWTH FUND DATE OF NAME CHANGE: 19901107 N-30D 1 PUTNAM INTERNATIONAL GROWTH FUND Putnam International Growth Fund SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK 12-31-99 [LOGO: BOSTON * LONDON * TOKYO] From the Chairman [GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM] [copyright] Karsh, Ottawa Dear Shareholder: It is always a pleasure to bring shareholders a report containing news of robust performance, and this year's semiannual report for Putnam International Growth Fund is no exception. It is also customary in such cases to caution that results of this magnitude should not become an annual expectation, though we remain confident that your fund's long-term prospects remain exceedingly bright. This is the last letter to you and the other shareholders of Putnam International Growth Fund that I will be signing. After more than 30 years as Chairman of the Trustees and President of the Putnam Funds, the time has come for me to step aside. In June, John Hill will become Chairman. John is currently an independent Trustee and has served on the board for the past 14 years. In addition, my son, George Putnam, III, will take on the role of President. I am confident that the leadership of the funds will be in exceptionally strong hands. I will become Chairman Emeritus, remain a Putnam shareholder, and stay in close touch with the funds. It has been my privilege to serve you. Respectfully yours, /S/GEORGE PUTNAM George Putnam Chairman of the Trustees February 16, 2000 Report from the Fund Managers Omid Kamshad Mark D. Pollard Justin M. Scott Paul Warren Joshua L. Byrne Putnam International Growth Fund can certainly be said to have enjoyed the best of all possible worlds during the first half of fiscal 2000. Markedly improved returns in international markets, a global economic recovery, and record levels of mergers and acquisitions in Europe and Japan all served to create a particularly favorable environment for the fund. Specifically, long-standing positions in technology and telecommunications stocks as well as other companies benefiting from the global recovery helped to drive fund performance over the six months ended December 31, 1999. The fund continued to generate attractive risk-adjusted returns relative to its peers, as indicated by the Morningstar reference on page 3. Additionally the fund's total return remained significantly higher than its benchmark index, the Morgan Stanley Capital International EAFE Index. (See page 7 for complete performance information.) Total return for 6 months ended 12/31/99 Class A Class B Class C Class M NAV POP NAV CDSC NAV CDSC NAV POP - -------------------------------------------------------------------------- 42.87% 34.66% 42.36% 37.36% 42.36% 41.36% 42.55% 37.55% - -------------------------------------------------------------------------- Past performance is no indication of future results. Performance information for longer periods and explanation of performance calculation methods begin on page 7. * TECHNOLOGY AND TELECOMMUNICATIONS STOCKS STAND OUT WORLDWIDE The rise of the Internet around the world, rapidly increasing flows of data through broadband networks, and worldwide demand for cellular and wireless telecommunications services have all contributed to the outstanding performance of technology and telecommunications companies over the period. Investors continued to recognize the strong fundamentals and extraordinary growth potential present in these sectors, much of which is based overseas. Technology and telecommunications leaders can be found in Europe, Japan, the Pacific Rim, and Latin America. [GRAPHIC OMITTED: horizontal bar chart TOP COUNTRY ALLOCATIONS] TOP COUNTRY ALLOCATIONS* Japan 21.8% United Kingdom 15.1% France 13.2% Netherlands 6.0% Switzerland 5.3% Footnote reads: *Based on net assets as of 12/31/99. Holdings will vary over time. Over the past few years, we have sought out technology and telecommunications companies that have significant growth potential in their respective industries or regions, are recognized leaders in product innovation, and are focused on earning a high return on capital. European companies such as Nokia, Ericsson, Vodafone AirTouch (sold prior to the end of the period), Bouygues, Telecom Italia Mobil (TIM), and Mannesmann all epitomize these themes. (The sidebar on page 4 discusses the Vodafone/Mannesmann deal as well as other important developments that affected the fund in this record year of European mergers and acquisitions.) For example, Nokia retains the bulk of market share in the handset market and has moved aggressively into the development of next-generation wireless products. Cellular companies Bouygues of France and TIM in Italy are experiencing astounding volume growth in their respective markets. TIM had seen a drop in revenues as its subscriber base shifted from contract to prepaid; however, the company's strong revenue growth has recently resumed. Demand for the products and services of technology and telecommunications companies in Asia continued to surge. In Japan, for example, Sony maintained its status as a global consumer electronics brand name by positioning itself in the burgeoning market for digital equipment and products. Kyocera, a mobile handset maker, benefited from its relationship with DDI, the second-largest mobile operator in Japan. Outside Japan, Samsung Electronics of South Korea is a major beneficiary of the upturn in global semiconductor prices and has been one of the most aggressive companies leading the country's restructuring wave. China Telecom (Hong Kong) is a leader in the rapidly growing, yet underdeveloped Chinese market for mobile communications and Internet infrastructure. Morningstar gave the fund's class A shares its highest rating of five out of five stars for risk-adjusted performance for the three years ended December 31, 1999. This put the fund among the top 10% of the 1104 international equity funds rated. Past performance is not indicative of future results. Morningstar ratings reflect risk-adjusted performance through 12/31/99 and are subject to change every month. Morningstar ratings are calculated from a fund's 3-, 5-, and 10-year returns (with fee adjustments) in excess of 90-day Treasury bill returns and a risk factor that reflects performance below 90-day Treasury bill returns. For the 5-year period, the fund received five stars. Performance of other share classes will vary. Like China, Latin America is racing to catch up technologically with the large markets. Incumbent telecommunications operators such as Telefonos de Mexico and foreign companies such as Spain's Telefonica are battling to provide broadband capabilities to a region in which demand for Internet access by companies and individuals is expected to generate exponential growth in Internet-related revenue. While these holdings, along with others discussed in this report, were viewed favorably at the end of the period, all are subject to review and adjustment in accordance with the fund's investment strategy and may vary in the future. * FUND FOCUSES ON COMPANIES THAT BENEFIT FROM GLOBAL RECOVERY With economic growth accelerating around the world, we targeted value-added exporters such as telecommunications equipment companies, luxury goods companies, and advertising and media firms. We've found that classic cyclical industries such as autos and commodity chemicals have far too much capacity and little pricing power. Record mergers and acquisitions activity positive but must be evaluated on an individual basis According to Thomson Financial Securities Data, mergers and acquisitions activity involving European companies rose to $1.23 trillion in 1999, double 1998 levels. Additionally Europe took a greater share of the world's biggest mergers as European M&A activity accounted for 39% of the global total, up from 22% in 1998. Japan also posted record M&A activity with about $85 billion in deals, although that was a small percentage of the world total. The level of hostile takeover activity in 1999 was unprecedented in Europe with takeover fights such as Telecom Italia and Olivetti, Total Fina and Elf Aquitaine, and the three-way fight among BNP, Paribas, and Societe Generale. More friendly deals also occurred such as those of Vodafone and AirTouch and Mannesmann and Orange -- all being a precursor to the recent hostile bid by Vodafone AirTouch for Mannesman to create a European telecommunications giant. Your fund has benefited from participation in many of 1999's largest mergers. Of course, not all mergers are positive for shareholders and some may be undertaken out of weakness. As portfolio managers, our job is to evaluate these deals on a case-by-case basis to determine if value is actually created, if the promised cost savings might occur, if synergies exist, and if the new entity can achieve the growth potential outlined by the new management. Luxury goods companies Gucci Group -- which fended off a hostile takeover attempt from rival LVMH in 1999 -- and Compagnie Financiere Richemont particularly benefited from the Asian economic recovery and renewed Asian consumer demand for Gucci's high-fashion products and Richemont's Cartier jewelry. These companies are able to retain pricing power because high-end consumers appreciate the cachet of paying higher prices for fashion and jewelry. Media companies such as cable operator TF1 (Televison Francaise), Granada Group of the United Kingdom, Mediaset in Italy, and Grupo Televisa in Mexico all have a role to play in the development and distribution of content that is driving the convergence of old media and new media. One example is Televisa, Mexico's largest broadcaster. Through its variety of interests in newspapers, magazines, and cable, the company is well positioned as a premier content provider in Latin America. Advertisers such as Havas Advertising, WPP, and Publicis are all generating high revenues from global multinational clients intent on raising their worldwide brand awareness. For example, Havas is one of Europe's leading advertising agencies and is quickly becoming one of the top agencies in the world. The company's client list includes large well-known names such as Microsoft, Volvo, MCI WorldCom, and Procter & Gamble. Some of the newer, less capital-intensive European companies we favor, with their U.S.