-----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, LS0mmCjPRTWltN8N4FIIbCH+3aNfPdlJ4MlkGWV0smkeuR9h24JaXgl45wJoIaMh PFhBNDvnMYiytF0CTfEkcA== 0000928816-00-000081.txt : 20000221 0000928816-00-000081.hdr.sgml : 20000221 ACCESSION NUMBER: 0000928816-00-000081 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000218 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM FUNDS TRUST CENTRAL INDEX KEY: 0001005942 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-07513 FILM NUMBER: 549129 BUSINESS ADDRESS: STREET 1: ONE POST STREET 2: ONE POST OFFICE SQUARE CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6172921010 MAIL ADDRESS: STREET 1: ONE POST OFFICE SQUARE CITY: BOSTON STATE: MA ZIP: 02109 N-30D 1 INTERNATIONAL GROWTH & INCOME FUND Putnam International Growth and Income 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: The markets continued to provide their share of challenges and opportunities as your fund closed its books on the first half of fiscal 2000. In the following report, the fund's managers discuss performance for the period and prospects for the months ahead. This is the last letter to you and the other shareholders of Putnam International Growth and Income Fund that I will be signing. After more than 30 years as Chairman of the Trustees and President of the Putnam Funds, the time has come for me to step aside. In June, John Hill will become Chairman. John is currently an independent Trustee and has served on the board for the past 14 years. In addition, my son, George Putnam, III, will take on the role of President. I am confident that the leadership of the funds will be in exceptionally strong hands. I will become Chairman Emeritus, remain a Putnam shareholder, and stay in close touch with the funds. It has been my privilege to serve you. Respectfully yours, /S/GEORGE PUTNAM George Putnam Chairman of the Trustees February 16, 2000 Report from the Fund Managers Deborah F. Kuenstner George W. Stairs Investment conditions in nearly all international markets were better in the final six months of calendar 1999 than many forecasts had anticipated. Improving international economies, ongoing merger activity, and investors' optimism for technology stocks all contributed to solid equity performance. All over the world, companies are following the example set by U.S. companies, learning to manage themselves in ways that enrich shareholders. We believe that this international effort to emulate U.S. companies and reward shareholders was a primary reason why Putnam International Growth and Income Fund appreciated 10.34% (3.97% at public offering price), in the six months that ended December 31, 1999, the first half of the fund's 2000 fiscal year. We also think the current strength of international stocks could herald a return to the situation of the mid-1980s when international stocks outperformed U.S. stocks in several consecutive years. 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 - ------------------------------------------------------------------------- 10.34% 3.97% 9.94% 5.11% 9.98% 9.01% 10.20% 6.31% - ------------------------------------------------------------------------- Past performance is not indicative of future results. Performance information for longer periods and explanation of performance calculation methods begin on page 6. * INTERNATIONAL MARKETS FLOURISH In the past six months international stocks benefited from three major trends. First, international technology companies finally caught up with their U.S. counterparts, showing competitiveness in business innovation that caught the fancy of investors. Second, the wave of corporate restructuring, mergers, and acquisitions, -- changes that our investment process is designed to identify -- gathered pace and had an impact on performance. Finally, Asia's ongoing recovery from its 1997-98 economic crisis contributed to demand for a host of basic materials and industrial goods, while providing a positive backdrop for stocks in other sectors. [GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY SECTORS] TOP INDUSTRY SECTORS* Banks 9.5% Telephone services 9.2% Electronics and electrical equipment 7.9% Financial services 7.0% Electric utilities 6.6% Footnote reads: *Based on net assets as of 12/31/99. Holdings will vary over time. Your fund benefited from each of these trends, but most of all from the corporate consolidation abroad. As you know from previous reports, our research seeks to identify undervalued stocks of large international companies experiencing positive changes. Restructurings and corporate takeovers are two of the primary changes we look for because they can strategically re-position companies to achieve better future earnings. The fund participated to a degree in the technology rally and the Asian rebound, but our value discipline prompted us to take profits on many stocks as their prices rose to more expensive levels. For example, we reduced our positions in many telecommunications utilities and manufacturers of electronic, communications, and computer equipment as they experienced a fourth-quarter rally of historic proportions. While this price discipline limits the degree to which this fund can enjoy explosive gains, we believe this strategy also helps to avoid the steep plunges that often follow rallies. We believe investing in undervalued, mostly dividend-paying stocks of large companies can achieve growth with income while experiencing less risk over time. * TECHNOLOGY AND TELECOMMUNICATIONS STOCKS SOAR Two of our top-performing stocks benefited from the recent demand for technology and telecommunications issues. Their gains were not attributable solely to a short-term trend, however, but also to positive internal changes -- good examples of the type of change we look for when we research stocks. We purchased Telecom Italia Mobile during the summer. This Italian cellular phone service company is part of Telecom Italia, which was acquired by Olivetti last spring in a hostile takeover. Olivetti subsequently announced a plan to complete the merger in a manner detrimental to shareholders. Because the market opposed this plan, Telecom Italia Mobile shares fell in price. Despite its attractive growth rates, it thereby became one of the cheapest cellular phone company stocks in Europe and we established a position. Shareholder opposition later convinced Olivetti to scuttle its proposal, and Telecom Italia Mobile's stock price has nearly doubled in the past six months. Although this holding, as well as others mentioned in this report, was viewed favorably at the end of the fiscal period, all are subject to review and adjustment in accordance with the fund's investment strategy and may vary in the future. "Bankers and market soothsayers say many of the factors that made 1999 a record-breaker in European mergers and acquisitions are just gaining steam." - -- The Wall Street Journal, January 4, 2000 Another telecommunications company stock, Canada's BCE, appreciated by approximately 85% during the past six months. The former Bell Canada, BCE is benefiting from its ownership stake in Nortel Networks, which makes optical fibers and digital switching equipment. Businesses and consumers are spending hefty sums for this equipment to build Internet connections. BCE has also been successfully integrating Bay Networks, a U.S. company it acquired in 1998. Finally, BCE has come to dominate the Canadian cellular phone market, which is growing more attractive because prices have stabilized. Its main competitor is in disarray, which makes BCE's growth prospects even more formidable. * FRUITS OF CHANGE IN ASIA; UNITED KINGDOM REMAINS UNDERVALUED We are encouraged that many of the top-performing stocks in the fund during this semiannual period have posted solid fundamental operating results. In Japan, for example, Nikko Securities, is reaping the benefits of changes undertaken over the past two to three years. Its alliance with Salomon Smith Barney, which is now part of Citigroup, has helped generate new revenue growth from investment banking fees. At the same time, Nikko remains a leader in its traditional brokerage business in Japan. Because Nikko's executives cut costs by introducing methods developed by more efficient international competitors, the company has been able to maintain attractive earnings even as brokerage commissions in Japan have fallen in the past two years. [GRAPHIC OMITTED: TOP 10 HOLDINGS] TOP 10 HOLDINGS BCE, Inc. Canada Telephone services Aventis S.A. France Pharmaceuticals and biotechnology Akzo-Nobel N.V. Netherlands Chemicals Total S.A. France Oil and gas Cable & Wireless Plc. United Kingdom Telephone services Veba AG Germany Electric utilities AMP, Ltd. Australia Financial services Diageo Plc. United Kingdom Food and beverages Siebe Plc. United Kingdom Electronics and electrical equipment Internationale Nederlanden Groep (ING) Netherlands Insurance Footnote reads: These holdings represent 21.5% of the fund's net assets as of 12/31/99. Portfolio holdings will vary over time. Another Asian stock, DBS Group, has appreciated by about one third over the semiannual period