Putnam
Global
Growth
Fund
ANNUAL REPORT
October 31, 1994
(Graphic- Balance Scales)
B O S T O N * L O N D O N * T O K Y O
<PAGE>
Performance highlights
> Morningstar, an independent mutual fund rating company, gave the fund's
class A shares a rating of four stars (out of five possible), for
risk-adjusted performance as of October 31, 1994.*
> "We will continue to position this fund to provide an opportunity to access
potential economic growth in the United States and around the world. We
will pursue a diverse range of opportunities, while attempting to minimize
the inherent risks in overseas investing."
--Anthony Regan, fund manager
> Performance should always be considered in light of a fund's investment
strategy. Putnam Global Growth Fund is designed for investors seeking
capital appreciation through a globally diversified equity portfolio.
FISCAL 1994 RESULTS AT A GLANCE
<TABLE>
<CAPTION>
Class A Class B
Total return NAV POP NAV CDSC
<S> <C> <C> <C> <C> <C>
.................................................................................................
(Change in value during period
plus reinvested
distributions)
12 months ended 10/31/94 8.62% 2.34 % 7.95 % 2.95%
Share value NAV POP NAV
.................................................................................................
10/31/93 $9.30 $ 9.87 $9.19
10/31/94 9.92 10.53 9.74
Capital gains
Distributions Long- Short-
No. Income term term Total
.................................................................................................
Class A 1 -- $ 0.151 $0.021 $0.172
Class B 1 -- 0.151 $0.021 0.172
</TABLE>
Performance data represent past results and will differ for each share class.
For performance over longer periods, see pages 8 and 9. POP assumes 5.75%
maximum sales charge. CDSC assumes 5% maximum contingent deferred sales
charge.
*Morningstar, Inc., is an independent research firm that rates funds relative
to funds with similar objectives, based on risk-adjusted medium- and
long-term performance, as applicable, and adjusted for sales charges. A
four-star rating put the fund in the top 32.5% of rated funds. Ratings are
updated monthly. Past performance is not indicative of future results.
<PAGE>
From the Chairman
(Photo of George Putnam)
(c) Karsh, Ottawa
Dear Shareholder:
As recovery works its way through the global economy, stock markets around
the world continue to feel the aftereffects of recession. Investors
everywhere seem nervous about inflation. Their concern, justified or not, has
been a major factor in the generally poor performance of bond markets. And
until the bond markets improve, there isn't likely to be much upward movement
in the stock markets of these countries.
That's why Fund Manager Anthony Regan and his management team have assumed
and are maintaining a cautious approach to the management of Putnam Global
Growth Fund. Tony isn't ready to say these markets have turned the corner.
Nevertheless, he sees growing room for optimism in the months ahead.
In the report that follows, Tony and Gerald Zukowski, who manage the U.S.
portion of the portfolio, look back on fiscal '94 and ahead on prospects for
fiscal '95.
Respectfully yours,
(Signature of George Putnam)
George Putnam
Chairman of the Trustees
December 14, 1994
<PAGE>
Report from the fund managers
Anthony W. Regan, lead fund manager
Gerald S. Zukowski
Looking back over Putnam Global Growth Fund's fiscal year, which ended on
October 31, 1994, it appears that the note of caution we sounded in the
semiannual report has proven accurate. Last April, we anticipated gradual
economic recovery in Europe and Japan, coupled with strong U.S. growth.
However, we were discouraged by poor bond markets and a corresponding
weakness in equity prices.
Our forecast for somewhat lackluster stock growth has been borne out. Global
equities continue to track bond prices, which have fallen in the wake of
inflation fears. For the year, your fund returned 8.62% at net asset value
(NAV). Although not as strong as in previous years, these results well
outperformed domestic stocks, as measured by the S&P 500(R) Index at 3.87%
for the year through October 31. Your fund's performance at NAV for the same
period also bested the MSCI World Index, which includes U.S. stocks. Please
see page 8 for performance comparisons.
> THE PACIFIC RIM: WEALTH BEGETS WEALTH
Over the year, we have seen ongoing economic vigor in Southeast Asia. Gross
domestic product (GDP) growth in Malaysia, Singapore, Hong Kong, Taiwan, and
South Korea has been persistently robust. Furthermore, the region has many
requisites for sustained growth: an inexpensive, educated work force, high
personal savings rates, and liquid markets. We will continue to position
assets in countries where we see the strongest growth potential.
In Japan, where your fund maintains a large position, economic fundamentals
appear increasingly solid for the coming months. Indeed, this continued
recovery finally seems to mark the end of the slowdown which has plagued
Japan for the past several years. And as Japan's condition improves, some of
the booming Asian-Pacific economies may begin to reinvest there, further
building on the recovery. Such infusions of foreign capital,
<PAGE>
coupled with the nation's traditional exporting strength, underscore the
prospects for renewal of Japanese economic health.
In the near term, however, we remain concerned about the impact of bond price
declines both in Japan and around the globe. Global stock prices have been
tracking rising bond yields, and Japan is not immune to the trend. This
weakness has been felt all year in the Japanese stock market, as measured by
the Nikkei Index, which grew only 1.45% for 1994 through October 31, in local
currency terms.
> EUROPEAN EQUITIES: ROOM FOR IMPROVEMENT
In Europe, weak bond markets have impeded a rise in stock prices. Massive
European budget deficits, which in some countries approach very high levels
relative to GDP, are fueling inflationary fears. Such deficits invariably
help depress stock and bond prices. Political uncertainty in France, Germany,
and Italy add to investor fears that the ill effects of imbalances between
government revenues and spending will not be addressed.
There have been bright spots in Europe, however. Several U.K. holdings have
performed well through the year, boosting your portfolio's value. In
addition, we share the optimism of economists forecasting solid GDP
performance in the United Kingdom over the coming year. We also believe
Ireland, where your fund has substantial holdings, will continue to show
strong growth this year, as it did in the past year.
(Graphic bar chart representing Portfolio Allocation 10/31/94 to 4/30/94)
(Supply plot points)
*Based on net assets
<PAGE>
We are optimistic that the Continent will enjoy continued recovery in
corporate earnings. Accordingly, we have added somewhat to our stock
positions in the core European countries, with
emphasis on France, Germany, and the United Kingdom. In these countries,
stock market valuations are looking increasingly attractive as higher profit
levels are established, a trend we believe will persist in the coming year.
> U.S. MARKETS: WATCHING BOND YIELDS
A lackluster bond market has undermined any meaningful advance in U.S. stock
prices. Interest rate increases and fears of further raises have dampened
enthusiasm for equities, despite strong GDP growth throughout fiscal 1994. A
recent difficult period for financial stocks retarded the fund's performance
somewhat, since the portfolio was heavily weighted in that sector. However,
we expect better prices in those stocks, as well as the fund's cyclical
holdings, over the near term.
Uncertainty about the country's political future could lead to some market
swings in the coming months. The investment community has been moderately
enthusiastic about Republican victories, but has demonstrated some concern
over the future of global trade negotiations.
> EMERGING MARKETS: A SUCCESS STORY FOR THE 1990s
Overall economic growth in India, Mexico, China, and Thailand was strong
throughout 1994. Although your fund has small holdings in several emerging
markets, we have not made substantial investments in any of them. Despite the
potential for high returns, we take a cautious approach to these nascent
stock markets. We insist that certain criteria be met before we invest in
newly industrializing countries (NICs). However, we will continue monitoring
developments in these dynamic economies to seek out opportunities for strong
potential returns without undertaking unduly large risk.
> THE COMING MONTHS: CAUTIOUS OPTIMISM
We remain cautiously optimistic about the chances for gains in global equity
prices in the near future. However, we do not believe we have reached the
turning point where stocks will perform dynamically. Although the linkage
between soft bond prices and slow-moving equities around the world has not
been
<PAGE>
NET CHANGE IN STOCK MARKETS
12 months ended 10/31/94
<TABLE>
<CAPTION>
Local currency U.S. $
<S> <C> <C>
.....................................................................
United Kingdom 0.45% 10.89%
.....................................................................
France -9.06 4.15
.....................................................................
Netherlands 4.19 17.00
.....................................................................
Spain -6.12 1.30
.....................................................................
Germany -1.72 10.15
.....................................................................
Switzerland -5.43 12.33
.....................................................................
Japan -2.84 8.78
.....................................................................
Australia 0.20 11.51
.....................................................................
Hong Kong 5.00 5.01
.....................................................................
Singapore/Malaysia 25.33/35.40 35.44
.....................................................................