-style business models and the ability to achieve high returns on capital, are also Havas clients. * UNITED KINGDOM HOLDINGS, EUROPEAN BANKS, AND PHARMACEUTICAL COMPANIES DE-EMPHASIZED The fund maintains investments in the United Kingdom; however, this weighting demands some explanation. In general, we've had difficulty finding investment opportunities in the United Kingdom that meet our stock selection criteria. If you look at the largest listed companies in the UK by market capitalization, 28.5% of the U.K. market is made up of banking and pharmaceutical stocks. Currently, we believe both of these sectors are too richly valued given their growth prospects. A substantial portion of our U.K. weighting is made up of growing global companies such as Vodafone AirTouch or multinationals such as Shell Transport and Trading, the sister company of the multinational oil company Royal Dutch Shell. Banking and financial companies across Europe are now feeling the pressure that low interest rates can have on their loan profitability. The Internet is also beginning to play a role in fulfilling the financial needs of Europeans and we are concerned that, as financial intermediaries, European banks are not responding quickly enough. In the pharmaceutical industry, we think industry growth may be lessened by lack of unexplored major therapeutic areas and the quickening pace of patents being lost resulting in a decline in profits. * GLOBAL SHAREHOLDER VALUE TREND POSITIVE, BUT OPPORTUNITIES MUST BE EVALUATED ON INDIVIDUAL MERITS For the past several years in Europe and more recently in Japan, international companies have announced new-found intentions to raise value for their shareholders by restructuring, cost cutting, or entering into strategic mergers. In general, this is positive for investors; however, the challenge becomes the need to sort out the companies willing to make the tough decisions and to change the status quo from those merely attempting to placate foreign investors by telling them what they want to hear. [GRAPHIC OMITTED: TOP 10 HOLDINGS] TOP 10 HOLDINGS Sony Corp. Japan Electronics and electrical equipment Oy Nokia A Class Finland Telecommunications Shell Transportation & Trading United Kingdom Oil and gas Total S.A. Class B France Oil and gas Kyocera Corp. Japan Electronics and electrical equipment Nikko Securities Co. Ltd. Japan Insurance and finance Mannesmann AG Germany Business equipment and services China Telecom Ltd. Hong Kong Telecommunications Telefonaktiebolaget LM Ericsson Class B Sweden Telecommunications Telecom Italia Mobile SpA Italy Telecommunications Footnote reads: These holdings represent 28.0% of the fund's net assets as of 12/31/99. Portfolio holdings will vary over time. Some examples of companies we've targeted that are matching action with their words are NEC in Japan and Philips Electronics in Europe. Both of these companies have global franchises in several growing businesses, but they are also taking a hard look at their less profitable divisions and shutting them down in favor of focusing on more profitable areas. These companies offer good value relative to their peers and that value may be recognized by investors as these changes improve overall profitability. Looking ahead, we believe the portfolio is well positioned for a continued upswing in global economic growth with relatively low inflation. We believe this type of environment can work in the favor of a great variety of international companies. We stand at the ready to rotate out of companies that have become more richly valued relative to their peers and redistribute those assets to companies with compelling growth prospects that stand to become beneficiaries of economic improvement around the world. 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 12/31/99, there is no guarantee the fund will continue to hold these securities in the future. International investing involves certain risks, such as currency fluctuations, economic instability, and political developments. Performance summary This section provides information about your fund's performance, which should always be considered in light of its investment strategy. Putnam International Growth Fund is designed for investors seeking capital appreciation primarily through equity securities of issuers located outside the United States.
TOTAL RETURN FOR PERIODS ENDED 12/31/99 Class A Class B Class C Class M (inception dates) (2/28/91) (6/1/94) (7/26/99) (12/1/94) NAV POP NAV CDSC NAV CDSC NAV POP - ------------------------------------------------------------------------------------------ 6 months 42.87% 34.66% 42.36% 37.36% 42.36% 41.36% 42.55% 37.55% - ------------------------------------------------------------------------------------------ 1 year 60.77 51.56 59.61 54.61 59.61 58.61 60.01 54.43 - ------------------------------------------------------------------------------------------ 5 years 198.09 180.88 187.29 185.29 187.11 187.11 191.31 181.03 Annual average 24.41 22.94 23.50 23.33 23.48 23.48 23.84 22.96 - ------------------------------------------------------------------------------------------ Life of fund 326.06 301.41 296.82 296.82 298.68 298.68 306.65 292.45 Annual average 17.82 17.03 16.87 16.87 16.93 16.93 17.20 16.73 - ------------------------------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 12/31/99 MSCI Consumer EAFE Index price index - --------------------------------------------------------------------- 6 months 22.12% 1.56% - --------------------------------------------------------------------- 1 year 26.96 2.80 - --------------------------------------------------------------------- 5 years 82.87 12.76 Annual average 12.83 2.43 - --------------------------------------------------------------------- Life of fund 125.11 25.22 Annual average 9.62 2.58 - --------------------------------------------------------------------- Past performance is no assurance of future results. More recent returns may be more or less than those shown. Returns for class A and class M shares reflect the current maximum initial sales charges of 5.75% and 3.50% respectively. Class B share returns for the 1-, 5-, and 10-year (where available) and life-of-fund periods reflect the applicable contingent deferred sales charge (CDSC), which is 5% in the first year, declines to 1% in the sixth year, and is eliminated thereafter. Returns shown for class B and class M shares for periods prior to their inception are derived from the historical performance of class A shares, adjusted to reflect both the initial sales charge or CDSC, if any, currently applicable to each class and in the case of class B and class M shares the higher operating expenses applicable to such shares. For class C shares, returns for periods prior to their inception are derived from the historical performance of class A shares, adjusted to reflect both the CDSC currently applicable to class C shares, which is 1% for the first year and is eliminated thereafter, and the higher operating expenses applicable to class C shares. All returns assume reinvestment of distributions at NAV. Investment return and principal value will fluctuate so that an investor's shares when redeemed may be worth more or less than their original cost. Performance data reflect an expense limitation previously in effect. Without it, total returns would have been lower. PRICE AND DISTRIBUTION INFORMATION 6 MONTHS ENDED 12/31/99 Class A Class B Class C Class M - ------------------------------------------------------------------------------ Distributions (number) 1 1 1 1 - ------------------------------------------------------------------------------ Income $0.339 $0.197 $0.315 $0.239 - ------------------------------------------------------------------------------ Capital gains Long-term 0.597 0.597 0.597 0.597 - ------------------------------------------------------------------------------ Short-term 0.193 0.193 0.193 0.193 - ------------------------------------------------------------------------------ Total $1.129 $0.987 $1.105 $1.029 - ------------------------------------------------------------------------------ Share value NAV POP NAV NAV NAV POP - ------------------------------------------------------------------------------ 6/30/99 $21.64 $22.96 $21.20 -- $21.45 $22.23 - ------------------------------------------------------------------------------ 7/26/99* -- -- -- $21.87 -- -- - ------------------------------------------------------------------------------ 12/31/99 29.68 31.49 29.10 29.61 29.45 30.52 - ------------------------------------------------------------------------------ *Inception of class C shares. Terms and definitions Total return shows how the value of the fund's shares changed over time, assuming you held the shares through the entire period and reinvested all distributions in the fund. Class A shares are generally subject to an initial sales charge. Class B shares may be subject to a sales charge upon redemption. Class C shares are not subject to an initial sales charge and are subject to a contingent deferred sales charge only if the shares are redeemed during the first year. Class M shares have a lower initial sales charge and a higher 12b-1 fee than class A shares and no sales charge on redemption. Net asset value (NAV) is the value of all your fund's assets, minus any liabilities, divided by the number of outstanding shares, not including any initial or contingent deferred sales charge. Public offering price (POP) is the price of a mutual fund share plus the maximum sales charge levied at the time of purchase. POP performance figures shown here assume the 5.75% maximum sales charge for class A shares and 3.50% for class M shares. Contingent deferred sales charge (CDSC) is a charge applied at the time of the redemption of class B or C shares and assumes redemption at the end of the period. Your fund's class B CDSC declines from a 5% maximum during the first year to 1% during the sixth year. After the sixth year, the CDSC no longer applies. The CDSC for class C shares is 1% for one year after purchase. Comparative benchmarks Morgan Stanley Capital International (MSCI) EAFE Index is an unmanaged list of equity securities from Europe, Australasia and the Far East, with all values expressed in U.S. dollars. Consumer price index (CPI) is a commonly used measure of inflation; it does not represent an investment return. Securities indexes assume reinvestment of all distributions and interest payments and do not take in account brokerage fees or taxes. Securities in the fund do not match those in the indexes and performance of the fund will differ. It is not possible to invest directly in an index. A guide to the financial statements These sections of the report constitute the fund's financial statements. The fund's portfolio lists all the fund's investments and their values as of the last day of the reporting period. Holdings are organized by asset type and industry sector, country, or state to show areas of concentration and diversification. Statement of assets and liabilities shows how the fund's net assets and share price are determined. All investment and noninvestment assets are added together. Any unpaid expenses and other liabilities are subtracted from this total. The result is divided by the number of shares to determine the net asset value per share, which is calculated separately for each class of shares. (For funds with preferred shares, the amount subtracted from total assets includes the net assets allocated to remarketed preferred shares.) Statement of operations shows the fund's net investment gain or loss for the reporting period. This is determined by adding up all the fund's earnings -- from dividends and interest income -- and subtracting its operating expenses. This statement also lists any net gain or loss the fund realized on the sales of its holdings and -- for holdings that remain in the portfolio -- any change in unrealized gains or losses over the period. Statement of changes in net assets shows how the fund's net assets were affected by distributions to shareholders and by changes in the number of the fund's shares. It lists distributions and their sources (net investment income or realized capital gains) over the current reporting period and the most recent fiscal year-end. The distributions listed here may not match the sources listed in the Statement of operations because the distributions are determined on a tax basis and may be paid in a different period from the one in which they were earned. Financial highlights provide an overview of the fund's investment results, per-share distributions, expense ratios, net investment income ratios and portfolio turnover in one summary table, reflecting the five most recent reporting periods. In a semiannual report, the highlight table also includes the current reporting period. For open-end funds, a separate table is provided for each share class.