thanks to the recovery in southeast Asian economies. We held on to this stock during the Asian recession because it had very conservative lending policies and brought in new top management who proceeded to focus the bank on its best businesses while selling weaker ones. DBS Group has also cut costs by eliminating staff redundancies. Stocks in the United Kingdom have struggled in the past six months but many still have attractive prospects, we believe. One of our top holdings, Diageo, owns several globally recognized brands, such as Pillsbury, Burger King, Guinness and Smirnoff's, which have appeal to consumers around the world. The company's management team is realizing gains from acquiring these brands and is improving the company's cash flow. BAT Industries, another one of the fund's large British holdings, has successfully restructured to reduce its reliance on tobacco revenues while moving to more attractive businesses. We believe investors misunderstand BAT. The stock has not performed well recently because investors are concerned about lawsuits brought by cigarette smokers in the United States. BAT is priced similarly to other tobacco companies, although in our view it is the top company in the industry. We anticipate that the stock will perform well when other investors recognize what they have overlooked. * RISING GLOBAL GROWTH AND CORPORATE RESTRUCTURINGS CAN LIFT FUND As the year 2000 begins, international economies appear to be continuing their strong performance and helping to lift equities higher. We anticipate the Japanese economy will experience a bona fide recovery in the coming year while Europe continues its gradual acceleration. Meanwhile, positive corporate changes are merely beginning. We expect a rising tide of European mergers, restructurings, and takeovers. More companies are also giving their managers performance incentives such as stock options that align their interests with shareholders and focus their goals on lifting stock prices. Hostile takeover activity, long absent on the European scene, is putting even more pressure on managers to show results or face consequences. Japan and other Asian markets are also starting down this bountiful path. Our research efforts remain focused on identifying international companies that are focused on rewarding shareholders and investing in them while they are still undervalued to achieve capital appreciation with less risk. 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 and Income Fund is designed for investors seeking long-term growth of capital. Current income is a secondary objective.
TOTAL RETURN FOR PERIODS ENDED 12/31/99 Class A Class B Class C Class M (inception dates) (8/1/96) (8/1/96) (2/1/99) (8/1/96) NAV POP NAV CDSC NAV CDSC NAV POP - -------------------------------------------------------------------------------------- 6 months 10.34% 3.97% 9.94% 5.11% 9.98% 9.01% 10.20% 6.31% - -------------------------------------------------------------------------------------- 1 year 25.68 18.42 24.72 19.72 24.82 23.82 25.16 20.79 - -------------------------------------------------------------------------------------- Life of fund 83.68 73.13 78.96 75.96 79.17 79.17 80.68 74.34 Annual average 19.52 17.46 18.61 18.02 18.65 18.65 18.94 17.70 - --------------------------------------------------------------------------------------
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 - --------------------------------------------------------------------- Life of fund 62.07 7.52 Annual average 15.18 2.14 - --------------------------------------------------------------------- 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 performance reflects the applicable contingent deferred sales charge which is 5% in the first year, declines to 1% in the sixth year, and is eliminated thereafter. 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.
PRICE AND DISTRIBUTION INFORMATION 6 MONTHS ENDED 12/31/99 Class A Class B Class C Class M - -------------------------------------------------------------------------------------- Distributions (number) 2 1 1 1 - -------------------------------------------------------------------------------------- Income $0.338 $0.299 $0.302 $0.307 - -------------------------------------------------------------------------------------- Capital gains Long-term 0.681 0.681 0.681 0.681 - -------------------------------------------------------------------------------------- Short-term 0.683 0.683 0.683 0.683 - -------------------------------------------------------------------------------------- Total $1.702 $1.663 $1.666 $1.671 - -------------------------------------------------------------------------------------- Share value NAV POP NAV NAV NAV POP - -------------------------------------------------------------------------------------- 6/30/99 $12.59 $13.36 $12.49 $12.57 $12.55 $13.01 - -------------------------------------------------------------------------------------- 12/31/99 12.17 12.91 12.05 12.14 12.14 12.58 - --------------------------------------------------------------------------------------
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. Securities indexes assume reinvestment of all distributions and interest payments and do not take in account brokerage fees or taxes. Securities in the fund do not match those in the indexes and performance of the fund will differ. It is not possible to invest directly in an index. Consumer price index (CPI) is a commonly used measure of inflation; it does not represent an investment return. 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 (96.2%) (a) NUMBER OF SHARES VALUE Aerospace and Defense (0.8%) - -------------------------------------------------------------------------------------------------------------------------- 861,418 British Aerospace Plc (United Kingdom) $ 5,705,292 794,000 Rolls-Royce Plc (United Kingdom) (NON) 2,744,823 -------------- 8,450,115 Automobiles (5.5%) - -------------------------------------------------------------------------------------------------------------------------- 2,249,000 Fuji Heavy Industries (Japan) 15,407,123 509,000 Honda Motor Co., Ltd. (Japan) (NON) 18,929,338 62,000 Hyundai Motor Co., GDR (South Korea) (NON) 666,500 203,840 Hyundai Motor Co., GDR 144A Deal Stock (South Korea) (NON) 2,191,280 226,000 Hyundai Motor Co., Ltd. (South Korea) (NON) 3,584,152 5,542,000 PT Astra International Inc. (Indonesia) (NON) 2,979,581 197,408 Valeo S.A. (France) 15,212,182 -------------- 58,970,156 Banks (9.5%) - -------------------------------------------------------------------------------------------------------------------------- 1,053,547 Australia & New Zealand Banking Group, Ltd. (Australia) (NON) 7,664,214 760,573 Bank of Nova Scotia (Canada) 16,317,136 87,316 Banque Nationale de Paris (France) 8,046,134 97,194 Barclays Plc (United Kingdom) 2,797,868 340,769 DBS Group Holdings, Ltd. (Singapore) 5,590,740 810,498 HSBC Holdings Plc (United Kingdom) 11,365,533 1,043,318 Istituto Bancario San Paolo di Torino (Italy) 14,158,806 1,730 Julius Baer Holdings AG (Switzerland) 5,226,947 675,297 National Bank of Canada (Canada) 8,631,931 378,000 Overseas-Chinese Banking Corp., Ltd. (Singapore) 3,475,601 23,031 Societe Generale (France) 5,352,082 80,290 Unidanmark AS (Denmark) 5,646,425 27,778 United Bank of Switzerland (UBS) AG (Switzerland) 7,502,852 -------------- 101,776,269 Building Products (2.0%) - -------------------------------------------------------------------------------------------------------------------------- 537,112 Blue Circle Industries Plc (United Kingdom) 3,121,373 279,462 CRH Plc (Ireland) 6,016,370 4,035,200 Pioneer Internationa,l Ltd. (Australia) 12,159,409 -------------- 21,297,152 Business Equipment (1.7%) - -------------------------------------------------------------------------------------------------------------------------- 330,000 Canon, Inc. (Japan) 13,112,154 275,000 Ricoh Co., Ltd. (Japan) 5,183,499 -------------- 18,295,653 Business Services (0.7%) - -------------------------------------------------------------------------------------------------------------------------- 468,000 Dai Nippon Printing Co., Ltd. (Japan) 7,465,648 Cellular Communications (2.3%) - -------------------------------------------------------------------------------------------------------------------------- 1,277,429 Telecom Italia Mobile SpA (Italy) 14,251,688 239,089 Telesp Celular Participacoes S.A. ADR (Brazil) 10,131,396 -------------- 24,383,084 Chemicals (5.9%) - -------------------------------------------------------------------------------------------------------------------------- 491,137 Akzo-Nobel N.V. (Netherlands) 24,605,374 181,541 Bayer AG (Germany) (NON) 8,583,622 252,900 BOC Group Plc (United Kingdom) 5,433,511 22,400 Clariant AG 144A Deal Stock (Switzerland) 10,679,397 1,700 Clariant AG (Switzerland) 810,490 262,300 Rhodia SA (France) 5,921,328 1,982,000 Teijin, Ltd. (Japan) 7,312,722 -------------- 63,346,444 Conglomerates (2.1%) - -------------------------------------------------------------------------------------------------------------------------- 361,565 Canadian Pacific, Ltd. (Canada) 