United States 3.72 3.72
.....................................................................
World Index N/A 7.65
.....................................................................
World Index (ex U.S.) N/A 9.89
</TABLE>
Source: Morgan Stanley Capital International World Indexes
severed, we believe current inflationary fears to be exaggerated. When and if
markets realize this in the coming year, there could be an uplift in prices.
Fundamentally, the signs of economic vigor are apparent around the globe. We
anticipate strong corporate earnings in Japan and the rest of Asia, in some
core European countries, and in the United States. Even as we wait for
broader markets to share this enthusiasm, we will continue to scour the globe
for attractive individual investments.
The opinions expressed here are exclusively those of Putnam Management. They
are not meant as investment advice. Although the described holdings were
viewed favorably as of October 31, 1994, there is no guarantee the fund will
continue to hold these securities in the future. International investing
involves certain risks, such as currency fluctuations and political
developments.
<PAGE>
Performance summary
TOTAL RETURN FOR PERIODS ENDED 10/31/94
<TABLE>
<CAPTION>
S&P
Class A Class B MSCI 500
NAV POP NAV CDSC World EAFE Index
<S> <C> <C> <C> <C> <C> <C> <C>
1 year 8.62% 2.34% 7.95% 2.95% 7.65% 10.09% 3.87%
5 years 59.38 50.27 -- -- 33.06 22.45 61.96
Annual average 9.77 8.49 -- -- 5.88 4.13 10.12
10 years 379.97 352.31 -- -- 319.97 438.36 296.87
Annual average 16.98 16.29 -- -- 15.43 18.33 14.78
Life of class B -- -- 33.46 30.46 35.76 47.94 22.29
Annual average -- -- 12.19 11.18 13.01 16.96 8.35
</TABLE>
TOTAL RETURN FOR PERIODS ENDED 9/30/94
(most recent calendar quarter)
<TABLE>
<CAPTION>
S&P
Class A Class B MSCI 500
NAV POP NAV CDSC World EAFE Index
<S> <C> <C> <C> <C> <C> <C> <C>
1 year 10.57% 4.18% 9.76% 4.76% 7.56% 9.83% 3.72%
5 years 49.83 41.22 -- -- 25.06 13.75 54.66
Annual average 8.42 7.15 -- -- 4.57 2.61 9.11
10 years 383.77 356.03 -- -- 312.74 434.04 288.72
Annual average 17.07 16.39 -- -- 15.23 18.24 14.54
Life of class B -- -- 31.13 28.13 32.03 43.17 19.79
Annual average -- -- 11.80 10.74 12.18 16.01 7.71
</TABLE>
Fund performance data do not take into account any adjustment for taxes
payable on reinvested distributions. Effective April 27, 1992, the fund began
offering class B shares. Performance of each share class will differ.
Performance data represent past results and will differ for each share class.
Investment returns and principal value will fluctuate so an investor's
shares, when sold, may be worth more or less than their original cost.
Total return shows how the value of the fund's shares changed over time,
assuming you held the shares through the entire period and reinvested all
distributions back into the fund.
Class A shares are generally subject to an initial sales charge.
Class B shares may be subject to a sales charge upon redemption.
Net asset value (NAV) is the value of all your fund's assets, minus any
liabilities, divided by the number of outstanding shares, not including any
initial or contingent deferred sales charge.
Public offering price (POP) is the price of a mutual fund share plus the
maximum sales charge levied at the time of purchase. POP performance figures
shown here assume the maximum 5.75% sales charge.
Contingent deferred sales charge (CDSC) is a charge applied at the time of
the redemption of class B shares and assumes redemption at the end of the
period. Your fund's CDSC declines from a 5% maximum during the first year to
1% during the sixth year. After the sixth year, the CDSC no longer applies.
<PAGE>
(Graphic line chart-Growth of a $10,000 Investment 11/1/84 to 10/94)
(Supply plot points)
Past performance is no assurance of future results. A $10,000 investment in
the fund's class B shares at inception on 4/27/92 would have been valued at
$13,346 on 10/31/94 ($13,046 with a redemption at the end of the period).
COMPARATIVE BENCHMARKS
Standard & Poor's 500 Index (S&P 500) is an unmanaged list of
large-capitalization common stocks and is frequently used as a general gauge
of stock market performance.
Morgan Stanley Capital International World Index (MSCI) is an unmanaged list
of approximately 1,482 equity securities listed on stock exchanges in the
United States, Europe, Canada, Australia, New Zealand, and the Far East.
Morgan Stanley Capital International EAFE Index (EAFE) is an unmanaged list
of approximately 1,045 equity securities from Europe, Australia, and the Far
East.
All indexes assume reinvestment of all distributions and do not take into
account brokerage commissions or other costs. Performance figures in the
Morgan Stanley Capital International indexes reflect changes in market prices
and reinvestment of distributions net of withholding taxes, with all values
expressed in U.S. dollars. The fund's portfolio contains securities that do
not match those in the indexes.
<PAGE>
Life cycle investing
As we move through life, our investment needs change. As these needs change,
so does the way we allocate our assets. Here are some basic rules for setting
up and maintaining an investment program and some examples of how assets
might be allocated.
> DETERMINE YOUR INVESTMENT OBJECTIVES.
Objectives may include a new home, college education expenses, or retirement.
> EVALUATE YOUR RISK TOLERANCE.
Generally, risk tolerance is higher for younger investors with longer
timelines and lower for older investors who may depend on their investment
for current income.
> ALLOCATE YOUR INVESTABLE SAVINGS.
Your investment advisor will help you determine how much of your investable
dollars should be allocated to each investment category.
> CHOOSE THE APPROPRIATE PUTNAM FUNDS.
Using Putnam's free exchange privilege, you can adjust your own Putnam
portfolio of funds as your financial needs change -- without a service fee.*
Look at the facing page for some ways you can allocate your assets, then turn
the page to see how the Putnam Family of Funds can help you make your
choices.
*Putnam reserves the right to change or terminate the exchange privilege. In
some cases, a sales charge may apply. See prospectus for details.
<PAGE>
Four ways to allocate assets
(Graphic pie charts)
SEEKING MAXIMUM GROWTH
Risk tolerance: 30%-40% Growth and income
Generally
investors with a
higher risk 40%-50% Growth
tolerance
(often in their 20s
and early 30s.) 5%-20% Income or tax-free income
SEEKING GROWTH AND SOME INCOME
Risk tolerance: 40%-50% Growth and income
Generally
investors with a
high to moder- 30%-40% Growth
ate risk toler-
ance (often in
their late 30s 10%-30% Income or tax-free income
and early 40s.)
SEEKING INCOME AND SOME GROWTH
WITH PROTECTION AGAINST INFLATION
Risk tolerance: 30%-40% Growth and income
Generally
investors with a
moderate risk 10%-20% Growth
tolerance (often
in their late 40s 25%-60% Income or tax-free income
and 50s.)
SEEKING HIGH CURRENT INCOME AND
PROTECTION AGAINST INFLATION
Risk tolerance: 20%-30% Growth and income
Generally
investors with
a moderate 5%-10% Growth
to low risk
tolerance 40%-70% Income or tax-free income
(often over 60
and retired)
<PAGE>
The Putnam Fund Selector(TM)
The Putnam Fund Selector shows the many opportunities for investors within
every investment strategy. All investors should first accumulate a base of
conservative, cash-equivalent investments. Then, with the help of your
investment advisor, diversify your portfolio by investing in the Putnam
Family of Funds.
(Graphic-Pyramid showing risk\rewards.)
Putnam Growth Funds
Putnam Growth and Income Funds
Putnam Income or Tax-Free Funds
Most Conservative Investments
<PAGE>
PUTNAM GROWTH FUNDS
Asia Pacific Growth Fund
Capital Appreciation
Diversified Equity Trust
Europe Growth Fund
Global Growth Fund
Health Sciences Trust
Investors Fund
Natural Resources Fund*
New Opportunities Fund
OTC Emerging Growth Fund
Overseas Growth Fund
Vista Fund
Voyager Fund
PUTNAM GROWTH AND INCOME FUNDS
Convertible Income-Growth Trust
Dividend Growth Fund
Equity Income Fund
The George Putnam Fund of Boston
The Putnam Fund for Growth and Income
Managed Income Trust
Utilities Growth and Income Fund
PUTNAM INCOME FUNDS
Adjustable Rate U.S. Government Fund
American Government Income Fund
Balanced Government Fund
Corporate Asset Trust
Diversified Income Trust
Federal Income Trust
Global Governmental Income Trust
High Yield Advantage Fund
High Yield Trust
Income Fund
U.S. Government Income Trust
PUTNAM TAX-FREE
INCOME FUNDS
Intermediate Tax Exempt Fund
Municipal Income Fund
Tax Exempt Income Fund
Tax-Free High Yield Fund
Tax-Free Insured Fund
State tax-free funds+
Arizona, California, Florida, Massachusetts, Michigan, Minnesota, New Jersey,
New York, Ohio, and Pennsylvania
LIFESTAGE(SM) FUNDS
Putnam Asset Allocation Funds--three investment portfolios that spread your
money across a variety of stocks, bonds, and money market investments to help
maximize your return and reduce your risk.
