International Capital Opportunities Fund Semi …...Karan S. Sodhi, CFA Portfolio Manager Karan has...

Putnam International Capital Opportunities Fund

IMPORTANT NOTICE: Beginning on January 1, 2021, reports like this one will no longer automatically be sent by mail. See inside for more information.

FUND SYMBOL CLASS A

PNVAX

Semiannual report 2 | 29 | 20

Blend funds invest opportunistically in a variety of stocks, such as growth stocks and value stocks.

Putnam International Capital Opportunities FundSemiannual report 2 | 29 | 20

Message from the Trustees 1

Interview with your fund’s portfolio manager 3

Your fund’s performance 7

Your fund’s expenses 9

Consider these risks before investing 11

Terms and definitions 12

Other information for shareholders 13

Trustee approval of management contract 14

Financial statements 19

IMPORTANT NOTICE: Delivery of paper fund reportsIn accordance with regulations adopted by the Securities and Exchange Commission, beginning on January 1, 2021, reports like this one will no longer be sent by mail unless you specifically request it. Instead, they will be on Putnam’s website, and you will be notified by mail whenever a new one is available, and provided with a website link to access the report.

If you wish to stop receiving paper reports sooner, or if you wish to continue to receive paper reports free of charge after January 1, 2021, please see the back cover or insert for instructions. If you invest through a bank or broker, your choice will apply to all funds held in your account. If you invest directly with Putnam, your choice will apply to all Putnam funds in your account.

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April 8, 2020

Dear Fellow Shareholder:

After a period of gains and relative tranquility, global financial markets encountered considerable challenges in early 2020. In late February, as COVID-19, the disease caused by the coronavirus, spread into regions beyond China, global stock markets began to experience significant declines and turbulence. By mid-March, major U.S. indexes had fallen into bear market territory, defined as a 20% drop from a previous high. As often happens when stocks decline sharply, bonds generally provided better results. As investors rushed to safe havens, the yield on the benchmark 10-year U.S. Treasury note fell to historic lows. Central banks and governments worldwide have enacted measures to inject liquidity into the markets and restore confidence, including emergency interest-rate cuts.

Markets are working to assess the economic impact of the disease and the public health measures taken in response to it. It is still unclear what the costs will be and how long the effects of the COVID-19 pandemic will last, but history has shown that markets recover from downturns. For investors, we believe the most important course of action is to remain calm, stay focused on your long-term goals, and consult with your financial advisor. At Putnam, our investment professionals remain focused on actively managing fund portfolios with a research-intensive approach that includes risk management strategies.

Thank you for investing with Putnam.

Respectfully yours,

Robert L. ReynoldsPresident and Chief Executive OfficerPutnam Investments

Kenneth R. LeiblerChair, Board of Trustees

Message from the Trustees

Performance history as of 2/28/20

Annualized total return (%) comparison

LIFE OF FUND(since 12/28/95)

10 YEARS 5 YEARS 3 YEARS 1 YEAR 6 MONTHS*

8.47

6.59

8.56

4.56

7.17

5.09

2.994.09

1.98

5.423.65

1.44

–0.81–1.93

–4.21

2.61

–0.43 –0.05

The fund — class A sharesbefore sales chargePutnam International CapitalOpportunities Fund (PNVAX)

Fund’s benchmarkS&P Developed Ex-U.S.SmallCap Index

Fund’s Lipperpeer group averageInternational Small/Mid-Cap Core Funds

Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. Share price, principal value, and return will fluctuate, and you may have a gain or a loss when you sell your shares. Performance of class A shares assumes reinvestment of distributions and does not account for taxes. Fund returns in the bar chart do not reflect a sales charge of 5.75%; had they, returns would have been lower. See below and pages 7–9 for additional performance information. For a portion of the periods, the fund had expense limitations, without which returns would have been lower. To obtain the most recent month-end performance, visit putnam.com.

* Returns for the six-month period are not annualized, but cumulative.

Recent broad market index and fund performance

3.39%

2.61%

1.92%

0.92%

–0.43%

U.S. bonds (Bloomberg Barclays U.S. Aggregate Bond Index)

Putnam International Capital Opportunities Fund (class A shares before sales charge)

U.S. stocks (S&P 500 Index)

Cash (ICE BofA U.S. 3-Month Treasury Bill Index)

Fund’s benchmark (S&P Developed Ex-U.S. SmallCap Index)

This comparison shows your fund’s performance in the context of broad market indexes for the six months ended 2/29/20. See above and pages 7–9 for additional fund performance information. Index descriptions can be found on pages 12–13.

2 International Capital Opportunities Fund

Interview with your fund’s portfolio manager

Karan S. Sodhi, CFAPortfolio Manager

Karan has an M.B.A. from Indiana University and a B.A. from Hendrix College. He served at Putnam from 2000 to 2007 and rejoined the firm in 2010. Karan has been in the investment industry since 1998.

Please describe the market environment during the six‑month reporting period?Despite the ongoing U.S.–China trade conflict and persistent market volatility early in the period, global equity markets posted gains in the fourth quarter. Since early 2020, the COVID-19 [coronavirus] outbreak has dominated the news. Little was known about the disease at the time. The virus, first found in China, began to spread to other countries. Heightened fear among investors drove significant and, in many cases, indiscrimi-nate markdowns of equity values. Market volatility increased, and investors fled stocks for perceived safer havens. However, the market sell-off has resulted in a plethora of compelling investment opportunities. This backdrop provides a fertile hunting ground for our long-term-oriented, quality-biased approach to investing. We are using this opportunity to selectively add to our favorite companies and, in some cases, upgrade to higher-quality investments.

During the period, Putnam International Capital Opportunities Fund posted a return of 2.61%, outperforming its benchmark, the S&P Developed Ex-U.S. SmallCap Index, with a return of –0.43%. Stock selection was the main driver of fund performance.

Karan Sodhi discusses the investing environment and fund performance for the six months ended February 29, 2020, as well as his outlook for international stocks.

Interview with your fund’s portfolio manager

Performance history as of 2/28/20

Annualized total return (%) comparison

LIFE OF FUND(since 12/28/95)

10 YEARS 5 YEARS 3 YEARS 1 YEAR 6 MONTHS*

8.47

6.59

8.56

4.56

7.17

5.09

2.994.09

1.98

5.423.65

1.44

–0.81–1.93

–4.21

2.61

–0.43 –0.05

The fund — class A sharesbefore sales chargePutnam International CapitalOpportunities Fund (PNVAX)

Fund’s benchmarkS&P Developed Ex-U.S.SmallCap Index

Fund’s Lipperpeer group averageInternational Small/Mid-Cap Core Funds

Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. Share price, principal value, and return will fluctuate, and you may have a gain or a loss when you sell your shares. Performance of class A shares assumes reinvestment of distributions and does not account for taxes. Fund returns in the bar chart do not reflect a sales charge of 5.75%; had they, returns would have been lower. See below and pages 7–9 for additional performance information. For a portion of the periods, the fund had expense limitations, without which returns would have been lower. To obtain the most recent month-end performance, visit putnam.com.

* Returns for the six-month period are not annualized, but cumulative.

Recent broad market index and fund performance

3.39%

2.61%

1.92%

0.92%

–0.43%

U.S. bonds (Bloomberg Barclays U.S. Aggregate Bond Index)

Putnam International Capital Opportunities Fund (class A shares before sales charge)

U.S. stocks (S&P 500 Index)

Cash (ICE BofA U.S. 3-Month Treasury Bill Index)

Fund’s benchmark (S&P Developed Ex-U.S. SmallCap Index)

This comparison shows your fund’s performance in the context of broad market indexes for the six months ended 2/29/20. See above and pages 7–9 for additional fund performance information. Index descriptions can be found on pages 12–13.

International Capital Opportunities Fund 3

Top 10 holdingsHOLDING (PERCENTAGE OF FUND’S NET ASSETS) COUNTRY OVER/UNDERWEIGHT VS. BENCHMARK

Euronext NV (3.4%) France

Eurazeo SA (3.2%) France

Cogeco Communications, Inc. (3.0%) Canada

Marwyn Materials, Ltd. (2.9%) Jersey

CompuGroup Medical SE (2.8%) Germany

Brickworks, Ltd. (2.7%) Australia

Ashtead Group PLC (2.6%) United Kingdom

Dassault Aviation SA (2.5%) France

Nexity SA (2.5%) France

PALTAC Corp. (2.3%) Japan 2.3%

3.2%

3.1%

2.9%

2.9%

2.7%

2.6%

2.5%

2.4%

2.8%

This table shows the fund’s top 10 holdings by percentage of the fund’s net assets as of 2/29/20. Short-term holdings and derivatives, if any, are excluded. Holdings may vary over time.

Country composition

Japan 20.3%

United Kingdom 18.7

France 13.3

Canada 9.7

Germany 5.6

Taiwan 5.5

Australia 3.9

Ireland 3.1

Other countries 16.6

Cash and net other assets 3.3

Allocations are shown as a percentage of the fund’s net assets as of 2/29/20. Cash and net other assets, if any, represent the market value weights of cash, derivatives, short-term securities, and other unclassified assets in the portfolio. Summary information may differ from the information in the portfolio schedule included in the financial statements due to the inclusion of derivative securities, any interest accruals, the exclusion of as-of trades, if any, the use of different classifications of securities for presentation purposes, and rounding. Holdings and allocations may vary over time.


What are some stocks that helped performance during the period?Dart Group, an airline and package holiday tour operator based in the United Kingdom, was the top contributor to performance. During this period, Dart benefited from the bankruptcy of Thomas Cook, the third largest tour operator in the United Kingdom. With meaningful overlap in Dart and Thomas Cook’s historical footprint, the bankruptcy created a significant opportu-nity for Dart to profitably increase market share. The improved industry dynamics lead to stock outperformance. Strong growth prospects have more recently been dented by fears of corona-virus. However, we believe the company, with its strong balance sheet, is well positioned to weather this storm and could emerge stronger once the impact of coronavirus subsides.

Breedon Group [previously known as Marwyn Group], a construction materials company based in the United Kingdom, was another significant contributor. We acquired a stake in Breedon at a depressed valuation due to a confluence of events. The company’s 2018 earnings were weak primarily due to volatile weather and higher input costs. Also, a large institutional holder of Breedon stock exited their position due to forced liquidations by investors. These events resulted in an appreciable decline in the stock price. We had an opportunity to acquire the stock at a discounted valuation. Operating results in the second half of 2019 were strong. The company also made a value-accretive acquisition of certain assets of CEMEX, a multinational building materials company. These developments resulted in stock appreciation.

What are some of the stocks that detracted from fund performance?Liberty Global, a broadband, distribution, and content company, operating primarily in Europe, detracted from performance. The company’s failure to complete a widely anticipated divestment of its Switzerland business unit hurt the stock. Liberty also reported weak results due to challenges in its business segment in the United Kingdom.

We believe these factors are a one-off. In our view, the company’s cash-rich balance sheet combined with its attractive valuation make it a compelling investment.

Megacable is a Mexican cable television, broadband, and phone service provider. The stock’s underperformance was primarily due to disappointing fourth-quarter earnings. While double-digit growth in revenue and EBITDA was respectable, the elevated capex spending outlook from the company was disappointing. The outlook reflects Megacable’s plans to expand its coverage of new homes as well as launch a fiber upgrade project in key cities in 2020–2021. We believe this investment will more than pay for itself and could strengthen the business.

Can you describe the fund’s investment strategy?The goal of our investment strategy is to identify quality companies that are trading at meaningful discounts to their intrinsic value. We combine our valuation framework with a process that identifies companies with wide competitive moats and large addressable markets. We also pay particular attention to balance sheet strength. Our focus is on maxi-mizing risk-adjusted returns. We believe our universe of small- and mid-cap stocks is a rela-tively inefficient segment of the market. This segment provides a rich hunting ground for undiscovered and undervalued businesses.

How did your sector allocations influence fund performance during the period?Stock selection drove performance, while sector allocation weighed on results. An overweight position in the communication services sector and underweight positions in the real estate,

The market sell‑off on COVID‑19‑induced fear has resulted in a plethora of compelling investment opportunities. Karan Sodhi


utilities, and information technology sectors detracted from performance. Underweight allocations to materials and consumer staples made positive contributions.

Our investment process emphasizes bottom-up stock selection. Our sector weightings reflect a combination of the conviction in our best ideas with a disciplined portfolio construction approach. Over time, our goal is for stock-specific returns to drive performance, with sector allocation being a neutral contributor to returns.

During the period, there was no material change in our largest sector positions. Communication services and financials continue to be our largest overweight sectors, and utilities and real estate represent the biggest underweight exposures. This is driven by bottom-up stock selection. The overweight positioning in these sectors is underpinned by holdings in relatively defensive businesses trading at significant discounts to intrinsic value.

What is your outlook for the markets, and how is the fund positioned?The unfortunate coronavirus outbreak has created significant uncertainty among investors, resulting in steep market sell-offs. The market decline has made available a variety of

excellent businesses at discounted valuations. Based on historical precedent [SARS, MERS, swine flu], we anticipate that medical break-throughs in treatment or prevention could improve sentiment, resulting in market stability.

