Putnam 811-7237
Global Growth
and Income
Fund
SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK
3-31-02
[SCALE LOGO OMITTED]
FROM THE TRUSTEES
[GRAPHIC OMITTED: PHOTO OF JOHN A. HILL AND GEORGE PUTNAM III]
Dear Fellow Shareholder:
The healthy gain posted by Putnam Global Growth and Income Fund for the
semiannual period ended March 31, 2002, was indeed heartening, given the
challenging global economic environment that was exacerbated by the
September terrorist attacks and the implosion of Enron. On the following
pages, your management team will provide you with a good understanding
of what has been driving your fund's performance.
This uncertain economic climate has also given Putnam pause and after
several lengthy working sessions between Management and the Board of
Trustees, your Trustees have agreed to recommend the mergers of several
funds. The intent of the mergers is to provide shareholders with more
focused products that will play a consistent role in a broad investment
plan. Your fund has been proposed for merger into Putnam Global Growth
Fund, which has a similar investment objective and strategy. For more
details, see page 6.
As you read this report, you may notice that we are now listing the team
that manages your fund. We do this to reflect more accurately how your
fund is managed as well as Putnam's firm belief in the value of team
management. The individuals who comprise the management team are shown
at the end of Management's discussion of performance.
We know that Putnam Investments values its relationship with you and its
other shareholders and appreciates your loyalty during these times of
restructuring of staff and products in the pursuit of superior
investment performance in the future.
Respectfully yours,
/S/ JOHN A. HILL /S/ GEORGE PUTNAM, III
John A. Hill George Putnam, III
Chairman of the Trustees President of the Funds
May 8, 2002
REPORT FROM FUND MANAGEMENT
This fund is managed by the
Putnam Global Value Team
Putnam Global Growth and Income Fund pursued its objective with
satisfying results during the semiannual fiscal period ended March 31,
2002. As the world's economies began to emerge from recession, the
portfolio's more economically sensitive, or cyclical, stocks produced
encouraging returns. The fund's favorable performance is attributable to
its value orientation, strategic weightings in industry sectors, and
strong performance by individual holdings. The fund performed in line
with its benchmark, the SSB World Primary Markets Value Index.
Performance and index information begins on page 8. Although the fund
slightly underperformed the average for its Lipper category, we believe
its solid returns underscore the benefit of including a value-oriented
global equity fund in your portfolio.
Total return for 6 months ended 3/31/02
Class A Class B Class C Class M
NAV POP NAV CDSC NAV CDSC NAV POP
- -----------------------------------------------------------------------
10.05% 3.76% 9.57% 4.57% 9.75% 8.74% 9.75% 5.89%
- -----------------------------------------------------------------------
Past performance does not indicate future results. Performance
information for longer periods and explanation of performance
calculation methods begin on page 8.
* FUND'S VALUE ORIENTATION WAS BENEFICIAL
Against a backdrop of improving economic conditions in the United States
and abroad, the fund's stock selection process and portfolio management
strategy remained unchanged. As a reminder, although the fund invests
globally, management does not make large country or sector bets. Our
primary focus is on picking stocks of companies that we believe have the
most compelling valuations and the greatest likelihood of outperforming.
Because the fund emphasizes value stocks, the portfolio's volatility is
often lower than that of the broad market.
[GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY SECTORS]
TOP INDUSTRY SECTORS*
Banking 12.0%
Oil and gas 10.8%
Insurance 5.7%
Pharmaceuticals 5.7%
Retail 4.2%
Footnote reads:
*Based on net assets as of 3/31/02. Holdings will vary over time.
As a rule, value stocks reflect investors' lowered expectations for a
particular company or sector. Several industries experienced
particularly severe declines following the events of September 11, 2001.
For example, uncertainty regarding the safety of air travel caused
shares of aerospace manufacturer Boeing to fall dramatically. In our
opinion, the stock was too severely punished for what we considered to
be a short-term concern. We established a position at a low valuation
and the stock price has recovered significantly since then, making
Boeing a major contributor during the period. We trimmed our position
somewhat, and locked in profits.
"Stock valuations in most foreign markets are now significantly lower
than in the U.S. and earnings potential is often just as good abroad as
it is at home."
- -- Lewis Braham, Business Week, April 29, 2002
Our success with fund holding ACE, Ltd. illustrates how lowered
expectations for the insurance industry translated into a rewarding
investment. In the immediate aftermath of the September 11 tragedies,
insurance stocks suffered as concerns about insurers' ability to pay
exorbitant claims led many investors to sell their insurance holdings.
Convinced that the insurers could remain solvent, we bought aggressively
as stock prices fell. ACE has experienced a surge in business and
increased pricing power. The net present value of the new business
appears to exceed the amount of the claims against the insurers,
ultimately adding value to the company. We locked in gains after selling
a fair amount of our shares, and ACE was among the fund's top
contributors during the semiannual period.
* BASIC MATERIALS, ENERGY, HEALTH CARE BOOST RETURNS
Historically, basic materials stocks are among the first to benefit as
the economy recovers from recession. With the economy improving in
recent months, the sector has lived up to its reputation, and the
portfolio's somewhat higher exposure to these stocks proved rewarding.
Pohang Iron and Steel Company (POSCO) of South Korea and UPM-Kymmene, a
commercial paper manufacturer based in Scandinavia, were among the
portfolio's best performers. The world's second-largest crude steel
producer, POSCO manufacturers a variety of steel products including
rolls, sheets, rods, plates, and customized products for the
shipbuilding industry. The fund continues to hold shares of POSCO, which
we believe remain somewhat undervalued. UPM-Kymmene's paper products,
manufactured in Europe, the United States, and China, are widely used
for magazines, newspapers, direct mail, labels, envelopes, and a variety
of other packaging goods. As shares of the company gained in value, we
took some profits. However, we believe the stock may appreciate further,
and the portfolio still has a position. While these stocks, as well as
others mentioned in this report, were viewed favorably at the end of the
reporting period, all are subject to review in accordance with the
fund's investment strategy and our opinion of them may change in the
future.
Fund Profile
Putnam Global Growth and Income Fund seeks capital growth, with current
income as a secondary goal, by investing in undervalued stocks across
domestic and international markets. The fund is appropriate for
investors seeking long-term growth of capital who can accept the
additional risks involved in international investing.
Our strategic overweighting in oil and gas stocks worked to the fund's
advantage. Fund holdings Alberta Energy Corp. of Canada and ENI-Ente
Nazionale Idrocarburi SpA of Italy experienced price gains as the
nascent economic recovery boosted demand and prices for energy. Both
companies explore for and produce oil and natural gas.*
*It should be noted that the fund sold its shares of Alberta Energy Corp.
during the period and no longer has a stake in the company.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
TOP 10 HOLDINGS
Exxon Mobil Corp.
United States
Oil and gas
Citigroup, Inc.
United States
Financial
Total Fina Elf SA Class B
France
Oil and gas
Bank of America Corp.
United States
Banking
Wells Fargo & Co.
United States
Banking
Philip Morris Companies, Inc.
United States
Tobacco
General Electric Co.
United States
Conglomerates
BP PLC
United Kingdom
Oil and gas
Novartis AG
Switzerland
Pharmaceuticals
U.S. Bancorp
United States
Banking
Footnote reads:
These holdings represent 16.8% of the fund's net assets as of 3/31/02.
Portfolio holdings will vary over time.
Your fund reaped substantial gains from the health-care sector over the
semiannual period, primarily through stocks of foreign companies. In
particular, the portfolio benefited from our sale of GlaxoSmithKline
shares, which had become fairly valued, and our reallocation of the
resulting assets into Switzerland-based Novartis. This well-diversified
company makes a range of items from vision-care products, such as
disposable contact lenses, to veterinary medicines. While Novartis
produces many pharmaceutical products, its oncology and cardiovascular
drugs bring in the lion's share of revenues. The company's consumer
health-care division comprises well-known brand names, including Ex-Lax,
Maalox, and Gerber. We continue to buy shares of Novartis and have
worked to make it a core portfolio holding.
* PORTFOLIO HAD SOME NEGATIVE CONTRIBUTORS
As can be expected from any diversified portfolio, a handful of stocks
failed to meet our expectations. Generally speaking, stocks in the U.S.
health-care sector have suffered in recent months. Several widely used
drugs lost their patent protection in 2001, and more are scheduled to
come off patent this year. Meanwhile, the process of gaining approval
for new drugs has slowed considerably due to the FDA's more stringent
regulatory hurdles. These difficulties have put greater-than-expected
pressure on the financial results of fund holdings Bristol-Myers Squibb,
Merck & Company, and Schering-Plough. In addition, Schering-Plough came
under increased scrutiny for its manufacturing process, which may have
fallen short of the FDA's standards. We believe these troubles are
likely to be short-lived and so we continue to hold shares in all three
companies.