The three portfolios:
Putnam Asset Allocation: Balanced Portfolio
Putnam Asset Allocation: Conservative Portfolio
Putnam Asset Allocation: Growth Portfolio
MOST CONSERVATIVE
INVESTMENTS++
Putnam money market funds:
Money Market FundS.
Tax Exempt Money Market Fund
CDs and savings accounts**
* Formerly Energy-Resources Trust.
+ Not available in all states.
++ Relative to above.
S. Formerly Daily Dividend Trust.
** Not offered by Putnam Investments. Certificates of deposit offer a fixed
rate of return and may be insured, up to certain limits, by federal/state
agencies. Savings accounts may also be insured up to certain limits.
Please call your financial advisor or Putnam to obtain a prospectus for any
Putnam fund. It contains more complete information, including charges and
expenses. Read it carefully before you invest or send money.
<PAGE>
Report of Independent Accountants
For the Year Ended October 31, 1994
To the Trustees and Shareholders of
Putnam Global Growth Fund
We have audited the accompanying statement of assets and liabilities of
Putnam Global Growth Fund, including the portfolio of investments owned, as
of October 31, 1994, and the related statement of operations for the year
then ended, the statement of changes in net assets for each of the two years
in the period then ended and the "Financial Highlights" for each of the
periods indicated therein. These financial statements and "Financial
Highlights" are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
"Financial Highlights" based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
"Financial Highlights" are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 1994, by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and "Financial Highlights" referred
to above present fairly, in all material respects, the financial position of
Putnam Global Growth Fund as of October 31, 1994, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the "Financial Highlights" for
each of the periods indicated therein, in conformity with generally accepted
accounting principles.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
December 21, 1994
<PAGE>
Portfolio of investments owned
October 31, 1994
<TABLE>
<CAPTION>
COMMON STOCKS (91.0%)(a)
NUMBER OF SHARES VALUE
<S> <C> <C>
Japan (23.5%)(b)
479,000 Asahi Diamond Industrial Co. Ltd. $ 8,796,260
1,022,000 Bridgestone Corp. Japan 16,869,950
250,000 CSK Corp. 8,382,350
196,000 Chudenko Corp. 7,198,590
1,100,000 Dai Nippon Printing Co., Ltd. 20,427,110
1,420,000 Daiwa Securities Ltd. 20,656,172
1,800,000 Fujitsu, Ltd. 20,612,880
130,000 Hirose Electric Co. Ltd. 7,711,750
363,000 Ito Yokado Ltd. 19,810,906
1,770,000 Komatsu, Ltd. 16,799,777
330,000 Komori Corp. 8,817,698
300,000 Kurita Water Ltd. 8,604,150
120,000 Mabuchi Motor Co. Ltd. 9,186,011
1,100,000 Marui Co., Ltd. 20,086,660
1,330,000 Matsushita Electric Ind. Ltd. 22,091,166
1,850,000 Mitsubishi Motors Corp. 17,291,950
585,000 Mitsubishi Trust & Banking 9,052,934
2,020,000 Mitsui Co. 18,130,712
1,250,000 Mitsui Fudosan Co., Ltd. 14,056,500
495,000 Murata Manufacturing Co. Ltd. 20,222,828
1,900 Nippon Telegraph and Telephone Corp. 17,739,606
960,000 Nippondenso Co., Ltd. 20,501,376
805,000 Nishimatsu Construction Co. 8,554,091
3,900,000 Nisshin Steel Co., Ltd. 20,479,680
1,200,000 Omron Corp. 21,912,720
316,000 Santen Pharmaceutical Co., Ltd. 8,411,030
270,000 Secom Co. 18,022,284
70,000 Shandong Huaneng Pwr. ADR 752,500
930,000 Shimizu Corp. 9,594,531
399,000 Sony Corp. 24,327,747
96,600 Sony Music Entertainment Inc. 5,471,307
300,000 Taihei Dengyo 8,232,750
490,000 Takuma Co. Ltd. 9,705,969
1,400,000 Tokio Marine & Fire Insurance Co. Ltd. 16,609,880
2,500,000 Toray Industries, Inc. 19,730,750
240,000 Toyo Seikan Kaisha 8,022,288
358,000 Yamanouchi Pharm Co. Ltd. 7,054,354
520,000 Yamatake Honeywell 7,778,836
1,204,000 Yamato Transport Co. Ltd. 15,154,026
1,000,000 Yasuda Fire & Marine Insurance Co., Ltd. 7,345,500
550,207,579
United States (17.6%)
100,000 A.P.S. Holding Corp. 2,950,000
63,000 AMR Corp. 3,472,870
46,000 AT&T Capital Corp. 1,069,500
137,400 Adaptec, Inc. 3,194,550
19,000 Advocat, Inc. 199,500
18,000 Air Products & Chemicals, Inc. 859,500
COMMON STOCKS
NUMBER OF SHARES VALUE
United States (continued)
125,230 Ak Steel Holding Corp. $ 4,101,283
150,000 Alexander Haagen Properties 2,418,750
69,000 American Electronic Components, Inc. 707,250
209,000 American Express Co. 6,426,750
376,000 American Fam. Restaurants 1,880,000
141,000 American General Corp. 3,877,500
17,100 Avalon Properties, Inc. 333,450
218,600 Avon Products, Inc. 13,826,450
113,000 Back Bay Restaurant Group, Inc. 1,017,000
145,000 Baker (J.) Inc. 2,446,870
50,000 Banco Comercial S A Gdr 144A(c) 975,000
75,800 Bank of Boston Corp. 2,179,250
28,500 Bankers Life Holding Corp. 548,625
64,000 Bankers Trust New York Corp. 4,272,000
20,800 Baxter International 543,442
78,200 Beacon Properties Corp. 1,476,025
25,000 Bell Atlantic Corp. 1,309,370
255,900 Brunswick Corp. 5,245,950
182,000 Burlington Industries, Inc. 1,706,250
54,405 CBS Inc. 3,257,499
97,000 CMC Group, Inc. 388,000
27,400 Camden Property Trust 582,250
337,000 Capco Automotive Products 4,170,375
58,000 Capital Cities/ABC, Inc. 4,821,250
77,000 Capstone Capital Trust, Inc. 1,270,500
45,281 Caremark International, Inc. 984,862
83,300 Cavalier Homes, Inc. 1,062,070
69,400 CenterPoint Properties Corp. 1,301,250
50,000 Chambers Development Co., Inc. Class A 100,000
14,400 Chateau Properties, Inc. 288,000
150,000 Chemical Banking Corp. 5,700,000
253,500 Circus Circus Enterprises, Inc. 5,640,370
42,500 Citizens Investments, Inc. 144A(c) 552,500
330,000 Collins & Aikman Corp. 2,928,750
50,000 Coltec Holdings Inc. 906,250
63,000 Commercial Net Lease Realty, Inc. 779,625
128,100 Computer Associates International, Inc. 6,356,963
58,800 Corrpro Cos., Inc. 918,750
235,300 Crown American Realty Trust 3,235,375
45,600 Donnkenny, Inc. 946,200
86,000 Duckwall-Alco Stores, Inc. 817,000
114,600 Dun & Bradstreet Corp. 6,718,420
348,000 EMC Corp. 7,482,000
36,000 Eagle Finance Corp. 558,000
69,600 Eastex Energy, Inc. 169,650
100,400 Felcor Suite Hotels, Inc. 2,233,900
43,700 Financing for Sciences 142,025
173,800 First Ind. Realty Trust 3,389,100