We have emphasized ownership of quality companies with solid balance sheets. This helped the fund navigate the market decline. On a country basis, the fund has overweight positions in the United Kingdom, Ireland, Canada, and Taiwan. Similar to the sector weightings, this positioning is driven by bottom-up stock selection. Given the quality bias in our portfolio holdings, we believe that the fund is well positioned to weather the current storm and to take advantage of dislocations in the market.

Thank you, Karan, for this update on the fund.

The views expressed in this report are exclusively those of Putnam Management and are subject to change. They are not meant as investment advice.

Please note that the holdings discussed in this report may not have been held by the fund for the entire period. Portfolio composition is subject to review in accordance with the fund’s investment strategy and may vary in the future. Current and future portfolio holdings are subject to risk.

Comparison of top sector shiftsSECTOR 8/31/19 2/29/20 CHANGE

Energy 4.5% 2.2%

Information technology 7.3% 9.1%

Materials 5.6% 6.8%

Communication services 13.8% 12.6%

Consumer staples 0.7% 1.6%

-3.0 -1.5 0.0 1.5 3.0

bar height 1p1.5

space between bars 0p11.5

max. width of chart: 11p

–1.2%

0.9%

1.2%

1.8%

–2.3%

Rule: 30% black. 4 pts above top bar / 4 pts below bottom bar.

This chart shows the fund’s largest allocation shifts, by percentage, over the past six months. Allocations are shown as a percentage of the fund’s net assets. Current period summary information may differ from the portfolio schedule notes included in the financial statements due to the inclusion of derivative securities, any interest accruals, the exclusion of as-of trades, if any, the use of different classifications of securities for presentation purposes, and rounding. Holdings and allocations may vary over time.


Your fund’s performanceThis section shows your fund’s performance, price, and distribution information for periods ended February 29, 2020, the end of the first half of its current fiscal year. In accordance with regulatory requirements for mutual funds, we also include performance information as of the most recent calendar quarter-end and expense information taken from the fund’s current prospectus. Performance should always be considered in light of a fund’s investment strategy. Data represent past performance. Past performance does not guarantee 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 information does not reflect any deduction for taxes a shareholder may owe on fund distributions or on the redemption of fund shares. For the most recent month-end performance, please visit the Individual Investors section at putnam.com or call Putnam at 1-800-225-1581. Class R, R6, and Y shares are not available to all investors. See the Terms and definitions section in this report for definitions of the share classes offered by your fund.

Fund performance Total return for periods ended 2/29/20

Annual average

(life of fund) 10 yearsAnnual average 5 years

Annual average 3 years

Annual average 1 year 6 months

Class A (12/28/95)

Before sales charge 8.47% 56.14% 4.56% 15.85% 2.99% 17.16% 5.42% –0.81% 2.61%

After sales charge 8.21 47.17 3.94 9.19 1.77 10.42 3.36 –6.51 –3.29

Class B (10/30/96)

Before CDSC 8.20 47.02 3.93 11.59 2.22 14.56 4.64 –1.54 2.25

After CDSC 8.20 47.02 3.93 9.67 1.86 11.56 3.71 –6.40 –2.75

Class C (7/26/99)

Before CDSC 8.14 44.84 3.77 11.60 2.22 14.57 4.64 –1.53 2.26

After CDSC 8.14 44.84 3.77 11.60 2.22 14.57 4.64 –2.50 1.26

Class R (1/21/03)

Net asset value 8.21 52.30 4.30 14.42 2.73 16.28 5.16 –1.08 2.48

Class R6 (5/22/18)

Net asset value 8.71 60.58 4.85 17.66 3.31 18.42 5.80 –0.39 2.83

Class Y (2/1/00)

Net asset value 8.70 60.10 4.82 17.31 3.24 18.07 5.69 –0.56 2.75

Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. After-sales-charge returns for class A shares reflect the deduction of the maximum 5.75% sales charge levied at the time of purchase. Class B share returns after contingent deferred sales charge (CDSC) reflect the applicable CDSC, which is 5% in the first year, declining over time to 1% in the sixth year, and is eliminated thereafter. Class C share returns after CDSC reflect a 1% CDSC for the first year that is eliminated thereafter. Class R, R6, and Y shares have no initial sales charge or CDSC. Performance for class B, C, R, and Y shares before their inception is derived from the historical performance of class A shares, adjusted for the applicable sales charge (or CDSC) and the higher operating expenses for such shares, except for class Y shares, for which 12b-1 fees are not applicable. Performance for class R6 shares prior to their inception is derived from the historical performance of class Y shares and has not been adjusted for the lower investor servicing fees applicable to class R6 shares; had it, returns would have been higher.

For a portion of the periods, the fund had expense limitations, without which returns would have been lower.

The fund has had performance fee adjustments that may have had a positive or negative impact on returns.

Class B share performance reflects conversion to class A shares after eight years.

Class C share performance reflects conversion to class A shares after 10 years.


Comparative index returns For periods ended 2/29/20

Annual average




S&P Developed Ex-U.S. SmallCap Index

6.59% 99.86% 7.17% 22.21% 4.09% 11.35% 3.65% –1.93% –0.43%

Lipper International Small/Mid-Cap Core Funds category average*

8.56 69.31 5.09 10.81 1.98 4.53 1.44 –4.21 –0.05

Index and Lipper results should be compared with fund performance before sales charge, before CDSC, or at net asset value.

* Over the 6-month, 1-year, 3-year, 5-year, 10-year, and life-of-fund periods ended 2/29/20, there were 66, 66, 57, 44, 30, and 4 funds, respectively, in this Lipper category.

Fund price and distribution information For the six-month period ended 2/29/20

Distributions Class A Class B Class C Class R Class R 6 Class Y

Number 1 1 1 1 1 1

Income — — — — — —

Capital gains

Long-term gains $0.529 $0.529 $0.529 $0.529 $0.529 $0.529

Short-term gains — — — — — —

Total $0.529 $0.529 $0.529 $0.529 $0.529 $0.529

Share value

Before sales

charge

After sales

charge

Net asset value

Net asset value

Net asset value

Net asset value

Net asset value

8/31/19 $34.55 $36.66 $34.27 $34.04 $33.95 $34.72 $34.64

2/29/20 34.98 37.11 34.57 34.34 34.32 35.23 35.12

The classification of distributions, if any, is an estimate. Before-sales-charge share value and current dividend rate for class A shares, if applicable, do not take into account any sales charge levied at the time of purchase. After-sales-charge share value, current dividend rate, and current 30-day SEC yield, if applicable, are calculated assuming that the maximum sales charge (5.75% for class A shares) was levied at the time of purchase. Final distribution information will appear on your year-end tax forms.


Fund performance as of most recent calendar quarter Total return for periods ended 3/31/20

Annual average




Class A (12/28/95)

Before sales charge 7.60% 18.96% 1.75% –3.54% –0.72% –6.22% –2.12% –16.71% –17.94%

After sales charge 7.33 12.12 1.15 –9.09 –1.89 –11.62 –4.03 –21.50 –22.66

Class B (10/30/96)

Before CDSC 7.33 12.03 1.14 –7.11 –1.46 –8.31 –2.85 –17.33 –18.24

After CDSC 7.33 12.03 1.14 –8.70 –1.80 –10.72 –3.71 –21.41 –22.27

Class C (7/26/99)

Before CDSC 7.26 10.35 0.99 –7.10 –1.46 –8.32 –2.85 –17.31 –18.25

After CDSC 7.26 10.35 0.99 –7.10 –1.46 –8.32 –2.85 –18.12 –19.05

Class R (1/21/03)

Net asset value 7.34 16.03 1.50 –4.74 –0.97 –6.93 –2.36 –16.90 –18.06

Class R6 (5/22/18)

Net asset value 7.83 22.37 2.04 –2.03 –0.41 –5.20 –1.77 –16.34 –17.76

Class Y (2/1/00)

Net asset value 7.82 21.97 2.01 –2.35 –0.47 –5.51 –1.87 –16.48 –17.83

See the discussion following the fund performance table on page 7 for information about the calculation of fund performance.

Your fund’s expensesAs a mutual fund investor, you pay ongoing expenses, such as management fees, distribution fees (12b-1 fees), and other expenses. Using the following information, you can estimate how these expenses affect your investment and compare them with the expenses of other funds. You may also pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund’s prospectus or talk to your financial representative.

Expense ratiosClass A Class B Class C Class R Class R6 Class Y

Total annual operating expenses for the fiscal year ended 8/31/19 1.50% 2.25% 2.25% 1.75% 1.06% 1.25%

Annualized expense ratio for the six-month period ended 2/29/20* 1.52% 2.27% 2.27% 1.77% 1.10% 1.27%

Fiscal-year expense information in this table is taken from the most recent prospectus, is subject to change, and may differ from that shown for the annualized expense ratio and in the financial highlights of this report.

Expenses are shown as a percentage of average net assets. * Includes an increase of 0.05% from annualizing the performance fee adjustment for the six months ended 2/29/20.


Expenses per $1,000The following table shows the expenses you would have paid on a $1,000 investment in each class of the fund from 9/1/19 to 2/29/20. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.

Class A Class B Class C Class R Class R6 Class Y

Expenses paid per $1,000*† $7.66 $11.41 $11.42 $8.91 $5.55 $6.40

Ending value (after expenses) $1,026.10 $1,022.50 $1,022.60 $1,024.80 $1,028.30 $1,027.50

* Expenses for each share class are calculated using the fund’s annualized expense ratio for each class, which represents the ongoing expenses as a percentage of average net assets for the six months ended 2/29/20. The expense ratio may differ for each share class.

† Expenses are calculated by multiplying the expense ratio by the average account value for the period; then multiplying the result by the number of days in the period; and then dividing that result by the number of days in the year.

Estimate the expenses you paidTo estimate the ongoing expenses you paid for the six months ended 2/29/20, use the following calculation method. To find the value of your investment on 9/1/19, call Putnam at 1-800-225-1581.

How to calculate the expenses you paid

Value of your investment on 9/1/19 ÷ $1,000 x Expenses paid per $1,000 = Total expenses paid

Example Based on a $10,000 investment in class A shares of your fund.

$10,000 ÷ $1,000 x $7.66 (see preceding table) = $76.60

Compare expenses using the SEC’s methodThe Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the following table shows your fund’s expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total costs) of investing in the fund with those of other funds. All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.

Class A Class B Class C Class R Class R6 Class Y

Expenses paid per $1,000*† $7.62 $11.36 $11.36 $8.87 $5.52 $6.37

Ending value (after expenses) $1,017.30 $1,013.58 $1,013.58 $1,016.06 $1,019.39 $1,018.55

* Expenses for each share class are calculated using the fund’s annualized expense ratio for each class, which represents the ongoing expenses as a percentage of average net assets for the six months ended 2/29/20. The expense ratio may differ for each share class.

† Expenses are calculated by multiplying the expense ratio by the average account value for the six-month period; then multiplying the result by the number of days in the six-month period; and then dividing that result by the number of days in the year.


Consider these risks before investingThe value of investments in the fund’s portfolio may fall or fail to rise over extended periods of time for a variety of reasons, including general economic, political, or financial market conditions; investor sentiment and market perceptions; government actions; geopolitical events or changes; and factors related to a specific issuer, geography, industry, or sector. These and other factors may lead to increased volatility and reduced liquidity in the fund’s portfolio holdings. International investing involves currency, economic, and political risks. Emerging-market securities carry illiquidity and volatility risks. Investments in small and/or midsize companies increase the risk of greater price fluctuations. Growth stocks may be more susceptible to earnings disappointments, and value stocks may fail to rebound. Risks associated with derivatives include increased investment exposure (which may be considered leverage) and, in the case of over-the-counter instruments, the potential inability to terminate or sell derivatives positions and the potential failure of the other party to the instrument to meet its obligations. You can lose money by investing in the fund.


Terms and definitions

Important termsTotal 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.

Before sales charge, or net asset value, is the price, or value, of one share of a mutual fund, without a sales charge. Before-sales-charge figures fluctuate with market conditions, and are calculated by dividing the net assets of each class of shares by the number of outstanding shares in the class.

After sales charge is the price of a mutual fund share plus the maximum sales charge levied at the time of purchase. After-sales-charge perfor-mance figures shown here assume the 5.75% maximum sales charge for class A shares.

Contingent deferred sales charge (CDSC) is generally 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 over time 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.

Share classesClass A shares are generally subject to an initial sales charge and no CDSC (except on certain redemptions of shares bought without an initial sales charge).

Class B shares are closed to new investments and are only available by exchange from another Putnam fund or through dividend and/or capital gains reinvestment. They are not subject to an initial sales charge and may be subject to a CDSC.

Class C shares are not subject to an initial sales charge and are subject to a CDSC only if the shares are redeemed during the first year.

Class R shares are not subject to an initial sales charge or CDSC and are only available to employer-sponsored retirement plans.

Class R6 shares are not subject to an initial sales charge or CDSC and carry no 12b-1 fee. They are generally only available to employer-sponsored retirement plans, corporate and institutional clients, and clients in other approved programs.

Class Y shares are not subject to an initial sales charge or CDSC and carry no 12b-1 fee. They are generally only available to corporate and institutional clients and clients in other approved programs.

Comparative indexesBloomberg Barclays U.S. Aggregate Bond Index is an unmanaged index of U.S. investment-grade fixed-income securities.