7,756,922 1,939,345 Cookson Group Plc (United Kingdom) 7,832,045 2,179,801 Tomkins Plc (United Kingdom) 7,042,501 -------------- 22,631,468 Cosmetics (0.4%) - -------------------------------------------------------------------------------------------------------------------------- 330,000 Shiseido Co., Ltd. (Japan) 4,812,096 Electric Utilities (6.6%) - -------------------------------------------------------------------------------------------------------------------------- 632,300 Chubu Electric Power, Inc. (Japan) 10,303,184 2,495,768 Hong Kong Electric Holdings, Ltd. (Hong Kong) 7,802,285 1,313,095 Scottish and Southern Energy Plc (United Kingdom) 10,483,901 2,348,183 Scottish Power Plc (United Kingdom) 17,790,365 7,554,000 Shandong International Power Development Co., Ltd. (China) (NON) 1,069,008 474,342 Veba (Vereinigte Elektrizitaets Bergwerks) AG (Germany) 23,024,324 -------------- 70,473,067 Electronics and Electrical Equipment (7.9%) - -------------------------------------------------------------------------------------------------------------------------- 238,000 Matsushita Electric Industrial Co. (Japan) 6,591,700 94,397 Philips Electronics N.V. (Netherlands) 12,820,057 156,110 Schneider SA (France) 12,241,787 3,675,430 Siebe Plc (United Kingdom) 20,008,666 24,900 Sony Corp. (Japan) 7,383,734 67,000 TDK Corp. (Japan) (NON) 9,252,005 2,072,000 Toshiba Corp. (Japan) 15,816,792 -------------- 84,114,741 Energy Related (2.3%) - -------------------------------------------------------------------------------------------------------------------------- 692,359 Iberdola S.A. (Spain) (NON) 9,584,021 325,300 Iberdrola II S.A. 144A (Spain) (NON) 4,502,985 582,200 Kansai Electric Power, Inc. (Japan) (NON) 10,147,760 -------------- 24,234,766 Financial Services (7.0%) - -------------------------------------------------------------------------------------------------------------------------- 52,950 Aiful Corp. (Japan) 6,477,539 2,053,098 AMP, Ltd. (Australia) 22,684,464 408,400 Investor AB (Sweden) 5,761,919 423,454 Manulife Financial Corp. (Canada) (NON) 5,398,139 1,293,000 Nikko Securities Co., Ltd. (Japan) (NON) 16,361,801 324,000 Nomura Securities Co., Ltd. (Japan) 5,850,264 235,300 Promise Co., Ltd. (Japan) 11,974,553 -------------- 74,508,679 Food and Beverages (5.9%) - -------------------------------------------------------------------------------------------------------------------------- 1,445,926 Bass Plc (United Kingdom) 17,996,945 2,629,427 Diageo Plc (United Kingdom) 21,152,930 2,727,120 Fomento Economico Mexicano, S.A. de C.V. (Mexico) 12,194,205 1,170,000 Kirin Brewery Co., Ltd. (Japan) (NON) 12,309,159 -------------- 63,653,239 Insurance (6.5%) - -------------------------------------------------------------------------------------------------------------------------- 136,048 AGF (Assurances Generales de France) (France) 7,363,299 1,567,758 Allied Zurich AG (United Kingdom) 18,474,998 140,963 Axa S.A. (France) 19,626,335 330,977 Internationale Nederlanden Groep (ING) (Netherlands) 19,957,794 82,243 Scor (France) 3,623,857 -------------- 69,046,283 Media (0.3%) - -------------------------------------------------------------------------------------------------------------------------- 370,600 Carlton Communications Plc (United Kingdom) 3,609,963 Oil and Gas (5.8%) - -------------------------------------------------------------------------------------------------------------------------- 1,805,850 British Petroleum Co. Plc (United Kingdom) 18,159,384 3,519,892 Ente Nazionale Idrocarburi (ENI) SpA (Italy) 19,333,922 182,446 Total S.A. Class B (France) 24,319,140 -------------- 61,812,446 Paper and Forest Products (3.5%) - -------------------------------------------------------------------------------------------------------------------------- 991,951 Abitibi-Consolidated, Inc. (Canada) 11,582,928 3,793,100 Jefferson Smurfit Group Plc (Ireland) 11,366,278 560,978 Sappi, Ltd. (South Africa) 5,552,700 306,195 Svenska Cellulosa AB (SCA) Class B (Sweden) 9,071,911 -------------- 37,573,817 Pharmaceuticals and Biotechnology (5.2%) - -------------------------------------------------------------------------------------------------------------------------- 442,110 Aventis S.A. (France) (NON) 25,573,869 328,000 Eisai Co., Ltd. (Japan) 6,307,692 130,536 Pharmacia & Upjohn, Inc. (Sweden) 5,924,037 352,000 Yamanouchi Pharmaceutical Co., Ltd. (Japan) 12,298,296 144,090 Zeneca Group Plc (United Kingdom) 5,977,353 -------------- 56,081,247 Railroads (0.8%) - -------------------------------------------------------------------------------------------------------------------------- 304,162 Canadian National Railway Co. (Canada) 8,028,044 Real Estate (1.2%) - -------------------------------------------------------------------------------------------------------------------------- 493,900 Canary Wharf 144A Plc (United Kingdom) (NON) 3,071,707 485,200 Canary Wharf Finance Plc (United Kingdom) (NON) 3,017,600 1,097,000 Henderson Land Development Co., Ltd. (Hong Kong) (R) 7,042,365 -------------- 13,131,672 Retail (1.5%) - -------------------------------------------------------------------------------------------------------------------------- 1,013,830 Coles Myer, Ltd. (Australia) (NON) 5,236,779 3,638,005 Tesco Plc (United Kingdom) 11,063,138 -------------- 16,299,917 Steel (1.1%) - -------------------------------------------------------------------------------------------------------------------------- 141,617 Pohang Iron & Steel Company, Ltd. ADR (South Korea) 4,956,595 268,961 SKF AB Class B (Sweden) 6,545,756 -------------- 11,502,351 Telephone Services (9.2%) - -------------------------------------------------------------------------------------------------------------------------- 287,401 BCE, Inc. (Canada) 26,043,414 362,393 British Telecommunications Plc ADR (United Kingdom) 8,857,248 1,358,815 Cable & Wireless Plc (United Kingdom) 23,025,862 373,200 Carso Global Telecom (Mexico) (NON) 3,511,078 288,042 Hellenic Telecommunication Organization S.A. (Greece) 6,848,104 690,882 Mahanager Telephone GDR 144A (Indonesia) (NON) 7,858,783 419 Nippon Telegraph and Telephone Corp. (Japan) 7,176,061 1,408,730 Portugal Telecom S.A. (Portugal) 15,433,116 -------------- 98,753,666 Tobacco (0.5%) - -------------------------------------------------------------------------------------------------------------------------- 887,217 BAT Industries Plc (United Kingdom) 5,041,317 -------------- Total Common Stocks (cost $913,045,277) $1,029,293,300 UNITS (0.1%) (a) (NON) (cost $2,213,878) NUMBER OF UNITS VALUE - -------------------------------------------------------------------------------------------------------------------------- 57,500 Ito-Yokado Co., Ltd./Seven-Eleven Japan Co., Structured Stub Warrants (issued by Salomon Smith Barney Holdings, Inc. Exp. 2/29/00) (Japan) $ 770,538 SHORT-TERM INVESTMENTS (3.4%) (a) PRINCIPAL AMOUNT VALUE - -------------------------------------------------------------------------------------------------------------------------- $ 1,700,000 U.S. Treasury BIll 5.04s, March 9, 2000 (SEG) $ 1,683,367 34,962,000 Interest in $578,946,000 joint repurchase agreement dated December 31, 1999 with Morgan (J.P.) & Co., Inc. due January 3, 2000 with respect to various U.S. Treasury obligations -- maturity value of $34,969,284 for an effective yield of 2.50%. 34,962,000 -------------- Total Short-Term Investments (cost $36,645,367) $ 36,645,367 - -------------------------------------------------------------------------------------------------------------------------- Total Investments (cost $951,904,522) (b) $1,066,709,205 - -------------------------------------------------------------------------------------------------------------------------- (a) Percentages indicated are based on net assets of $1,069,939,985. (b) The aggregate identified cost on a tax basis is $968,677,145, resulting in gross unrealized appreciation and depreciation of $149,267,396 and $51,235,336, respectively, or net unrealized appreciation of $98,032,060. (NON) Non-income-producing security. (SEG) This security was pledged and segregated with the custodian to cover margin requirements for futures contracts at December 31, 1999. (R) Real Estate Investment Trust. 