Poor results from fund holding Tyco also detracted from overall
performance during the period. This Bermuda-based conglomerate suffered
when concerns were raised over its merger accounting methods and when
the company announced its decision to break up into four discrete
businesses. In our opinion, the company represents sound value and has
strong long-term potential. We added to our position when share prices
fell on negative sentiment.
* DIVIDEND PAYOUT ELIMINATED
In the past decade, dividend yields on international stocks have
generally been in decline. There are several reasons for this, including
increased capital investment on technology, research and development,
and other measures companies have taken to become more competitive in
the global economy. In addition, as economies in several important
global regions have slowed in the past two years, many non-U.S.
companies have either suspended or lowered dividend payments on their
stocks. Since a fund's dividend reflects the dividend yield of the
securities it holds, shareholders have seen a gradual decline in this
fund's yield in response to these trends. During this period, dividend
payments on holdings fell to a level where Putnam Management determined
that it was no longer feasible for the fund to pay out a dividend. As of
March 28, 2002, the dividend was eliminated and, as of that date, the
fund's distribution yield and dividend distribution rate were reduced to
zero.
* MANAGERS SEE VALUE OPPORTUNITIES IN HEALTH CARE, FINANCIALS
Our outlook for the second half of the fiscal year is one of cautious
optimism. We anticipate that the economic recovery currently underway
will progress at a modest pace and that inflationary pressures will
remain low. In our opinion, the currently undervalued health-care sector
offers some of the most attractive opportunities and potential to
recover in time. If the economy continues to improve, as we expect it
will, concerns about credit risk may begin to subside, brightening the
outlook for the financial sector. We have confidence in U.S. and
European financial stocks, but continue to avoid Japan's offerings, as
the prospects for those stocks remain bleak. In our opinion, the capital
goods and basic materials sectors may offer a bit more upside potential
before they are fully valued. Finally, insurance companies remain
attractive. In the months ahead, we will explore these and other sectors
to identify the most attractive opportunities among those that meet the
portfolio's investment criteria. As always, we continue to weigh the
market's opportunities in pursuit of above-average portfolio returns and
below-market volatility.
The views expressed here are exclusively those of Putnam Management.
They are not meant as investment advice. Although the described holdings
were viewed favorably as of 3/31/02, there is no guarantee the fund will
continue to hold these securities in the future. International investing
involves certain risks, such as currency fluctuations, economic
instability, and political developments.
This fund is managed by the Putnam Global Value Team. The members of the
team are Colin Moore, Pamela Holding, Deborah Kuenstner, and Hugh
Mullin.
MERGER PROPOSED FOR PUTNAM GLOBAL GROWTH AND INCOME FUND
After careful study and lengthy working sessions with Putnam Investment
Management, your fund's Trustees have agreed to recommend the merger of
Putnam Global Growth and Income Fund into Putnam Global Growth Fund.
Completion of the merger is subject to a number of conditions, including
the approval of shareholders. Proxy materials will be delivered within
the next few months so you can submit your vote.
Putnam Global Growth Fund is managed in the blend investment style,
which has no bias toward either growth or value stocks. If the merger is
approved, shareholders are expected to benefit from the more flexible
approach provided by the blend style. In addition, shareholders are
expected to benefit from potentially lower expenses provided by a larger
asset base of the merged funds. We encourage you to vote on this
important matter by returning your completed proxy material.
Once a registration statement relating to a merger has been filed with
the SEC and is effective, you may call 1-800-225-1581 or visit
www.sec.gov for a free copy of the prospectus/proxy statement. Please
read this important information carefully.
A NOTE ABOUT DUPLICATE MAILINGS
In response to investors' requests, the SEC has modified mailing
regulations for proxy statements, semiannual and annual reports, and
prospectuses. Putnam is now able to send a single copy of these materials
to customers who share the same address. This change will automatically
apply to all shareholders except those who notify us. If you would prefer
to receive your own copy, please call Putnam at 1-800-225-1581.
PERFORMANCE SUMMARY
This section provides information about your fund's performance, which
should always be considered in light of its investment strategy.
TOTAL RETURN FOR PERIODS ENDED 3/31/02
Class A Class B Class C Class M
(inception dates) (1/3/95) (11/5/97) (7/26/99) (11/5/97)
NAV POP NAV CDSC NAV CDSC NAV POP
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6 months 10.05% 3.76% 9.57% 4.57% 9.75% 8.74% 9.75% 5.89%
- ------------------------------------------------------------------------------
1 year -1.04 -6.73 -1.81 -6.72 -1.79 -2.77 -1.47 -4.90
- ------------------------------------------------------------------------------
5 years 41.62 33.47 36.01 34.01 36.80 36.80 37.83 33.03
Annual average 7.21 5.94 6.34 6.03 6.47 6.47 6.63 5.87
- ------------------------------------------------------------------------------
Life of fund 109.38 97.31 96.45 96.45 98.93 98.93 100.47 93.56
Annual average 10.74 9.84 9.77 9.77 9.96 9.96 10.08 9.55
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COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 3/31/02
SSB World
Primary Markets MSCI Consumer
Value Index* World Index* price index
- ------------------------------------------------------------------------------
6 months 10.09% 8.96% 0.22%
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1 year 0.09 -4.24 1.30
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5 years 39.61 29.93 11.62
Annual average 6.90 5.38 2.22
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Life of fund 100.70 78.51 18.91
Annual average 10.09 8.32 2.42
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*The benchmark index for Putnam Global Growth and Income Fund has changed
from the MSCI World Index to the SSB World Primary Markets Value Index.
Putnam Investment Management has changed the benchmarks of several mutual
funds to more accurately reflect the investment strategies of the funds.
Past performance does not indicate future results. More recent returns
may be less or more than those shown. Investment return and principal
value will fluctuate and you may have a gain or a loss when you sell
your shares.
Performance assumes reinvestment of distributions and does not account
for taxes. Returns at public offering price (POP) for class A and M
shares reflect a sales charge of 5.75% and 3.50%, respectively. Class B
share returns reflect the applicable contingent deferred sales charge
(CDSC), which is 5% in the first year, declining to 1% in the sixth
year, and is eliminated thereafter. Class C shares reflect a 1% CDSC the
first year that is eliminated thereafter. Performance for class B, C,
and M shares before their inception are derived from the historical
performance of class A shares, adjusted for the applicable sales charge
(or CDSC) and higher operating expenses for such shares. For a portion
of the period this fund was sold on a limited basis with limited assets
and expenses. Had expenses not been limited, returns would have been
lower.
PRICE AND DISTRIBUTION INFORMATION 6 MONTHS ENDED 3/31/02
Class A Class B Class C Class M
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Distributions
(number) 1 -- -- --
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Income $0.010 -- -- --
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Capital gains -- -- -- --
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Total $0.010 -- -- --
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Share value: NAV POP NAV NAV NAV POP
- ------------------------------------------------------------------------------
9/30/01 $11.05 $11.72 $10.87 $10.98 $10.97 $11.37
- ------------------------------------------------------------------------------
3/31/02 12.15 12.89 11.91 12.05 12.04 12.48
- ------------------------------------------------------------------------------
TERMS AND DEFINITIONS
Total return shows how the value of the fund's shares changed over time,
assuming you held the shares through the entire period and reinvested
all distributions in the fund.
Net asset value (NAV) is the price, or value, of one share of a mutual
fund, without a sales charge. NAVs fluctuate with market conditions. The
NAV is calculated by dividing the net value of all the fund's assets by
the number of outstanding shares.
Public offering price (POP) is the price of a mutual fund share plus the
maximum sales charge levied at the time of purchase. POP performance
figures shown here assume the 5.75% maximum sales charge for class A
shares and 3.50% for class M shares.
Contingent deferred sales charge (CDSC) is a charge applied at the time
of the redemption of class B or C shares and assumes redemption at the
end of the period. Your fund's class B CDSC declines from a 5% maximum
during the first year to 1% during the sixth year. After the sixth year,
the CDSC no longer applies. The CDSC for class C shares is 1% for one
year after purchase.
Class A shares are generally subject to an initial sales charge and no
sales charge on redemption (except on certain redemptions of shares
bought without an initial sales charge).
Class B shares may be subject to a sales charge upon redemption.
Class C shares are not subject to an initial sales charge and are
subject to a contingent deferred sales charge only if the shares are
redeemed during the first year.
Class M shares have a lower initial sales charge and a higher 12b-1 fee
than class A shares and no sales charge on redemption (except on certain
redemptions of shares bought without an initial sales charge).
COMPARATIVE BENCHMARKS
The Salomon Smith Barney World Primary Markets Value Index* is an
unmanaged index of mostly large- and some small-capitalization stocks
from developed countries chosen for their value orientation.
The Morgan Stanley Capital International (MSCI) World Index* is an
unmanaged index of developed and emerging markets.