ICE BofA (Intercontinental Exchange Bank of America) U.S. 3-Month Treasury Bill Index is an unmanaged index that seeks to measure the performance of U.S. Treasury bills available in the marketplace.

S&P 500 Index is an unmanaged index of common stock performance.

S&P Developed Ex-U.S. SmallCap Index is an unmanaged index of small-cap stocks from developed countries, excluding the United States.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.

ICE Data Indices, LLC (“ICE BofA”), used with permission. ICE BofA permits use of the ICE BofA indices and related data on an “as is” basis; makes no warranties regarding same; does not guarantee the suitability, quality, accu-racy, timeliness, and/or completeness of the ICE BofA indices or any data included in, related to, or derived therefrom; assumes no liability in connection with the use of the foregoing; and does not sponsor, endorse, or recommend Putnam Investments, or any of its products or services.


Lipper is a third-party industry-ranking entity that ranks mutual funds. Its rankings do not reflect sales charges. Lipper rankings are based on total return at net asset value relative to other funds that have similar current invest-

ment styles or objectives as determined by Lipper. Lipper may change a fund’s category assignment at its discretion. Lipper category averages reflect performance trends for funds within a category.

Other information for shareholders

Important notice regarding delivery of shareholder documents

In accordance with Securities and Exchange Commission (SEC) regulations, Putnam sends a single copy of annual and semiannual shareholder reports, prospectuses, and proxy statements to Putnam shareholders who share the same address, unless a shareholder requests otherwise. If you prefer to receive your own copy of these documents, please call Putnam at 1-800-225-1581, and Putnam will begin sending individual copies within 30 days.

Proxy votingPutnam is committed to managing our mutual funds in the best interests of our shareholders. The Putnam funds’ proxy voting guidelines and procedures, as well as information regarding how your fund voted proxies relating to portfolio securities during the 12-month period ended June 30, 2019, are available in the Individual Investors section of putnam.com and on the SEC’s website, www.sec.gov. If you have questions about finding forms on the SEC’s website, you may call the SEC at 1-800-SEC-0330. You may also obtain the Putnam funds’ proxy voting guidelines and

procedures at no charge by calling Putnam’s Shareholder Services at 1-800-225-1581.

Fund portfolio holdingsThe fund will file a complete schedule of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT within 60 days of the end of such fiscal quarter. Shareholders may obtain the fund’s Form N-PORT on the SEC’s website at www.sec.gov.

Prior to its use of Form N-PORT, the fund filed its complete schedule of its portfolio holdings with the SEC on Form N-Q, which is available online at www.sec.gov.

Trustee and employee fund ownershipPutnam employees and members of the Board of Trustees place their faith, confidence, and, most importantly, investment dollars in Putnam mutual funds. As of February 29, 2020, Putnam employees had approximately $449,000,000 and the Trustees had approxi-mately $74,000,000 invested in Putnam mutual funds. These amounts include investments by the Trustees’ and employees’ immediate family members as well as investments through retirement and deferred compensation plans.


Trustee approval of management contract

Trustee approval of management contract

Consideration of the proposed sub-advisory contractAt their meeting on October 18, 2019, the Trustees of the fund, including all of the Trustees who are not “interested persons” (as this term is defined in the Investment Company Act of 1940, as amended) of The Putnam Funds (the “Independent Trustees”), approved the terms of the proposed sub-advisory contract between Putnam Investment Manage-ment, LLC (“Putnam Management”), Putnam Investments Limited (“PIL”) and The Putnam Advisory Company, LLC (“PAC”) with respect to your fund.

The Trustees noted that Putnam Management was proposing approval of the sub-advisory contract because a member of your fund’s current portfolio management team was relocating to Singapore, where he would become an employee of PAC. The Trustees considered Putnam Management’s recommendation that the Trustees approve the sub-advisory contract so that the portfolio manager could remain a member of your fund’s portfolio management team following his reloca-tion. The Trustees also considered information provided by Putnam Management regarding the terms of the sub-advisory contract. The Trustees noted that the sub-advisory contract with PAC they had approved with respect to a number of other Putnam funds at their meeting in June 2019 and that the terms of the proposed sub-advisory contract for your fund, including the sub-advisory fee, were the same as had been approved for each other fund subject to the contract. In approving the sub-advisory contract, the Trustees relied to a considerable extent on their previous approvals in June 2019, which are described below. They also noted that, because PAC, like PIL, is an affiliate of Putnam Management and Putnam Management remains fully responsible for all services provided by PAC, they had not attempted to evaluate PIL or PAC as a separate entity. All references to Putnam Management below should be deemed to include references to PIL and PAC as necessary or appropriate in the context.

General conclusions in connection with the Trustees’ previous approvalsThe Board of Trustees of The Putnam Funds oversees the management of each fund and, as required by law, determines annually whether to approve the continuance of your fund’s

management contract with Putnam Management and the sub-management contract with respect to your fund between Putnam Management and its affiliate, PIL. The Board, with the assistance of its Contract Committee, requests and evaluates all information it deems reasonably necessary under the circumstances in connection with its annual contract review. The Contract Committee consists solely of Independent Trustees.

At the outset of the review process, members of the Board’s independent staff and independent legal counsel discussed with representatives of Putnam Management the annual contract review materials furnished to the Contract Committee during the course of the previous year’s review, identifying possible changes in these materi-als that might be necessary or desirable for the coming year. Following these discussions and in consultation with the Contract Committee, the Independent Trustees’ independent legal counsel requested that Putnam Management and its affiliates furnish specified information, together with any additional information that Putnam Management considered relevant, to the Contract Committee. Over the course of several months ending in June 2019, the Contract Committee met on a number of occasions with representatives of Putnam Management, and separately in executive session, to consider the information that Putnam Management provided. Throughout this process, the Contract Committee was assisted by the members of the Board’s independent staff and by independent legal counsel for The Putnam Funds and the Independent Trustees.

In May 2019, the Contract Committee met in executive session to discuss and consider its recommendations with respect to the contin-uance of the contracts. At the Trustees’ June 2019 meeting, the Contract Committee met in executive session with the other Independent Trustees to review a summary of the key financial, performance and other data that the Contract Committee considered in the course of its review. The Contract Committee then presented its written report, which summarized the key factors that the Committee had considered and set forth its recommendations. The Contract Committee recommended, and the Independent Trustees approved, the continuance of your fund’s manage-ment and sub-management contracts, effective July 1, 2019. (Because PIL is an affiliate of Putnam


Management and Putnam Management remains fully responsible for all services provided by PIL, the Trustees have not attempted to evaluate PIL as a separate entity, and all subsequent refer-ences to Putnam Management below should be deemed to include reference to PIL as necessary or appropriate in the context.)

The Independent Trustees’ approval was based on the following conclusions:

• That the fee schedule in effect for your fund repre-sented reasonable compensation in light of the nature and quality of the services being provided to the fund, the fees paid by competitive funds, the costs incurred by Putnam Management in providing services to the fund, and the appli-cation of certain reductions and waivers noted below; and

• That the fee schedule in effect for your fund represented an appropriate sharing between fund shareholders and Putnam Management of such economies of scale as may exist in the management of the fund at current asset levels.

These conclusions were based on a comprehen-sive consideration of all information provided to the Trustees and were not the result of any single factor. Some of the factors that figured particu-larly in the Trustees’ deliberations and how the Trustees considered these factors are described below, although individual Trustees may have evaluated the information presented differently, giving different weights to various factors. It is also important to recognize that the management arrangements for your fund and the other Putnam funds are the result of many years of review and discussion between the Independent Trustees and Putnam Management, that some aspects of the arrangements may receive greater scrutiny in some years than others, and that the Trust-ees’ conclusions may be based, in part, on their consideration of fee arrangements in previous years. For example, with some minor exceptions, the funds’ current fee arrangements under the management contracts were first implemented at the beginning of 2010 following extensive review by the Contract Committee and discussions with representatives of Putnam Management, as well as approval by shareholders.

Management fee schedules and total expensesThe Trustees reviewed the management fee schedules in effect for all Putnam funds, including fee levels and breakpoints. The Trustees also

reviewed the total expenses of each Putnam fund, recognizing that in most cases manage-ment fees represented the major, but not the sole, determinant of total costs to fund shareholders. (Two funds have implemented so-called “all-in” management fees covering substantially all routine fund operating costs.)

In reviewing fees and expenses, the Trustees generally focus their attention on material changes in circumstances — for example, changes in assets under management, changes in a fund’s investment strategy, changes in Putnam Management’s operating costs or profitability, or changes in competitive practices in the mutual fund industry — that suggest that consideration of fee changes might be warranted. The Trustees concluded that the circumstances did not indicate that changes to the management fee structure for your fund would be appropriate at this time.

Under its management contract, your fund has the benefit of breakpoints in its management fee schedule that provide shareholders with econo-mies of scale in the form of reduced fee rates as assets under management in the Putnam family of funds increase. The Trustees concluded that the fee schedule in effect for your fund represented an appropriate sharing of econo-mies of scale between fund shareholders and Putnam Management.

In addition, your fund’s management contract provides that its management fees will be adjusted up or down depending upon whether your fund’s performance is better or worse than the performance of an appropriate index of securi-ties prices specified in the management contract. In the course of reviewing investment perfor-mance, the Trustees examined the operation of your fund’s performance fees and concluded that these fees were operating effectively to align further Putnam Management’s economic interests with those of the fund’s shareholders.

As in the past, the Trustees also focused on the competitiveness of each fund’s total expense ratio. In order to support the effort to have fund expenses meet competitive standards, the Trustees and Putnam Management and the funds’ investor servicing agent, Putnam Investor Services, Inc. (“PSERV”), have implemented expense limitations that were in effect during your fund’s fiscal year ending in 2018. These expense limitations were: (i) a contractual expense limita-tion applicable to all open-end funds of 25 basis points on investor servicing fees and expenses


and (ii) a contractual expense limitation appli-cable to specified open-end funds, including your fund, of 20 basis points on so-called “other expenses” (i.e., all expenses exclusive of manage-ment fees, distribution fees, investor servicing fees, investment-related expenses, interest, taxes, brokerage commissions, acquired fund fees and expenses and extraordinary expenses). These expense limitations attempt to maintain competitive expense levels for the funds. Most funds, including your fund, had sufficiently low expenses that these expense limitations were not operative during their fiscal years ending in 2018. Putnam Management and PSERV have agreed to maintain these expense limitations until at least December 30, 2020. The support of Putnam Management and PSERV for these expense limitation arrangements was an import-ant factor in the Trustees’ decision to approve the continuance of your fund’s management and sub-management contracts.

The Trustees reviewed comparative fee and expense information for a custom group of competitive funds selected by Broadridge Financial Solutions, Inc. (“Broadridge”). This comparative information included your fund’s percentile ranking for effective management fees and total expenses (excluding any applicable 12b-1 fees), which provides a general indication of your fund’s relative standing. In the custom peer group, your fund ranked in the second quintile in effective management fees (determined for your fund and the other funds in the custom peer group based on fund asset size and the applicable contractual management fee schedule) and in the second quintile in total expenses (excluding any applicable 12b-1 fees) as of December 31, 2018. The first quintile represents the least expensive funds and the fifth quintile the most expensive funds. The fee and expense data reported by Broadridge as of December 31, 2018 reflected the most recent fiscal year-end data available in Broadridge’s database at that time.

In connection with their review of fund manage-ment fees and total expenses, the Trustees also reviewed the costs of the services provided and the profits realized by Putnam Management and its affiliates from their contractual relationships with the funds. This information included trends in revenues, expenses and profitability of Putnam Management and its affiliates relating to the investment management, investor servicing and distribution services provided to the funds. In this regard, the Trustees also reviewed an analysis of

Putnam Management’s revenues, expenses and profitability, allocated on a fund-by-fund basis, with respect to the funds’ management, distribu-tion, and investor servicing contracts. For each fund, the analysis presented information about revenues, expenses and profitability for each of the agreements separately and for the agree-ments taken together on a combined basis. The Trustees concluded that, at current asset levels, the fee schedules in place represented reasonable compensation for the services being provided and represented an appropriate sharing between fund shareholders and Putnam Management of such economies of scale as may exist in the management of the Putnam funds at that time.

The information examined by the Trustees in connection with their annual contract review for the Putnam funds included information regard-ing fees charged by Putnam Management and its affiliates to institutional clients, including defined benefit pension and profit-sharing plans and sub-advised mutual funds. This information included, in cases where an institutional product’s investment strategy corresponds with a fund’s strategy, comparisons of those fees with fees charged to the Putnam funds, as well as an assess-ment of the differences in the services provided to these different types of clients as compared to the services provided to the Putnam funds. The Trustees observed that the differences in fee rates between these clients and the Putnam funds are by no means uniform when examined by individ-ual asset sectors, suggesting that differences in the pricing of investment management services to these types of clients may reflect, among other things, historical competitive forces operating in separate markets. The Trustees considered the fact that in many cases fee rates across different asset classes are higher on average for mutual funds than for institutional clients, and the Trust-ees also considered the differences between the services that Putnam Management provides to the Putnam funds and those that it provides to its other clients. The Trustees did not rely on these comparisons to any significant extent in conclud-ing that the management fees paid by your fund are reasonable.