144A after the name of a security represents those exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. ADR or GDR after the name of a foreign holding stands for American Depositary Receipts or Global Depositary Receipts, respectively, representing ownership of foreign securities on deposit with a custodian bank. DIVERSIFICATION BY COUNTRY Distribution of investments by country of issue at December 31, 1999: (as percentage of Market Value) Australia 4.6% Brazil 1.0 Canada 8.1 France 12.4 Germany 3.1 Hong Kong 1.4 Indonesia 1.1 Ireland 1.7 Italy 4.6 Japan 20.5 Mexico 1.5 Netherlands 5.6 Portugal 1.5 South Korea 1.1 Spain 1.4 Sweden 2.7 Switzerland 2.4 United Kingdom 22.7 Other 2.6 ------ Total 100.0% - ------------------------------------------------------------------------------- Forward Currency Contracts to Buy at December 31, 1999 (Unaudited) Aggregate Face Delivery Unrealized Market Value Value Date Depreciation - ------------------------------------------------------------------------------- Japanese Yen $31,616,449 $31,656,185 3/9/00 $(39,736) - ------------------------------------------------------------------------------- Futures Contracts Outstanding at December 31, 1999 (Unaudited) Aggregate Face Expiration Unrealized Total Value Value Date Appreciation - ------------------------------------------------------------------------------- Topix Index (Long) $33,006,851 $31,285,173 Mar-00 $1,721,678 - ------------------------------------------------------------------------------- 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 $951,904,522) (Note 1) $1,066,709,205 - ----------------------------------------------------------------------------------------------- Cash 192,847 - ----------------------------------------------------------------------------------------------- Foreign currency 1,113 - ----------------------------------------------------------------------------------------------- Dividends and other receivables 3,131,716 - ----------------------------------------------------------------------------------------------- Receivable for shares of the fund sold 2,498,893 - ----------------------------------------------------------------------------------------------- Receivable for securities sold 6,226,758 - ----------------------------------------------------------------------------------------------- Receivable for variation margin 192,797 - ----------------------------------------------------------------------------------------------- Unamortized organization expenses (Note 1) 32,689 - ----------------------------------------------------------------------------------------------- Total assets 1,078,986,018 Liabilities - ----------------------------------------------------------------------------------------------- Payable for securities purchased 4,907,961 - ----------------------------------------------------------------------------------------------- Payable for shares of the fund repurchased 900,871 - ----------------------------------------------------------------------------------------------- Payable for compensation of Manager (Note 2) 1,936,833 - ----------------------------------------------------------------------------------------------- Payable for investor servicing and custodian fees (Note 2) 240,555 - ----------------------------------------------------------------------------------------------- Payable for compensation of Trustees (Note 2) 17,916 - ----------------------------------------------------------------------------------------------- Payable for administrative services (Note 2) 2,985 - ----------------------------------------------------------------------------------------------- Payable for open forward currency contracts (Note 1) 39,736 - ----------------------------------------------------------------------------------------------- Payable for distribution fees (Note 2) 818,185 - ----------------------------------------------------------------------------------------------- Payable for organization expense (Note 1) 64,834 - ----------------------------------------------------------------------------------------------- Other accrued expenses 116,157 - ----------------------------------------------------------------------------------------------- Total liabilities 9,046,033 - ----------------------------------------------------------------------------------------------- Net assets $1,069,939,985 Represented by - ----------------------------------------------------------------------------------------------- Paid-in capital (Notes 1 and 4) $950,609,750 - ----------------------------------------------------------------------------------------------- Distributions in excess of net investment income (Note 1) (29,857,664) - ----------------------------------------------------------------------------------------------- Accumulated net realized gain on investments and foreign currency transactions (Note 1) 32,381,635 - ----------------------------------------------------------------------------------------------- Net unrealized appreciation of investments and assets and liabilities in foreign currencies 116,806,264 - ----------------------------------------------------------------------------------------------- Total -- Representing net assets applicable to capital shares outstanding $1,069,939,985 Computation of net asset value and offering price - ----------------------------------------------------------------------------------------------- Net asset value and redemption price per class A share ($528,097,358 divided by 43,402,636 shares) $12.17 - ----------------------------------------------------------------------------------------------- Offering price per class A share (100/94.25 of $12.17)* $12.91 - ----------------------------------------------------------------------------------------------- Net asset value and offering price per class B share ($484,460,773 divided by 40,218,524 shares)** $12.05 - ----------------------------------------------------------------------------------------------- Net asset value and offering price per class C share ($17,128,073 divided by 1,411,260 shares)** $12.14 - ----------------------------------------------------------------------------------------------- Net asset value and redemption price per class M share ($40,253,781 divided by 3,316,884 shares) $12.14 - ----------------------------------------------------------------------------------------------- Offering price per class M share (100/96.50 of $12.14)* $12.58 - ----------------------------------------------------------------------------------------------- * 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 $834,278) $ 9,936,330 - ----------------------------------------------------------------------------------------------- Interest 1,047,654 - ----------------------------------------------------------------------------------------------- Total investment income 10,983,984 Expenses: - ----------------------------------------------------------------------------------------------- Compensation of Manager (Note 2) 3,810,217 - ----------------------------------------------------------------------------------------------- Investor servicing and custodian fees (Note 2) 1,042,599 - ----------------------------------------------------------------------------------------------- Compensation of Trustees (Note 2) 13,995 - ----------------------------------------------------------------------------------------------- Administrative services (Note 2) 5,917 - ----------------------------------------------------------------------------------------------- Distribution fees -- Class A (Note 2) 624,723 - ----------------------------------------------------------------------------------------------- Distribution fees -- Class B (Note 2) 2,343,570 - ----------------------------------------------------------------------------------------------- Distribution fees -- Class C (Note 2) 67,324 - ----------------------------------------------------------------------------------------------- Distribution fees -- Class M (Note 2) 144,862 - ----------------------------------------------------------------------------------------------- Amortization of organizational expenses (Note 1) 5,474 - ----------------------------------------------------------------------------------------------- Reports to shareholders 42,084 - ----------------------------------------------------------------------------------------------- Registration fees 36,723 - ----------------------------------------------------------------------------------------------- Auditing 36,808 - ----------------------------------------------------------------------------------------------- Legal 5,008 - ----------------------------------------------------------------------------------------------- Postage 55,546 - ----------------------------------------------------------------------------------------------- Other 104,584 - ----------------------------------------------------------------------------------------------- Total expenses 8,339,434 - ----------------------------------------------------------------------------------------------- Expense reduction (Note 2) (108,530) - ----------------------------------------------------------------------------------------------- Net expenses 8,230,904 - ----------------------------------------------------------------------------------------------- Net investment income 2,753,080 - ----------------------------------------------------------------------------------------------- Net realized gain on investments (Notes 1 and 3) 56,452,140 - ----------------------------------------------------------------------------------------------- Net realized gain on futures contracts (Note 1) 3,329,032 - ----------------------------------------------------------------------------------------------- Net realized gain on foreign currency transactions (Note 1) 2,931,054 - ----------------------------------------------------------------------------------------------- Net