The fund's portfolio December 31, 1999 (Unaudited) COMMON STOCKS (95.8%) (a) NUMBER OF SHARES VALUE Australia (1.5%) - -------------------------------------------------------------------------------------------------------------------------- 4,186,447 Cable & Wireless Optus Ltd. (NON) $ 13,989,368 3,070,214 News Corp. Ltd. ADR 117,435,686 -------------- 131,425,054 Brazil (1.7%) - -------------------------------------------------------------------------------------------------------------------------- 1,672,686 Companhia Energetica de Minas Gerais ADR 36,799,092 600,122 Tele Centro Sul Participacoes S.A. 54,461,072 1,524,249 Telesp Celular Participacoes S.A. ADR 64,590,051 -------------- 155,850,215 Canada (2.7%) - -------------------------------------------------------------------------------------------------------------------------- 1,113,633 Abitibi-Consolidated Inc. (NON) 13,003,799 2,167,709 BCE, Inc. 196,431,321 331,924 Nortel Networks Corp. 33,449,243 -------------- 242,884,363 Finland (3.9%) - -------------------------------------------------------------------------------------------------------------------------- 78,700 Helsingin Puhelin Oyj (Helsinki Telephone Corp.) Class E 6,547,541 135,922 HPY Holding Oyj (NON) 5,093,473 1,748,625 Oy Nokia AB Class A 316,641,015 1,373,987 Stora Enso Oyj Class R 23,926,417 284,400 Stora Enso Oyj Class A 5,035,473 -------------- 357,243,919 France (13.2%) - -------------------------------------------------------------------------------------------------------------------------- 29,670 Alcatel Alsthom CGE S.A. 6,805,349 2,014,770 Aventis S.A. 116,544,369 547,184 Axa S.A. 76,184,647 377,317 Banque Nationale de Paris 34,769,611 186,630 Bouygues S.A. 118,470,111 668,637 France Telecom S.A. 88,318,790 105,456 Groupe Danone 24,824,764 123,499 Havas Advertising S.A. 52,553,517 571,381 Lafarge Coppee 66,447,953 100,392 Publicis S.A. 37,872,882 1,712,465 Sanofi-Synthelabo S.A. 71,218,063 133,786 Societe Generale 31,089,993 317,751 STMicroelectronics N.V. ADR 48,119,417 166,985 Television Francaise I 87,353,193 1,935,237 Total S.A. Class B 257,957,416 938,509 Vivendi 84,642,156 -------------- 1,203,172,231 Germany (4.0%) - -------------------------------------------------------------------------------------------------------------------------- 2,547,989 Bayerische Motoren Werke (BMW) AG 77,667,291 96 Celanese AG (NON) 1,752 996,541 Mannesmann AG 240,103,599 886 SAP AG 435,854 70,193 SAP AG Vorzug 42,227,266 -------------- 360,435,762 Hong Kong (3.4%) - -------------------------------------------------------------------------------------------------------------------------- 5,272,000 Cheung Kong Infrastructure Holdings 66,976,716 35,169,000 China Telecom Ltd. (NON) 219,891,090 1,245,000 Hutchison Whampoa, Ltd. 18,099,190 -------------- 304,966,996 Ireland (1.4%) - -------------------------------------------------------------------------------------------------------------------------- 3,900,998 CRH Plc 83,982,245 1,284,799 Elan Corp. Plc ADR (NON) 36,897,866 3,395,066 Jefferson Smurfit Group Plc 10,173,543 -------------- 131,053,654 Italy (3.6%) - -------------------------------------------------------------------------------------------------------------------------- 378,500 Banca Popolare di Brescia SPA (PIK)(RES) 33,450,732 6,202,457 Mediaset SPA 96,340,532 17,902,187 Telecom Italia Mobile SPA 199,726,465 -------------- 329,517,729 Japan (21.8%) - -------------------------------------------------------------------------------------------------------------------------- 443,100 Advantest Corp. 117,084,557 202,400 Asatsu Inc. 13,667,644 198,700 Benesse Corp. 47,837,341 70 Circle K Japan Co. Ltd. 2,870 9,742 DDI Corp. 133,478,162 1,113,000 Eisai Co. Ltd. 21,403,844 16,800 Fancl Corp. 4,504,991 40,400 Fancl Corp. 144A 10,833,430 5,148,000 Fuji Bank Ltd. (The) 50,029,002 130,900 Fuji Machine Manufacturing Co., Ltd. 10,556,037 1,119,000 Fujitsu Ltd. 51,032,878 11,000 Industrial Bank Of Japan 106,038 869,000 Ito-Yokado Co., Ltd. 94,401,047 190,746 KDD Corp. 26,433,383 311,600 Kojima Co. Ltd. 12,198,081 934,600 Kyocera Corp. 242,384,982 400 Mitsumi Electric Company, Ltd. 12,527 3,725,000 NEC Corp. 88,768,585 19,072,000 Nikko Securities Co. Ltd. 241,339,729 6,290 Nippon Telegraph and Telephone Corp. 107,726,550 99,790 Nippon Television Network Corp. 117,193,176 485,300 Promise Co., Ltd. 24,697,198 2,518,000 Sharp Corp. 64,440,889 4,081,000 Shiseido Co., Ltd. 59,509,585 1,166,100 Sony Corp. 345,790,041 56,000 Tokyo Broadcasting System, Inc. 1,896,261 10,814,000 Toshiba Corp. 82,549,618 568,000 Yamanouchi Pharmaceutical Co., Ltd. 19,844,977 -------------- 1,989,723,423 Luxembourg (0.6%) - -------------------------------------------------------------------------------------------------------------------------- 1,497 NTT Mobile Communications 57,576,916 Mexico (2.4%) - -------------------------------------------------------------------------------------------------------------------------- 3,084,385 Carso Global Telecom 29,018,000 2,370,600 Grupo Financiero Bancomer, S.A. de C.V. 9,522,495 970,308 Grupo Televisa S.A.GDR (NON) 66,223,521 989,793 Telefonos de Mexico S.A. ADR Class L 111,351,713 -------------- 216,115,729 Netherlands (6.0%) - -------------------------------------------------------------------------------------------------------------------------- 1,596,961 Akzo-Nobel N.V. 80,005,830 388,606 ASM Lithography Holding N.V. (NON) 43,120,421 992,875 Gucci Group N.V. 113,684,188 2,481,905 Internationale Nederlanden Groep 149,657,978 1,038,141 Philips Electronics N.V. 140,989,929 175,640 United Pan-Europe N.V. 22,440,118 -------------- 549,898,464 Singapore (1.1%) - -------------------------------------------------------------------------------------------------------------------------- 2,518,648 DBS Group Holdings Ltd. (NON) 41,321,569 3,960,685 Overseas-Chinese Banking Corp. Ltd. 36,417,356 2,115,168 United Overseas Bank Ltd. 18,685,679 -------------- 96,424,604 South Korea (2.3%) - -------------------------------------------------------------------------------------------------------------------------- 1,398,349 Korea Electric Power Corp. 43,367,434 549,497 Korea Telecom Corp. 41,074,901 333,800 Pohang Iron & Steel Company, Ltd. ADR 11,683,000 461,299 Samsung Electronics Co. 108,110,700 -------------- 204,236,035 Spain (0.9%) - -------------------------------------------------------------------------------------------------------------------------- 3,243,467 Telefonica S.A. 80,920,609 Sweden (4.0%) - -------------------------------------------------------------------------------------------------------------------------- 7,140,083 Investor AB 100,735,987 542,611 Sandvik AB Class A 17,001,449 700,407 Sandvik AB Class B 22,316,183 1,291,523 Svenska Handelsbanken 16,247,482 3,275,771 Telefonaktiebolaget LM Ericsson Class B 210,669,177 -------------- 366,970,278 Switzerland (5.3%) - -------------------------------------------------------------------------------------------------------------------------- 34,196 Ares-Serono Group Class B 73,031,658 54,556 Compagnie Financiere Richmont AG 130,221,607 129,202 Clariant AG 61,598,189 231,658 Credit Suisse Group 46,055,123 60,111 Fantastic Corp. (NON) 11,368,673 22,192 Julius Baer Holdings AG 67,049,949 69,676 Publicitas Holding S.A. 68,931,972 2,050 Swatch Group AG (The) 477,732 23,490 Swatch Group AG Class B (The) 27,060,716 -------------- 485,795,619 Taiwan (0.8%) - -------------------------------------------------------------------------------------------------------------------------- 2,894,000 Hon Hai Precision Industry 21,580,496 12,021,000 Winbond Electronics Corp. 28,539,340 1,082,600 Winbond Electronics Corp. 144A GDR 24,629,150 -------------- 74,748,986 United Kingdom (15.1%) - -------------------------------------------------------------------------------------------------------------------------- 10,538,522 Aegis Group Plc 38,303,839 2,318,589 Barclays Plc 66,743,895 198,000 British Petroleum Co. Plc 1,991,061 6,694,773 British Telecommunications Plc ADR 163,626,960 715,000 Cable & Wireless Communications (NON) 10,279,598 6,661,500 Cable & Wireless Plc 112,882,755 8,517,200 Carlton Communications Plc 82,964,870 4,574,331 Diageo Plc 36,799,084 7,915,382 EMI Group Plc 77,678,037 10,774,538 Granada Group Plc 109,217,559 2,426,774 Orange Plc ADR (NON) 81,932,404 6,721,512 Scottish Power Plc 50,923,694 6,662,159 Securicor Group Plc 17,299,998 33,613,936 Shell Transportation & Trading 279,373,254 13,862,117 Siebe Plc 75,463,951 3,961,924 Smiths Industries Plc 59,200,851 18,077,608 Tesco Plc 54,973,834 3,581,682 WPP Group Plc 56,759,180 -------------- 1,376,414,824 United States (0.1%) - -------------------------------------------------------------------------------------------------------------------------- 104,700 NTL Inc. 13,061,325 -------------- Total Common Stocks (cost $5,674,561,373) $8,728,436,735 UNITS (0.6%) (a) NUMBER OF UNITS VALUE - -------------------------------------------------------------------------------------------------------------------------- 114,400 Pohang Iron & Steel Co., Ltd. Structured Warrants expiration 4/17/00 (Issued by Lehman Brothers Finance S.A.) (South Korea) $ 12,626,328 483,800 Tokyo Broadcasting System, Inc. Structured Call Warrants expiration 11/17/00 (Issued by Lehman Brothers Finance S.A.) (Japan) 16,347,602 701,000 Tokyo Broadcasting System, Inc. Structured Note (Issued by UBS, AG) 3.15%, 2000 (Japan) 24,223,265 -------------- Total Units (cost $41,809,688) $ 53,197,195 SHORT-TERM INVESTMENTS (3.4%) (a) PRINCIPAL AMOUNT VALUE - -------------------------------------------------------------------------------------------------------------------------- $24,135,000 Federal Home Loan Mortgage Corp., effective yield of 5.76%, February 17, 2000 $ 23,953,505 49,451,000 Federal Home Loan Mortgage Corp., effective yield of 5.74%, February 15, 2000 49,096,189 50,000,000 Federal Home Loan Mortgage Corp., effective yield of 5.50%, January 27, 2000 49,801,389 50,000,000 Merrill Lynch & Co., Inc., effective yield of 5.85%, January 20, 2000 49,852,222 60,952,000 Interest in $200,000,000 joint repurchase agreement dated December 31, 1999 with Credit Suisse First Boston due January 3, 2000 with respect to various U.S. Treasury obligations -- maturity value of $60,965,460 for an effective yield of 2.65% 60,952,000 76,541,000 Interest in $624,736,000 joint repurchase agreement December 31, 1999 with S.B.C. Warburg Inc. due January 3, 2000 with respect to various U.S. Treasury obligations -- maturity value of $76,558,541 for an effective yield of 2.75% 76,541,000 -------------- Total Short-Term Investments (cost $310,196,305) $ 310,196,305 - -------------------------------------------------------------------------------------------------------------------------- Total Investments (cost $6,026,567,366) (b) $9,091,830,235 - -------------------------------------------------------------------------------------------------------------------------- (a) Percentages indicated are based on net assets of $9,111,496,779. (b) The aggregate identified cost on a tax basis is $6,103,253,968, resulting in gross unrealized appreciation and depreciation of $3,061,801,928 and $73,225,661, respectively, or net unrealized appreciation of $2,988,576,267. (NON) Non-income-producing security. (REL) Banca Popolare di Brescia is involved in a joint venture with Putnam Investments. 144A after the name of a security represents those exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. ADR and GDR after the name of a foreign holding stands for American Depositary Receipts and Global Depositary Receipts, respectively, representing ownership of foreign securities on deposit with a custodian bank. The fund had the following industry group concentrations greater than 10% at December 31, 1999 (as a percentage of net assets): Telecommunications 23.8% Electronics and electrical equipment 15.7 Insurance and finance 12.2 The accompanying notes are an integral part of these financial statements.