Consumer price index (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
Lipper Inc. is a third-party industry ranking entity that ranks funds
(without sales charges) with similar current investment styles or
objectives as determined by Lipper.
*Indexes assume reinvestment of all distributions and do not account for
fees. Securities and performance of a fund and an index will differ. You
cannot invest directly in an index.
A GUIDE TO THE FINANCIAL STATEMENTS
These sections of the report, as well as the accompanying Notes,
constitute the fund's financial statements.
The fund's portfolio lists all the fund's investments and their values
as of the last day of the reporting period. Holdings are organized by
asset type and industry sector, country, or state to show areas of
concentration and diversification.
Statement of assets and liabilities shows how the fund's net assets and
share price are determined. All investment and noninvestment assets are
added together. Any unpaid expenses and other liabilities are
subtracted from this total. The result is divided by the number of
shares to determine the net asset value per share, which is calculated
separately for each class of shares. (For funds with preferred shares,
the amount subtracted from total assets includes the net assets
allocated to remarketed preferred shares.)
Statement of operations shows the fund's net investment gain or loss.
This is done by first adding up all the fund's earnings -- from
dividends and interest income -- and subtracting its operating expenses
to determine net investment income (or loss). Then, any net gain or
loss the fund realized on the sales of its holdings -- as well as any
unrealized gains or losses over the period -- is added to or subtracted
from the net investment result to determine the fund's net gain or loss
for the fiscal period.
Statement of changes in net assets shows how the fund's net assets were
affected by distributions to shareholders and by changes in the number
of the fund's shares. It lists distributions and their sources (net
investment income or realized capital gains) over the current reporting
period and the most recent fiscal year-end. The distributions listed
here may not match the sources listed in the Statement of operations
because the distributions are determined on a tax basis and may be paid
in a different period from the one in which they were earned.
Financial highlights provide an overview of the fund's investment results,
per-share distributions, expense ratios, net investment income ratios, and
portfolio turnover in one summary table, reflecting the five most recent
reporting periods. In a semiannual report, the highlight table also
includes the current reporting period. For open-end funds, a separate table
is provided for each share class.
THE FUND'S PORTFOLIO
March 31, 2002 (Unaudited)
COMMON STOCKS (96.0%) (a)
NUMBER OF SHARES VALUE
Aerospace and Defense (1.2%)
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141,087 BAE Systems PLC (United Kingdom) $ 672,947
26,800 Boeing Co. (The) 1,293,100
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1,966,047
Automotive (2.7%)
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21,600 Bayerische Motoren Werke (BMW) AG (Germany) 860,966
34,512 Ford Motor Co. 569,103
18,100 Honda Motor Co., Ltd. (Japan) 760,826
16,300 Peugeot SA (France) 804,674
51,700 Toyota Motor Corp. (Japan) 1,490,408
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4,485,977
Banking (12.0%)
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44,000 Allied Irish Banks PLC (Ireland) 541,113
39,348 Bank of America Corp. 2,676,451
40,600 Bank of New York Company, Inc. (The) 1,706,012
20,798 Bank One Corp. 868,940
28,300 BNP Paribas SA (France) 1,429,161
17,139 Comerica, Inc. 1,072,387
46,000 Danske Bank A/S (Denmark) 718,159
4,992 M&T Bank Corp. 401,207
39,200 National Bank of Canada (Canada) 797,417
37,900 Royal Bank of Scotland Group PLC (United Kingdom) 975,633
61,669 Sanpaolo IMI SpA (Italy) 725,058
18,700 Societe Generale (France) 1,182,485
34,000 Standard Chartered PLC (United Kingdom) 371,057
31,500 Toronto-Dominion Bank (Canada) 861,945
89,545 U.S. Bancorp 2,021,031
11,600 Wachovia Corp. 430,128
22,300 Washington Mutual, Inc. 738,799
48,600 Wells Fargo & Co. 2,400,840
-------------
19,917,823
Basic Materials (0.5%)
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5,000 Compagnie de Saint Gobain (France) 815,943
Beverage (3.3%)
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25,327 Anheuser-Busch Companies, Inc. 1,322,069
28,528 Coca-Cola Co. (The) 1,490,873
61,400 Diageo PLC (United Kingdom) 802,528
75,300 Six Continents PLC (United Kingdom) 800,875
136,000 South African Breweries PLC (United Kingdom) 949,789
-------------
5,366,134
Broadcasting (0.6%)
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469,940 Granada PLC (United Kingdom) 916,668
Cable Television (0.5%)
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23,750 Comcast Corp. Class A (NON) 755,250
Chemicals (1.5%)
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26,800 Dow Chemical Co. (The) 876,896
19,335 Eastman Chemical Co. 943,355
149,400 Imperial Chemicals Industries PLC (United Kingdom) 727,488
-------------
2,547,739
Commercial and Consumer Services (1.0%)
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15,000 Adecco SA (Switzerland) 952,388
255,300 Hays PLC (United Kingdom) 656,111
-------------
1,608,499
Communications Equipment (0.6%)
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238,600 Telefonaktiebolaget LM Ericsson AB Class B (Sweden) 1,009,328
Computers (1.7%)
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98,500 Compaq Computer Corp. 1,029,325
50,841 Hewlett-Packard Co. 912,088
19,800 NCR Corp. (NON) 886,050
-------------
2,827,463
Conglomerates (2.8%)
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60,100 General Electric Co. 2,250,745
62,100 Smiths Group PLC (United Kingdom) 717,070
50,904 Tyco International, Ltd. (Bermuda) 1,645,217
-------------
4,613,032
Construction (1.0%)
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3,500 Holcim, Ltd. Class B (Switzerland) 793,136
9,020 Lafarge (France) 806,393
-------------
1,599,529
Consumer Cyclicals (0.9%)
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31,400 Cie Financier Richemont AG (Switzerland) 723,696
61,000 Matsushita Electric Industrial Co. (Japan) 743,914
-------------
1,467,610
Consumer Finance (1.5%)
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19,000 Acom Co., Ltd. (Japan) 1,149,951
33,400 MBNA Corp. 1,288,238
-------------
2,438,189
Consumer Goods (0.4%)
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36,000 KAO Corp. (Japan) 671,044
Electric Utilities (4.1%)
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18,783 E.On AG (Germany) 951,825
40,300 Endesa SA (Spain) 599,302
18,759 Entergy Corp. 814,328
25,900 FirstEnergy Corp. 895,622
50,400 PG&E Corp. (NON) 1,187,424
16,340 Progress Energy, Inc. 817,654
34,300 Reliant Energy, Inc. 884,597
5,500 RWE AG (Germany) 206,275
40,000 Scottish and Southern Energy PLC (United Kingdom) 387,274
-------------
6,744,301
Electronics (2.3%)
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22,000 Fuji Soft ABC, Inc. (Japan) 722,210
41,000 Motorola, Inc. 582,200
4,780 Samsung Electronics Co., Ltd. (South Korea) 1,287,948
316,800 Taiwan Semiconductor Manufacturing Co. (Taiwan) (NON) 860,058
265,000 United Microelectronics Corp. (Taiwan) (NON) 401,366
-------------
3,853,782
Energy (0.5%)
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13,500 Schlumberger, Ltd. 794,070
Financial (3.8%)
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80,989 Citigroup, Inc. 4,010,575
12,687 Fannie Mae 1,013,438
143,900 Sampo OYJ Class A (Finland) 1,229,994
-------------
6,254,007
Food (1.3%)
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18,700 Kraft Foods, Inc. Class A 722,755
6,364 Nestle SA (Switzerland) 1,415,652
-------------
2,138,407
Health Care Services (1.9%)
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17,762 Anthem, Inc. (NON) 1,022,558
12,500 CIGNA Corp. 1,267,375
19,300 HCA, Inc. 850,744
-------------
3,140,677
Insurance (5.7%)
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18,400 ACE, Ltd. (Bermuda) 767,280
3,991 Allianz AG (Germany) 943,338
21,675 American International Group, Inc. 1,563,635
16,050 Converium Holding AG (Switzerland) (NON) 820,972
37,649 Fortis (Belgium) (NON) 837,684
39,796 ING Groep NV (Netherlands) 1,082,954
6,256 Muenchener Rueckversicherungs-Gesellschaft AG (Germany) 1,555,098
4,350 Swiss Re (Switzerland) 400,382
3,210 Swiss Re 144A (Switzerland) 295,454
12,900 Travelers Property Casualty Corp. Class A (NON) 258,000
10,337 XL Capital, Ltd. Class A (Bermuda) 964,959