Investment performanceThe quality of the investment process provided by Putnam Management represented a major factor in the Trustees’ evaluation of the quality of services provided by Putnam Management under your fund’s management contract. The Trustees


were assisted in their review of the Putnam funds’ investment process and performance by the work of the investment oversight committees of the Trustees and the full Board of Trustees, which meet on a regular basis with the funds’ portfolio teams and with the Chief Investment Officers and other senior members of Putnam Management’s Investment Division throughout the year. The Trustees concluded that Putnam Management generally provides a high-quality investment process — based on the experience and skills of the individuals assigned to the management of fund portfolios, the resources made available to them, and in general Putnam Manage-ment’s ability to attract and retain high-quality personnel — but also recognized that this does not guarantee favorable investment results for every fund in every time period.

The Trustees considered that, after a strong start to the year, 2018 was a mixed year for The Putnam Funds, with the Putnam open-end Funds’ perfor-mance, on an asset-weighted basis, ranking in the 54th percentile of their Lipper Inc. (“Lipper”) peers (excluding those Putnam funds that are evaluated based on their total returns versus selected investment benchmarks). The Trustees also noted that The Putnam Funds were ranked by the Barron’s/Lipper Fund Families survey as the 41st-best performing mutual fund complex out of 57 complexes for the one-year period ended December 31, 2018 and the 29th-best perform-ing mutual fund complex out of 55 complexes for the five-year period ended December 31, 2018. The Trustees observed that The Putnam Funds’ performance over the longer-term continued to be strong, ranking 6th out of 49 mutual fund complexes in the survey over the ten-year period ended 2018. In addition, the Trustees noted that 22 of the funds were four- or five-star rated by Morningstar Inc. at the end of 2018. They also noted, however, the disappointing investment performance of some funds for periods ended December 31, 2018 and considered information provided by Putnam Management regarding the factors contributing to the underperformance and actions being taken to improve the performance of these particular funds. The Trustees indicated their intention to continue to monitor closely the performance of those funds, including the effec-tiveness of any efforts Putnam Management has undertaken to address underperformance and whether additional actions to address areas of underperformance are warranted.

For purposes of the Trustees’ evaluation of the Putnam Funds’ investment performance, the Trustees generally focus on a competitive indus-try ranking of each fund’s total net return over a one-year, three-year and five-year period. For a number of Putnam funds with relatively unique investment mandates for which Putnam Manage-ment informed the Trustees that meaningful competitive performance rankings are not considered to be available, the Trustees evalu-ated performance based on their total gross and net returns and comparisons of those returns with the returns of selected investment bench-marks. In the case of your fund, the Trustees considered that its class A share cumulative total return performance at net asset value was in the following quartiles of its Lipper peer group (Lipper International Small/Mid-Cap Core Funds) for the one-year, three-year and five-year periods ended December 31, 2018 (the first quartile representing the best-performing funds and the fourth quartile the worst-performing funds):

One-year period 1stThree-year period 2ndFive-year period 3rd

Over the one-year, three-year and five-year periods ended December 31, 2018, there were 63, 52 and 45 funds, respectively, in your fund’s Lipper peer group. (When considering performance infor-mation, shareholders should be mindful that past performance is not a guarantee of future results.)

The Trustees considered Putnam Management’s continued efforts to support fund performance through initiatives including structuring compen-sation for portfolio managers and research analysts to enhance accountability for fund performance, emphasizing accountability in the portfolio management process, and affirming its commitment to a fundamental-driven approach to investing. The Trustees noted further that Putnam Management had made selective hires in 2018 to strengthen its investment team.

Brokerage and soft-dollar allocations; investor servicingThe Trustees considered various potential benefits that Putnam Management may receive in connection with the services it provides under the management contract with your fund. These include benefits related to brokerage allocation and the use of soft dollars, whereby a portion of the commissions paid by a fund for brokerage may be used to acquire research services that are


expected to be useful to Putnam Management in managing the assets of the fund and of other clients. Subject to policies established by the Trustees, soft dollars generated by these means are used predominantly to acquire brokerage and research services (including third-party research and market data) that enhance Putnam Manage-ment’s investment capabilities and supplement Putnam Management’s internal research efforts. However, the Trustees noted that a portion of available soft dollars continues to be used to pay fund expenses. The Trustees indicated their continued intent to monitor regulatory and indus-try developments in this area with the assistance of their Brokerage Committee. The Trustees also indicated their continued intent to monitor the allocation of the Putnam funds’ brokerage in order to ensure that the principle of seeking best price and execution remains paramount in the portfolio trading process.

Putnam Management may also receive benefits from payments that the funds make to Putnam Management’s affiliates for investor or distribution services. In conjunction with the annual review of your fund’s management and sub-management contracts, the Trustees reviewed your fund’s investor servicing agreement with PSERV and its distributor’s contracts and distribution plans with Putnam Retail Management Limited Partnership (“PRM”), both of which are affiliates of Putnam Management. The Trustees concluded that the fees payable by the funds to PSERV and PRM, as applicable, for such services are fair and reason-able in relation to the nature and quality of such services, the fees paid by competitive funds, and the costs incurred by PSERV and PRM, as appli-cable, in providing such services. Furthermore, the Trustees were of the view that the services provided were required for the operation of the funds, and that they were of a quality at least equal to those provided by other providers.


Financial statements


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 non-investment 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 liquidation preference of 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 the fund’s net investment gain or loss, 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. Dividend sources are estimated at the time of declaration. Actual results may vary. Any non-taxable return of capital cannot be determined until final tax calculations are completed after the end of the fund’s fiscal year.

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 highlights table also includes the current reporting period.


COMMON STOCKS (96.9%)* Shares ValueAustralia (3.9%)Brickworks, Ltd. 769,905 $9,054,424Mineral Resources, Ltd. 353,377 3,790,354

12,844,778Canada (9.7%)CI Financial Corp. 267,300 4,438,903Cogeco Communications, Inc. 124,500 9,852,405Constellation Software, Inc. 6,515 6,637,218Fairfax Financial Holdings, Ltd. 17,300 7,452,437Home Capital Group, Inc. † 165,300 3,503,658

31,884,621Chile (1.5%)Liberty Latin America, Ltd. Class C † 332,900 5,056,751

5,056,751China (0.7%)China Traditional Chinese Medicine Holdings Co., Ltd. 4,304,000 2,269,965

2,269,965France (13.4%)Dassault Aviation SA 8,034 8,371,391Eurazeo SA 158,879 10,664,577Euronext NV 135,484 11,310,785Kaufman & Broad SA 144,029 5,791,216Nexity SA 176,550 8,172,017

44,309,986Germany (5.6%)AURELIUS Equity Opportunities SE & Co. KGaA S 119,031 3,487,022CompuGroup Medical SE 149,126 9,348,933CTS Eventim AG & Co. KGaA 105,620 5,586,412

18,422,367Greece (1.2%)Hellenic Exchanges — Athens Stock Exchange SA 222,676 899,489Motor Oil (Hellas) Corinth Refineries SA 193,072 3,175,590

4,075,079Hong Kong (1.8%)Melco International Development, Ltd. 2,933,000 6,065,329

6,065,329Ireland (3.1%)Bank of Ireland Group PLC 526,643 1,979,046Dalata Hotel Group PLC 710,625 3,260,586Ryanair Holdings PLC ADR † 68,000 4,874,240

10,113,872Italy (1.7%)DiaSorin SpA 47,888 5,455,999

5,455,999Japan (20.3%)Amano Corp. 237,400 5,864,103Daiho Corp. 240,800 5,183,599Daiseki Co., Ltd. 140,800 3,348,013Kobe Bussan Co., Ltd. 120,000 4,390,063

The fund’s portfolio 2/29/20 (Unaudited)


COMMON STOCKS (96.9%)* cont. Shares ValueJapan cont.Kyudenko Corp. 190,100 $5,071,169METAWATER Co., Ltd. 99,000 3,484,122MinebeaMitsumi, Inc. 304,890 5,341,085Open House Co., Ltd. 293,100 7,453,727PALTAC Corp. 181,700 7,657,332Sanwa Holdings Corp. 475,300 4,350,914Solasto Corp. 443,600 4,024,804TechnoPro Holdings, Inc. 95,400 5,657,612Trend Micro, Inc. (Japan) 102,200 5,068,256

66,894,799Jersey (2.9%)Marwyn Materials, Ltd. † 8,739,158 9,675,743

9,675,743Mexico (2.0%)Megacable Holdings SAB de CV (Units) 1,941,034 6,518,435

6,518,435South Korea (1.2%)i-SENS, Inc. 53,245 904,144Vieworks Co., Ltd. 122,384 3,059,421

3,963,565Spain (2.6%)Applus Services SA 604,742 6,832,402Fomento de Construcciones y Contratas SA 141,782 1,685,394

8,517,796Taiwan (5.6%)CTCI Corp. 3,897,000 4,727,267Elite Material Co., Ltd. 1,522,000 5,828,146Sino-American Silicon Products, Inc. 2,013,000 6,737,901TCI Co., Ltd. 139,990 972,681

18,265,995United Kingdom (18.7%)Admiral Group PLC 278,144 7,596,328Afren PLC † F 4,060,504 5Ashtead Group PLC 274,597 8,595,262Berkeley Group Holdings PLC (The) 113,928 7,006,889Cairn Energy PLC † 2,231,633 4,047,615Dart Group PLC 150,058 2,382,327Domino’s Pizza Group PLC 1,644,481 6,269,520Liberty Global PLC Class C † 214,400 3,985,696LSL Property Services PLC 759,679 3,078,645PageGroup PLC 516,875 2,729,138Rightmove PLC 919,860 7,358,244Schroders PLC 131,243 4,826,203Vivo Energy PLC 2,939,910 3,808,649

61,684,521United States (1.0%)Discovery, Inc. Class C † 129,800 3,257,980

3,257,980Total common stocks (cost $325,442,887) $319,277,581


U.S. TREASURY OBLIGATIONS (0.0%)*Principal

amount ValueU.S. Treasury Inflation Index Notes 1/15/21 i $9,399 $9,519Total U.S. treasury obligations (cost $9,519) $9,519

SHORT‑TERM INVESTMENTS (4.8%)*Principal amount/

shares ValuePutnam Cash Collateral Pool, LLC 1.78% d Shares 3,504,312 $3,504,312Putnam Short Term Investment Fund 1.74% L Shares 10,275,884 10,275,884State Street Institutional U.S. Government Money Market Fund, Premier Class 1.53% P Shares 431,000 431,000U.S. Treasury Bills 1.574%, 5/21/20 ∆ $682,000 680,073U.S. Treasury Bills 1.640%, 4/9/20 ∆ 577,000 576,150U.S. Treasury Bills 1.889%, 3/12/20 278,000 277,886U.S. Treasury Bills 1.636%, 4/2/20 242,000 241,709Total short-term investments (cost $15,986,339) $15,987,014

TOTAL INVESTMENTSTotal investments (cost $341,438,745) $335,274,114

Key to holding’s abbreviations

ADR American Depository Receipts: represents ownership of foreign securities on deposit with a custodian bank

Notes to the fund’s portfolio

Unless noted otherwise, the notes to the fund’s portfolio are for the close of the fund’s reporting period, which ran from September 1, 2019 through February 29, 2020 (the reporting period). Within the following notes to the portfolio, references to “Putnam Management” represent Putnam Investment Management, LLC, the fund’s manager, an indirect wholly-owned subsidiary of Putnam Investments, LLC and references to “ASC 820” represent Accounting Standards Codification 820 Fair Value Measurements and Disclosures.

* Percentages indicated are based on net assets of $329,644,880.

† This security is non-income-producing.

∆ This security, in part or in entirety, was pledged and segregated with the custodian for collateral on certain derivative contracts at the close of the reporting period. Collateral at period end totaled $587,282 and is included in Investments in securities on the Statement of assets and liabilities (Notes 1 and 6).

d Affiliated company. See Notes 1 and 5 to the financial statements regarding securities lending. The rate quoted in the security description is the annualized 7-day yield of the fund at the close of the reporting period.

F This security is valued by Putnam Management at fair value following procedures approved by the Trustees. Securities are classified as Level 3 for ASC 820 based on the securities’ valuation inputs. At the close of the reporting period, fair value pricing was also used for certain foreign securities in the portfolio (Note 1).

i This security was pledged, or purchased with cash that was pledged, to the fund for collateral on certain derivative contracts (Note 1).

L Affiliated company (Note 5). The rate quoted in the security description is the annualized 7-day yield of the fund at the close of the reporting period.

P This security was pledged, or purchased with cash that was pledged, to the fund for collateral on certain derivative contracts. The rate quoted in the security description is the annualized 7-day yield of the fund at the close of the reporting period.

S Security on loan, in part or in entirety, at the close of the reporting period (Note 1).

At the close of the reporting period, the fund maintained liquid assets totaling $667,736 to cover certain derivative contracts.

Unless otherwise noted, the rates quoted in Short-term investments security descriptions represent the weighted average yield to maturity.


Debt obligations are considered secured unless otherwise indicated.

The dates shown on debt obligations are the original maturity dates.