130,000 First Interstate Bancorp 10,400,000
206,000 Ford Motor Co. 6,077,000
75,000 GTE Corp. 2,306,250
238,850 General Electric Co. 11,673,794
91,900 General Growth Properties, Inc. 1,929,900
169,000 General Motors Corp. 6,675,500
59,706 General RE Corp. 6,687,072
70,000 Golden Systems Inc. 122,500
United States (continued)
69,300 Grace (W.R.) & Co. $ 2,746,013
92,000 Holophane Corp. 1,633,000
52,000 Horizon Outlet Centers 1,222,000
82,695 Hubco Pwr. Gdr 950,993
66,000 ICN Pharmaceuticals, Inc. 767,250
133,000 ITT Consumer Service Corp. 11,737,250
96,000 Integrated Health Services, Inc. 3,912,000
212,200 LTC Properties Inc. 2,732,070
90,000 Landstar System, Inc. 2,992,500
18,400 Lehman Brothers Holding, Inc. 285,200
179,000 Levitz Furniture 144A(c) 1,566,250
68,600 Life Partners Group, Inc. 1,492,050
239,100 Limited Inc. (The) 4,393,463
180,000 Lyondell Petrochemical Co. 4,927,500
9,000 MBNA Corp. 240,750
116,000 Malan Realty Investors, Inc. 1,740,000
70,000 Manufactured Home Communities, Inc. 1,303,750
134,000 Mapco, Inc. 7,319,750
100,000 Maritime Investment Fund(c) 1,050,000
40,000 McArthur/Glen Realty Corp. 635,000
79,000 Merrill Lynch & Co., Inc. 3,110,620
78,000 Mid Atlantic Realty Trust 682,500
175,000 Mid Ocean, Ltd. 4,200,000
36,500 Millicom International Cellular S.A. 1,026,563
43,900 Millipore Corp. 2,255,363
76,000 Minerals Technologies, Inc. 2,261,000
59,500 Morgan (J.P.) & Co., Inc. 3,681,563
140,500 National Health Investors, Inc. 3,846,188
18,000 NN Ball & Roller, Inc. 366,750
95,000 Norfolk Southern Corp. 5,985,000
450,700 Northwest Airlines, Inc. Class A 9,464,700
39,500 Norton McNaughton Inc. 720,870
77,400 Nuevo Energy Co. 1,731,820
118,000 O'Sullivan Industries Holdings 1,489,750
62,000 OM Group, Inc. 1,240,000
47,000 Oasis Residential, Inc. 1,098,620
80,800 Oroamerica, Inc. 606,000
508,000 Owens-Illinois Inc. 5,715,000
13,200 Parametric Technology Corp. 475,200
69,900 Penn National 524,250
120,000 Penney (J.C.) Co., Inc. 6,075,000
175,100 PepsiCo, Inc. 6,128,500
85,000 Pfizer, Inc. 6,300,625
42,000 Post Properties, Inc. 1,233,750
312,800 Premark International, Inc. 13,997,800
100,000 Raychem Corp. 3,700,000
71,100 Reptron Electronics, Inc. 728,775
154,100 Rfs Hotel Investors, Inc. 2,388,550
40,000 Rite Aid Corp. 960,000
111,000 River Bank America 1,304,250
40,400 Ross Stores, Inc. 560,550
21,000 Royal Caribbean Cruises Ltd. 624,750
92,375 SPI Pharmaceuticals Inc. 2,124,625
140,000 SafeCard Services, Inc. 2,240,000
192,400 Salora Int. Equity Share 705,261
24,400 Seda Specialty Parking Corp. 317,200
United States (continued)
48,000 Seitel, Inc. $ 1,344,000
121,000 Shoney's Inc. 1,815,000
116,000 Signet Banking Corp. 3,944,000
81,500 Sizeler Property Investments, Inc. 896,500
249,650 Snap-On Tools Corp. 7,926,388
108,000 Sports Club Co., Inc. 918,000
297,500 Sprint Corp. 9,705,938
162,800 Sterile Concepts Holdings 2,564,100
154,600 Stone Energy Corp. 2,763,475
64,600 Sun Communities, Inc. 1,453,500
176,450 TJX Cos., Inc. (The) 2,779,088
10,000 Talbots, Inc. 347,500
70,000 Tandem Computers Inc. 1,233,750
187,800 Tandy Corp. 8,310,150
224,500 Team Rental Group, Inc. 2,581,750
139,800 Titan Holdings, Inc. 1,432,950
224,000 Transtexas Gas Corp. 2,968,000
105,000 Tribune Co. 5,525,625
93,000 Trism, Inc. 1,395,000
52,000 US WEST, Inc. 1,956,500
57,800 USAir Group, Inc. 252,875
241,200 USX-Marathon Group 4,522,500
251,000 Union Texas Petroleum 5,239,625
19,845 Vishay Intertechnology, Inc. 974,886
121,000 Western Digital Corp. 2,057,000
131,000 Winston Hotels 1,277,250
410,313,517
United Kingdom (10.3%)(b)
3,000,000 Amec PLC 4,854,600
600,000 Anglian Water. PLC 5,364,420
1,977,275 Argyll Group PLC 8,467,482
1,851,800 Associated British Ports PLC 8,323,656
1,517,481 BAT Industries PLC 10,888,680
1,217,322 Barclays Bank PLC 11,599,983
6,564,200 British Steel PLC 17,166,696
530,327 Burmah Oil 7,350,650
2,400,000 CLM Insurance Fund PLC(c) 3,530,640
950,000 East Midlands Electric PLC 10,652,060
3,937,500 Explaura Holdings PLC 96,469
2,180,000 General Electric Co. (The) PLC 9,870,168
1,500,000 Guinness PLC 11,474,250
381,800 Meyer International 2,327,720
850,000 Molins PLC 7,488,500
1,119,095 North West Water Group PLC 10,298,136
600,000 Northern Electric PLC 8,188,860
1,355,000 Pearson PLC 14,041,459
1,500,000 Rothmans International PLC 10,223,850
2,428,900 Royal Insurance Holdings PLC 11,592,411
8,316,200 Sears PLC 14,544,202
272,000 Securicor Group PLC Class A 4,192,417
704,295 Security Services PLC 8,748,893
2,690,900 Senior Engineering Group PLC 3,518,621
1,215,384 Siebe PLC 10,687,601
2,750,000 Tate & Lyle PLC 19,148,250
2,000,000 Vodafone Group PLC 6,914,000
241,554,674
France (6.2%)(b)
41,536 Cetelem $ 8,108,720
203,100 Credit Local de France 15,548,116
42,682 Docks de France 5,919,763
224,324 Elf Aquitaine 16,580,280
106,970 Essilor ADP 10,701,161
206,000 Lafarge Coppee (Bearer Shares) 16,338,354
380,000 Michelin (CGDE)-B 15,907,142
156,200 Pechiney International 4,836,498
53,000 Peugeot S.A. 7,937,646
140,000 Societe Generale D'Enterprises 15,800,316
36,200 Sommer-Allibert 13,501,166
66,818 Ugine 5,015,512
305,000 Union Assurance 8,045,656
144,240,330
Netherlands (4.8%)(b)
29,962 ABN AMRO Holding N.V. 1,064,550
162,263 Aegon N.V. (Bearer) 10,019,317
110,000 Akzo N.V. 13,891,097
153,900 DSM N.V. 13,327,832
1,050,000 Elsevier N.V. 10,712,410
497,580 Getronics Electric N.V. 15,317,851
600,000 IHC Caland N.V. 15,232,200
422,400 Royal Ptt 13,454,454
261,857 Wolters Kluwer N.V. 18,933,727
111,953,438
Switzerland (4.2%)(b)
20,500 BBC Brown Boveri AG-Bearer 17,580,759
14,731 Fischer Georg (Bearer) 16,992,798
3,845 Fischer Georg (Registered) 825,895
8,280 Nestle S.A. (Registered) 7,733,272
5,700 Rieter Holding AG Part Cert 7,346,063
2,750 Rieter Holding AG Part Cert 656,325
9,300 Societe Generale De Surveillance Holdings
S.A. 13,465,396
8,350 Sulzer PC 5,746,022
69,000 Swiss Bank Corp. (Registered) 9,523,870
17,286 Swiss Reinsurance Co. (Registered) 10,245,084
10,000 Zurich Insurance Co. (Bearer) 9,108,990
99,224,474
Singapore (3.5%)(b)
1,203,000 Cycle & Carriage Ltd. 11,066,758
1,105,000 Development Bank of Singapore 11,746,482
1,800,000 Genting Berhad 16,555,860
1,257,000 Jurong Shipyard Ltd. 11,306,589
700,000 Singapore Airlines Ltd. 6,725,740