-------------
9,489,756
Investment Banking/Brokerage (3.5%)
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20,400 Credit Suisse Group (Switzerland) 773,509
49,800 JPMorgan Chase & Co. 1,775,370
13,500 Merrill Lynch & Company, Inc. 747,630
25,350 Morgan Stanley Dean Witter & Co. 1,452,809
14,000 Orix Corp. (Japan) 1,050,185
-------------
5,799,503
Lodging/Tourism (0.5%)
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22,390 Accor SA (France) 898,314
Machinery (1.0%)
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18,180 Ingersoll-Rand Co. Class A (Bermuda) 909,364
15,200 Parker-Hannifin Corp. 758,480
-------------
1,667,844
Media (1.9%)
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45,300 AOL Time Warner, Inc. (NON) 1,071,345
26,700 USA Networks, Inc. (NON) 848,259
49,925 Walt Disney Co. (The) 1,152,269
-------------
3,071,873
Metals (1.5%)
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139,200 BHP Billiton, Ltd. (Australia) 846,759
8,920 Pohang Iron & Steel Co., Ltd. (South Korea) 927,766
35,100 Rio Tinto, Ltd. (Australia) 705,910
-------------
2,480,435
Natural Gas Utilities (1.1%)
- -------------------------------------------------------------------------------------------------------------------
30,100 Dynegy, Inc. Class A 872,900
32,177 NiSource, Inc. 738,462
82,700 Snam Rete Gas SpA 144A (Italy) (NON) 221,442
-------------
1,832,804
Office Equipment & Supplies (0.5%)
- -------------------------------------------------------------------------------------------------------------------
22,000 Canon, Inc. (Japan) 816,844
Oil & Gas (10.8%)
- -------------------------------------------------------------------------------------------------------------------
187,100 BG Group PLC (United Kingdom) 811,167
240,500 BP PLC (United Kingdom) 2,140,149
60,800 ENI SpA (Italy) 890,900
116,102 Exxon Mobil Corp. 5,088,751
10,600 PanCanadian Energy Corp. (Canada) 315,236
33,023 Petroleo Brasileiro SA ADR (Brazil) 874,119
30,400 Royal Dutch Petroleum Co. (Netherlands) 1,663,809
217,600 Shell Transport & Trading Co. PLC (United Kingdom) 1,620,353
108,300 Statoil ASA (Norway) 858,609
5,700 Technip-Coflexip SA (France) 784,012
18,088 TotalFinaElf SA Class B (France) 2,792,415
-------------
17,839,520
Paper & Forest Products (1.1%)
- -------------------------------------------------------------------------------------------------------------------
27,600 Svenska Cellulosa AB SCA Class B (Sweden) 858,327
29,600 UPM-Kymmene OYJ (Finland) 1,012,031
-------------
1,870,358
Pharmaceuticals (5.7%)
- -------------------------------------------------------------------------------------------------------------------
20,096 AstraZeneca PLC (United Kingdom) 997,724
21,655 Bristol-Myers Squibb Co. 876,811
18,397 Merck & Company, Inc. 1,059,299
52,500 Novartis AG (Switzerland) 2,065,589
19,000 Novo-Nordisk A/S (Denmark) 757,190
18,000 Pfizer, Inc. 715,320
15,200 Pharmacia Corp. 685,216
9,050 Sanofi-Synthelabo SA (France) 580,955
18,585 Schering-Plough Corp. 581,711
9,000 Takeda Chemical Industries, Ltd. (Japan) 364,727
11,900 Wyeth 781,235
-------------
9,465,777
Railroads (0.5%)
- -------------------------------------------------------------------------------------------------------------------
26,900 Burlington Northern Santa Fe Corp. 811,842
Real Estate (0.4%)
- -------------------------------------------------------------------------------------------------------------------
17,216 Boston Properties, Inc. (R) 679,171
Regional Bells (2.1%)
- -------------------------------------------------------------------------------------------------------------------
31,500 BellSouth Corp. 1,161,090
42,543 SBC Communications, Inc. 1,592,810
15,600 Verizon Communications, Inc. 712,140
-------------
3,466,040
Restaurants (0.4%)
- -------------------------------------------------------------------------------------------------------------------
24,456 McDonald's Corp. 678,654
Retail (3.8%)
- -------------------------------------------------------------------------------------------------------------------
238,800 Dixons Group PLC (United Kingdom) 889,109
31,600 JC Penney Company, Inc. 654,436
36,000 Kroger Co. (NON) 797,760
40,800 Limited, Inc. (The) 730,320
22,200 Office Depot, Inc. (NON) 440,670
304,800 Rite Aid Corp. (NON) 1,054,608
38,800 Staples, Inc. (NON) 774,836
180,000 Tesco PLC (United Kingdom) 617,644
9,700 TJX Companies, Inc. (The) 388,097
-------------
6,347,480
Software (1.4%)
- -------------------------------------------------------------------------------------------------------------------
41,393 BMC Software, Inc. (NON) 805,094
43,200 Computer Associates International, Inc. 945,648
152,480 Misys PLC (United Kingdom) 636,649
-------------
2,387,391
Technology Services (0.9%)
- -------------------------------------------------------------------------------------------------------------------
19,900 Convergys Corp. (NON) 588,443
42,700 KPMG Consulting, Inc. (NON) 862,540
-------------
1,450,983
Telecommunications (3.7%)
- -------------------------------------------------------------------------------------------------------------------
18,500 Deutsche Telekom AG (Germany) 279,148
340 NTT DoCoMo, Inc. (Japan) 923,704
102,700 Portugal Telecom SGPS SA (Portugal) 764,074
39,300 Qwest Communications International, Inc. 323,046
45,970 Sprint Corp. (FON Group) 702,881
1,335 Swisscom AG (Switzerland) 403,366
20,100 TDC A/S (Denmark) 646,484
95,100 Telecom Italia SpA (Italy) 783,012
694,500 Vodafone Group PLC (United Kingdom) 1,283,006
-------------
6,108,721
Telephone (0.4%)
- -------------------------------------------------------------------------------------------------------------------
63,900 Telefonica SA (Spain) (NON) 716,177
Tobacco (1.7%)
- -------------------------------------------------------------------------------------------------------------------
39,400 BAT Industries PLC (United Kingdom) 378,660
45,376 Philip Morris Companies, Inc. 2,389,945
-------------
2,768,605
Waste Management (0.7%)
- -------------------------------------------------------------------------------------------------------------------
43,300 Waste Management, Inc. 1,179,925
Water Utilities (0.6%)
- -------------------------------------------------------------------------------------------------------------------
53,100 Severn Trent PLC (United Kingdom) 557,956
12,800 Vivendi Environnement (France) 397,444
-------------
955,400
-------------
Total Common Stocks (cost $153,913,238) $ 158,714,936
CONVERTIBLE PREFERRED STOCKS (0.7%) (a)
NUMBER OF SHARES VALUE
- -------------------------------------------------------------------------------------------------------------------
6,400 Ford Motor Company Capital Trust II $3.25 cum. cv. pfd. $ 358,272
29,900 General Motors Corp. zero % cv. pfd. 814,028
-------------
Total Convertible Preferred Stocks (cost $1,123,425) $ 1,172,300
UNITS (0.9%) (a)
NUMBER OF UNITS VALUE
- -------------------------------------------------------------------------------------------------------------------
7,300 Fast Retailing Company, Ltd. 144A Structured Capped
Warrants, 2002, (Issued by Salomon Smith Barney
Holdings, Inc.) (Japan) $ 301,286
7,300 Fast Retailing Company, Ltd. 144A Structured Capped
Warrants, 2002. (Issued by Salomon Smith Barney
Holdings, Inc.) (Japan) 346,954
10,640 Korea Telecom Corp. 144A Structured Call Warrants,
2002, (Issued by UBS AG) (South Korea) 505,216
1,640 Samsung Electronics Company, Ltd. 144A Structured
Capped Call Warrant, 2002 (Issued by Morgan
Stanley & Co.) (South Korea) 402,932
-------------
Total Units (cost $1,394,426) $ 1,556,388
CONVERTIBLE BONDS AND NOTES (0.4%) (a) (cost $600,000)
PRINCIPAL AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------------
$ 600,000 Service Corp. International cv. sub. notes 6 3/4s, 2008 $ 612,240
SHORT-TERM INVESTMENTS (1.7%) (a)
PRINCIPAL AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------------
$ 968,896 Short-term investments held as collateral for loaned
securities with yields ranging from 1.80% to 2.19% and
due dates ranging from April 1, 2002 to May 13, 2002 (d) $ 968,000
95,000 US Treasury Bills zero %, June 13, 2002 94,684
1,732,000 Interest in $750,000,000 joint tri-party repurchase agreement
dated March 28, 2002 with Goldman Sachs & Co., Inc. due
April 1, 2002 with respect to various U.S. Government
obligations -- maturity value of $1,732,369 for an
effective yield of 1.92% 1,732,000
-------------
Total Short-Term Investments (cost $2,794,674) $ 2,794,684
- -------------------------------------------------------------------------------------------------------------------
Total Investments (cost $159,825,763) (b) $ 164,850,548
- -------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $165,400,917.