Statement of assets and liabilities December 31, 1999 (Unaudited) Assets - ----------------------------------------------------------------------------------------------- Investments in securities, at value (identified cost $6,026,567,366) (Note 1) $9,091,830,235 - ----------------------------------------------------------------------------------------------- Cash 597 - ----------------------------------------------------------------------------------------------- Foreign currency, at value (cost $1,261,399) 12,398 - ----------------------------------------------------------------------------------------------- Dividends, interest and other receivable 13,707,485 - ----------------------------------------------------------------------------------------------- Receivable for shares of the fund sold 57,498,056 - ----------------------------------------------------------------------------------------------- Receivable for securities sold 56,175,107 - ----------------------------------------------------------------------------------------------- Total assets 9,219,223,878 Liabilities - ----------------------------------------------------------------------------------------------- Payable for securities purchased 71,080,689 - ----------------------------------------------------------------------------------------------- Payable for shares of the fund repurchased 18,016,016 - ----------------------------------------------------------------------------------------------- Payable for compensation of Manager (Note 2) 11,257,649 - ----------------------------------------------------------------------------------------------- Payable for investor servicing and custodian fees (Note 2) 1,310,785 - ----------------------------------------------------------------------------------------------- Payable for compensation of Trustees (Note 2) 40,875 - ----------------------------------------------------------------------------------------------- Payable for administrative services (Note 2) 9,186 - ----------------------------------------------------------------------------------------------- Payable for distribution fees (Note 2) 5,394,626 - ----------------------------------------------------------------------------------------------- Other accrued expenses 617,273 - ----------------------------------------------------------------------------------------------- Total liabilities 107,727,099 - ----------------------------------------------------------------------------------------------- Net assets $9,111,496,779 Represented by - ----------------------------------------------------------------------------------------------- Paid-in capital (Notes 1 and 4) $5,858,338,204 - ----------------------------------------------------------------------------------------------- Distributions in excess of net investment income (Note 1) (118,631,884) - ----------------------------------------------------------------------------------------------- Accumulated net realized gain on investments and foreign currency transactions (Note 1) 308,582,892 - ----------------------------------------------------------------------------------------------- Net unrealized appreciation of investments and assets and liabilities in foreign currencies 3,063,207,567 - ----------------------------------------------------------------------------------------------- Total -- Representing net assets applicable to capital shares outstanding $9,111,496,779 Computation of net asset value and offering price - ----------------------------------------------------------------------------------------------- Net asset value and redemption price per class A share ($5,014,581,890 divided by 168,962,576 shares) $29.68 - ----------------------------------------------------------------------------------------------- Offering price per class A share (100/94.25 of $29.68)* $31.49 - ----------------------------------------------------------------------------------------------- Net asset value and offering price per class B share ($2,985,808,587 divided by 102,619,798 shares)** $29.10 - ----------------------------------------------------------------------------------------------- Net asset value and offering price per class C share ($102,579,999 divided by 3,464,279 shares)** $29.61 - ----------------------------------------------------------------------------------------------- Net asset value and redemption price per class M share ($327,982,915 divided by 11,136,878 shares) $29.45 - ----------------------------------------------------------------------------------------------- Offering price per class M share (100/96.50 of $29.45)* $30.52 - ----------------------------------------------------------------------------------------------- Net asset value, offering price and redemption price per class Y share ($680,543,388 divided by 22,843,618 shares) $29.79 - ----------------------------------------------------------------------------------------------- * 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 December 31, 1999 (Unaudited) Investment income: - ----------------------------------------------------------------------------------------------- Dividends (net of foreign tax of $6,023,817) $ 37,900,541 - ----------------------------------------------------------------------------------------------- Interest 4,548,274 - ----------------------------------------------------------------------------------------------- Total investment income 42,448,815 Expenses: - ----------------------------------------------------------------------------------------------- Compensation of Manager (Note 2) 20,128,112 - ----------------------------------------------------------------------------------------------- Investor servicing and custodian fees (Note 2) 7,454,531 - ----------------------------------------------------------------------------------------------- Compensation of Trustees (Note 2) 35,886 - ----------------------------------------------------------------------------------------------- Administrative services (Note 2) 18,331 - ----------------------------------------------------------------------------------------------- Distribution fees -- Class A (Note 2) 4,468,368 - ----------------------------------------------------------------------------------------------- Distribution fees -- Class B (Note 2) 10,942,596 - ----------------------------------------------------------------------------------------------- Distribution fees -- Class C (Note 2) 154,881 - ----------------------------------------------------------------------------------------------- Distribution fees -- Class M (Note 2) 916,846 - ----------------------------------------------------------------------------------------------- Reports to shareholders 79,677 - ----------------------------------------------------------------------------------------------- Registration fees 411,880 - ----------------------------------------------------------------------------------------------- Auditing 33,448 - ----------------------------------------------------------------------------------------------- Legal 19,851 - ----------------------------------------------------------------------------------------------- Postage 323,860 - ----------------------------------------------------------------------------------------------- Other 528,984 - ----------------------------------------------------------------------------------------------- Total expenses 45,517,251 - ----------------------------------------------------------------------------------------------- Expense reduction (Note 2) (1,974,675) - ----------------------------------------------------------------------------------------------- Net expenses 43,542,576 - ----------------------------------------------------------------------------------------------- Net investment loss (1,093,761) - ----------------------------------------------------------------------------------------------- Net realized gain on investments (Notes 1 and 3) 439,300,984 - ----------------------------------------------------------------------------------------------- Net realized gain on foreign currency transactions (Note 1) 584,651 - ----------------------------------------------------------------------------------------------- Net unrealized depreciation of assets and liabilities in foreign currencies during the period (2,424,071) - ----------------------------------------------------------------------------------------------- Net unrealized appreciation of investments during the period 2,134,588,791 - ----------------------------------------------------------------------------------------------- Net gain on investments 2,572,050,355 - ----------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations $2,570,956,594 - ----------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements.
Statement of changes in net assets Six months ended Year ended December 31 June 30 1999* 1999 - --------------------------------------------------------------------------------------------------------------- Increase in net assets - --------------------------------------------------------------------------------------------------------------- Operations: - --------------------------------------------------------------------------------------------------------------- Net investment income (loss) $ (1,093,761) $ 3,933,285 - --------------------------------------------------------------------------------------------------------------- Net realized gain on investments and foreign currency transactions 439,885,635 72,892,717 - --------------------------------------------------------------------------------------------------------------- Net unrealized appreciation of investments and assets and liabilities in foreign currencies 2,132,164,720 460,292,239 - --------------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 2,570,956,594 537,118,241 - --------------------------------------------------------------------------------------------------------------- Distributions to shareholders: - --------------------------------------------------------------------------------------------------------------- From net investment income Class A (53,779,843) (22,568,753) - --------------------------------------------------------------------------------------------------------------- Class B (19,094,099) (7,287,243) - --------------------------------------------------------------------------------------------------------------- Class C (806,547) -- - --------------------------------------------------------------------------------------------------------------- Class M (2,507,298) (1,060,968) - --------------------------------------------------------------------------------------------------------------- Class Y (7,728,554) (1,891,655) - --------------------------------------------------------------------------------------------------------------- From net realized gain on investments Class A (125,327,657) (38,505,930) - --------------------------------------------------------------------------------------------------------------- Class B (76,570,245) (26,499,065) - --------------------------------------------------------------------------------------------------------------- Class C (2,022,769) -- - --------------------------------------------------------------------------------------------------------------- Class M (8,287,723) (2,915,639) - --------------------------------------------------------------------------------------------------------------- Class Y (15,858,592) (2,723,694) - --------------------------------------------------------------------------------------------------------------- Increase from capital share transactions (Note 4) 1,638,906,264 1,434,362,924 - --------------------------------------------------------------------------------------------------------------- Total increase in net assets 3,897,879,531 1,868,028,218 Net assets - --------------------------------------------------------------------------------------------------------------- Beginning of period 5,213,617,248 3,345,589,030 - --------------------------------------------------------------------------------------------------------------- End of period (including distributions in excess of net investment income of $118,631,884 and $33,621,782, respectively) $9,111,496,779 $5,213,617,248 - --------------------------------------------------------------------------------------------------------------- * Unaudited The accompanying notes are an integral part of these financial statements.
Financial highlights (For a share outstanding throughout the period) CLASS A - --------------------------------------------------------------------------------------------------------------------------------- Six months ended Per-share December 31 operating performance (Unaudited) Year ended June 30 - --------------------------------------------------------------------------------------------------------------------------------- 1999 1999 1998 1997 1996 1995 - --------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $21.64 $20.00 $17.58 $14.25 $12.10 $11.83 - --------------------------------------------------------------------------------------------------------------------------------- Investment operations - --------------------------------------------------------------------------------------------------------------------------------- Net investment income (loss) .03(c) .07(c) .20(c) .15(c) .13(c) .08(d) - --------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments 9.14 2.14 3.26 3.39 2.29 .36 - --------------------------------------------------------------------------------------------------------------------------------- Total from investment operations 9.17 2.21 3.46 3.54 2.42 .44 - --------------------------------------------------------------------------------------------------------------------------------- Less distributions: - --------------------------------------------------------------------------------------------------------------------------------- From net investment income (.34) (.21) (.25) (.15) (.26) -- - --------------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments (.79) (.36) (.79) (.06) (.01) (.11) - --------------------------------------------------------------------------------------------------------------------------------- In excess of net realized gain on investments -- -- -- -- -- (.06) - --------------------------------------------------------------------------------------------------------------------------------- Total distributions (1.13) (.57) (1.04) (.21) (.27) (.17) - --------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $29.68 $21.64 $20.00 $17.58 $14.25 $12.10 - --------------------------------------------------------------------------------------------------------------------------------- Ratios and supplemental data - --------------------------------------------------------------------------------------------------------------------------------- Total return at net asset value (%)(a) 42.87* 11.57 20.73 25.13 20.21 3.76 - --------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $5,014,582 $2,928,662 $1,827,331 $728,849 $151,088 $32,856 - --------------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%) (b) .58* 1.27 1.36 1.59 1.74 1.61(d) - --------------------------------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average net assets (%) .12* .38 1.07 .98 .99 .97(d) - --------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 53.84* 97.24 93.53 86.40 44.14 25.83 - --------------------------------------------------------------------------------------------------------------------------------- + Commencement of operations. * Not annualized (a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges. (b) The ratio of expenses to average net assets for the period ended June 30, 1996 and thereafter includes amounts paid through expense offset and brokerage service arrangements. Prior period ratios exclude these amounts (Note 2). (c) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding for the period. (d) Reflects an expense limitation in effect during the year. As a result of such limitation, expenses for class A, B and M shares for the period ended June 30, 1995 reflect a reduction of less than $0.01 per share.