465,000 Singapore Press For. A 8,523,683
1,552,569 United Overseas Bank Ltd. 17,033,234
82,958,346
Hong Kong (3.0%)(b)
1,300,000 Chen Hsong Holdings 824,460
1,300,000 Cheung Kong Holdings Ltd. 6,258,980
272,000 Citic Pacific Ltd. 818,470
Hong Kong (continued)
345,000 Consolidated Electric Pwr. Asia Ltd. $ 805,950
280,000 Dao Heng Bank Ltd. 929,516
3,100,000 Golden Resources Dev. Int. Ltd. 481,430
1,350,000 Guangdong Investment Ltd. 856,170
1,400,000 Guoco Group Ltd. 6,613,600
933,956 HSBC Holdings PLC 11,060,281
3,420,000 Hong Kong Land Holdings Ltd. 8,764,092
2,742,000 Hong Kong Telecommunications Ltd. 5,873,364
1,432,000 Hutchison Whampoa, Ltd. 6,616,556
755,000 Jinhui Shipping & Transp 144A ADR(c) 1,359,000
1,060,000 Johnson Electric Holdings Ltd. 2,949,556
1,700,000 Manhattan Card Co., Ltd. 693,090
1,455,000 Swire Pacific Ltd. Class A 11,110,526
16,000,000 UDL Holdings Ltd. 2,443,200
3,150,000 Yue Yuen Ind. Hldgs 676,930
69,135,171
Ireland (2.6%)(b)
4,474,508 Allied Irish Banks 18,227,356
2,775,000 CRH PLC 15,414,848
108,000 Elan Corp., PLC ADR 3,982,500
87,800 Fleming Russia Securities Fund Ltd. 790,200
2,666,428 Greencore PLC 16,528,921
1,681,426 Irish Life PLC 5,143,818
60,087,643
Malaysia (2.2%)(b)
1,690,000 Hong Leong Industries 9,061,780
1,746,000 Leader Universal 9,703,744
1,500,000 Malayan Banking Berhad 10,215,300
285,000 Maruichi Malaysia Steel Tube 836,589
675,000 Public Bank 1,532,318
3,850,000 Sime Darby Berhad 10,623,300
169,000 SungeiWay Holdings 668,057
106,000 Telekom Malaysia Berhad 858,791
154,000 Tenaga Naszonal 819,727
51,000 Tung Ho Steel Gdr 144A(c) 688,500
1,150,000 United Engineers Berhad 6,211,380
137,000 Ytl 777,502
51,996,988
Germany (2.2%)(b)
85,000 BASF AG 18,036,290
21,100 Benpres Holding Corp. 144A Gdr(c) 242,650
39,000 Cementos Paz Deleware Rio 144A ADR(c) 955,500
13,000 Cesc Limited Units ADR 767,000
16,795 Schering AG 11,220,484
61,000 VEBA AG 20,437,416
51,659,340
Spain (2.1%)(b)
386,200 Argentaria 14,957,140
300,000 Hidrolectrica del Cantabrico 9,112,710
300,000 Inmobiliaria Metropolitana Vasco Central 9,832,140
28,000 Repsol S.A. 896,403
425,000 Repsol S.A. ADS 13,812,500
48,610,893
Australia (1.9%)(b)
1,196,752 Amcor, Ltd. $ 7,958,520
2,250,000 Biota Holdings Ltd. 4,920,730
1,348,000 Brambles Industries, Ltd. 13,486,605
142,500 CRA Ltd. 2,026,436
4,376,682 MIM Holdings Ltd. 9,517,970
911,076 Western Mining Holdings, Ltd. 5,673,361
43,583,622
Sweden (1.0%)(b)
3,250 Nordic Recovery Fund 144A(c) 5,037,500
1,110,000 Svenska Cellulosa AB 18,137,511
23,175,011
Belgium (0.9%)(b)
21,500 Bekaert S.A. 16,698,489
8,930 Solvay SA 4,428,732
21,127,221
Denmark (0.9%)(b)
706,450 Tele Danmark A/S ADR 20,310,438
Finland (0.8%)(b)
910,000 Repola 19,100,627
Argentina (0.7%)(b)
450,000 Astra CIA Argentina DE Petro 945,360
30,500 Banco De Galicia ADR Class B 823,500
345,500 Banco Frances del Rio De La Plata S.A. 2,937,925
50,000 Banco Frances del Rio De La Plata S.A. ADR 1,281,250
39,100 Capex S.A. Gdr 144A(c) 752,675
93,000 Cia Naviera Perez Companc Sa 502,405
590,235 Ciadea 8,237,025
15,000 Inversiones Y Represent-ADR 491,250
75,000 Telecom 454,830
16,426,220
Thailand (0.7%)(b)
45,000 Advanced Information Service 794,768
950,000 Bangkok Bank (Registered) 10,295,815
231,000 Bank of Ayudhya 904,042
352,000 Industrial Finance Corp. 911,328
24,000 Shinawatra Comp Commerce Public Co. 747,562
16,200 Siam Cement 935,079
130,000 Thai Farmers Bank Public Co. 1,147,991
15,736,585
Italy (0.4%)(b)
1,404,840 Cartiere Burgo S.P.A. 8,719,701
1,974,500 Cir Savings 1,258,941
9,978,642
Norway (0.4%)(b)
400,000 Christiana Bank Kreditkass ADR 7,800,000
35,000 Smedvig Transportation ADR 538,125
8,338,125
Austria (0.2%)(b)
410,000 Mayr-Melnhof Karton AG ADS 144A(c) $ 5,586,250
Brazil (0.2%)(b)
79,100 Banco Bradesco Pn 740,392
15,600 Comp Energetica De Minas Gerais 144A ADS(c) 382,200
24,700 Companhia Siderurgica Nacional 1,135,499
4,800 Companhia Vale Do 1,040,758
1,620 Coteminas C Tecidos Norte 690,976
1,469 Eletrobas (Centrais Eletr Bras) 572,631
228,000 Refripar Preference (Refrigeracao Parana) 688,856
5,251,312
India (0.2%)(b)
66,300 Autoriders Finance Ltd. 739,756
36,000 East India Hotel Gdr 144A(c) 519,480
40,000 Gnfc Gdr India 144A(c) 510,000
46,800 India Cements Ltd. Gdr 144A(c) 468,000
21,800 India Magnum Fund 1,308,000
105,000 Kec International Ltd. 970,599
12,300 Southern Petrochemical Ltd.(c) 176,874
4,692,709
Mexico (0.1%)(b)
405,000 Cifra, Series A 1,164,699
58,700 Grupo Mexicano De Desarrollo Sa Senior B ADR 1,063,938
180,900 Transportacion Maritima Mexicana, S.A. Class
A ADS 144A(c) 1,266,300
3,494,937
Portugal (0.1%)(b)
175,000 Banco Commercial Portugues, S.A.
(Registered) 2,392,583
Indonesia (0.1%)(b)
325,000 Indorayon 883,350
13,900 Part Tri Polyta ADR 413,525
267,000 Pt Astra International Foreign Registered 590,390
1,887,265
Venezuela (0.1%)(b)
225,040 Venepal(d) 562,600
184,000 Venezolana de Prerreducidos Caroni Venprecar 1,081,000
1,643,600
Taiwan (0.1%)(b)
40,700 Hocheng Group Corp. Gdr 144A(c) 1,180,300
22,000 Yageo Gdr 144A(c) 456,500
1,636,800
Pakistan (--%)(b)
37,000 Pakistan State Oil 534,106
2,693 Pakistan Telecommunication Ltd. 144A Gds(c) 438,959
973,065
Colombia (--%)(b)
33,300 Banco Ganadero S.A. ADS $ 899,100
Chile (--%)(b)
31,400 Empresas Telex-Chile Sa ADR 576,975
Total Common Stocks (cost $1,835,912,324) $2,128,753,480
Convertible Preferred Stocks (0.3%)(a)
Number of Shares Value
40,000 Citicorp $5.375 cv. pfd. $ 5,290,000
68,600 IVF America, Inc. $0.20 cv. Prf. Ser. A 248,675
Total Convertible Preferred Stocks
(cost $2,383,671) $ 5,538,675
Convertible Bonds (--%)(a)
Principal Amount Value
$160,000 O'Brien Environmental Energy Inc. cv. sub.
deb.
11s, 2011 $ 68,000
880,000 Regency Health Services, Inc. cv. 6-1/2s,
2003 928,400
Total Convertible Bonds (cost $1,017,600) $ 996,400
Warrants (--%)(a)(b)(d) Expiration Date Value
Italy (--%)(b)
134,140 Cartiere Burgo S.P.A. 12/31/95 $ 17,881
United States (--%)
43,700 Financing for Sciences Wts 5/20/99 10,925
Venezuela (--%)(b)
184,000 Siderurigica Venezolana Sivensa 04/01/95 1,840
Total Warrants (cost $6,210) $ 30,646
Short-Term Investments (8.8%)(a)
Principal Amount Value
$21,000,000 Bell Atlantic Financial Services, Inc.