(b) The aggregate identified cost on a tax basis is $161,732,820,
resulting in gross unrealized appreciation and depreciation of
$12,224,628 and $9,106,900, respectively, or net unrealized appreciation
of $3,117,728.
(NON) Non-income-producing security.
(R) Real Estate Investment Trust.
(d) See footnote 1 to the financial statements.
144A after the name of a security represents those exempt from
registration under Rule 144A of the Securities Act of 1933. These
securities may be resold in transactions exempt from registration,
normally to qualified institutional buyers.
ADR after the name of a foreign holding stands for American
Depositary Receipts representing ownership of foreign securities on
deposit with a custodian bank.
DIVERSIFICATION BY COUNTRY
Distribution of investments by country of issue at March 31, 2002:
(as percentage of Market Value)
Australia 0.9%
Bermuda 2.6
Canada 1.2
Denmark 1.3
Finland 1.4
France 6.4
Germany 2.9
Italy 1.6
Japan 5.7
Netherlands 1.7
South Korea 1.9
Sweden 1.1
Switzerland 5.2
United Kingdom 10.9
United States 51.4
Other 3.8
-----
Total 100.0%
The accompanying notes are an integral part of these financial statements.
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2002 (Unaudited)
Assets
- -------------------------------------------------------------------------------------------
Investments in securities, at value, including $669,856 of securities on loan
(identified cost $159,825,763) (Note 1) $164,850,548
- -------------------------------------------------------------------------------------------
Cash 23,700
- -------------------------------------------------------------------------------------------
Dividends, interest and other receivables 499,223
- -------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 1,046,844
- -------------------------------------------------------------------------------------------
Receivable for securities sold 1,643,489
- -------------------------------------------------------------------------------------------
Total assets 168,063,804
Liabilities
- -------------------------------------------------------------------------------------------
Payable for securities repurchased 819,261
- -------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 324,515
- -------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 304,973
- -------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 70,892
- -------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 13,648
- -------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 2,322
- -------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 108,714
- -------------------------------------------------------------------------------------------
Collateral on securities loaned, at value (Note 1) 968,000
- -------------------------------------------------------------------------------------------
Other accrued expenses 50,562
- -------------------------------------------------------------------------------------------
Total liabilities 2,662,887
- -------------------------------------------------------------------------------------------
Net assets $165,400,917
Represented by
- -------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $174,474,769
- -------------------------------------------------------------------------------------------
Distributions in excess of net investment income (Note 1) (127,287)
- -------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign currency
transactions (Note 1) (13,968,250)
- -------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and assets and liabilities in
foreign currencies 5,021,685
- -------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to capital shares outstanding $165,400,917
Computation of net asset value and offering price
- -------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($111,208,900 divided by 9,154,501 shares) $12.15
- -------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $12.15)* $12.89
- -------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($45,036,067 divided by 3,780,831 shares)** $11.91
- -------------------------------------------------------------------------------------------
Net asset value and offering price per class C share
($6,077,104 divided by 504,295 shares)** $12.05
- -------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($3,078,846 divided by 255,765 shares) $12.04
- -------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $12.04)* $12.48
- -------------------------------------------------------------------------------------------
* On single retail sales of less than $50,000. On sales of $50,000 or more and on group
sales, the offering price is reduced.
** Redemption price per share is equal to net asset value less any applicable contingent
deferred sales charge.
The accompanying notes are an integral part of these financial statements.
STATEMENT OF OPERATIONS
Six months ended March 31, 2002 (Unaudited)
Investment income:
- -------------------------------------------------------------------------------------------
Dividends (net of foreign tax of $72,242) $ 1,205,026
- -------------------------------------------------------------------------------------------
Interest 51,096
- -------------------------------------------------------------------------------------------
Securities lending 1,764
- -------------------------------------------------------------------------------------------
Total investment income 1,257,886
Expenses:
- -------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 580,791
- -------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 196,524
- -------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 7,265
- -------------------------------------------------------------------------------------------
Administrative services (Note 2) 4,717
- -------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 119,239
- -------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 209,440
- -------------------------------------------------------------------------------------------
Distribution fees -- Class C (Note 2) 27,214
- -------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 9,416
- -------------------------------------------------------------------------------------------
Other 103,129
- -------------------------------------------------------------------------------------------
Total expenses 1,257,735
- -------------------------------------------------------------------------------------------
Expense reduction (Note 2) (24,300)
- -------------------------------------------------------------------------------------------
Net expenses 1,233,435
- -------------------------------------------------------------------------------------------
Net investment income 24,451
- -------------------------------------------------------------------------------------------
Net realized loss on investments (Notes 1 and 3) (6,898,232)
- -------------------------------------------------------------------------------------------
Net realized gain on futures contracts (Note 1) 120,424
- -------------------------------------------------------------------------------------------
Net realized gain on foreign currency transactions (Note 1) 64,509
- -------------------------------------------------------------------------------------------
Net unrealized depreciation of assets and liabilities in foreign currencies
during the period (71,956)
- -------------------------------------------------------------------------------------------
Net unrealized appreciation of investments during the period 20,274,456
- -------------------------------------------------------------------------------------------
Net gain on investments 13,489,201
- -------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $13,513,652
- -------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
STATEMENT OF CHANGES IN NET ASSETS
Six months ended Year ended
March 31 September 30
2002* 2001
- --------------------------------------------------------------------------------------------------
Increase in net assets
- --------------------------------------------------------------------------------------------------
Operations:
- --------------------------------------------------------------------------------------------------
Net investment income $ 24,451 $ 456,019
- --------------------------------------------------------------------------------------------------
Net realized loss on investments and foreign currency transactions (6,713,299) (6,141,633)
- --------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments and
assets and liabilities in foreign currencies 20,202,500 (15,186,718)
- --------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 13,513,652 (20,872,332)
- --------------------------------------------------------------------------------------------------
Distributions to shareholders: (Note 1)
- --------------------------------------------------------------------------------------------------
From net investment income
Class A (82,910) (417,255)
- --------------------------------------------------------------------------------------------------
Class B -- (71,273)
- --------------------------------------------------------------------------------------------------
Class C -- (5,667)
- --------------------------------------------------------------------------------------------------
Class M -- (6,340)
- --------------------------------------------------------------------------------------------------
From net realized gain on investments
Class A -- (2,880,004)
- --------------------------------------------------------------------------------------------------
Class B -- (1,637,236)
- --------------------------------------------------------------------------------------------------
Class C -- (121,194)
- --------------------------------------------------------------------------------------------------
Class M -- (119,172)
- --------------------------------------------------------------------------------------------------
Return of capital
Class A -- (45,652)
- --------------------------------------------------------------------------------------------------
Class B -- (12,483)
- --------------------------------------------------------------------------------------------------
Class C -- (956)
- --------------------------------------------------------------------------------------------------
Class M -- (1,002)
- --------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 28,283,448 44,211,474
- --------------------------------------------------------------------------------------------------
Total increase in net assets 41,714,190 18,020,908
Net assets
- --------------------------------------------------------------------------------------------------
Beginning of period 123,686,727 105,665,819
- --------------------------------------------------------------------------------------------------
End of period (including distributions in excess of net investment
income of $127,287 and $68,828, respectively) $165,400,917 $123,686,727
- --------------------------------------------------------------------------------------------------
* Unaudited
The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS
(For a common share outstanding throughout the period)
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Six months
ended
Per-share March 31
operating performance (Unaudited) Year ended September 30
- ------------------------------------------------------------------------------------------------------------------
2002 2001 2000 1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $11.05 $13.56 $14.06 $11.39 $12.50 $10.77
- ------------------------------------------------------------------------------------------------------------------
Investment operations:
- ------------------------------------------------------------------------------------------------------------------
Net investment income .02(a) .08(a) .11(a) .07(a) .16(a)(d) .14(d)
- ------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 1.09 (1.93) .59 2.98 (.87) 3.13
- ------------------------------------------------------------------------------------------------------------------
Total from
investment operations 1.11 (1.85) .70 3.05 (.71) 3.27
- ------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------
From net
investment income (.01) (.08) (.26) (.09) (.09) (.23)
- ------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- (.57) (.94) (.29) (.31) (1.31)
- ------------------------------------------------------------------------------------------------------------------
Return of capital -- (.01) -- -- -- --
- ------------------------------------------------------------------------------------------------------------------
Total distributions (.01) (.66) (1.20) (.38) (.40) (1.54)
- ------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $12.15 $11.05 $13.56 $14.06 $11.39 $12.50
- ------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 10.05* (14.31) 5.10 27.06 (5.72) 33.88
- ------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $111,209 $78,624 $63,055 $36,082 $22,091 $2,885
- ------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .74* 1.50 1.59 1.69 1.70(d) 1.48(d)
- ------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) .15* .65 .77 .53 1.14(d) 1.19(d)
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 46.11* 139.38 68.22 68.46 62.96 103.92
- ------------------------------------------------------------------------------------------------------------------
* Not annualized.