The fund had the following sector concentrations greater than 10% at the close of the reporting period (as a percentage of net assets):

Industrials 22.0%Financials 17.0Communication services 12.6Consumer discretionary 12.1

FORWARD CURRENCY CONTRACTS at 2/29/20 (aggregate face value $183,550,784 ) (Unaudited)

Counterparty CurrencyContract

type*Delivery

date ValueAggregate face value

Unrealized appreciation/ (depreciation)

Bank of America N.A.Australian Dollar Buy 4/15/20 $2,204,920 $2,348,550 $(143,630 )

British Pound Sell 3/18/20 352,999 349,367 (3,632 )Euro Buy 3/18/20 2,266,230 2,288,031 (21,801 )Euro Sell 3/18/20 2,266,230 2,230,957 (35,273 )

Barclays Bank PLCBritish Pound Sell 3/18/20 9,067,148 9,185,939 118,791

Euro Buy 3/18/20 1,313,395 1,325,683 (12,288 )Euro Sell 3/18/20 1,313,395 1,293,002 (20,393 )

Hong Kong Dollar Buy 5/20/20 691,411 693,212 (1,801 )Japanese Yen Sell 5/20/20 7,844,970 7,759,501 (85,469 )

Citibank, N.A.Canadian Dollar Sell 4/15/20 4,540,868 4,696,187 155,319

Chilean Peso Sell 4/15/20 5,748,968 6,199,845 450,877Danish Krone Buy 3/18/20 5,388,007 5,448,380 (60,373 )

Euro Buy 3/18/20 2,335,734 2,356,647 (20,913 )Euro Sell 3/18/20 2,335,734 2,299,436 (36,298 )

Goldman Sachs InternationalAustralian Dollar Buy 4/15/20 497,061 529,414 (32,353 )

British Pound Buy 3/18/20 2,243,570 2,264,698 (21,128 )British Pound Sell 3/18/20 2,243,570 2,274,096 30,526

Canadian Dollar Sell 4/15/20 739,514 764,724 25,210Japanese Yen Buy 5/20/20 3,621,868 3,582,628 39,240

South African Rand Buy 4/15/20 457,393 501,953 (44,560 )HSBC Bank USA, National Association

Chinese Yuan Sell 5/20/20 872,389 870,272 (2,117 )Norwegian Krone Buy 3/18/20 1,720,857 1,788,546 (67,689 )

JPMorgan Chase Bank N.A.Australian Dollar Buy 4/15/20 2,515,885 2,679,929 (164,044 )

British Pound Sell 3/18/20 9,474,021 9,590,358 116,337Euro Buy 3/18/20 876,591 884,957 (8,366 )Euro Sell 3/18/20 876,591 862,949 (13,642 )

Japanese Yen Buy 5/20/20 1,777,318 1,750,334 26,984New Zealand Dollar Buy 4/15/20 1,015,150 1,083,793 (68,643 )

Norwegian Krone Buy 3/18/20 1,308,420 1,341,494 (33,074 )Singapore Dollar Buy 5/20/20 4,221,518 4,290,663 (69,145 )


FORWARD CURRENCY CONTRACTS at 2/29/20 (aggregate face value $183,550,784 ) (Unaudited) cont.

Counterparty CurrencyContract

type*Delivery

date ValueAggregate face value

Unrealized appreciation/ (depreciation)

JPMorgan Chase Bank N.A. cont.South Korean Won Buy 5/20/20 $9,698,782 $9,956,124 $(257,342 )

Swedish Krona Buy 3/18/20 11,007,619 11,144,324 (136,705 )Swiss Franc Buy 3/18/20 30,980,435 30,436,023 544,412

NatWest Markets PLCAustralian Dollar Buy 4/15/20 2,036,364 2,087,366 (51,002 )

State Street Bank and Trust Co.British Pound Sell 3/18/20 7,669,775 7,783,484 113,709

Euro Buy 3/18/20 1,219,360 1,200,386 18,974Euro Sell 3/18/20 1,219,360 1,227,333 7,973

Israeli Shekel Buy 4/16/20 2,139,181 2,140,792 (1,611 )Japanese Yen Buy 5/20/20 8,227,772 8,137,553 90,219

UBS AGAustralian Dollar Buy 4/15/20 504,820 537,666 (32,846 )

British Pound Buy 3/18/20 1,590,933 1,643,941 (53,008 )British Pound Sell 3/18/20 1,590,933 1,615,275 24,342

Canadian Dollar Buy 4/15/20 3,537,614 3,663,345 (125,731 )Euro Sell 3/18/20 5,426,510 5,540,820 114,310

Japanese Yen Buy 5/20/20 1,209,622 1,170,249 39,373WestPac Banking Corp.

Canadian Dollar Sell 4/15/20 2,333,500 2,351,391 17,891Euro Buy 3/18/20 4,053,114 3,989,962 63,152Euro Sell 3/18/20 4,053,114 4,123,896 70,782

Japanese Yen Buy 5/20/20 1,279,207 1,265,309 13,898Unrealized appreciation 2,082,319Unrealized (depreciation) (1,624,877 )Total $457,442

* The exchange currency for all contracts listed is the United States Dollar.


The accompanying notes are an integral part of these financial statements.

ASC 820 establishes a three-level hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of the fund’s investments. The three levels are defined as follows:

Level 1: Valuations based on quoted prices for identical securities in active markets.Level 2: Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.Level 3: Valuations based on inputs that are unobservable and significant to the fair value measurement.

The following is a summary of the inputs used to value the fund’s net assets as of the close of the reporting period:

Valuation inputsInvestments in securities: Level 1 Level 2 Level 3Common stocks*:

Australia $— $12,844,778 $—

Canada 31,884,621 — —

Chile 5,056,751 — —

China — 2,269,965 —

France — 44,309,986 —

Germany — 18,422,367 —

Greece — 4,075,079 —

Hong Kong — 6,065,329 —

Ireland 4,874,240 5,239,632 —

Italy — 5,455,999 —

Japan — 66,894,799 —

Jersey — 9,675,743 —

Mexico 6,518,435 — —

South Korea — 3,963,565 —

Spain — 8,517,796 —

Taiwan — 18,265,995 —

United Kingdom 3,985,696 57,698,820 5

United States 3,257,980 — — Total common stocks 55,577,723 263,699,853 5

U.S. treasury obligations — 9,519 — Short-term investments 10,706,884 5,280,130 — Totals by level $66,284,607 $268,989,502 $5

Valuation inputsOther financial instruments: Level 1 Level 2 Level 3Forward currency contracts $— $457,442 $— Totals by level $— $457,442 $—

* Common stock classifications are presented at the sector level, which may differ from the fund’s portfolio presentation.

At the start and close of the reporting period, Level 3 investments in securities represented less than 1% of the fund’s net assets and were not considered a significant portion of the fund’s portfolio.

Statement of assets and liabilities 2/29/20 (Unaudited)

ASSETSInvestment in securities, at value, including $3,103,448 of securities on loan (Notes 1 and 6):

Unaffiliated issuers (identified cost $327,658,549) $321,493,918 Affiliated issuers (identified cost $13,780,196) (Notes 1 and 5) 13,780,196

Foreign currency (cost $47,321) (Note 1) 47,299 Foreign tax reclaim 192,791 Dividends, interest and other receivables 432,248 Receivable for shares of the fund sold 206,743 Receivable for investments sold 1,537,997 Unrealized appreciation on forward currency contracts (Note 1) 2,082,319 Prepaid assets 45,803 Total assets 339,819,314

LIABILITIESPayable for investments purchased 3,064,940 Payable for shares of the fund repurchased 588,996 Payable for compensation of Manager (Note 2) 282,391 Payable for custodian fees (Note 2) 97,647 Payable for investor servicing fees (Note 2) 130,755 Payable for Trustee compensation and expenses (Note 2) 206,561 Payable for administrative services (Note 2) 1,120 Payable for distribution fees (Note 2) 139,502 Unrealized depreciation on forward currency contracts (Note 1) 1,624,877 Collateral on securities loaned, at value (Note 1) 3,504,312 Collateral on certain derivative contracts at value (Notes 1 and 6) 440,519 Other accrued expenses 92,814 Total liabilities 10,174,434

Net assets $329,644,880

REPRESENTED BYPaid-in capital (Unlimited shares authorized) (Notes 1 and 4) $338,751,127 Total distributable earnings (Note 1) (9,106,247)Total — Representing net assets applicable to capital shares outstanding $329,644,880

(Continued on next page)



Statement of assets and liabilities cont.

COMPUTATION OF NET ASSET VALUE AND OFFERING PRICENet asset value and redemption price per class A share ($272,582,224 divided by 7,792,446 shares) $34.98 Offering price per class A share (100/94.25 of $34.98)* $37.11 Net asset value and offering price per class B share ($2,083,018 divided by 60,259 shares)** $34.57 Net asset value and offering price per class C share ($4,494,528 divided by 130,901 shares)** $34.34 Net asset value, offering price and redemption price per class R share ($9,247,042 divided by 269,414 shares) $34.32 Net asset value, offering price and redemption price per class R6 share ($11,116,059 divided by 315,507 shares) $35.23 Net asset value, offering price and redemption price per class Y share ($30,122,009 divided by 857,773 shares) $35.12

*On single retail sales of less than $50,000. On sales of $50,000 or more the offering price is reduced.**Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.



Statement of operations Six months ended 2/29/20 (Unaudited)

INVESTMENT INCOMEDividends (net of foreign tax of $145,450) $2,068,888 Interest (including interest income of $81,011 from investments in affiliated issuers) (Note 5) 95,886 Securities lending (net of expenses) (Notes 1 and 5) 91,377 Total investment income 2,256,151

EXPENSESCompensation of Manager (Note 2) 1,753,052 Investor servicing fees (Note 2) 392,922 Custodian fees (Note 2) 22,545 Trustee compensation and expenses (Note 2) 982 Distribution fees (Note 2) 444,336 Administrative services (Note 2) 5,731 Other 138,739 Total expenses 2,758,307

Expense reduction (Note 2) (3,996)Net expenses 2,754,311

Net investment loss (498,160)

REALIZED AND UNREALIZED GAIN (LOSS)Net realized gain (loss) on:

Securities from unaffiliated issuers (Notes 1 and 3) 3,809,333 Foreign currency transactions (Note 1) 7,709 Forward currency contracts (Note 1) (1,385,838)

Total net realized gain 2,431,204 Change in net unrealized appreciation (depreciation) on:

Securities from unaffiliated issuers 7,861,473 Assets and liabilities in foreign currencies (9,001)Forward currency contracts 550,971

Total change in net unrealized appreciation 8,403,443

Net gain on investments 10,834,647

Net increase in net assets resulting from operations $10,336,487



Statement of changes in net assets

DECREASE IN NET ASSETS Six months ended 2/29/20* Year ended 8/31/19OperationsNet investment income (loss) $(498,160) $1,799,482 Net realized gain on investments and foreign currency transactions 2,431,204 7,242,204 Change in net unrealized appreciation (depreciation) of investments and assets and liabilities in foreign currencies 8,403,443 (43,379,494)Net increase (decrease) in net assets resulting from operations 10,336,487 (34,337,808)

From net realized long-term gain on investmentsClass A (4,164,586) (25,248,680)Class B (33,466) (278,298)Class C (74,976) (598,138)Class M — (352,575)Class R (145,073) (1,004,753)Class R6 (169,772) (1,037,082)Class Y (460,826) (2,686,155)

Increase in capital from settlement payments (Note 4) — 2,413 Decrease from capital share transactions (Note 4) (18,036,278) (19,709,442)Total decrease in net assets (12,748,490) (85,250,518)

NET ASSETSBeginning of period 342,393,370 427,643,888

End of period $329,644,880 $342,393,370

*Unaudited.


Fund _FundCode, — NumbCols Columns — This section modified: 3/20/20 3:26:20 PM Fund _FundCode, — NumbCols Columns — This section modified: 3/20/20 3:26:20 PM

International Capital Opportunities Fund 31 30 International Capital Opportunities Fund


See notes to financial highlights at the end of this section.

