AGREEMENT AND PLAN OF REORGANIZATION



         This Agreement and Plan of Reorganization (the "Agreement") is made as

of April 30, 2002 in Boston, Massachusetts, by and between Putnam International

Growth Fund, a Massachusetts business trust ("Acquiring Fund"), Putnam

Investment Funds, a Massachusetts business trust, on behalf of its Putnam

Emerging Markets Fund series ("Acquired Fund"), and Putnam Investment

Management, LLC, a Delaware limited liability company.



                             PLAN OF REORGANIZATION



(a) Acquired Fund will sell, assign, convey, transfer and deliver to

Acquiring Fund on the Exchange Date (as defined in Section 6) all of its

properties and assets existing at the Valuation Time (as defined in Section

3(d)). In consideration therefor, Acquiring Fund shall, on the Exchange Date,

assume all of the liabilities of Acquired Fund existing at the Valuation Time

and deliver to Acquired Fund (i) a number of full and fractional Class A

shares of beneficial interest of Acquiring Fund (the "Class A Merger Shares")

having an aggregate net asset value equal to the value of the assets of

Acquired Fund attributable to Class A shares of Acquired Fund transferred to

Acquiring Fund on such date less the value of the liabilities of Acquired

Fund attributable to Class A shares of Acquired Fund assumed by Acquiring

Fund on such date; (ii) a number of full and fractional Class B shares of

beneficial interest of Acquiring Fund (the "Class B Merger Shares") having an

aggregate net asset value equal to the value of the assets of Acquired Fund

attributable to Class B shares of Acquired Fund transferred to Acquiring Fund

on such date less the value of the liabilities of Acquired Fund attributable

to Class B shares of Acquired Fund assumed by Acquiring Fund on such date;

(iii) a number of full and fractional Class C shares of beneficial interest

of Acquiring Fund (the "Class C Merger Shares") having an aggregate net asset

value equal to the value of the assets of Acquired Fund attributable to Class

C shares of Acquired Fund transferred to Acquiring Fund on such date less the

value of the liabilities of Acquired Fund attributable to Class C shares of

Acquired Fund assumed by Acquiring Fund on such date; (iv) a number of full

and fractional Class M shares of beneficial interest of Acquiring Fund (the

"Class M Merger Shares") having an aggregate net asset value equal to the

value of the assets of Acquired Fund attributable to Class M shares of

Acquired Fund transferred to Acquiring Fund on such date less the value of

the liabilities of Acquired Fund attributable to Class M shares of Acquired

Fund assumed by Acquiring Fund on such date; and (v) a number of full and

fractional Class Y shares of beneficial interest of Acquiring Fund (the

"Class Y Merger Shares") having an aggregate net asset value equal to the

value of the assets of Acquired Fund attributable to Class Y shares of

Acquired Fund transferred to Acquiring Fund on such date less the value of

the liabilities of Acquired Fund attributable to Class Y shares of Acquired

Fund assumed by Acquiring Fund on such date. The Class A Merger Shares, the

Class B Merger Shares, the Class C Merger Shares, the Class M Merger Shares

and the Class Y Merger Shares shall be referred to collectively as the

"Merger Shares." It is intended that the reorganization described in this

Plan shall be a reorganization within the meaning of Section 368 of the

Internal Revenue Code of 1986, as amended (the "Code"). Prior to the Exchange

Date, Acquired Fund will declare and pay to its shareholders a dividend

and/or other distribution in an



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amount such that it will have distributed all of its net investment income

and capital gains as described in Section 8(l) hereof.



(b) Upon consummation of the transactions described in paragraph (a) of this

Agreement, Acquired Fund shall distribute in complete liquidation to its Class

A, Class B, Class C, Class M and Class Y shareholders of record as of the

Exchange Date Class A, Class B, Class C, Class M and Class Y Merger Shares, each

shareholder being entitled to receive that proportion of such Class A, Class B,

Class C, Class M or Class Y Merger Shares that the number of Class A, Class B,

Class C, Class M or Class Y shares of beneficial interest of Acquired Fund held

by such shareholder bears to the number of such Class A, Class B, Class C, Class

M or Class Y shares of Acquired Fund outstanding on such date. Certificates

representing the Merger Shares will be issued only if the shareholder so

requests.



                                    AGREEMENT



Acquiring Fund and Acquired Fund agree as follows:



1. REPRESENTATIONS AND WARRANTIES OF ACQUIRING FUND. Acquiring Fund represents

and warrants to and agrees with Acquired Fund that:



(a) Acquiring Fund is a business trust duly established and validly existing

under the laws of The Commonwealth of Massachusetts, and has power to own all of

its properties and assets and to carry out its obligations under this Agreement.

Acquiring Fund is not required to qualify as a foreign association in any

jurisdiction. Acquiring Fund has all necessary federal, state and local

authorizations to carry on its business as now being conducted and to carry out

this Agreement.



(b) Acquiring Fund is registered under the Investment Company Act of 1940, as

amended (the "1940 Act"), as an open-end management investment company, and such

registration has not been revoked or rescinded and is in full force and effect.



(c) A statement of assets and liabilities, statement of operations, statement of

changes in net assets and schedule of investments (indicating their market

values) of Acquiring Fund for the fiscal year ended June 30, 2001, such

statements and schedule having been audited by PricewaterhouseCoopers LLP,

independent accountants, and an unaudited statement of assets and liabilities,

statement of operations, statement of changes in net assets and schedule of

investments (indicating their market values) of Acquiring Fund for the six

months ended December 31, 2001, have been furnished to Acquired Fund. Such

statements of assets and liabilities and schedules of investments fairly present

the financial position of Acquiring Fund as of the dates thereof and such

statements of operations and changes in net assets fairly reflect the results of

its operations and changes in net assets for the periods covered thereby in

conformity with generally accepted accounting principles.



(d) The prospectus and statement of additional information dated October 30,

2001, as revised March 30, 2002, previously furnished to Acquired Fund, and any

amendment or supplement thereto or any superseding prospectus or statement of

additional information in respect thereof in effect prior to the Exchange Date,

which will be furnished to Acquired Fund (collectively, the



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"Acquiring Fund Prospectus") do not, as of the date hereof, and will not, as

of the Exchange Date, contain any untrue statement of a material fact or omit

to state a material fact required to be stated therein or necessary to make

the statements therein not misleading; provided however, that Acquiring Fund

makes no representation or warranty as to any information in the Acquiring

Fund Prospectus that does not specifically relate to Acquiring Fund.



(e) There are no material legal, administrative or other proceedings pending or,

to the knowledge of Acquiring Fund, threatened against Acquiring Fund which

assert liability or may, if successfully prosecuted to their conclusion, result

in liability on the part of Acquiring Fund, other than as have been disclosed in

the Prospectus (as defined below).

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