4.87s,
November 17, 1994 $ 20,954,547
20,000,000 Federal Farm Credit Bank 4.74s, November 15,
1994 19,963,133
25,000,000 Federal Home Loan Mortgage Corp. 4.9s,
December 5, 1994 24,884,305
40,000,000 Federal National Mortgage Assn. 4.88s to
4.97s, with various due dates to December
19, 1994 39,788,844
25,000,000 Ford Motor Credit Co. 5.06s, November 30,
1994 24,898,097
30,000,000 General Motors Acceptance Corp. 4.93s,
November 23, 1994 29,909,617
45,216,000 Interest in $497,257,000 joint repurchase
agreement dated October 31, 1994 with Lehman
Brothers, Inc. due November 1, 1994 with
respect to various U.S. Treasury obligations
-- maturity value of $45,221,966 for an
effective yield of 4.75% 45,221,966
Total Short-Term Investments (cost
$205,620,509) $ 205,620,509
Total Investments (cost $2,044,940,314)(e) $2,340,939,710
</TABLE>
<PAGE>
(a) Percentages indicated are based on total net assets of $2,338,389,151,
which correspond to a net asset value per class A, class B and class Y
shares of $9.92, $9.74 and $10.00 respectively.
(b) Value is determined or significantly influenced by trading on exchanges
not in the United States or Canada. ADR or ADS after the name of a
foreign holding stands for American Depository Receipt or American
Depository Shares, respectively, representing ownership of securities on
deposit with a domestic custodian bank.
(c) Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At October 31,
1994 these securities amounted to $27,695,078 or 1.2% of net assets.
(d) Non-income-producing security.
(e) The aggregate identified cost on a tax basis is $2,054,684,508, resulting
in gross unrealized appreciation and depreciation of $597,753,102 and
$311,497,900, respectively, or net unrealized appreciation of
$286,255,202.
Forward Currency Contracts Outstanding (at October 31, 1994)
(aggregate face value $207,878,096)
<TABLE>
<CAPTION>
Aggregate
Market Face Delivery Unrealized
Value Value Date Depreciation
<S> <C> <C> <C> <C>
Japanese Yen (Sell) $105,082,992 $103,352,810 2/22/95 $(1,730,182)
Japanese Yen (Sell) 105,082,992 104,525,286 2/22/95 (557,706)
Total $(2,287,888)
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Statement of assets and liabilities
October 31, 1994
<TABLE>
<CAPTION>
Assets
<S> <C>
Investments in securities, at value (identified cost $2,044,940,314) (Note 1) $2,340,939,710
Foreign currency (cost $3,231,781) 4,225,552
Dividends, interest and other receivables 5,652,823
Receivable for shares of the Fund sold 10,913,805
Receivable for securities sold 3,677,959
Foreign tax receivable 2,238,614
Prepaid expenses 2,634
Total assets 2,367,651,097
Liabilities
Payable to subcustodian (Note 2) 172,634
Payable for securities purchased 17,717,308
Payable for shares of the Fund repurchased 2,009,043
Payable for compensation of Manager (Note 2) 3,802,758
Payable for administrative services (Note 2) 10,874
Payable for compensation of Trustees (Note 2) 4,692
Payable for investor servicing and custodian fees (Note 2) 1,298,270
Payable for distribution fees (Note 2) 968,562
Other accrued expenses 989,917
Payable for open forward currency contracts 2,287,888
Total liabilities 29,261,946
Net assets $2,338,389,151
Represented by
Paid-in capital (Notes 4 and 5) $1,981,357,765
Undistributed net investment income (Note 5) 4,113,885
Accumulated net realized gain on investment transactions (Note 5) 57,904,464
Net unrealized foreign currency translation gains 1,301,529
Net unrealized appreciation of investments and forward currency contracts 293,711,508
Total--Representing net assets applicable
to capital shares outstanding $2,338,389,151
Computation of net asset value and offering price
Net asset value and redemption of class A price per share
($1,507,549,950 divided by 152,036,952 shares) $9.92
Offering price per share (100/94.25 of $9.92)* $10.53
Net asset value and offering price of class B per share
($801,443,339 divided by 82,323,782 shares)+ $9.74
Net asset value, offering price and redemption price of class Y shares
($29,395,862 divided by 2,940,217 shares) $10.00
</TABLE>
* On single retail sales of less than $50,000. On sales of $50,000 or more
and on group sales the offering price is reduced.
+ Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
The accompanying notes are an integral part of these financial statements.
<PAGE>
Statement of operations
Year ended October 31, 1994
<TABLE>
<CAPTION>
<S> <C>
Investment income:
Dividends (net of foreign tax of $2,895,543) $ 33,975,446
Interest 5,437,347
Total investment income 39,412,793
Expenses:
Compensation of Manager (Note 2) $ 12,562,847
Investor servicing and custodian fee (Note 2) 5,393,663
Compensation of Trustees (Note 2) 53,179
Reports to shareholders 341,857
Auditing 58,943
Legal 40,246
Registration fees 311,079
Administrative services (Note 2) 62,390
Postage 746,879
Distribution fees--class A (Note 2) 3,117,765
Distribution fees--class B (Note 2) 5,554,686
Other 41,989
Total expenses 28,285,523
Net investment income 11,127,270
Net realized gain on investments (Notes 1 and 3) 64,734,648
Net realized loss on forward currency contracts (Note 1 and 3) (10,783,242)
Net realized gain on foreign currency (Note 1) 52,312
Net unrealized foreign currency translation gains during the year 914,363
Net unrealized appreciation of investments, and forward
currency contracts during the year 63,829,703
Net gain on investments 118,747,784
Net increase in net assets resulting from operations $129,875,054
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Statement of changes in net assets
<TABLE>
<CAPTION>
Year ended October 31
1994 1993
<S> <C> <C>
Increase in net assets
Operations:
Net investment income $ 11,127,270 $ 6,406,339
Net realized gain on investments 64,734,648 19,887,985
Net realized gain (loss) on forward currency contracts (10,783,242) 3,250,656
Net realized gain (loss) on foreign currency 52,312 (111,102)
Net unrealized foreign currency translation gains 914,363 384,641
Net unrealized appreciation of investments, options and
forward currency contracts 63,829,703 181,620,117
Net increase in net assets resulting from operations 129,875,054 211,438,636
Distributions to shareholders from:
Net investment income
Class A -- (6,035,088)
Class B -- (188,835)
Net realized gain on investments
Class A (18,205,009) (786,486)
Class B (5,583,193) (29,244)
Increase from capital share transactions (Note 4) 1,058,122,192 320,863,037
Total increase in net assets 1,164,209,044 525,262,020
Net assets
Beginning of year 1,174,180,107 648,918,087
End of year (including undistributed net investment
income of $4,113,885 and $2,869,595, respectively) $2,338,389,151 $1,174,180,107
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Financial Highlights*
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
June 15, 1994 April 27, 1992
(commencement (commencement of
of operations) to operations) to
October 31 Year ended October 31 October 31
1994 1994 1993 1992
Class Y Class B
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $ 9.46 $ 9.19 $ 7.22 $ 7.50
Investment operations
Net investment income .01 .01 .05 .01
Net realized and unrealized gain (loss) on
investments .53 .71 1.99 (.29)
Total from investment operations .54 .72 2.04 (.28)
Less distributions from:
Net investment income -- -- (.06) --
Net realized gain on investments -- (.17) (.01) --
Total distributions -- (.17) (.07) --
Net asset value, end of period $ 10.00 $ 9.74 $ 9.19 $ 7.22
Total investment return at net asset value (%)
(b) 5.71(c) 7.95 28.44 (3.73)(c)
Net assets, end of period
(in thousands) $29,396 $801,443 $233,195 $18,154
Ratio of expenses to average
net assets (%) .37(c) 2.11 2.09 1.16(c)
Ratio of net investment income to average net
assets (%) .42(c) .12 .23 .21(c)
Portfolio turnover (%) 17.45 17.45 49.53 61.84
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Year Ten months
ended ended
Year ended October 31 October 31 October 31
1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Class A Class A
$9.30 $ 7.25 $ 7.64 $ 7.12 $ 7.42 $ 6.51
.02 .07 .10 .12 .12 .11
.77 2.06 (.22) .96 (.21) .80
.79 2.13 (.12) 1.08 (.09) .91
-- (.07) (.12) (.15) (.14) --
(.17) (.01) (.15) (.41) (.07) --
(.17) (.08) (.27) (.56) (.21) --
$9.92 $ 9.30 $ 7.25 $ 7.64 $ 7.12 $ 7.42
8.62 29.62 (1.51) (16.51) (1.35) 14.07(c)
$1,507,550 $940,985 $630,764 $648,450 $560,019 $482,750
1.33 1.39 1.56 1.47 1.44 1.06(c)
.83 .85 1.28 1.60 1.56 1.52(c)
17.45 49.53 61.84 70.64 95.39 66.91
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Year ended December 31
1988 1987 1986** 1985
Class A
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $ 6.07 $ 7.60 $ 5.88 $ 3.94
Investment operations
Net investment income .09 .07 .06(a) .03
Net realized and unrealized gain
(loss) on investments .46 .44 2.07 2.31
Total from investment operations .55 .51 2.13 2.34
Less distributions from:
Net investment income (.11) (.13) (.03) (.06)
Net realized gain on investments -- (1.91) (.38) (.34)
Total distributions (.11) (2.04) (.41) (.40)
Net asset value, end of period $ 6.51 $ 6.07 $ 7.60 $ 5.88
Total investment return at net
asset value (%) (b) 9.04 7.26 37.66 65.03
Net assets, end of period
(in thousands) $478,489 $522,569 $411,793 $90,625
Ratio of expenses to average
net assets (%) 1.40 1.39 1.07(a) 1.32
Ratio of net investment income to
average net assets (%) 1.34 1.03 .85(a) 1.04
Portfolio turnover (%) 102.90 113.05 175.68 134.07
</TABLE>
* The table has been restated to reflect a 4-for-1 share split declared by
the Fund to shareholders of record on October 27, 1989, payable on October
28, 1989.