Financial highlights (For a share outstanding throughout the period) CLASS B - -------------------------------------------------------------------------------------------------------------------------------- Six months ended Per-share December 31 operating performance (Unaudited) Year ended June 30 - -------------------------------------------------------------------------------------------------------------------------------- 1999 1999 1998 1997 1996 1995 - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $21.20 $19.63 $17.32 $14.10 $12.00 $11.82 - -------------------------------------------------------------------------------------------------------------------------------- Investment operations - -------------------------------------------------------------------------------------------------------------------------------- Net investment income (loss) (.06)(c) (.07)(c) .06(c) .03(c) .04(c) .01(d) - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments 8.95 2.10 3.21 3.34 2.26 .34 - -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations 8.89 2.03 3.27 3.37 2.30 .35 - -------------------------------------------------------------------------------------------------------------------------------- Less distributions: - -------------------------------------------------------------------------------------------------------------------------------- From net investment income (.20) (.10) (.17) (.09) (.19) -- - -------------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments (.79) (.36) (.79) (.06) (.01) (.11) - -------------------------------------------------------------------------------------------------------------------------------- In excess of net realized gain on investments -- -- -- -- -- (.06) - -------------------------------------------------------------------------------------------------------------------------------- Total distributions (.99) (.46) (.96) (.15) (.20) (.17) - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $29.10 $21.20 $19.63 $17.32 $14.10 $12.00 - -------------------------------------------------------------------------------------------------------------------------------- Ratios and supplemental data - -------------------------------------------------------------------------------------------------------------------------------- Total return at net asset value (%)(a) 42.36* 10.75 19.87 24.09 19.35 3.00 - -------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $2,985,809 $1,821,024 $1,226,917 $472,663 $132,013 $25,892 - -------------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%) (b) .95* 2.02 2.11 2.34 2.49 2.41(d) - -------------------------------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average net assets (%) (.26)* (.38) .31 .18 .32 .23(d) - -------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 53.84* 97.24 93.53 86.40 44.14 25.83 - -------------------------------------------------------------------------------------------------------------------------------- + Commencement of operations. * Not annualized (a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges. (b) The ratio of expenses to average net assets for the period ended June 30, 1996 and thereafter includes amounts paid through expense offset and brokerage service arrangements. Prior period ratios exclude these amounts (Note 2). (c) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding for the period. (d) Reflects an expense limitation in effect during the year. As a result of such limitation, expenses for class A, B and M shares for the period ended June 30, 1995 reflect a reduction of less than $0.01 per share.
Financial highlights (For a share outstanding throughout the period) CLASS C - --------------------------------------------------------------------------------------------------------------------------------- For the period Per-share July 26, 1999+ operating performance to December 31 - --------------------------------------------------------------------------------------------------------------------------------- 1999 - --------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $21.87 - --------------------------------------------------------------------------------------------------------------------------------- Investment operations - --------------------------------------------------------------------------------------------------------------------------------- Net investment income (loss) (c) (.04) - --------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments 8.89 - --------------------------------------------------------------------------------------------------------------------------------- Total from investment operations 8.85 - --------------------------------------------------------------------------------------------------------------------------------- Less distributions: - --------------------------------------------------------------------------------------------------------------------------------- From net investment income (.32) - --------------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments (.79) - --------------------------------------------------------------------------------------------------------------------------------- In excess of net realized gain on investments -- - --------------------------------------------------------------------------------------------------------------------------------- Total distributions (1.11) - --------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $29.61 - --------------------------------------------------------------------------------------------------------------------------------- Ratios and supplemental data - --------------------------------------------------------------------------------------------------------------------------------- Total return at net asset value (%)(a) 40.92* - --------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $102,580 - --------------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%) (b) .82* - --------------------------------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average net assets (%) (.18)* - --------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 53.84* - --------------------------------------------------------------------------------------------------------------------------------- + Commencement of operations. * Not annualized (a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges. (b) The ratio of expenses to average net assets for the period ended June 30, 1996 and thereafter includes amounts paid through expense offset and brokerage service arrangements. Prior period ratios exclude these amounts (Note 2). (c) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding for the period. (d) Reflects an expense limitation in effect during the year. As a result of such limitation, expenses for class A, B and M shares for the period ended June 30, 1995 reflect a reduction of less than $0.01 per share.
Financial highlights (For a share outstanding throughout the period) CLASS M - --------------------------------------------------------------------------------------------------------------------------------- Six months ended For the period Per-share December 31 Dec. 1,1994+ operating performance (Unaudited) Year ended June 30 to June 30 - --------------------------------------------------------------------------------------------------------------------------------- 1999 1999 1998 1997 1996 1995 - --------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $21.45 $19.85 $17.48 $14.22 $12.09 $11.87 - --------------------------------------------------------------------------------------------------------------------------------- Investment operations - --------------------------------------------------------------------------------------------------------------------------------- Net investment income (loss) (.03)(c) (.02)(c) .10(c) .07(c) .08(c) .03(d) - --------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments 9.06 2.11 3.26 3.36 2.28 .36 - --------------------------------------------------------------------------------------------------------------------------------- Total from investment operations 9.03 2.09 3.36 3.43 2.36 .39 - --------------------------------------------------------------------------------------------------------------------------------- Less distributions: - --------------------------------------------------------------------------------------------------------------------------------- From net investment income (.24) (.13) (.20) (.11) (.22) -- - --------------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments (.79) (.36) (.79) (.06) (.01) (.11) - --------------------------------------------------------------------------------------------------------------------------------- In excess of net realized gain on investments -- -- -- -- -- (.06) - --------------------------------------------------------------------------------------------------------------------------------- Total distributions (1.03) (.49) (.99) (.17) (.23) (.17) - --------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $29.45 $21.45 $19.85 $17.48 $14.22 $12.09 - --------------------------------------------------------------------------------------------------------------------------------- Ratios and supplemental data - --------------------------------------------------------------------------------------------------------------------------------- Total return at net asset value (%)(a) 42.55* 10.97 20.18 24.40 19.71 3.33* - --------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $327,983 $208,064 $140,202 $58,471 $14,309 $1,777 - --------------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%) (b) .83* 1.77 1.86 2.09 2.25 1.61(d)* - --------------------------------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average net assets (%) (.14)* (.12) .54 .44 .61 .58(d)* - --------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 53.84* 97.24 93.53 86.40 44.14 25.83 - --------------------------------------------------------------------------------------------------------------------------------- + Commencement of operations. * Not annualized (a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges. (b) The ratio of expenses to average net assets for the period ended June 30, 1996 and thereafter includes amounts paid through expense offset and brokerage service arrangements. Prior period ratios exclude these amounts (Note 2). (c) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding for the period. (d) Reflects an expense limitation in effect during the year. As a result of such limitation, expenses for class A, B and M shares for the period ended June 30, 1995 reflect a reduction of less than $0.01 per share.
Financial highlights (For a share outstanding throughout the period) CLASS Y - -------------------------------------------------------------------------------------------------------------------------------- Six months ended For the period Per-share December 31 July 12, 1996+ operating performance (Unaudited) Year ended June 30 to June 30 - -------------------------------------------------------------------------------------------------------------------------------- 1999 1999 1998 1997 - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $21.72 $20.05 $17.60 $13.88 - -------------------------------------------------------------------------------------------------------------------------------- Investment operations - -------------------------------------------------------------------------------------------------------------------------------- Net investment income (loss) .06(c) .14(c) .22(c) .20(c) - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments 9.19 2.13 3.30 3.75 - -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations 9.25 2.27 3.52 3.95 - -------------------------------------------------------------------------------------------------------------------------------- Less distributions: - -------------------------------------------------------------------------------------------------------------------------------- From net investment income (.39) (.24) (.28) (.17) - -------------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments (.79) (.36) (.79) (.06) - -------------------------------------------------------------------------------------------------------------------------------- In excess of net realized gain on investments -- -- -- -- - -------------------------------------------------------------------------------------------------------------------------------- Total distributions (1.18) (.60) (1.07) (.23) - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $29.79 $21.72 $20.05 $17.60 - -------------------------------------------------------------------------------------------------------------------------------- Ratios and supplemental data - -------------------------------------------------------------------------------------------------------------------------------- Total return at net asset value (%)(a) 43.08* 11.83 21.08 25.44* - -------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $680,543 $255,867 $151,139 $96,375 - -------------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%) (b) .45* 1.02 1.11 1.30* - -------------------------------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average net assets (%) .25* .70 1.22 1.26* - -------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 53.84* 97.24 93.53 86.40 - -------------------------------------------------------------------------------------------------------------------------------- + Commencement of operations. * Not annualized (a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges. (b) The ratio of expenses to average net assets for the period ended June 30, 1996 and thereafter includes amounts paid through expense offset and brokerage service arrangements. Prior period ratios exclude these amounts (Note 2). (c) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding for the period. (d) Reflects an expense limitation in effect during the year. As a result of such limitation, expenses for class A, B and M shares for the period ended June 30, 1995 reflect a reduction of less than $0.01 per share.