unrealized appreciation of assets and liabilities in foreign currencies during the period 32,360 - ----------------------------------------------------------------------------------------------- Net unrealized appreciation of investments and futures during the period 34,080,250 - ----------------------------------------------------------------------------------------------- Net gain on investments 96,824,836 - ----------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations $99,577,916 - ----------------------------------------------------------------------------------------------- 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 $ 2,753,080 $ 4,748,298 - --------------------------------------------------------------------------------------------------------------- Net realized gain on investments and foreign currency transactions 62,712,226 81,831,321 - --------------------------------------------------------------------------------------------------------------- Net unrealized appreciation (depreciation) of investments and assets and liabilities in foreign currencies 34,112,610 (6,464,816) - --------------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 99,577,916 80,114,803 - --------------------------------------------------------------------------------------------------------------- Distributions to shareholders: - --------------------------------------------------------------------------------------------------------------- From net investment income Class A (12,974,668) (8,562,227) - --------------------------------------------------------------------------------------------------------------- Class B (10,643,817) (6,251,787) - --------------------------------------------------------------------------------------------------------------- Class C (369,344) (4,975) - --------------------------------------------------------------------------------------------------------------- Class M (899,162) (571,933) - --------------------------------------------------------------------------------------------------------------- From net realized gain on investments Class A (52,384,086) (17,231,317) - --------------------------------------------------------------------------------------------------------------- Class B (48,555,742) (17,184,367) - --------------------------------------------------------------------------------------------------------------- Class C (1,668,165) -- - --------------------------------------------------------------------------------------------------------------- Class M (3,994,975) (1,524,471) - --------------------------------------------------------------------------------------------------------------- Increase from capital share transactions (Note 4) 141,199,182 68,971,565 - --------------------------------------------------------------------------------------------------------------- Total increase in net assets 109,287,139 97,755,291 Net assets - --------------------------------------------------------------------------------------------------------------- Beginning of period 960,652,846 862,897,555 - --------------------------------------------------------------------------------------------------------------- End of period (including distributions in excess of net investment income of $29,857,664 and $7,723,753, respectively) $1,069,939,985 $960,652,846 - --------------------------------------------------------------------------------------------------------------- * 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 For the period Per-share December 31 August 1, 1996+ operating performance (Unaudited) Year ended June 30 to June 30 - --------------------------------------------------------------------------------------------------------------------------------- 1999 1999 1998 1997 - --------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $12.59 $12.25 $10.76 $8.53 - --------------------------------------------------------------------------------------------------------------------------------- Investment operations - --------------------------------------------------------------------------------------------------------------------------------- Net investment income (a) .06 .11 .23 .15 - --------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments 1.22 .98 1.78 2.13 - --------------------------------------------------------------------------------------------------------------------------------- Total from investment operations 1.28 1.09 2.01 2.28 - --------------------------------------------------------------------------------------------------------------------------------- Less distributions: - --------------------------------------------------------------------------------------------------------------------------------- From net investment income (.34) (.25) (.16) (.05) - --------------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments (1.36) (.50) (.36) -- - --------------------------------------------------------------------------------------------------------------------------------- Total distributions (1.70) (.75) (.52) (.05) - --------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $12.17 $12.59 $12.25 $10.76 - --------------------------------------------------------------------------------------------------------------------------------- Ratios and supplemental data - --------------------------------------------------------------------------------------------------------------------------------- Total return at net asset value (%)(b) 10.34* 9.87 19.56 26.73* - --------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $528,097 $469,726 $409,456 $157,990 - --------------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%) (c) .63* 1.30 1.36 1.52* - --------------------------------------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets (%) .46* .94 1.98 1.61* - --------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 39.39* 88.09 53.57 70.25* - --------------------------------------------------------------------------------------------------------------------------------- + Commencement of operations. * Not annualized. (a) Per share net investment income has been determined on the basis of weighted average number of shares outstanding during the period. (b) Total return assumes dividend reinvestment and does not reflect the effect of sales charges. (c) Includes amounts paid through expense offset arrangements and brokerage service arrangements. (Note 2)
Financial highlights (For a share outstanding throughout the period) CLASS B - --------------------------------------------------------------------------------------------------------------------------------- Six months ended For the period Per-share December 31 August 1, 1996+ operating performance (Unaudited) Year ended June 30 to June 30 - --------------------------------------------------------------------------------------------------------------------------------- 1999 1999 1998 1997 - --------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $12.49 $12.18 $10.72 $8.53 - --------------------------------------------------------------------------------------------------------------------------------- Investment operations - --------------------------------------------------------------------------------------------------------------------------------- Net investment income (a) .01 .02 .14 .10 - --------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments 1.21 .97 1.78 2.10 - --------------------------------------------------------------------------------------------------------------------------------- Total from investment operations 1.22 .99 1.92 2.20 - --------------------------------------------------------------------------------------------------------------------------------- Less distributions: - --------------------------------------------------------------------------------------------------------------------------------- From net investment income (.30) (.18) (.10) (.01) - --------------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments (1.36) (.50) (.36) -- - --------------------------------------------------------------------------------------------------------------------------------- Total distributions (1.66) (.68) (.46) (.01) - --------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $12.05 $12.49 $12.18 $10.72 - --------------------------------------------------------------------------------------------------------------------------------- Ratios and supplemental data - --------------------------------------------------------------------------------------------------------------------------------- Total return at net asset value (%)(b) 9.94* 9.04 18.68 25.80* - --------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $484,461 $445,472 $414,609 $174,801 - --------------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%) (c) 1.01* 2.05 2.11 2.21* - --------------------------------------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets (%) .08* .19 1.21 1.03* - --------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 39.39* 88.09 53.57 70.25* - --------------------------------------------------------------------------------------------------------------------------------- + Commencement of operations. * Not annualized. (a) Per share net investment income has been determined on the basis of weighted average number of shares outstanding during the period. (b) Total return assumes dividend reinvestment and does not reflect the effect of sales charges. (c) Includes amounts paid through expense offset arrangements and brokerage service arrangements. (Note 2)