Financial highlights (For a common share outstanding throughout the period)

INVESTMENT OPERATIONS LESS DISTRIBUTIONS RATIOS AND SUPPLEMENTAL DATA

Period ended

Net asset value,

beginning of period

Net investment income (loss ) a

Net realized and unrealized gain (loss) on investments

Total from investment operations

From net investment

income

From net realized

gain on investments

Total dis tri bu tions

Non-recurring re im burse-

ments

Net asset value, end of period

Total return at net asset value (% ) b

Net assets, end of period

(in thousands )

Ratio of expenses

to average net assets

(% ) c

Ratio of net investment

income (loss) to average

net assets (% )

Portfolio turnover

(% )

Class AFebruary 29, 2020 * * $34.55 (.05 ) 1.01 .96 — (.53 ) (.53 ) — $34.98 2.61 * $272,582 .76 * (.14 )* 17 * August 31, 2019 41.27 .17 (3.72 ) (3.55 ) — (3.17 ) (3.17 ) — e,h 34.55 (7.69 ) 278,379 1.50 .48 42 August 31, 2018 40.19 .51 1.73 2.24 (.97 ) (.19 ) (1.16 ) — 41.27 5.54 347,828 1.37 1.22 44 August 31, 2017 33.90 .38 6.73 7.11 (.82 ) — (.82 ) — d,e 40.19 21.59 346,173 1.29 1.07 103 August 31, 2016 34.27 .63 (.44 ) .19 (.56 ) — (.56 ) — 33.90 .52 346,192 1.22 g 1.86 g 92 August 31, 2015 39.38 .56 (4.78 ) (4.22 ) (.73 ) (.16 ) (.89 ) — 34.27 (10.70 ) 403,286 1.28 1.56 14 Class BFebruary 29, 2020 * * $34.27 (.19 ) 1.02 .83 — (.53 ) (.53 ) — $34.57 2.25 * $2,083 1.13 * (.50 )* 17 * August 31, 2019 41.26 (.11 ) (3.71 ) (3.82 ) — (3.17 ) (3.17 ) — e,h 34.27 (8.40 ) 2,480 2.25 (.29 ) 42 August 31, 2018 40.16 .21 1.71 1.92 (.63 ) (.19 ) (.82 ) — 41.26 4.74 4,073 2.12 .52 44 August 31, 2017 33.80 .11 6.76 6.87 (.51 ) — (.51 ) — d,e 40.16 20.70 5,520 2.04 .32 103 August 31, 2016 34.12 .36 (.44 ) (.08 ) (.24 ) — (.24 ) — 33.80 (.24 ) 6,764 1.97 g 1.08 g 92 August 31, 2015 39.11 .29 (4.74 ) (4.45 ) (.38 ) (.16 ) (.54 ) — 34.12 (11.38 ) 9,489 2.03 .81 14 Class CFebruary 29, 2020 * * $34.04 (.19 ) 1.02 .83 — (.53 ) (.53 ) — $34.34 2.26 * $4,495 1.13 * (.50 )* 17 * August 31, 2019 41.01 (.10 ) (3.70 ) (3.80 ) — (3.17 ) (3.17 ) — e,h 34.04 (8.40 ) 5,553 2.25 (.29 ) 42 August 31, 2018 39.96 .26 f 1.65 1.91 (.67 ) (.19 ) (.86 ) — 41.01 4.74 8,491 2.12 .64 f 44 August 31, 2017 33.65 .12 6.72 6.84 (.53 ) — (.53 ) — d,e 39.96 20.72 24,301 2.04 .34 103 August 31, 2016 34.02 .37 (.45 ) (.08 ) (.29 ) — (.29 ) — 33.65 (.26 ) 25,610 1.97 g 1.11 g 92 August 31, 2015 39.03 .29 (4.72 ) (4.43 ) (.42 ) (.16 ) (.58 ) — 34.02 (11.36 ) 30,072 2.03 .82 14 Class RFebruary 29, 2020 * * $33.95 (.10 ) 1.00 .90 — (.53 ) (.53 ) — $34.32 2.48 * $9,247 .88 * (.26 )* 17 * August 31, 2019 40.72 .08 (3.68 ) (3.60 ) — (3.17 ) (3.17 ) — e,h 33.95 (7.93 ) 9,914 1.75 .22 42 August 31, 2018 39.66 .41 1.70 2.11 (.86 ) (.19 ) (1.05 ) — 40.72 5.28 15,380 1.62 1.00 44 August 31, 2017 33.44 .29 6.65 6.94 (.72 ) — (.72 ) — d,e 39.66 21.31 17,974 1.54 .84 103 August 31, 2016 33.79 .54 (.45 ) .09 (.44 ) — (.44 ) — 33.44 .24 19,742 1.47 g 1.61 g 92 August 31, 2015 38.82 .46 (4.70 ) (4.24 ) (.63 ) (.16 ) (.79 ) — 33.79 (10.92 ) 25,605 1.53 1.31 14 Class R6February 29, 2020 * * $34.72 .03 1.01 1.04 — (.53 ) (.53 ) — $35.23 2.83 * $11,116 .55 * .07 * 17 * August 31, 2019 41.29 .33 (3.73 ) (3.40 ) — (3.17 ) (3.17 ) — e,h 34.72 (7.30 ) 11,955 1.06 .92 42 August 31, 2018 † 42.19 .13 (1.03 ) (.90 ) — — — — 41.29 (2.13 )* 12,695 .27 * .32 * 44 Class YFebruary 29, 2020 * * $34.64 (.01 ) 1.02 1.01 — (.53 ) (.53 ) — $35.12 2.75 * $30,122 .63 * (.03 )* 17 * August 31, 2019 41.27 .28 (3.74 ) (3.46 ) — (3.17 ) (3.17 ) — e,h 34.64 (7.46 ) 30,794 1.25 .77 42 August 31, 2018 40.19 .64 1.70 2.34 (1.07 ) (.19 ) (1.26 ) — 41.27 5.79 34,311 1.12 1.54 44 August 31, 2017 33.91 .50 6.69 7.19 (.91 ) — (.91 ) — d,e 40.19 21.90 54,499 1.04 1.40 103 August 31, 2016 34.30 .68 (.42 ) .26 (.65 ) — (.65 ) — 33.91 .74 44,636 .97 g 2.03 g 92 August 31, 2015 39.43 .66 (4.79 ) (4.13 ) (.84 ) (.16 ) (1.00 ) — 34.30 (10.46 ) 66,944 1.03 1.84 14

Fund _FundCode, — NumbCols Columns — This section modified: 3/20/20 3:26:20 PM Fund _FundCode, — NumbCols Columns — This section modified: 3/20/20 3:26:20 PM


Financial highlights cont.


* Not annualized. ** Unaudited.

† For the period May 22, 2018 (commencement of operations) to August 31, 2018. 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, if any (Note 2). Also excludes

acquired fund fees and expenses, if any. d Reflects a non-recurring reimbursement pursuant to a settlement between the Securities and Exchange Commission

(the SEC) and Haidar Capital Management/Haidar Capital Advisors which amounted to less than $0.01 per share outstanding on February 15, 2017.

e Amount represents less than $0.01 per share. f The net investment income ratio and per share amount shown for the period ending August 31, 2018 may not correspond

with the expected class specific differences for the period due to the timing of redemptions out of the class. g Reflects a voluntary waiver of certain fund expenses in effect during the period. As a result of such waiver, the

expenses of each class reflect a reduction of less than 0.01% as a percentage of average net assets. h Reflects a non-recurring reimbursement pursuant to a settlement between the SEC and Canadian Imperial Holdings,

Inc. and CIBC World Market Corp. which amounted to less than $0.01 per share outstanding on March 6, 2019.


Notes to financial statements 2/29/20 (Unaudited)

Within the following Notes to financial statements, references to “State Street” represent State Street Bank and Trust Company, references to “the SEC” represent the Securities and Exchange Commission, references to “Putnam Management” represent Putnam Investment Management, LLC, the fund’s manager, an indirect wholly-owned subsidiary of Putnam Investments, LLC and references to “OTC”, if any, represent over-the-counter. Unless otherwise noted, the “reporting period” represents the period from September 1, 2019 through February 29, 2020.

Putnam International Capital Opportunities Fund (the fund) is a diversified series of Putnam Investment Funds (the Trust), a Massachusetts business trust registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The goal of the fund is to seek long-term capital apprecia-tion. The fund invests mainly in common stocks (growth or value stocks or both) of small and midsize companies outside the United States that Putnam Management believes have favorable investment potential. For example, the fund may purchase stocks of companies with stock prices that reflect a value lower than that which Putnam Management places on the company. Putnam Management also considers other factors it believes will cause the stock price to rise. The fund invests mainly in developed countries, but may invest in emerging markets. Putnam Management may consider, among other factors, a company’s valuation, financial strength, growth potential, competitive position in its industry, projected future earnings, cash flows and dividends when deciding whether to buy or sell investments. The fund may also use derivatives, such as futures, options, certain foreign currency transactions, warrants and swap contracts, for both hedging and non-hedging purposes.

The fund offers class A, class B, class C, class R, class R6 and class Y shares. Effective November 25, 2019, all class M shares were converted to class A shares and are no longer available for purchase. Purchases of class B shares are closed to new and existing investors except by exchange from class B shares of another Putnam fund or through dividend and/or capital gains reinvestment. Class A shares are sold with a maximum front-end sales charge of 5.75%. Class A shares generally are not subject to a contingent deferred sales charge, and class R, class R6 and class Y shares are not subject to a contingent deferred sales charge. Class B shares, which convert to class A shares after approximately eight years, are not subject to a front-end sales charge 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 a one-year 1.00% contingent deferred sales charge and generally convert to class A shares after approximately ten years. Class R shares, which are not available to all investors, are sold at net asset value. The expenses for class A, class B, class C and class R shares may differ based on the distribution fee of each class, which is identified in Note 2. Class R6 and class Y shares, which are sold at net asset value, are generally subject to the same expenses as class A, class B, class C and class R shares, but do not bear a distribution fee, and in the case of class R6 shares, bear a lower investor servicing fee, which is identified in Note 2. Class R6 and class Y shares are not available to all investors.

In the normal course of business, the fund enters into contracts that may include agreements to indemnify another party under given circumstances. The fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be, but have not yet been, made against the fund. However, the fund’s management team expects the risk of material loss to be remote.

The fund has entered into contractual arrangements with an investment adviser, administrator, distributor, share-holder servicing agent and custodian, who each provide services to the fund. Unless expressly stated otherwise, shareholders are not parties to, or intended beneficiaries of these contractual arrangements, and these contrac-tual arrangements are not intended to create any shareholder right to enforce them against the service providers or to seek any remedy under them against the service providers, either directly or on behalf of the fund.

Under the fund’s Amended and Restated Agreement and Declaration of Trust, any claims asserted against or on behalf of the Putnam Funds, including claims against Trustees and Officers, must be brought in state and federal courts located within the Commonwealth of Massachusetts.

Note 1: Significant accounting policiesThe 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 assump-tions 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. Actual results could differ from those esti-mates. Subsequent events after the Statement of assets and liabilities date through the date that the financial statements were issued have been evaluated in the preparation of the financial statements.


Investment income, realized and unrealized gains and losses and expenses of the fund are borne pro-rata based on the relative net assets of each class to the total net assets of the fund, except that each class bears expenses unique to that class (including the distribution fees applicable to such classes). 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. If the fund were liquidated, shares of each class would receive their pro-rata share of the net assets of the fund. In addition, the Trustees declare separate dividends on each class of shares.

Security valuation Portfolio securities and other investments are valued using policies and procedures adopted by the Board of Trustees. The Trustees have formed a Pricing Committee to oversee the implementation of these procedures and have delegated responsibility for valuing the fund’s assets in accordance with these procedures to Putnam Management. Putnam Management has established an internal Valuation Committee that is respon-sible for making fair value determinations, evaluating the effectiveness of the pricing policies of the fund and reporting to the Pricing Committee.

Investments for which market quotations are readily available are valued at the last reported sales price on their principal exchange, or official closing price for certain markets, and are classified as Level 1 securities under Accounting Standards Codification 820 Fair Value Measurements and Disclosures (ASC 820). If no sales are reported, as in the case of some securities that are traded OTC, a security is valued at its last reported bid price and is generally categorized as a Level 2 security.

Investments in open-end investment companies (excluding exchange-traded funds), if any, which can be classi-fied as Level 1 or Level 2 securities, are valued based on their net asset value. The net asset value of such invest-ment companies equals the total value of their assets less their liabilities and divided by the number of their outstanding shares.

Market quotations are not considered to be readily available for certain debt obligations (including short-term investments with remaining maturities of 60 days or less) and other investments; such investments are valued on the basis of valuations furnished by an independent pricing service approved by the Trustees or dealers selected by Putnam Management. Such services or dealers determine valuations for normal institutional-size trading units of such securities using methods based on market transactions for comparable securities and various relation-ships, generally recognized by institutional traders, between securities (which consider such factors as security prices, yields, maturities and ratings). These securities will generally be categorized as Level 2.

Many securities markets and exchanges outside the U.S. close prior to the scheduled close of the New York Stock Exchange and therefore the closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the scheduled close of the New York Stock Exchange. Accord-ingly, on certain days, the fund will fair value certain foreign equity securities taking into account multiple factors including movements in the U.S. securities markets, currency valuations and comparisons to the valuation of American Depository Receipts, exchange-traded funds and futures contracts. The foreign equity securities, which would generally be classified as Level 1 securities, will be transferred to Level 2 of the fair value hierarchy when they are valued at fair value. The number of days on which fair value prices will be used will depend on market activity and it is possible that fair value prices will be used by the fund to a significant extent. At the close of the reporting period, fair value pricing was used for certain foreign securities in the portfolio. Securities quoted in foreign currencies, if any, are translated into U.S. dollars at the current exchange rate.

To the extent a pricing service or dealer is unable to value a security or provides a valuation that Putnam Manage-ment does not believe accurately reflects the security’s fair value, the security will be valued at fair value by Putnam Management in accordance with policies and procedures approved by the Trustees. Certain invest-ments, including certain restricted and illiquid securities and derivatives, are also valued at fair value following procedures approved by the Trustees. These valuations consider such factors as significant market or specific security events such as interest rate or credit quality changes, various relationships with other securities, discount rates, U.S. Treasury, U.S. swap and credit yields, index levels, convexity exposures, recovery rates, sales and other multiples and resale restrictions. These securities are classified as Level 2 or as Level 3 depending on the priority of the significant inputs.