** Per share investment income, expenses and net investment income for the
year ended December 31, 1986 have been determined on the basis of the
weighted average number of shares outstanding during the year.
(a) Reflects an expense limitation applicable during the year. As a result of
such limitation, expenses of the Fund for fiscal 1986 reflect a reduction of
$0.01 per share.
(b) Total investment return assumes dividend reinvestment and does not
reflect the effect of sales charges.
(c) Not annualized.
<PAGE>
Notes to financial statements
October 31, 1994
Note 1
Significant accounting policies
The Fund is registered under the Investment Company Act of 1940, as amended,
as a diversified, open-end management investment company. The fund seeks
capital appreciation by investing primarily in common stocks traded in
securities markets located in a number of foreign countries and in the United
States.
The fund offers class A, class B and class Y shares. The fund commenced
offering its class Y shares June 15, 1994. The fund commenced its public
offering of class B shares on April 27, 1992. Class A shares are sold with a
maximum front-end sales charge of 5.75%. Class B shares do not pay a
front-end sales charge, but pay a higher ongoing distribution fee than class
A shares, and are subject to a contingent deferred sales charge if those
shares are redeemed within six years of purchase. Class Y shares which do not
pay a front-end or contingent deferred sales charge, are generally subject to
the same expenses as class A and class B shares, but do not bear a
distribution fee. Class Y shares are sold only to defined contribution plans
with an initial investment of $250 million in a combination of Putnam funds
and other investments managed by Putnam. Expenses of the fund are borne pro-
rata by the holders of all classes of shares, except that each class bears
expenses unique to that class (including the distribution fees applicable to
such class), and 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 to be
determined by the Trustees. Shares of each class would receive their pro-rata
share of the net assets of the fund if the fund were liquidated. In addition
the Trustees declare separate dividends on each class of shares.
The following is a summary of significant accounting policies consistently
followed by the fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
A Security valuation Investments for which market quotations are readily
available are stated at market value, which is determined using the last
reported sale price, or, if no sales are reported--as in the case of some
securities traded over-the-counter--the last reported bid price, except that
certain U.S. government obligations are stated at the mean between the last
reported bid and asked prices. Securities quoted in foreign currencies are
translated into U.S. dollars at the current exchange rate. Gains and losses
that arise from changes in exchange rates are not segregated from gains and
losses that arise from changes in market prices of investments. The effects
on net investment income arising from changes in exchange rates are also not
segregated. Short-term investments having remaining maturities of 60 days or
less are stated at amortized cost which approximates market, and other
investments are stated at fair value following procedures approved by the
Trustees.
B Joint trading account Pursuant
to an exemptive order issued by the Securities and Exchange commission the
fund may transfer uninvested cash balances into a joint trading account,
along with the cash of other registered investment companies managed by
Putnam Investment Management, Inc. (Putnam Management) the fund's
<PAGE>
Manager, a wholly-owned subsidiary of Putnam Investments, Inc., and certain
accounts. These balances may be invested in one or more repurchase agreements
and/or short-term money market instruments.
C Repurchase agreements The fund or any joint trading account, through its
custodian, receives delivery of the underlying securities, the market value
of which at the time of purchase is required to be in an amount at least
equal to the resale price, including accrued interest. The fund's Manager is
responsible for determining that the value of these underlying securities is
at all times at least equal to the resale price, including accrued interest.
D Security transactions and related investment income Security transactions
are accounted for on the trade date (date the order to buy or sell is
executed). Interest income is recorded on the accrual basis and dividend
income is recorded on the ex-dividend date, except that certain dividends
from foreign securities are recorded as soon as the fund is informed of the
ex-dividend date.
Foreign-denominated receivables and payables are "marked-to-market" daily
using the current exchange rate. The fluctuation between the original
exchange rate and the current exchange rate is recorded as unrealized
translation gain or loss. Upon receipt or payment, the fund realizes a gain
or loss amounting to the difference between the original value and the ending
value of the receivable or payable.
E Option accounting principles When the fund writes a call or put option, an
amount equal to the premium received by the fund is included in the fund's
"Statement of Assets and Liabilities" as an asset and an equivalent
liability. The amount of the liability is subsequently "marked-to-market" to
reflect the current market value of the option written. The current market
value of an option is the last sale price or, in the absence of a sale, the
last offering price. If an option expires on its stipulated expiration date,
or if the fund enters into a closing purchase transaction, the fund realizes
a gain or loss if the cost of a closing purchase transaction exceeds the
premium received when the option was written without regard to any unrealized
gain or loss on the underlying security, and the liability related to such
option is extinguished. If a written call option is exercised, the fund
realizes a gain or loss from the sale of the underlying security and the
proceeds of the sale are increased by the premium originally received. If a
written put option is exercised, the amount of the premium originally
received reduces the cost of the security which the fund purchases upon
exercise of the option.
The fund writes covered call options; that is, options for which it holds the
underlying security or its equivalent. Accordingly, the risk in writing a
call option is that the fund relinquishes the opportunity to profit if the
market price of the underlying security increases and the option is
exercised. In writing a put option, the fund assumes the risk of incurring a
loss if the market price of the underlying security decreases and the option
is exercised.
The premium paid by the fund for the purchase of a call or put option is
included in the fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of
the option. If an option which the fund has purchased expires on the
stipulated expiration date, the fund realizes a loss in the amount of the
cost of the option. If the fund enters into a closing sale transaction, the
fund realizes a gain or loss, depending on whether the proceeds from the
closing sale transaction are greater or less than the cost of the option. If
the fund exercises a call option, the cost of the security acquired by
exercising the call is increased by the premium paid
<PAGE>
to buy the call. If the fund exercises a put option, it realizes a gain or
loss from the sale of the underlying security and the proceeds from such sale
are decreased by the premium originally paid.
Options on foreign currencies The fund writes and purchases put and call
options on foreign currencies. The accounting principles and risks involved
are similar to those described above relating to options on securities. The
amount of potential loss to the fund upon exercise of a written call option
is the value (in U.S. dollars) of the currency sold, converted at the spot
price, less the value of the U.S. dollars received in exchange. The amount of
potential loss to the fund upon exercise of a written put option is the value
(in U.S. dollars) of the currency received converted at the spot price, less
the value of the U.S. dollars paid in exchange.
Forward currency contracts A forward currency contract is an agreement
between two parties to buy or sell a currency at a set price on a future
date. The market value of the contract will fluctuate with changes in
currency exchange rates. The contract is "marked-to-market" daily and the
change in market value is recorded by the fund as an unrealized gain or loss.