Financial highlights (For a share outstanding throughout the period) CLASS C - --------------------------------------------------------------------------------------------------------------------------------- Six months ended For the period Per-share December 31 Feb. 1, 1999+ operating performance (Unaudited) to June 30 - --------------------------------------------------------------------------------------------------------------------------------- 1999 1999 - --------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $12.57 $11.10 - --------------------------------------------------------------------------------------------------------------------------------- Investment operations - --------------------------------------------------------------------------------------------------------------------------------- Net investment income (a) .01 .07 - --------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments 1.22 1.42 - --------------------------------------------------------------------------------------------------------------------------------- Total from investment operations 1.23 1.49 - --------------------------------------------------------------------------------------------------------------------------------- Less distributions: - --------------------------------------------------------------------------------------------------------------------------------- From net investment income (.30) (.02) - --------------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments (1.36) -- - --------------------------------------------------------------------------------------------------------------------------------- Total distributions (1.66) (.02) - --------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $12.14 $12.57 - --------------------------------------------------------------------------------------------------------------------------------- Ratios and supplemental data - --------------------------------------------------------------------------------------------------------------------------------- Total return at net asset value (%)(b) 9.98* 13.40* - --------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $17,128 $9,163 - --------------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%) (c) 1.01* .84* - --------------------------------------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets (%) .11* .58* - --------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 39.39* 88.09 - --------------------------------------------------------------------------------------------------------------------------------- + Commencement of operations. * Not annualized. (a) Per share net investment income has been determined on the basis of weighted average number of shares outstanding during the period. (b) Total return assumes dividend reinvestment and does not reflect the effect of sales charges. (c) Includes amounts paid through expense offset arrangements and brokerage service arrangements. (Note 2)
Financial highlights (For a share outstanding throughout the period) CLASS M - --------------------------------------------------------------------------------------------------------------------------------- Six months ended For the period Per-share December 31 August 1, 1996+ operating performance (Unaudited) Year ended June 30 to June 30 - --------------------------------------------------------------------------------------------------------------------------------- 1999 1999 1998 1997 - --------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $12.55 $12.22 $10.74 $8.53 - --------------------------------------------------------------------------------------------------------------------------------- Investment operations - --------------------------------------------------------------------------------------------------------------------------------- Net investment income (a) .03 .05 .16 .12 - --------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments 1.23 .97 1.79 2.11 - --------------------------------------------------------------------------------------------------------------------------------- Total from investment operations 1.26 1.02 1.95 2.23 - --------------------------------------------------------------------------------------------------------------------------------- Less distributions: - --------------------------------------------------------------------------------------------------------------------------------- From net investment income (.31) (.19) (.11) (.02) - --------------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments (1.36) (.50) (.36) -- - --------------------------------------------------------------------------------------------------------------------------------- Total distributions (1.67) (.69) (.47) (.02) - --------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $12.14 $12.55 $12.22 $10.74 - --------------------------------------------------------------------------------------------------------------------------------- Ratios and supplemental data - --------------------------------------------------------------------------------------------------------------------------------- Total return at net asset value (%)(b) 10.20* 9.24 18.95 26.17* - --------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $40,254 $36,291 $38,832 $17,105 - --------------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%) (c) .88* 1.80 1.86 1.98* - --------------------------------------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets (%) .21* .40 1.40 1.19* - --------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 39.39* 88.09 53.57 70.25* - --------------------------------------------------------------------------------------------------------------------------------- + Commencement of operations. * Not annualized. (a) Per share net investment income has been determined on the basis of weighted average number of shares outstanding during the period. (b) Total return assumes dividend reinvestment and does not reflect the effect of sales charges. (c) Includes amounts paid through expense offset arrangements and brokerage service arrangements. (Note 2)
Notes to financial statements December 31, 1999 (Unaudited) Note 1 Significant accounting policies Putnam International Growth and Income Fund ("the fund") is a series of Putnam Funds Trust (the "Trust") which is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. The fund invests primarily in common stocks that offer potential for capital growth and may invest in stocks that offer potential for current income. The fund offers class A, class B, class C and class M shares. Class A shares are sold with a maximum front-end sales charge of 5.75%. Class B shares, which convert to class A shares after approximately eight years, do not pay a front-end sales charge but pay a higher ongoing distribution fee than class A shares, and are subject to a contingent deferred sales charge, if those shares are redeemed within six years of purchase. Class C shares are subject to the same fees and expenses as class B shares, except that class C shares have a one-year 1.00% contingent deferred sales charge and do not convert to class A shares. Class M shares are sold with a maximum front end sales charge of 3.50% and pay an ongoing distribution fee that is higher than class A shares but lower than class B and class C shares. Expenses of the fund are borne pro-rata by the holders of each class of shares, except that each class bears expenses unique to that class (including the distribution fees applicable to such class). Each class votes as a class only with respect to its own distribution plan or other matters on which a class vote is required by law or determined by the Trustees. Shares of each class would receive their pro-rata share of the net assets of the fund, if that fund were liquidated. In addition, the Trustees declare separate dividends on each class of shares. The following is a summary of significant accounting policies consistently followed by the fund in the preparation of its financial statements. The preparation of financial statements is in conformity with 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. Securities quoted in foreign currencies are translated into U.S. dollars at the current exchange rate. Short-term investments having remaining maturities of 60 days or less are stated at amortized cost, which approximates market value. Other investments, including restricted securities, are stated at fair value following procedures approved by the Trustees. B) Joint trading account Pursuant to an exemptive order issued by the Securities and Exchange Commission, the fund may transfer