To assess the continuing appropriateness of fair valuations, the Valuation Committee reviews and affirms the reasonableness of such valuations on a regular basis after considering all relevant information that is reasonably available. Such valuations and procedures are reviewed periodically by the Trustees. The fair value of securities is generally determined as the amount that the fund could reasonably expect to realize from an orderly disposi-tion of such securities over a reasonable period of time. By its nature, a fair value price is a good faith estimate of the value of a security in a current sale and does not reflect an actual market price, which may be different by a material amount.


Security transactions and related investment income Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Gains or losses on securities sold are determined on the identified cost basis.

Interest income, net of any applicable withholding taxes and including amortization and accretion of premiums and discounts on debt securities, is recorded on the accrual basis. Dividend income, net of any applicable with-holding taxes, is recognized on the ex-dividend date except that certain dividends from foreign securities, if any, are recognized as soon as the fund is informed of the ex-dividend date. Non-cash dividends, if any, are recorded at the fair value of the securities received. Dividends representing a return of capital or capital gains, if any, are reflected as a reduction of cost and/or as a realized gain.

Foreign currency translation The accounting records of the fund are maintained in U.S. dollars. The fair value of foreign securities, currency holdings, and other assets and liabilities is 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 deter-mined using historical exchange rates. Income and withholding taxes are translated at prevailing exchange rates when earned 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 disposition of foreign currencies, currency gains and losses realized between the trade and settlement dates on securities transactions 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 assets and liabilities other than investments at the period end, resulting from changes in the exchange rate.

Forward currency contracts The fund buys and sells 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 hedge currency exposure.

The U.S. dollar value of forward currency contracts is determined using current forward currency exchange rates supplied by a quotation service. The fair value of the contract will fluctuate with changes in currency exchange rates. The contract is marked to market daily and the change in fair value is recorded as an unrealized gain or loss. 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 when the contract matures or by delivery of the currency. 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. Risks may exceed amounts recognized on the Statement of assets and liabilities.

Forward currency contracts outstanding at period end, if any, are listed after the fund’s portfolio.

Master agreements The fund is a party to ISDA (International Swaps and Derivatives Association, Inc.) Master Agreements that govern OTC derivative and foreign exchange contracts and Master Securities Forward Transac-tion Agreements that govern transactions involving mortgage-backed and other asset-backed securities that may result in delayed delivery (Master Agreements) with certain counterparties entered into from time to time. The Master Agreements may contain provisions regarding, among other things, the parties’ general obligations, repre-sentations, agreements, collateral requirements, events of default and early termination. With respect to certain counterparties, in accordance with the terms of the Master Agreements, collateral posted to the fund is held in a segregated account by the fund’s custodian and, with respect to those amounts which can be sold or repledged, are presented in the fund’s portfolio.

Collateral pledged by the fund is segregated by the fund’s custodian and identified in the fund’s portfolio. Collat-eral can be in the form of cash or debt securities issued by the U.S. Government or related agencies or other secu-rities as agreed to by the fund and the applicable counterparty. Collateral requirements are determined based on the fund’s net position with each counterparty.

With respect to ISDA Master Agreements, termination events applicable to the fund may occur upon a decline in the fund’s net assets below a specified threshold over a certain period of time. Termination events applicable to counterparties may occur upon a decline in the counterparty’s long-term or short-term credit ratings below a specified level. In each case, upon occurrence, the other party may elect to terminate early and cause settlement of all derivative and foreign exchange contracts outstanding, including the payment of any losses and costs


resulting from such early termination, as reasonably determined by the terminating party. Any decision by one or more of the fund’s counterparties to elect early termination could impact the fund’s future derivative activity.

At the close of the reporting period, the fund had a net liability position of $426,157 on open derivative contracts subject to the Master Agreements. Collateral posted by the fund at period end for these agreements totaled $587,282 and may include amounts related to unsettled agreements.

Securities lending The fund may lend securities, through its agent, to qualified borrowers in order to earn addi-tional income. The loans are collateralized by cash in an amount at least equal to the fair value of the securities loaned. The fair value of securities loaned is determined daily and any additional required collateral is allocated to the fund on the next business day. The remaining maturities of the securities lending transactions are consid-ered overnight and continuous. The risk of borrower default will be borne by the fund’s agent; the fund will bear the risk of loss with respect to the investment of the cash collateral. Income from securities lending, net of expenses, is included in investment income on the Statement of operations. Cash collateral is invested in Putnam Cash Collateral Pool, LLC, a limited liability company managed by an affiliate of Putnam Management. Invest-ments in Putnam Cash Collateral Pool, LLC are valued at its closing net asset value each business day. There are no management fees charged to Putnam Cash Collateral Pool, LLC. At the close of the reporting period, the fund received cash collateral of $3,504,312 and the value of securities loaned amounted to $3,103,448.

Interfund lending The fund, along with other Putnam funds, may participate in an interfund lending program pursuant to an exemptive order issued by the SEC. This program allows the fund to borrow from or lend to other Putnam funds that permit such transactions. Interfund lending transactions are subject to each fund’s investment policies and borrowing and lending limits. Interest earned or paid on the interfund lending transac-tion will be based on the average of certain current market rates. During the reporting period, the fund did not utilize the program.

Lines of credit The fund participates, along with other Putnam funds, in a $317.5 million unsecured committed line of credit and a $235.5 million unsecured uncommitted line of credit, both provided by State Street. Borrow-ings may be made for temporary or emergency purposes, including the funding of shareholder redemption requests and trade settlements. Interest is charged to the fund based on the fund’s borrowing at a rate equal to 1.25% plus the higher of (1) the Federal Funds rate and (2) the overnight LIBOR for the committed line of credit and the Federal Funds rate plus 1.30% for the uncommitted line of credit. A closing fee equal to 0.04% of the committed line of credit and 0.04% of the uncommitted line of credit has been paid by the participating funds. In addition, a commitment fee of 0.21% per annum on any unutilized portion of the committed line of credit is allo-cated to the participating funds based on their relative net assets and paid quarterly. During the reporting period, the fund had no borrowings against these arrangements.

Federal taxes It is the policy of the fund to distribute all of its taxable income within the prescribed time period and otherwise comply with the provisions of the Internal Revenue Code of 1986, as amended (the Code), appli-cable 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 Code.

The fund is subject to the provisions of Accounting Standards Codification 740 Income Taxes (ASC 740). ASC 740 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The fund did not have a liability to record for any unrecognized tax benefits in the accompanying financial statements. 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. Each of the fund’s federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service.

The fund may also be subject to taxes imposed by governments of countries in which it invests. Such taxes are generally based on either income or gains earned or repatriated. The fund accrues and applies such taxes to net investment income, net realized gains and net unrealized gains as income and/or capital gains are earned. In some cases, the fund may be entitled to reclaim all or a portion of such taxes, and such reclaim amounts, if any, are reflected as an asset on the fund’s books. In many cases, however, the fund may not receive such amounts for an extended period of time, depending on the country of investment.

Pursuant to federal income tax regulations applicable to regulated investment companies, the fund has elected to defer $336,134 to its fiscal year ending August 31, 2020 of late year ordinary losses ((i) ordinary losses recog-nized between January 1, 2019 and August 31, 2019, and (ii) specified ordinary and currency losses recognized between November 1, 2018 and August 31, 2019).

Tax cost of investments includes adjustments to net unrealized appreciation (depreciation) which may not necessarily be final tax cost basis adjustments, but closely approximate the tax basis unrealized gains and losses


that may be realized and distributed to shareholders. The aggregate identified cost on a tax basis is $343,140,445, resulting in gross unrealized appreciation and depreciation of $33,317,190 and $40,726,079, respectively, or net unrealized depreciation of $7,408,889.

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 accor-dance with income tax regulations, which may differ from generally accepted accounting principles. Dividend sources are estimated at the time of declaration. Actual results may vary. Any non-taxable return of capital cannot be determined until final tax calculations are completed after the end of the fund’s fiscal year. 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.

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 transactionsThe fund pays Putnam Management a management fee (base fee) (based on the fund’s average net assets and computed and paid monthly) at annual rates that may vary based on the average of the aggregate net assets of all open-end mutual funds sponsored by Putnam Management (excluding net assets of funds that are invested in, or that are invested in by, other Putnam funds to the extent necessary to avoid “double counting” of those assets). Such annual rates may vary as follows:

1.080 % of the first $5 billion,

1.030 % of the next $5 billion,





0.850 % of the next $100 billion and

0.845 % of any excess thereafter.

In addition, the monthly management fee consists of the monthly base fee plus or minus a performance adjust-ment for the month. The performance adjustment is determined based on performance over the thirty-six month period then ended. Each month, the performance adjustment is calculated by multiplying the performance adjustment rate and the fund’s average net assets over the performance period and dividing the result by twelve. The resulting dollar amount is added to, or subtracted from the base fee for that month. The performance adjust-ment rate is equal to 0.03 multiplied by the difference between the fund’s annualized performance (measured by the fund’s class A shares) and the annualized performance of the S&P Developed Ex-U.S. SmallCap Index each measured over the performance period. The maximum annualized performance adjustment rate is +/– 0.21%. The monthly base fee is determined based on the fund’s average net assets for the month, while the performance adjustment is determined based on the fund’s average net assets over the thirty-six month performance period. This means it is possible that, if the fund underperforms significantly over the performance period, and the fund’s assets have declined significantly over that period, the negative performance adjustment may exceed the base fee. In this event, Putnam Management would make a payment to the fund.

Because the performance adjustment is based on the fund’s performance relative to its applicable benchmark index, and not its absolute performance, the performance adjustment could increase Putnam Management’s fee even if the fund’s shares lose value during the performance period provided that the fund outperformed its benchmark index, and could decrease Putnam Management’s fee even if the fund’s shares increase in value during the performance period provided that the fund underperformed its benchmark index.

For the reporting period, the management fee represented an effective rate (excluding the impact of any expense waiver in effect) of 0.479% of the fund’s average net assets, which included an effective base fee of 0.456% and an increase of 0.023% or $83,227 based on performance.

Putnam Management has contractually agreed, through December 30, 2020, to waive fees and/or reimburse the fund’s expenses to the extent necessary to limit the cumulative expenses of the fund, exclusive of brokerage, interest, taxes, investment-related expenses, extraordinary expenses, acquired fund fees and expenses and payments under the fund’s investor servicing contract, investment management contract and distribution plans, on a fiscal year-to-date basis to an annual rate of 0.20% of the fund’s average net assets over such fiscal year-to-date period. During the reporting period, the fund’s expenses were not reduced as a result of this limit.


Putnam Investments Limited (PIL), an affiliate of Putnam Management, is authorized by the Trustees to manage a separate portion of the assets of the fund as determined by Putnam Management from time to time. PIL did not manage any portion of the assets of the fund during the reporting period. If Putnam Management were to engage the services of PIL, Putnam Management would pay a quarterly sub-management fee to PIL for its services at an annual rate of 0.35% of the average net assets of the portion of the fund managed by PIL.

The Putnam Advisory Company, LLC (PAC), an affiliate of Putnam Management, is authorized by the Trustees to manage a separate portion of the assets of the fund, as designated from time to time by Putnam Management or PIL. Putnam Management or PIL, as applicable, pays a quarterly sub-advisory fee to PAC for its services at the annual rate of 0.35% of the average net assets of the portion of the fund’s assets for which PAC is engaged as sub-adviser.

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 State Street. Custody fees are based on the fund’s asset level, the number of its security holdings and transaction volumes.

Putnam Investor Services, Inc., an affiliate of Putnam Management, provides investor servicing agent functions to the fund. Putnam Investor Services, Inc. received fees for investor servicing for class A, class B, class C, class M, class R and class Y shares that included (1) a per account fee for each direct and underlying non-defined contribu-tion account (retail account) of the fund; (2) a specified rate of the fund’s assets attributable to defined contribu-tion plan accounts; and (3) a specified rate based on the average net assets in retail accounts. Putnam Investor Services, Inc. has agreed that the aggregate investor servicing fees for each fund’s retail and defined contribution accounts for these share classes will not exceed an annual rate of 0.25% of the fund’s average assets attributable to such accounts. Effective November 25, 2019, the fund converted all of its class M shares to class A shares and class M shares were no longer able to be purchased.

Class R6 shares paid a monthly fee based on the average net assets of class R6 shares at an annual rate of 0.05%.

During the reporting period, the expenses for each class of shares related to investor servicing fees were as follows:

Class A $330,126

Class B 2,709

Class C 5,989

Class M 1,868

Class R 11,365

Class R6 3,115

Class Y 37,750

Total $392,922

The fund has entered into expense offset arrangements with Putnam Investor Services, Inc. and State Street whereby Putnam Investor Services, Inc.’s and State Street’s fees are reduced by credits allowed on cash balances. The fund also reduced expenses through brokerage/service arrangements. For the reporting period, the fund’s expenses were reduced by $1,672 under the expense offset arrangements and by $2,324 under the brokerage/service arrangements.

Each Independent Trustee of the fund receives an annual Trustee fee, of which $261, as a quarterly retainer, has been allocated to the fund, and an additional fee for each Trustees meeting attended. Trustees also are reimbursed for expenses they incur relating to their services as Trustees.

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 and were first elected prior to 2004.