Notes to financial statements December 31, 1999 (Unaudited) Note 1 Significant accounting policies Putnam International Growth Fund ("the fund") is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. The fund seeks capital appreciation by investing primarily in equity securities of companies located outside the United States. The fund offers class A, class B, class C, class M and class Y shares. The fund began offering class C shares on July 26, 1999. Class A shares are sold with a maximum front-end sales charge of 5.75%. Class B shares, which convert to class A shares after approximately eight years, do not pay a front-end sales charge but pay a higher ongoing distribution fee than class A shares, and are subject to a contingent deferred sales charge, if those shares are redeemed within six years of purchase. Class C shares are subject to the same fees and expenses as class B shares, except that class C shares have a one-year 1.00% contingent deferred sales charge and do not convert to class A shares. Class M shares are sold with a maximum front end sales charge of 3.50% and pay an ongoing distribution fee that is higher than class A shares but lower than class B and class C shares. Class Y shares, which are sold at net asset value, are generally subject to the same expenses as class A, class B, class C and class M shares, but do not bear a distribution fee. Class Y shares are sold to defined contribution plans that invest at least $150 million in a combination of Putnam funds and other accounts managed by affiliates of Putnam Investment Management, Inc. ("Putnam Management"), the fund's manager, a wholly-owned subsidiary of Putnam Investments, Inc. Expenses of the fund are borne pro-rata by the holders of each class of shares, except that each class bears expenses unique to that class (including the distribution fees applicable to such class). Each class votes as a class only with respect to its own distribution plan or other matters on which a class vote is required by law or determined by the Trustees. Shares of each class would receive their pro-rata share of the net assets of the fund, if that fund were liquidated. In addition, the Trustees declare separate dividends on each class of shares. The following is a summary of significant accounting policies consistently followed by the fund in the preparation of its financial statements. The preparation of financial statements is in conformity with generally accepted accounting principles and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. A) Security valuation Investments for which market quotations are readily available are stated at market value, which is determined using the last reported sales price on its principal exchange, or if no sales are reported -- as in the case of some securities traded over-the-counter -- the last reported bid price. Short-term investments having remaining maturities of 60 days or less are stated at amortized cost, which approximates market value. Other investments, including restricted securities, are stated at fair value following procedures approved by the Trustees. B) Joint trading account Pursuant to an exemptive order issued by the Securities and Exchange Commission, the fund may transfer uninvested cash balances into a joint trading account along with the cash of other registered investment companies and certain other accounts managed by Putnam Management. These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. C) Repurchase agreements The fund, or any joint trading account, through its custodian, receives delivery of the underlying securities, the market value of which at the time of purchase is required to be in an amount at least equal to the resale price, including accrued interest. Collateral for certain tri-party repurchase agreements is held at the counterparty's custodian in a segregated account for the benefit of the fund and the counterparty. Putnam Management is responsible for determining that the value of these underlying securities is at all times at least equal to the resale price, including accrued interest. D) Security transactions and related investment income Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Gains or losses on securities sold are determined on the identified cost basis. Interest income is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date except that certain dividends from foreign securities are recorded as soon as the fund is informed of the ex-dividend date. E) Foreign currency translation The accounting records of the fund are maintained in U.S. dollars. The market value of foreign securities, currency holdings, and other assets and liabilities are recorded in the books and records of the fund after translation to U.S. dollars based on the exchange rates on that day. The cost of each security is determined using historical exchange rates. Income and withholding taxes are translated at prevailing exchange rates when accrued or incurred. The fund does not isolate that portion of realized or unrealized gains or losses resulting from changes in the foreign exchange rate on investments from fluctuations arising from changes in the market prices of the securities. Such gains and losses are included with the net realized and unrealized gain or loss on investments. Net realized gains and losses on foreign currency transactions represent net realized exchange gains or losses on closed forward currency contracts, disposition of foreign currencies and the difference between the amount of investment income and foreign withholding taxes recorded on the fund's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized appreciation and depreciation of assets and liabilities in foreign currencies arise from changes in the value of open forward currency contracts and assets and liabilities other than investments at the period end, resulting from changes in the exchange rate. Investments in foreign securities involve certain risks, including those related to economic instability, unfavorable political developments, and currency fluctuations, not present with domestic investments. F) Line of credit The fund has entered into a committed line of credit with certain banks. This line of credit agreement includes restrictions that the fund maintain an asset coverage ratio of at least 300% and borrowings must not exceed prospectus limitations. For the six months ended December 31, 1999, the fund had no borrowings against the line of credit. G) Federal taxes It is the policy of the fund to distribute all of its taxable income within the prescribed time and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. It is also the intention of the fund to distribute an amount sufficient to avoid imposition of any excise tax under Section 4982 of the Internal Revenue Code of 1986, as amended. Therefore, no provision has been made for federal taxes on income, capital gains or unrealized appreciation on securities held nor for excise tax on income and capital gains. H) Distributions to shareholders Distributions to shareholders from net investment income are recorded by the fund on the ex-dividend date. Capital gain distributions, if any, are recorded on the ex-dividend date and paid at least annually. The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. Reclassifications are made to the fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryovers) under income tax regulations. 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, and 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 subsidiary of Putnam Investments, Inc. Investor servicing agent functions are provided by Putnam Investor Services, a division of PFTC. For the six months ended December 31, 1999, fund expenses were reduced by $1,974,675 under expense offset arrangements with PFTC and brokerage service arrangements. Investor servicing and custodian fees reported in the Statement of operations exclude these credits. The fund could have invested a portion of the assets utilized in connection with the expense offset arrangements in an income producing asset if it had not entered into such arrangements. Each Trustee of the fund receives an annual Trustee fee, of which $3,437 has been allocated to the fund, and an additional fee for each Trustee's meeting attended. Trustees receive additional fees for attendance at certain committee meetings. The fund has adopted a Trustee Fee Deferral Plan (the "Deferral Plan") which allows the Trustees to defer the receipt of all or a portion of Trustees Fees payable on or after July 1, 1995. The deferred fees remain invested in certain Putnam funds until distribution in accordance with the Deferral Plan. The fund has adopted an unfunded noncontributory defined benefit pension plan (the "Pension Plan") covering all Trustees of the fund who have served as a Trustee for at least five years. Benefits under the Pension Plan are equal to 50% of the Trustee's average total retainer and meeting fees for the three years preceding retirement. Pension expense for the fund is included in Compensation of Trustees in the Statement of operations. Accrued pension liability is included in Payable for compensation of Trustees in the Statement of assets and liabilities. The fund has adopted distribution plans (the "Plans") with respect to its class A, class B, class C and class M shares pursuant to Rule 12b-1 under the Investment Company Act of 1940. The purpose of the Plans is to compensate Putnam Mutual Funds Corp., a wholly-owned subsidiary of Putnam Investments Inc., for services provided and expenses incurred by it in distributing shares of the fund. The Plans provide for payments by the fund to Putnam Mutual Funds Corp. at an annual rate up to 0.35%, 1.00%, 1.00% and 1.00% of the average net assets attributable to class A, class B, class C and class M shares, respectively. The Trustees have approved payment by the fund at an annual rate of 0.25%, 1.00%, 1.00% and 0.75% of the average net assets attributable to class A, class B, class C and class M shares, respectively. For the six months ended December 31, 1999, Putnam Mutual Funds Corp., acting as underwriter received net commissions of $864,904 and $70,316 from the sale of class A and class M shares, respectively, and received $1,169,543 and $2,590 in contingent deferred sales charges from redemptions of class B and class C shares, respectively. A deferred sales charge of up to 1% is assessed on certain redemptions of class A shares. For the six months ended December 31, 1999, Putnam Mutual Funds Corp., acting as underwriter received $97,578 on class A redemptions. Note 3 Purchases and sales of securities During the six months ended