uninvested cash balances into a joint trading account along with the cash of other registered investment companies and certain other accounts managed by Putnam Investment Management, Inc. ("Putnam Management"), the fund's Manager, a wholly-owned subsidiary of Putnam Investments, Inc.. These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. C) Repurchase agreements The fund, or any joint trading account, through its custodian, receives delivery of the underlying securities, the market value of which at the time of purchase is required to be in an amount at least equal to the resale price, including accrued interest. Collateral for certain tri-party repurchase agreements is held at the counterparty's custodian in a segregated account for the benefit of the fund and the counterparty. Putnam Management is responsible for determining that the value of these underlying securities is, at all times at least equal to the resale price, including accrued interest. D) Security transactions and related investment income Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Gains or losses on securities sold are determined on the identified cost basis. Interest income is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date except that certain dividends from foreign securities are recorded as soon as the fund is informed of the ex-dividend date. E) Foreign currency translation The accounting records of the fund are maintained in U.S. dollars. The market value of foreign securities, currency holdings, and other assets and liabilities are recorded in the books and records of the fund after translation to U.S. dollars based on the exchange rates on that day. The cost of each security is determined using historical exchange rates. Income and withholding taxes are translated at prevailing exchange rates when accrued or incurred. The fund does not isolate that portion of realized or unrealized gains or losses resulting from changes in the foreign exchange rate on investments from fluctuations arising from changes in the market prices of the securities. Such gains and losses are included with the net realized and unrealized gain or loss on investments. Net realized gains and losses on foreign currency transactions represent net realized exchange gains or losses on closed forward currency contracts, disposition of foreign currencies and the difference between the amount of investment income and foreign withholding taxes recorded on the fund's books, and the U.S. dollar equivalent amounts actually received or paid. Net unrealized appreciation and depreciation of assets and liabilities in foreign currencies arise from changes in the value of open forward currency contracts and assets and liabilities other than investments at the period end, resulting from changes in the exchange rate. Investments in foreign securities involve certain risks, including those related to economic instability, unfavorable political developments, and currency fluctuations, not present with domestic investments. F) Forward currency contracts The fund may engage in forward currency contracts, which are agreements between two parties to buy and sell currencies at a set price on a future date, to protect against a decline in value relative to the U.S. dollar of the currencies in which its portfolio securities are denominated or quoted (or an increase in the value of a currency in which securities a fund intends to buy are denominated, when a fund holds cash reserves and short-term investments). The U.S. dollar value of forward currency contracts is determined using current forward currency exchange rates supplied by a quotation service. The market value of the contract will fluctuate with changes in currency exchange rates. The contract is "marked-to-market" daily and the change in market value is recorded as an unrealized gain or loss. When the contract is closed, the fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. The fund could be exposed to risk if the value of the currency changes unfavorably, if the counterparties to the contracts are unable to meet the terms of their contracts or if the fund is unable to enter into a closing position. G) Futures and options contracts The fund may use futures and options contracts to hedge against changes in the values of securities the fund owns or expects to purchase. The fund may also write options on securities it owns or in which it may invest to increase its current returns. The potential risk to the fund is that the change in value of futures and options contracts may not correspond to the change in value of the hedged instruments. In addition, losses may arise from changes in the value of the underlying instruments, if there is an illiquid secondary market for the contracts, or if the counterparty to the contract is unable to perform. When the contract is closed, the fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. Realized gains and losses on purchased options are included in realized gains and losses on investment securities. Futures contracts are valued at the quoted daily settlement prices established by the exchange on which they trade. Exchange traded options are valued at the last sale price, or if no sales are reported, the last bid price for purchased options and the last ask price for written options. Options traded over-the-counter are valued using prices supplied by dealers. H) Line of credit The fund has entered into a committed line of credit with certain banks. This line of credit agreement includes restrictions that the fund maintain an asset coverage ratio of at least 300% and borrowings must not exceed prospectus limitations. For the six months ended ended December 31, 1999, the fund had no borrowings against the line of credit. I) Federal taxes It is the policy of the fund to distribute all of its taxable income within the prescribed time and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. It is also the intention of the fund to distribute an amount sufficient to avoid imposition of any excise tax under Section 4982 of the Internal Revenue Code of 1986, as amended. Therefore, no provision has been made for federal taxes on income, capital gains or unrealized appreciation on securities held nor for excise tax on income and capital gains. J) Distributions to shareholders Distributions to shareholders from net investment income are recorded by the fund on the ex-dividend date. Capital gain distributions, if any, are recorded on the ex-dividend date and paid at least annually. The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. Reclassifications are made to the fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryovers) under income tax regulations. K) Expenses of the trust Expenses directly charged or attributable to any fund will be paid from the assets of that fund. Generally, expenses of the trust will be allocated among and charged to the assets of each fund on a basis that the Trustees deem fair and equitable, which may be based on the relative assets of each fund or the nature of the services performed and relative applicability to each fund. L) Unamortized organization expenses Expenses incurred by the fund in connection with its organization, its registration with the Securities and Exchange Commission and with various states and the initial public offering of its shares were $64,834. These expenses are being amortized on projected net asset levels over a five-year period. The fund will reimburse Putnam Management for the payment of these expenses. Note 2 Management fee, administrative services, and other transactions Compensation of Putnam Management, for management and investment advisory services is paid quarterly based on the average net assets of the fund. Such fee is based on the following annual rates: 0.80% of the first $500 million of average net assets, 0.70% of the next $500 million, 0.65% of the next $500 million, 0.60% of the next $5 billion, 0.575% of the next $5 billion, 0.555% of the next $5 billion, 0.54% of the next $5 billion, and 0.53% thereafter. 