Benefits under the Pension Plan are equal to 50% of the Trustee’s average annual attendance and retainer fees for the three years ended December 31, 2005. The retirement benefit is payable during a Trustee’s lifetime, beginning the year following retirement, for the number of years of service through December 31, 2006. Pension expense for the fund is included in Trustee compensation and expenses in the Statement of operations. Accrued pension liability is included in Payable for Trustee compensation and expenses in the Statement of assets and liabilities. The Trustees have terminated the Pension Plan with respect to any Trustee first elected after 2003.

The fund has adopted distribution plans (the Plans) with respect to the following share classes pursuant to Rule 12b–1 under the Investment Company Act of 1940. The purpose of the Plans is to compensate Putnam Retail Management Limited Partnership, an indirect wholly-owned subsidiary of Putnam Investments, LLC, for services provided and expenses incurred in distributing shares of the fund. The Plans provide payments by the fund to Putnam Retail Management Limited Partnership at an annual rate of up to the following amounts (Maximum %) of the average net assets attributable to each class. The Trustees have approved payment by the fund at the following annual rate (Approved %) of the average net assets attributable to each class. During the reporting period, the class-specific expenses related to distribution fees were as follows:

Maximum % Approved % Amount

Class A 0.35 % 0.25 % $373,158

Class B 1.00 % 1.00 % 12,248

Class C 1.00 % 1.00 % 27,070

Class M * 1.00 % 0.75 % 6,170

Class R 1.00 % 0.50 % 25,690

Total $444,336

* Effective November 25, 2019, the fund converted all of its class M shares to class A shares and class M shares were no longer able to be purchased.

For the reporting period, Putnam Retail Management Limited Partnership, acting as underwriter, received net commissions of $6,691 and $6 from the sale of class A and class M shares, respectively, and received $97 and $78 in contingent deferred sales charges from redemptions of class B and class C shares, respectively.

A deferred sales charge of up to 1.00% is assessed on certain redemptions of class A shares. For the reporting period, Putnam Retail Management Limited Partnership, acting as underwriter, received $65 on class A redemptions.

Note 3: Purchases and sales of securitiesDuring the reporting period, the cost of purchases and the proceeds from sales, excluding short-term investments, were as follows:

Cost of purchases Proceeds from sales

Investments in securities (Long-term ) $57,636,869 $80,482,215

U.S. government securities (Long-term ) — —

Total $57,636,869 $80,482,215

The fund may purchase or sell investments from or to other Putnam funds in the ordinary course of business, which can reduce the fund’s transaction costs, at prices determined in accordance with SEC requirements and policies approved by the Trustees. During the reporting period, purchases or sales of long-term securities from or to other Putnam funds, if any, did not represent more than 5% of the fund’s total cost of purchases and/or total proceeds from sales.


Note 4: Capital sharesAt the close of the reporting period, there were an unlimited number of shares of beneficial interest autho-rized. Transactions, including, if applicable, direct exchanges pursuant to share conversions, in capital shares were as follows:

SIX MONTHS ENDED 2/29/20 YEAR ENDED 8/31/19

Class A Shares Amount Shares Amount

Shares sold 185,014 $7,070,448 608,220 $23,487,008

Shares issued in connection with reinvestment of distributions 100,989 3,967,837 777,594 24,050,991

286,003 11,038,285 1,385,814 47,537,999

Shares repurchased (551,187 ) (20,875,415 ) (1,756,738 ) (63,336,779 )

Net decrease (265,184 ) $(9,837,130 ) (370,924 ) $(15,798,780 )


Class B Shares Amount Shares Amount

Shares sold 191 $7,564 828 $29,480

Shares issued in connection with reinvestment of distributions 859 33,409 9,008 277,806

1,050 40,973 9,836 307,286

Shares repurchased (13,158 ) (492,305 ) (36,183 ) (1,299,879 )

Net decrease (12,108 ) $(451,332 ) (26,347 ) $(992,593 )


Class C Shares Amount Shares Amount

Shares sold 4,354 $162,767 13,788 $488,055

Shares issued in connection with reinvestment of distributions 1,885 72,771 19,098 584,962

6,239 235,538 32,886 1,073,017

Shares repurchased (38,452 ) (1,432,493 ) (76,823 ) (2,735,557 )

Net decrease (32,213 ) $(1,196,955 ) (43,937 ) $(1,662,540 )


Class M * Shares Amount Shares Amount

Shares sold 217 $7,721 1,551 $54,305

Shares issued in connection with reinvestment of distributions — — 10,801 331,471

217 7,721 12,352 385,776


Net decrease (97,151 ) $(3,682,276 ) (21,392 ) $(811,323 )



Class R Shares Amount Shares Amount

Shares sold 28,427 $1,078,563 58,805 $2,083,024

Shares issued in connection with reinvestment of distributions 3,718 143,417 32,387 985,869

32,145 1,221,980 91,192 3,068,893


Net decrease (22,593 ) $(812,585 ) (85,735 ) $(3,313,446 )


Class R6 Shares Amount Shares Amount

Shares sold 10,868 $421,552 52,539 $2,014,274

Shares issued in connection with reinvestment of distributions 4,294 169,772 33,465 1,037,082

15,162 591,324 86,004 3,051,356


Net increase (decrease ) (28,792 ) $(1,081,295 ) 36,814 $1,264,604


Class Y Shares Amount Shares Amount

Shares sold 175,888 $6,855,279 313,166 $11,214,882

Shares issued in connection with reinvestment of distributions 10,881 428,941 80,531 2,492,430

186,769 7,284,220 393,697 13,707,312


Net increase (decrease ) (31,215 ) $(974,705 ) 57,584 $1,604,636

* Effective November 25, 2019, the fund converted all of its class M shares to class A shares and class M shares were no longer able to be purchased.

Note 5: Affiliated transactionsTransactions during the reporting period with any company which is under common ownership or control were as follows:

Name of affiliateFair value as

of 8/31/19Purchase

costSale

proceedsInvestment

income

Shares outstanding

and fair value as

of 2/29/20

Short-term investments

Putnam Cash Collateral Pool, LLC * $3,186,911 $21,307,257 $20,989,856 $40,211 $3,504,312

Putnam Short Term Investment Fund * * 9,581,044 54,812,397 54,117,557 81,011 10,275,884

Total Short-term investments $12,767,955 $76,119,654 $75,107,413 $121,222 $13,780,196

* No management fees are charged to Putnam Cash Collateral Pool, LLC (Note 1). Investment income shown is included in securities lending income on the Statement of operations. There were no realized or unrealized gains or losses during the period.

** Management fees charged to Putnam Short Term Investment Fund have been waived by Putnam Management. There were no realized or unrealized gains or losses during the period.

International Capital Opportunities Fund 43 42 International Capital Opportunities Fund

Note 6: Offsetting of financial and derivative assets and liabilitiesThe following table summarizes any derivatives, repurchase agreements and reverse repurchase agreements, at the end of the reporting period, that are subject to an enforceable master netting agreement or similar agree-ment. For securities lending transactions or borrowing transactions associated with securities sold short, if any, see Note 1. For financial reporting purposes, the fund does not offset financial assets and financial liabilities that are subject to the master netting agreements in the Statement of assets and liabilities.

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Assets:

Forward currency contracts# $— $118,791 $606,196 $94,976 $— $687,733 $— $230,875 $178,025 $165,723 $2,082,319

Total Assets $— $118,791 $606,196 $94,976 $— $687,733 $— $230,875 $178,025 $165,723 $2,082,319

Liabilities:

Forward currency contracts# 204,336 119,951 117,584 98,041 69,806 750,961 51,002 1,611 211,585 — 1,624,877

Total Liabilities $204,336 $119,951 $117,584 $98,041 $69,806 $750,961 $51,002 $1,611 $211,585 $— $1,624,877

Total Financial and Derivative Net Assets $(204,336) $(1,160) $488,612 $(3,065) $(69,806) $(63,228) $(51,002) $229,264 $(33,560) $165,723 $457,442

Total collateral received (pledged)†## $(110,634) $9,519 $431,000 $(3,065) $— $(63,228) $— $— $— $—

Net amount $(93,702) $(10,679) $57,612 $— $(69,806) $— $(51,002) $229,264 $(33,560) $165,723

Controlled collateral received (including TBA commitments)** $— $9,519 $431,000 $— $— $— $— $— $— $— $440,519

Uncontrolled collateral received $— $— $— $— $— $— $— $— $— $— $—

Collateral (pledged) (including TBA commitments)** $(110,634) $— $— $(140,760) $— $(335,888) $— $— $— $— $(587,282)

* Excludes premiums, if any. Included in unrealized appreciation and depreciation on OTC swap contracts on the Statement of assets and liabilities.

** Included with Investments in securities on the Statement of assets and liabilities.

† Additional collateral may be required from certain brokers based on individual agreements.

# Covered by master netting agreement (Note 1).

##Any over-collateralization of total financial and derivative net assets is not shown. Collateral may include amounts related to unsettled agreements.


Note 7: Market, credit and other risksIn the normal course of business, the fund trades financial instruments and enters into financial transactions where risk of potential loss exists due to changes in the market (market risk) or failure of the contracting party to the transaction to perform (credit risk). The fund may be exposed to additional credit risk that an institution or other entity with which the fund has unsettled or open transactions will default. Investments in foreign securities involve certain risks, including those related to economic instability, unfavorable political developments, and currency fluctuations.

Beginning in January 2020, global financial markets have experienced, and may continue, to experience signifi-cant volatility resulting from the spread of a virus known as COVID–19. The outbreak of COVID–19 has resulted in travel and border restrictions, quarantines, supply chain disruptions, lower consumer demand, and general market uncertainty. The effects of COVID–19 have adversely affected, and may continue to adversely affect, the global economy, the economies of certain nations, and individual issuers, all of which may negatively impact the Fund’s performance.

Note 8: Summary of derivative activityThe volume of activity for the reporting period for any derivative type that was held during the period is listed below and was based on an average of the holdings at the end of each fiscal quarter:

Forward currency contracts (contract amount ) $148,600,000

The following is a summary of the fair value of derivative instruments as of the close of the reporting period:

Fair value of derivative instruments as of the close of the reporting periodASSET DERIVATIVES LIABILITY DERIVATIVES

Derivatives not accounted for as hedging instruments under ASC 815

Statement of assets and

liabilities location Fair value

Statement of assets and

liabilities location Fair value

Foreign exchange contracts Receivables $2,082,319 Payables $1,624,877

Total $2,082,319 $1,624,877

The following is a summary of realized and change in unrealized gains or losses of derivative instruments in the Statement of operations for the reporting period (Note 1):

Amount of realized gain or (loss ) on derivatives recognized in net gain or (loss ) on investmentsDerivatives not accounted for as hedging instruments under ASC 815

Forward currency contracts Total

Foreign exchange contracts $(1,385,838 ) $(1,385,838 )

Total $(1,385,838 ) $(1,385,838 )

Change in unrealized appreciation or (depreciation ) on derivatives recognized in net gain or (loss ) on investmentsDerivatives not accounted for as hedging instruments under ASC 815

Forward currency contracts Total

Foreign exchange contracts $550,971 $550,971

Total $550,971 $550,971

Fund informationFounded over 80 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 manage funds across income, value, blend, growth, sustainable, asset allocation, absolute return, and global sector categories.

Investment ManagerPutnam Investment Management, LLC 100 Federal Street Boston, MA 02110

Investment Sub-AdvisorPutnam Investments Limited 16 St James’s Street London, England SW1A 1ER

Marketing ServicesPutnam Retail Management 100 Federal Street Boston, MA 02110

CustodianState Street Bank and Trust Company

Legal CounselRopes & Gray LLP

TrusteesKenneth R. Leibler, Chair Liaquat Ahamed Ravi Akhoury Barbara M. Baumann Katinka Domotorffy Catharine Bond Hill Paul L. Joskow Robert E. Patterson George Putnam, III Robert L. Reynolds Manoj P. Singh Mona K. Sutphen

OfficersRobert L. Reynolds President

Robert T. Burns Vice President and Chief Legal Officer

James F. Clark Vice President, Chief Compliance Officer, and Chief Risk Officer

Nancy E. Florek Vice President, Director of Proxy Voting and Corporate Governance, Assistant Clerk, and Assistant Treasurer

Michael J. Higgins Vice President, Treasurer, and Clerk

Jonathan S. Horwitz Executive Vice President, Principal Executive Officer, and Compliance Liaison

Richard T. Kircher Vice President and BSA Compliance Officer

Susan G. Malloy Vice President and Assistant Treasurer

Denere P. Poulack Assistant Vice President, Assistant Clerk, and Assistant Treasurer

Janet C. Smith Vice President, Principal Financial Officer, Principal Accounting Officer, and Assistant Treasurer

Mark C. Trenchard Vice President

This report is for the information of shareholders of Putnam International Capital Opportunities Fund. It may also be used as sales literature when preceded or accompanied by the current prospectus, the most recent copy of Putnam’s Quarterly Performance Summary, and Putnam’s Quarterly Ranking Summary. For more recent performance, please visit putnam.com. Investors should carefully consider the investment objectives, risks, charges, and expenses of a fund, which are described in its prospectus. For this and other information or to request a prospectus or summary prospectus, call 1-800-225-1581 toll free. Please read the prospectus carefully before investing. 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.

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