(a) Per share net investment income has been determined on the basis
of the weighted average number of shares outstanding during the period.
(b) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(c) Includes amounts paid through expense offset and brokerage service
arrangements (Note 2).
(d) Reflects an expense limitation during the period. As a result of
such limitation, expenses of the fund for the period ended September 30,
1998 and September 30, 1997, reflect a reduction of approximately 0.40%
and 0.58% per share respectively.
The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS
(For a common share outstanding throughout the period)
CLASS B
- -----------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share March 31 Nov. 3, 1997+
operating performance (Unaudited) Year ended September 30 to Sept. 30
- -----------------------------------------------------------------------------------------------------
2002 2001 2000 1999 1998
- -----------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $10.87 $13.38 $13.94 $11.34 $12.01
- -----------------------------------------------------------------------------------------------------
Investment operations:
- -----------------------------------------------------------------------------------------------------
Net investment income (loss)(a) (.03) (.01) --(e) (.03) .04(d)
- -----------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 1.07 (1.90) .58 2.95 (.35)
- -----------------------------------------------------------------------------------------------------
Total from
investment operations 1.04 (1.91) .58 2.92 (.31)
- -----------------------------------------------------------------------------------------------------
Less distributions:
- -----------------------------------------------------------------------------------------------------
From net
investment income -- (.03) (.20) (.03) (.05)
- -----------------------------------------------------------------------------------------------------
From net realized gain
on investments -- (.57) (.94) (.29) (.31)
- -----------------------------------------------------------------------------------------------------
Return of capital -- --(e) -- -- --
- -----------------------------------------------------------------------------------------------------
Total distributions -- (.60) (1.14) (.32) (.36)
- -----------------------------------------------------------------------------------------------------
Net asset value,
end of period $11.91 $10.87 $13.38 $13.94 $11.34
- -----------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 9.57* (14.89) 4.26 26.08 (2.62)*
- -----------------------------------------------------------------------------------------------------
Ratios and supplemental data
- -----------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $45,036 $38,875 $37,356 $28,105 $16,315
- -----------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) 1.11* 2.25 2.34 2.44 2.24(d)*
- -----------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) (.24)* (.11) .01 (.23) .39(d)*
- -----------------------------------------------------------------------------------------------------
Portfolio turnover (%) 46.11* 139.38 68.22 68.46 62.96
- -----------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Per share net investment income (loss) has been determined on the
basis of the weighted average number of shares outstanding during the
period.
(b) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(c) Includes amounts paid through expense offset and brokerage service
arrangements (Note 2).
(d) Reflects an expense limitation during the period. As a result of
such limitation, expenses of the fund for the period ended September 30,
1998 reflect a reduction of 0.40% per share.
(e) Amount represents less than $0.01 per share.
The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS
(For a common share outstanding throughout the period)
CLASS C
- ----------------------------------------------------------------------------------------
Six months
ended For the period
Per-share March 31 Year ended July 26, 1999+
operating performance (Unaudited) September 30 to Sept. 30
- ----------------------------------------------------------------------------------------
2002 2001 2000 1999
- ----------------------------------------------------------------------------------------
Net asset value,
beginning of period $10.98 $13.53 $14.06 $14.56
- ----------------------------------------------------------------------------------------
Investment operations:
- ----------------------------------------------------------------------------------------
Net investment income (loss)(a) (.03) (.01) .01 (.01)
- ----------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 1.10 (1.93) .61 (.48)
- ----------------------------------------------------------------------------------------
Total from
investment operations 1.07 (1.94) .62 (.49)
- ----------------------------------------------------------------------------------------
Less distributions:
- ----------------------------------------------------------------------------------------
From net
investment income -- (.03) (.21) (.01)
- ----------------------------------------------------------------------------------------
From net realized gain
on investments -- (.57) (.94) --
- ----------------------------------------------------------------------------------------
Return of capital -- (.01) -- --
- ----------------------------------------------------------------------------------------
Total distributions -- (.61) (1.15) (.01)
- ----------------------------------------------------------------------------------------
Net asset value,
end of period $12.05 $10.98 $13.53 $14.06
- ----------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 9.75* (15.01) 4.48 (3.40)*
- ----------------------------------------------------------------------------------------
Ratios and supplemental data
- ----------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $6,077 $4,124 $2,392 $515
- ----------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) 1.11* 2.25 2.34 .44*
- ----------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) (.22)* (.07) .09 (.10)*
- ----------------------------------------------------------------------------------------
Portfolio turnover (%) 46.11* 139.38 68.22 68.46
- ----------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Per share net investment income (loss) has been determined on the
basis of the weighted average number of shares outstanding during the
period.
(b) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(c) Includes amounts paid through expense offset and brokerage service
arrangements (Note 2).
The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS
(For a common share outstanding throughout the period)
CLASS M
- -----------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share March 31 Nov. 3, 1997+
operating performance (Unaudited) Year ended September 30 to Sept. 30
- -----------------------------------------------------------------------------------------------------
2002 2001 2000 1999 1998
- -----------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $10.97 $13.46 $14.00 $11.35 $12.01
- -----------------------------------------------------------------------------------------------------
Investment operations:
- -----------------------------------------------------------------------------------------------------
Net investment income (loss)(a) (.01) .01 .03 --(e) .07(d)
- -----------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 1.08 (1.89) .58 2.98 (.36)
- -----------------------------------------------------------------------------------------------------
Total from
investment operations 1.07 (1.88) .61 2.98 (.29)
- -----------------------------------------------------------------------------------------------------
Less distributions:
- -----------------------------------------------------------------------------------------------------
From net
investment income -- (.03) (.21) (.04) (.06)
- -----------------------------------------------------------------------------------------------------
From net realized gain
on investments -- (.57) (.94) (.29) (.31)
- -----------------------------------------------------------------------------------------------------
Return of capital -- (.01) -- -- --
- -----------------------------------------------------------------------------------------------------
Total distributions -- (.61) (1.15) (.33) (.37)
- -----------------------------------------------------------------------------------------------------
Net asset value,
end of period $12.04 $10.97 $13.46 $14.00 $11.35
- -----------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 9.75* (14.61) 4.46 26.57 (2.48)*
- -----------------------------------------------------------------------------------------------------
Ratios and supplemental data
- -----------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $3,079 $2,064 $2,862 $2,712 $1,783
- -----------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .99* 2.00 2.09 2.19 2.02(d)*
- -----------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) (.10)* .08 .24 .03 .62(d)*
- -----------------------------------------------------------------------------------------------------
Portfolio turnover (%) 46.11* 139.38 68.22 68.46 62.96
- -----------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Per share net investment income (loss) has been determined on the
basis of the weighted average number of shares outstanding during the
period.
(b) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(c) Includes amounts paid through expense offset and brokerage service
arrangements (Note 2).
(d) Reflects an expense limitation during the period. As a result of
such limitation, expenses of the fund for the period ended September 30,
1998 reflect a reduction of 0.40% per share.
(e) Amount represents less than $0.01 per share.
The accompanying notes are an integral part of these financial statements.
NOTES TO FINANCIAL STATEMENTS
March 31, 2002 (Unaudited)
Note 1
Significant accounting policies
Putnam Global Growth and Income Fund (the "fund") is a series of Putnam
Investment Funds (the "trust") which is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end management
investment company. The objective of the fund is to seek capital growth
and current income as a secondary objective by investing primarily in
common stocks of companies worldwide.
The fund offers class A, class B, class C and class M shares. Class A
shares are sold with a maximum front-end sales charge of 5.75%. Class B
shares, which convert to class A shares after approximately eight years,
do not pay a front-end sales charge but pay a higher ongoing
distribution fee than class A shares, and are subject to a contingent
deferred sales charge, if those shares are redeemed within six years of
purchase. Class C shares are subject to the same fees and expenses as
class B shares, except that class C shares have a one-year 1.00%
contingent deferred sales charge and do not convert to class A shares.
Class M shares are sold with a maximum front end sales charge of 3.50%
and pay an ongoing distribution fee that is higher than class A shares
but lower than class B and class C shares.
Expenses of the fund are borne pro-rata by the holders of each class of
shares, except that each class bears expenses unique to that class
(including the distribution fees applicable to such class). Each class
votes as a class only with respect to its own distribution plan or other
matters on which a class vote is required by law or determined by the
Trustees. Shares of each class would receive their pro-rata share of the
net assets of the fund, if that fund were liquidated. In addition, the
Trustees declare separate dividends on each class of shares.