December 31, 1999, cost of purchases and proceeds from sales of investment securities other than short-term investments aggregated $4,629,807,306 and $3,429,424,104, respectively. There were no purchases and sales of U.S. government obligations. Note 4 Capital shares At December 31, 1999, there was an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows: Six months ended December 31, 1999 - ----------------------------------------------------------------------------- Class A Shares Amount - ----------------------------------------------------------------------------- Shares sold 118,882,200 $2,825,170,233 - ----------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 6,124,357 165,908,022 - ----------------------------------------------------------------------------- 125,006,557 2,991,078,255 Shares repurchased (91,392,668) (2,155,025,745) - ----------------------------------------------------------------------------- Net increase 33,613,889 $ 836,052,510 - ----------------------------------------------------------------------------- Year ended June 30, 1999 - ----------------------------------------------------------------------------- Class A Shares Amount - ----------------------------------------------------------------------------- Shares sold 217,110,664 $4,256,867,643 - ----------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 3,117,893 57,181,946 - ----------------------------------------------------------------------------- 220,228,557 4,314,049,589 Shares repurchased (176,253,908) (3,467,222,878) - ----------------------------------------------------------------------------- Net increase 43,974,649 $ 846,826,711 - ----------------------------------------------------------------------------- Six months ended December 31, 1999 - ----------------------------------------------------------------------------- Class B Shares Amount - ----------------------------------------------------------------------------- Shares sold 21,395,842 $508,397,049 - ----------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 3,073,659 81,667,582 - ----------------------------------------------------------------------------- 24,469,501 590,064,631 Shares repurchased (7,753,236) (181,059,998) - ----------------------------------------------------------------------------- Net increase 16,716,265 $409,004,633 - ----------------------------------------------------------------------------- Year ended June 30, 1999 - ----------------------------------------------------------------------------- Class B Shares Amount - ----------------------------------------------------------------------------- Shares sold 39,583,994 $758,304,651 - ----------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 1,608,670 29,020,279 - ----------------------------------------------------------------------------- 41,192,664 787,324,930 Shares repurchased (17,794,641) (337,422,833) - ----------------------------------------------------------------------------- Net increase 23,398,023 $449,902,097 - ----------------------------------------------------------------------------- For the period July 26, 1999 (commencement of operations) to December 31, 1999 - ----------------------------------------------------------------------------- Class C Shares Amount - ----------------------------------------------------------------------------- Shares sold 3,557,622 $89,129,643 - ----------------------------------------------------------------------------- Shares issued in c connection with reinvestment of distributions 75,011 2,028,305 - ----------------------------------------------------------------------------- 3,632,633 91,157,948 Shares repurchased (168,354) (4,518,029) - ----------------------------------------------------------------------------- Net increase 3,464,279 $86,639,919 - ----------------------------------------------------------------------------- Six months ended December 31, 1999 - ----------------------------------------------------------------------------- Class M Shares Amount - ----------------------------------------------------------------------------- Shares sold 5,027,779 $121,518,427 - ----------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 380,894 10,242,155 - ----------------------------------------------------------------------------- 5,408,673 131,760,582 Shares repurchased (3,969,739) (95,709,692) - ----------------------------------------------------------------------------- Net increase 1,438,934 $ 36,050,890 - ----------------------------------------------------------------------------- Year ended June 30, 1999 - ----------------------------------------------------------------------------- Class M Shares Amount - ----------------------------------------------------------------------------- Shares sold 6,415,962 $125,270,005 - ----------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 208,034 3,791,905 - ----------------------------------------------------------------------------- 6,623,996 129,061,910 Shares repurchased (3,990,008) (77,706,579) - ----------------------------------------------------------------------------- Net increase 2,633,988 $ 51,355,331 - ----------------------------------------------------------------------------- Six months ended December 31, 1999 - ----------------------------------------------------------------------------- Class Y Shares Amount - ----------------------------------------------------------------------------- Shares sold 13,971,777 $342,179,579 - ----------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 867,337 23,587,146 - ----------------------------------------------------------------------------- 14,839,114 365,766,725 Shares repurchased (3,773,159) (94,608,413) - ----------------------------------------------------------------------------- Net increase 11,065,955 $271,158,312 - ----------------------------------------------------------------------------- Year ended June 30, 1999 - ----------------------------------------------------------------------------- Class Y Shares Amount - ----------------------------------------------------------------------------- Shares sold 7,133,724 $142,964,956 - ----------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 245,487 4,615,349 - ----------------------------------------------------------------------------- 7,379,211 147,580,305 Shares repurchased (3,139,377) (61,301,520) - ----------------------------------------------------------------------------- Net increase 4,239,834 $ 86,278,785 - ----------------------------------------------------------------------------- Fund information WEB SITE www.putnaminv.com INVESTMENT MANAGER Putnam Investment Management, Inc. One Post Office Square Boston, MA 02109 MARKETING SERVICES Putnam Mutual Funds Corp. One Post Office Square Boston, MA 02109 CUSTODIAN Putnam Fiduciary Trust Company LEGAL COUNSEL Ropes & Gray TRUSTEES George Putnam, Chairman William F. Pounds, Vice Chairman John A. Hill, Vice Chairman Jameson Adkins Baxter Hans H. Estin Ronald J. Jackson Paul L. Joskow Elizabeth T. Kennan Lawrence J. Lasser John H. Mullin III Robert E. Patterson George Putnam, III A.J.C. Smith W. Thomas Stephens W. Nicholas Thorndike OFFICERS George Putnam President Charles E. Porter Executive Vice President Patricia C. Flaherty Senior Vice President John D. Hughes Senior Vice President and Treasurer Lawrence J. Lasser Vice President Gordon H. Silver Vice President Ian C. Ferguson Vice President John J. Morgan Vice President Brett C. Browchuk Vice President Justin M. Scott Vice President and Fund Manager Omid Kamshad Vice President and Fund Manager Paul Warren Vice President and Fund Manager Mark D. Pollard Vice President and Fund Manager Joshua L. Byrne Vice President and Fund Manager Richard A. Monaghan Vice President John R. Verani Vice President This report is for the information of shareholders of Putnam International Growth Fund. It may also be used as sales literature when preceded or accompanied by the current prospectus, which gives details of sales charges, investment objectives, and operating policies of the fund, and the most recent copy of Putnam's Quarterly Performance Summary. For more information or to request a prospectus, call toll free: 1-800-225-1581. You can also learn more at Putnam Investments' Web site: www.putnaminv.com. Shares of mutual funds are not deposits or obligations of, or guaranteed or endorsed by, any financial institution; are not insured by the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board, or any other agency; and involve risk, including the possible loss of the principal amount invested. [LOGO OMITTED] PUTNAM INVESTMENTS The Putnam Funds One Post Office Square Boston, Massachusetts 02109 - --------------------- BULK RATE U.S. POSTAGE PAID PUTNAM INVESTMENTS - --------------------- For account balances, economic forecasts, and the latest on Putnam funds, visit www.putnaminv.com SA009-58382 841/524/891/2BA 2/00 PUTNAM INVESTMENTS [SCALE LOGO OMITTED] - ------------------------------------------------------------------------------ Putnam International Growth Fund Supplement to Semiannual Report dated 12/31/99 The following information has been prepared to provide class Y shareholders with a performance overview specific to their holdings. Class Y shares are offered exclusively to defined contribution plans investing $150 million or more in one or more of Putnam's funds or private accounts. Performance of class Y shares, which incur neither a front-end load, distribution fee, nor contingent deferred sales charge, will differ from performance of class A, B, C, and M shares, which are discussed more extensively in the semiannual report. ANNUAL RESULTS AT A GLANCE - ------------------------------------------------------------------------------ Total return: NAV Six months ended 12/31/99 43.08% One year ended 12/31/99 61.19 Life of class (since 7/12/96) 17.94 Annual average - ------------------------------------------------------------------------------ Share value: NAV 6/30/99 $21.72 12/31/99 29.79 - ------------------------------------------------------------------------------ Distributions: No. Income Capital gains Total 1 $0.385 $0.790 $1.175 - ------------------------------------------------------------------------------ Please note that past performance does not indicate future results. Investment return and principal value will fluctuate so your shares, when redeemed, may be worth more or less than their original cost. See full report for information on comparative benchmarks. If you have questions, please consult your fund prospectus or call Putnam toll free at 1-800-752-9894. -----END PRIVACY-ENHANCED MESSAGE-----