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 $108,530 under expense-offset arrangements with PFTC and brokerage service arrangements. Investor servicing and custodian fees reported in the Statement of operations exclude these credits. The fund could have invested a portion of the assets utilized in connection with the expense-offset arrangements in an income-producing asset if it had not entered into such arrangements. Each Trustee of the fund receives an annual Trustee fee, of which $1,189 has been allocated to the fund and an additional fee for each Trustees meeting attended. Trustees receive additional fees for attendance at certain committee meetings. The fund has adopted a Trustee Fee Deferral Plan (the "Deferral Plan") which allows the Trustees to defer the receipt of all or a portion of Trustees Fees payable on or after July 1, 1995. The deferred fees remain invested in certain Putnam funds until distribution in accordance with the Deferral Plan. The fund has adopted an unfunded noncontributory defined benefit pension plan (the "Pension Plan") covering all Trustees of the fund who have served as a Trustee for at least five years. Benefits under the Pension Plan are equal to 50% of the Trustee's average total retainer and meeting fees for the three years preceding retirement. Pension expense for the fund is included in Compensation of Trustees in the Statement of operations. Accrued pension liability is included in Payable for compensation of Trustees in the Statement of assets and liabilities. The fund has adopted distribution plans (the "Plans") with respect to its class A, class B, class C and class M shares pursuant to Rule 12b-1 under the Investment Company Act of 1940. The purpose of the Plans is to compensate Putnam Mutual Funds Corp., a wholly owned subsidiary of Putnam Investments Inc., for services provided and expenses incurred by it in distributing shares of the fund. The Plans provide for payments by the fund to Putnam Mutual Funds Corp. at an annual rate up to 0.35%, 1.00%, 1.00% and 1.00% of the average net assets attributable to class A, class B, class C and class M shares, respectively. The Trustees have approved payment by the fund at an annual rate of 0.25%, 1.00%, 1.00% and 0.75% of the average net assets attributable to class A, class B, class C and class M shares, respectively. For the six months ended December 31, 1999, Putnam Mutual Funds Corp., acting as underwriter received net commissions of $157,149 and $7,546 from the sale of class A and class M shares, respectively, and received $306,554 and $3,023 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 $1,503 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 $425,033,073 and $376,181,938, respectively. There were no purchases and sales of U.S. government obligations. Note 4 Capital shares At December 31, 1999, there were 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 15,786,977 $204,449,198 - ----------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 4,769,918 57,465,736 - ----------------------------------------------------------------------------- 20,556,895 261,914,934 Shares repurchased (14,478,346) (188,555,231) - ----------------------------------------------------------------------------- Net increase 6,078,549 $ 73,359,703 - ----------------------------------------------------------------------------- Year ended June 30, 1999 - ----------------------------------------------------------------------------- Class A Shares Amount - ----------------------------------------------------------------------------- Shares sold 25,486,440 $293,865,844 - ----------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 2,259,777 24,453,045 - ----------------------------------------------------------------------------- 27,746,217 318,318,889 Shares repurchased (23,849,432) (274,006,683) - ----------------------------------------------------------------------------- Net increase 3,896,785 $ 44,312,206 - ----------------------------------------------------------------------------- Six months ended December 31, 1999 - ----------------------------------------------------------------------------- Class B Shares Amount - ----------------------------------------------------------------------------- Shares sold 4,021,496 $51,613,287 - ----------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 4,498,391 53,620,812 - ----------------------------------------------------------------------------- 8,519,887 105,234,099 Shares repurchased (3,980,131) (51,210,214) - ----------------------------------------------------------------------------- Net increase 4,539,756 $54,023,885 - ----------------------------------------------------------------------------- Year ended June 30, 1999 - ----------------------------------------------------------------------------- Class B Shares Amount - ----------------------------------------------------------------------------- Shares sold 8,011,247 $91,975,997 - ----------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 2,003,520 21,477,689 - ----------------------------------------------------------------------------- 10,014,767 113,453,686 Shares repurchased (8,373,704) (94,136,683) - ----------------------------------------------------------------------------- Net increase 1,641,063 $19,317,003 - ----------------------------------------------------------------------------- Six months ended December 31, 1999 - ----------------------------------------------------------------------------- Class C Shares Amount - ----------------------------------------------------------------------------- Shares sold 1,027,309 $13,333,112 - ----------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 140,042 1,681,905 - ----------------------------------------------------------------------------- 1,167,351 15,015,017 Shares repurchased (485,034) (6,324,673) - ----------------------------------------------------------------------------- Net increase 682,317 $ 8,690,344 - ----------------------------------------------------------------------------- For the period February 1, 1999 (commencement of operations) to June 30, 1999 - ----------------------------------------------------------------------------- Class C Shares Amount - ----------------------------------------------------------------------------- Shares sold 795,822 $9,522,643 - ----------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 308 3,755 - ----------------------------------------------------------------------------- 796,130 9,526,398 Shares repurchased (67,187) (845,963) - ----------------------------------------------------------------------------- Net increase 728,943 $8,680,435 - ----------------------------------------------------------------------------- Six months ended December 31, 1999 - ----------------------------------------------------------------------------- Class M Shares Amount - ----------------------------------------------------------------------------- Shares sold 791,786 $10,294,978 - ----------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 394,356 4,732,270 - ----------------------------------------------------------------------------- 1,186,142 15,027,248 Shares repurchased (760,548) (9,901,998) - ----------------------------------------------------------------------------- Net increase 425,594 $ 5,125,250 - ----------------------------------------------------------------------------- Year ended June 30, 1999 - ----------------------------------------------------------------------------- Class M Shares Amount - ----------------------------------------------------------------------------- Shares sold 645,549 $ 7,389,654 - ----------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 177,635 1,911,353 - ----------------------------------------------------------------------------- 823,184 9,301,007 Shares repurchased (1,109,843) (12,639,086) - ----------------------------------------------------------------------------- Net decrease (286,659) $(3,338,079) - ----------------------------------------------------------------------------- Fund information WEB SITE www.putnaminv.com INVESTMENT MANAGER Putnam Investment Management, Inc. One Post Office Square Boston, MA 02109 MARKETING SERVICES Putnam Mutual Funds Corp. One Post Office Square Boston, MA 02109 CUSTODIAN Putnam Fiduciary Trust Company LEGAL COUNSEL Ropes & Gray TRUSTEES George Putnam, Chairman William F. Pounds, Vice Chairman John A. Hill, Vice Chairman Jameson Adkins Baxter Hans H. Estin Ronald J. Jackson Paul L. Joskow Elizabeth T. Kennan Lawrence J. Lasser John H. Mullin III Robert E. Patterson George Putnam, III A.J.C. Smith W. Thomas Stephens W. Nicholas Thorndike OFFICERS George Putnam President Charles E. Porter Executive Vice President Patricia C. Flaherty Senior Vice President John D. Hughes Senior Vice President and Treasurer Lawrence J. Lasser Vice President Gordon H. Silver Vice President Ian C. Ferguson Vice President Brett C. Browchuk Vice President Thomas V. Reilly Vice President Deborah F. Kuenstner Vice President and Fund Manager George W. Stairs 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 and Income Fund. It may also be used as sales literature when preceded or accompanied by the current prospectus, which gives details of sales charges, investment objectives, and operating policies of the fund, and the most recent copy of Putnam's Quarterly Performance Summary. For more information or to request a prospectus, call toll free: 1-800-225-1581. You can also learn more at Putnam Investments' Web site: www.putnaminv.com. Shares of mutual funds are not deposits or obligations of, or guaranteed or endorsed by, any financial institution; are not insured by the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board, or any other agency; and involve risk, including the possible loss of the principal amount invested. [LOGO OMITTED] PUTNAM INVESTMENTS The Putnam Funds One Post Office Square Boston, Massachusetts 02109 - --------------------- BULK RATE U.S. POSTAGE PAID PUTNAM INVESTMENTS - --------------------- For account balances, economic forecasts, and the latest on Putnam funds, visit www.putnaminv.com SA024-58383 2CE/2CG/2CH 2/00 -----END PRIVACY-ENHANCED MESSAGE-----