The following is a summary of significant accounting policies
consistently followed by the fund in the preparation of its financial
statements. The preparation of financial statements is in conformity
with accounting principles generally accepted in the United States of
America and requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities in the financial
statements and the reported amounts of increases and decreases in net
assets from operations during the reporting period. Actual results could
differ from those estimates.
A) Security valuation Investments for which market quotations are
readily available are stated at market value, which is determined using
the last reported sales price on its principal exchange, or if no sales
are reported -- as in the case of some securities traded
over-the-counter -- the last reported bid price. Securities quoted in
foreign currencies are translated into U.S. dollars at the current
exchange rate. Short-term investments having remaining maturities of 60
days or less are stated at amortized cost, which approximates market
value. Other investments, including restricted securities, are stated at
fair value following procedures approved by the Trustees.
B) Joint trading account The fund may transfer uninvested cash balances,
including cash collateral received under security lending arrangements,
into a joint trading account along with the cash of other registered
investment companies and certain other accounts managed by Putnam
Investment Management, LLC ("Putnam Management"), the fund's manager, an
indirect wholly-owned subsidiary of Putnam, LLC. These balances may be
invested in one or more repurchase agreements and/or short-term money
market instruments.
C) Repurchase agreements The fund, or any joint trading account, through
its custodian, receives delivery of the underlying securities, the
market value of which at the time of purchase is required to be in an
amount at least equal to the resale price, including accrued interest.
Collateral for certain tri-party repurchase agreements is held at the
counterparty's custodian in a segregated account for the benefit of the
fund and the counterparty. Putnam Management is responsible for
determining that the value of these underlying securities is at all
times at least equal to the resale price, including accrued interest.
D) Security transactions and related investment income Security
transactions are accounted for on the trade date (date the order to buy
or sell is executed). Gains or losses on securities sold are determined
on the identified cost basis.
Interest income is recorded on the accrual basis. Dividend income is
recorded on the ex-dividend date, except that certain dividends from
foreign securities are recorded as soon as the fund is informed of the
ex-dividend date. Non-cash dividends, if any, are recorded at the fair
market value of the securities received.
E) Foreign currency translation The accounting records of the fund are
maintained in U.S. dollars. The market value of foreign securities,
currency holdings, and other assets and liabilities are recorded in the
books and records of the fund after translation to U.S. dollars based on
the exchange rates on that day. The cost of each security is determined
using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when accrued or incurred. The
fund does not isolate that portion of realized or unrealized gains or
losses resulting from changes in the foreign exchange rate on
investments from fluctuations arising from changes in the market prices
of the securities. Such gains and losses are included with the net
realized and unrealized gain or loss on investments. Net realized gains
and losses on foreign currency transactions represent net realized
exchange gains or losses on closed forward currency contracts,
disposition of foreign currencies and the difference between the amount
of investment income and foreign withholding taxes recorded on the
fund's books and the U.S. dollar equivalent amounts actually received or
paid. Net unrealized appreciation and depreciation of assets and
liabilities in foreign currencies arise from changes in the value of
open forward currency contracts and assets and liabilities other than
investments at the period end, resulting from changes in the exchange
rate. Investments in foreign securities involve certain risks, including
those related to economic instability, unfavorable political
developments, and currency fluctuations, not present with domestic
investments.
F) Forward currency contracts The fund may engage in forward currency
contracts, which are agreements between two parties to buy and sell
currencies at a set price on a future date. These contracts are used to
protect against a decline in value relative to the U.S. dollar of the
currencies in which its portfolio securities are denominated or quoted
(or an increase in the value of a currency in which securities a fund
intends to buy are denominated, when a fund holds cash reserves and
short-term investments). The U.S. dollar value of forward currency
contracts is determined using current forward currency exchange rates
supplied by a quotation service. The market value of the contract will
fluctuate with changes in currency exchange rates. The contract is
"marked to market" daily and the change in market value is recorded as
an unrealized gain or loss. When the contract is closed, the fund
records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the
time it was closed. The fund could be exposed to risk if the value of
the currency changes unfavorably, if the counterparties to the contracts
are unable to meet the terms of their contracts or if the fund is unable
to enter into a closing position.
G) Futures and options contracts The fund may use futures and options
contracts to hedge against changes in the values of securities the fund
owns or expects to purchase. The fund may also write options on
securities it owns or in which it may invest to increase its current
returns.
The potential risk to the fund is that the change in value of futures
and options contracts may not correspond to the change in value of the
hedged instruments. In addition, losses may arise from changes in the
value of the underlying instruments, if there is an illiquid secondary
market for the contracts, or if the counterparty to the contract is
unable to perform. When the contract is closed, the fund records a
realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was
closed. Realized gains and losses on purchased options are included in
realized gains and losses on investment securities.
Futures contracts are valued at the quoted daily settlement prices
established by the exchange on which they trade. The Fund agrees to
receive from or pay to the broker an amount of cash equal to the daily
fluctuation in the value of the futures contract. Such receipts or
payments are known as "variation margin." Exchange traded options are
valued at the last sale price, or if no sales are reported, the last bid
price for purchased options and the last ask price for written options.
Options traded over-the-counter are valued using prices supplied by
dealers.
H) Security lending The fund may lend securities, through its agent
Citibank N.A., to qualified borrowers in order to earn additional
income. The loans are collateralized by cash and/or securities in an
amount at least equal to the market value of the securities loaned. The
market value of securities loaned is determined daily and any additional
required collateral is allocated to the fund on the next business day.
The risk of borrower default will be borne by Citibank N.A., the fund
will bear the risk of loss with respect to the investment of the cash
collateral. Income from securities lending is included in investment
income on the Statement of operations. At March 31, 2002, the value of
securities loaned amounted to $669,856. The fund received cash
collateral of $968,000 which is pooled with collateral of other Putnam
funds into 35 issuers of high grade short-term investments.
I) Line of credit The fund has entered into a committed line of credit
with certain banks. This line of credit agreement includes restrictions
that the fund maintains an asset coverage ratio of at least 300% and
borrowings must not exceed prospectus limitations. For the six months
ended March 31, 2002, the fund had no borrowings against the line of
credit.
J) Federal taxes It is the policy of the fund to distribute all of its
taxable income within the prescribed time and otherwise comply with the
provisions of the Internal Revenue Code applicable to regulated
investment companies. It is also the intention of the fund to distribute
an amount sufficient to avoid imposition of any excise tax under Section
4982 of the Internal Revenue Code of 1986, as amended. Therefore, no
provision has been made for federal taxes on income, capital gains or
unrealized appreciation on securities held nor for excise tax on income
and capital gains.
At September 30, 2001, the fund had a capital loss carryover of
approximately $2,908,000 available to the extent allowed by tax law to
offset future net capital gain, if any, which will expire on September
30, 2009.
K) Distributions to shareholders Distributions to shareholders from net
investment income are recorded by the fund on the ex-dividend date.
Distributions from capital gains, if any, are recorded on the
ex-dividend date and paid at least annually. The amount and character of
income and gains to be distributed are determined in accordance with
income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the fund's capital
accounts to reflect income and gains available for distribution (or
available capital loss carryovers) under income tax regulations.
L) Expenses of the trust Expenses directly charged or attributable to
any fund will be paid from the assets of that fund. Generally, expenses
of the trust will be allocated among and charged to the assets of each
fund on a basis that the Trustees deem fair and equitable, which may be
based on the relative assets of each fund or the nature of the services
performed and relative applicability to each fund.
Note 2
Management fee, administrative
services and other transactions
Compensation of Putnam Management, for management and investment
advisory services is paid quarterly based on the average net assets of
the fund. Such fee is based on the following annual rates: 0.80% of the
first $500 million of average net assets, 0.70% of the next $500
million, 0.65% of the next $500 million, 0.60% of the next $5 billion,
0.575% of the next $5 billion, 0.555% of the next $5 billion, 0.54% of
the next $5 billion, and 0.53% thereafter.
The fund reimburses Putnam Management an allocated amount for the
compensation and related expenses of certain officers of the fund and
their staff who provide administrative services to the fund. The
aggregate amount of all such reimbursements is determined annually by
the Trustees.
Custodial functions for the fund's assets are provided by Putnam
Fiduciary Trust Company (PFTC), a wholly-owned subsidiary of Putnam,
LLC. Investor servicing agent functions are provided by Putnam Investor
Services, a division of PFTC.
The fund has entered into an arrangement with PFTC whereby credits
realized as a result of uninvested cash balances are used to reduce a
portion of the fund's expenses. The fund also reduced expenses through
brokerage service arrangements. For the six months ended, March 31, 2002
the fund's expenses were reduced by $24,300 under these arrangements.
Each independent Trustee of the fund receives an annual Trustee fee, of
which $716 has been allocated to the fund, and an additional fee for
each Trustees meeting attended. Trustees receive additional fees for
attendance at certain committee meetings.
The fund has adopted a Trustee Fee Deferral Plan (the "Deferral Plan")
which allows the Trustees to defer the receipt of all or a portion of
Trustees Fees payable on or after July 1, 1995. The deferred fees remain
invested in certain Putnam funds until distribution in accordance with
the Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension
plan (the "Pension Plan") covering all Trustees of the fund who have
served as a Trustee for at least five years. Benefits under the Pension
Plan are equal to 50% of the Trustee's average total retainer and
meeting fees for the three years preceding retirement. Pension expense
for the fund is included in Compensation of Trustees in the Statement of
operations. Accrued pension liability is included in Payable for
compensation of Trustees in the Statement of assets and liabilities.
The fund has adopted distribution plans (the "Plans") with respect to
its class A, class B, class C and class M shares pursuant to Rule 12b-1
under the Investment Company Act of 1940. The purpose of the Plans is to
compensate Putnam Retail Management, a wholly-owned subsidiary of
Putnam, LLC and Putnam Retail Management GP, Inc., for services provided
and expenses incurred by it in distributing shares of the fund. The
Plans provide for payments by the fund to Putnam Retail Management at an
annual rate up to 0.35%, 1.00%, 1.00% and 1.00% of the average net
assets attributable to class A, class B, class C and class M shares,
respectively. The Trustees have approved payment by the fund at an
annual rate of 0.25%, 1.00%, 1.00% and 0.75% of the average net assets
attributable to class A, class B, class C and class M shares,
respectively.
For the six months ended March 31, 2002, Putnam Retail Management,
acting as underwriter received net commissions of no monies and $284
from the sale of class A and class M shares, respectively, and received
$33,382 and $350 in contingent deferred sales charges from redemptions
of class B and class C shares, respectively. A deferred sales charge of
up to 1.00% and 0.65% is assessed on certain redemptions of class A and
class M shares, respectively. For the six months ended March 31, 2002,
Putnam Retail Management, acting as underwriter received no monies on
class A and class M redemptions, respectively.
Note 3
Purchases and sales of securities
During the six months ended March 31, 2002, cost of purchases and
proceeds from sales of investment securities other than short-term
investments aggregated $99,794,351 and $67,155,713, respectively. There
were no purchases and sales of U.S. government obligations.
Note 4
Capital shares
At March 31, 2002, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Six months ended March 31, 2002
- ---------------------------------------------------------------------------
Class A Shares Amount
- ---------------------------------------------------------------------------
Shares sold 4,511,734 $ 52,313,716
- ---------------------------------------------------------------------------
Shares issued in connection
with reinvestment
of distributions 6,676 77,783
- ---------------------------------------------------------------------------
4,518,410 52,391,499
Shares repurchased (2,479,844) (28,766,557)
- ---------------------------------------------------------------------------
Net increase 2,038,566 $ 23,624,942
- ---------------------------------------------------------------------------
Year ended September 30, 2001
- ---------------------------------------------------------------------------
Class A Shares Amount
- ---------------------------------------------------------------------------
Shares sold 6,293,589 $ 80,732,105
- ---------------------------------------------------------------------------
Shares issued in connection
with reinvestment
of distributions 254,600 3,250,286
- ---------------------------------------------------------------------------
6,548,189 83,982,391
Shares repurchased (4,082,143) (52,059,556)
- ---------------------------------------------------------------------------
Net increase 2,466,046 $ 31,922,835
- ---------------------------------------------------------------------------
Six months ended March 31, 2002
- ---------------------------------------------------------------------------
Class B Shares Amount
- ---------------------------------------------------------------------------
Shares sold 695,255 $ 7,951,405
- ---------------------------------------------------------------------------
Shares issued in connection
with reinvestment
of distributions -- --
- ---------------------------------------------------------------------------
695,255 7,951,405
Shares repurchased (489,199) (5,566,261)
- ---------------------------------------------------------------------------
Net increase 206,056 $ 2,385,144
- ---------------------------------------------------------------------------
Year ended September 30, 2001
- ---------------------------------------------------------------------------
Class B Shares Amount
- ---------------------------------------------------------------------------
Shares sold 1,374,503 $17,306,493
- ---------------------------------------------------------------------------
Shares issued in connection
with reinvestment
of distributions 127,341 1,612,132
- ---------------------------------------------------------------------------
1,501,844 18,918,625
Shares repurchased (719,247) (8,916,193)
- ---------------------------------------------------------------------------
Net increase 782,597 $10,002,432
- ---------------------------------------------------------------------------
Six months ended March 31, 2002
- ---------------------------------------------------------------------------
Class C Shares Amount
- ---------------------------------------------------------------------------
Shares sold 432,182 $ 5,041,199
- ---------------------------------------------------------------------------
Shares issued in connection
with reinvestment
of distributions -- --
- ---------------------------------------------------------------------------
432,182 5,041,199
Shares repurchased (303,338) (3,568,869)
- ---------------------------------------------------------------------------
Net increase 128,844 $ 1,472,330
- ---------------------------------------------------------------------------
Year ended September 30, 2001
- ---------------------------------------------------------------------------
Class C Shares Amount
- ---------------------------------------------------------------------------
Shares sold 315,208 $ 4,075,649
- ---------------------------------------------------------------------------
Shares issued in connection
with reinvestment
of distributions 9,395 120,345
- ---------------------------------------------------------------------------
324,603 4,195,994
Shares repurchased (125,970) (1,606,107)
- ---------------------------------------------------------------------------
Net increase 198,633 $ 2,589,887
- ---------------------------------------------------------------------------
Six months ended March 31, 2002
- ---------------------------------------------------------------------------
Class M Shares Amount
- ---------------------------------------------------------------------------
Shares sold 98,335 $1,156,427
- ---------------------------------------------------------------------------
Shares issued in connection
with reinvestment
of distributions -- --
- ---------------------------------------------------------------------------
98,335 1,156,427
Shares repurchased (30,733) (355,395)
- ---------------------------------------------------------------------------
Net increase 67,602 $ 801,032
- ---------------------------------------------------------------------------
Year ended September 30, 2001
- ---------------------------------------------------------------------------
Class M Shares Amount
- ---------------------------------------------------------------------------
Shares sold 47,545 $ 615,172
- ---------------------------------------------------------------------------
Shares issued in connection
with reinvestment
of distributions 9,797 124,918
- ---------------------------------------------------------------------------
57,342 740,090
Shares repurchased (81,739) (1,043,770)
- ---------------------------------------------------------------------------
Net decrease (24,397) $ (303,680)
- ---------------------------------------------------------------------------
Note 5
Actions by Trustees
In April 2002, the Trustees approved the merger of Putnam Global Growth
and Income Fund into Putnam Global Growth Fund. The transaction is
currently scheduled to occur in September 2002. It is subject to a
number of conditions and there is no guarantee it will occur.
FUND INFORMATION
ABOUT PUTNAM INVESTMENTS
One of the largest mutual fund families in the United States, Putnam
Investments has a heritage of investment leadership dating back to Judge
Samuel Putnam, whose Prudent Man Rule has defined fiduciary tradition and
practice since 1830. Founded 65 years ago, Putnam Investments was built
around the concept that a balance between risk and reward is the hallmark
of a well-rounded financial program. We presently manage over 100 mutual
funds in growth, value, blend, fixed income, and international.
INVESTMENT MANAGER
Putnam Investment Management, LLC
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Retail Management
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
TRUSTEES
John A. Hill, Chairman
Jameson Adkins Baxter
Charles B. Curtis
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John H. Mullin III
Robert E. Patterson
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
W. Nicholas Thorndike
OFFICERS
George Putnam, III
President
Charles E. Porter
Executive Vice President and Treasurer
Patricia C. Flaherty
Senior Vice President
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Ian C. Ferguson
Vice President
Brett C. Browchuk
Vice President
Deborah F. Kuenstner
Vice President
Richard G. Leibovitch
Vice President
Richard A. Monaghan
Vice President
Michael T. Healy
Vice President
John R. Verani
Vice President
This report is for the information of shareholders of Putnam Global
Growth and Income Fund. It may also be used as sales literature when
preceded or accompanied by the current prospectus, which gives details
of sales charges, investment objectives, and operating policies of the
fund, and the most recent copy of Putnam's Quarterly Performance Summary
and Putnam's Quarterly Ranking Summary. For more information or to
request a prospectus, call toll free: 1-800-225-1581. The fund's
Statement of Additional Information contains additional information
about the fund's Trustees and is available without charge upon request
by calling 1-800-225-1581.
Visit www.putnaminvestments.com or call a representative at 1-800-225-1581.
NOT FDIC INSURED, MAY LOSE VALUE, NO BANK GUARANTEE
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
- ---------------------
PRSRT STD
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
- ---------------------
For account balances, economic forecasts, and the latest on Putnam funds, visit
www.putnaminvestments.com
SA063-79281 197/2HP/2HQ 5/02