When the contract is closed, the fund records a realized gain or loss equal
to the difference between the value of the contract at the time it was opened
and the value at the time it was closed. The maximum potential loss from
forward currency contracts is the aggregate face value in U.S. dollars at the
time the contract was opened; however, management believes the likelihood of
such a loss to be remote.
F Federal taxes It is the policy of the fund to distribute all of its income
within the prescribed time and otherwise comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies. It is
also the intention of the fund to distribute an amount sufficient to avoid
imposition of any excise tax under Section 4982 of the Internal Revenue Code
of 1986. Therefore, no provision has been made for federal taxes on income,
capital gains or unrealized appreciation of securities held and excise tax on
income and capital gains.
G Distributions to shareholders Distributions to shareholders are recorded by
the Fund on the ex-dividend date.
The amount and character of income and gains to be distributed are determined
in accordance with income tax regulations which may differ from generally
accepted accounting principles. These differences include treatment of
certain gains and losses on foreign currency transactions. 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. For the year ended October 31, 1994, the fund reclassified
$7,490,439 to decrease undistributed net investment income, $7,765,332 to
increase accumulated net realized gain in investments and $274,893 to
decrease paid-in capital.
H Foreign currency translation The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Purchases and
sales of securities, income receipts, and expense payments are translated
into U.S. dollars at the prevailing exchange rate on the respective dates of
transactions.
Effective November 1, 1993, the fund adopted Statement of Position (SOP)
93-4, Foreign Currency Accounting and Financial Statement Presentation for
Investment Companies. In accordance with this SOP, reported net realized
gains and losses on foreign currency transactions represent net gains
<PAGE>
and losses from sales and maturities of forward currency contracts,
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 net investment income accrued and the U.S. dollar
amount actually received.
Further, as permitted under the SOP, the effects of changes in foreign
currency exchange rates on investments in securities are not segregated in
the Statement of Operations from the effects of changes in market prices of
those securities, but are included with the net realized and unrealized gain
or loss on investments.
Note 2
Management fee, administrative services, and other transactions
Compensation of Putnam Management, for management and investment advisory
services is paid quarterly based on the average net assets of the fund for
the quarter. Such fee is based on an annual rate of 0.80% of the first $500
million of average net assets, 0.70% of the next $500 million, 0.65% of the
next $500 million and 0.60% of any amount over $1.5 billion. Under current
law, the fee is subject to reduction in any year to the extent that expenses
(exclusive of distribution fees, brokerage, interest and taxes) of the fund
exceed 2.5% of the first $30 million of average net assets, 2.0% of the next
$70 million and 1.5% of any amount over $100 million and by the amount of
certain brokerage commissions and fees (less expenses) received by affiliates
of the Manager on the fund's portfolio transactions.
The fund also reimburses the Manager 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. For the year ended
October 31, 1994, the Fund paid $62,390 for these services.
Trustees of the fund receive an annual Trustee's fee of $3,480 and an
additional fee for each Trustees' meeting attended. Trustees who are not
interested persons of the Manager and who serve on committees of the Trustees
receive additional fees for attendance at certain committee meetings.
Custodial functions for the fund are provided by the Putnam Fiduciary Trust
Company (PFTC), a subsidiary of Putnam Investments, Inc. Investor servicing
agent functions are currently provided by Putnam Investor Services, a
division of PFTC. Fees paid for these investor servicing and custodial
functions for the year ended October 31, 1994 amounted to $5,393,663.
Investor servicing and custodian fees reported in the Statement of Operations
for the year ended October 31, 1994 have been reduced by credits allowed by
PFTC.
As part of the custodial contract between Putnam Fiduciary Trust Company and
the subcustodian bank, the subcustodian has a lien on the securities of the
fund to the extent permitted by the fund's investment restrictions to cover
any advances made by the subcustodian for the settlement of securities
purchased by the fund. At October 31, 1994, the payable to subcustodian
represents the amount due for cash advanced for the settlement of a security
purchase.
The fund has adopted a distribution plan with respect to class A shares (the
"Class A Plan") pursuant to Rule 12b-1 under the Investment Company Act of
1940. The purpose of the Class A Plan is to compensate Putnam Mutual Funds
Corp., a wholly owned subsidiary of Putnam Investments Inc. for services
provided and expenses incurred by it in distributing class A shares. The
Trustees have approved payment by the fund to Putnam Mutual Funds Corp. at an
annual rate of 0.25% of the fund's average net assets attributable to class A
shares. For the year ended October 31, 1994, the fund
<PAGE>
paid $3,117,765 in distribution fees for class A shares.
During the year ended October 31, 1994, Mutual Funds Corp., acting as an
underwriter, received net commissions of $1,359,290 from the sale of class A
shares of the fund.
A deferred sales charge of up to 1.00% is assessed on certain redemptions of
class A shares purchased as part of an investment of $1 million or more. For
the year ended October 31, 1994, Putnam Mutual Funds Corp., acting as
underwriter, received $8,713 on class A redemptions.
The fund has adopted a separate distribution plan with respect to its class B
shares (the "Class B Plan") pursuant to Rule 12b-1 under the Investment
Company Act of 1940. The purpose of the Class B Plan is to compensate Putnam
Mutual Funds Corp. for services provided and expenses incurred by it in
distributing class B shares. The Trustees have approved payment by the fund
to Putnam Mutual Funds Corp. at an annual rate of 1.00% of the fund's average
net asset value of class B shares. For the year ended October 31, 1994, the
fund paid Putnam Mutual Funds Corp. distribution fees of $5,554,686 for class
B shares.
Putnam Mutual Funds Corp. also receives the proceeds on the contingent
deferred sales charges levied on class B share redemptions within six years
of purchase. The charge is based on declining rates, which begins at 5.0% of
the net asset value of the redeemed shares. Putnam Mutual Funds Corp. has
received contingent deferred sales charges of $755,561 from sales of class B
shares during the year ended October 31, 1994.
Note 3
Purchases and sales of securities
During the year ended October 31, 1994, purchases and sales of investment
securities other than short-term investments aggregated $1,482,228,063
and $537,153,242, respectively. There were no purchases or sales of U.S.
government obligations during the year. In determining the net gain or loss
on securities sold, the cost of securities has been determined on the
identified cost basis.
Transactions in forward currency contracts during the year are summarized as
follows:
<TABLE>
<CAPTION>
Sales of Forward
Currency Contracts
Aggregate Face Value
<S> <C>
Contracts outstanding at beginning of year $ 104,773,120
Contracts opened 506,608,874
Contracts closed (403,503,898)
Contracts Open at end of year $ 207,878,096
</TABLE>
<PAGE>
Note 4
Capital shares
At October 31, 1994, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
<TABLE>
<CAPTION>
Year ended October 31
1994
Class A Shares Amount
<S> <C> <C>
Shares sold 89,867,991 $ 864,456,541
Shares issued in connection with
reinvestment of distributions 1,757,924 16,542,020
91,625,915 880,998,561
Shares repurchased (40,809,495) (391,801,048)
Net increase 50,816,420 $ 489,197,513
Year ended October 31
1993
Class A Shares Amount
Shares sold 44,065,078 $ 367,610,548
Shares issued in connection with
reinvestment of distributions 816,802 6,085,174
44,881,880 373,695,722
Shares repurchased (30,696,170) (247,602,245)
Net increase 14,185,710 $ 126,093,477
Year ended October 31
1994
Class B Shares Amount
Shares sold 67,923,259 $ 643,916,531
Shares issued in connection with
reinvestment of distributions 543,647 5,055,913
68,466,906 648,972,444
Shares repurchased (11,507,056) (108,633,648)
Net increase 56,959,850 $ 540,338,796
Year ended October 31
1993
Class B Shares Amount
Shares sold 24,618,432 $ 209,632,239
Shares issued in connection with
reinvestment of distributions 27,755 205,947
24,646,187 209,838,186
Shares repurchased (1,797,350) (15,068,626)
Net increase 22,848,837 $ 194,769,560
From June 15, 1994
(commencement of operations)
to October 31, 1994
Class Y Shares Amount
Shares sold 2,962,991 $ 28,809,511
Shares issued in connection with
reinvestment of distributions -- --
2,962,991 28,809,511
Shares repurchased (22,774) (223,628)
Net increase 2,940,217 $ 28,585,883
</TABLE>
<PAGE>
Note 5
Reclassification of Capital Accounts
Effective November 1, 1993 Putnam Global Growth Fund has adopted the
provisions of the AICPA Statement of Position (SOP) 93-2 "Determination,
Disclosure and Financial Statement Presentation of Income, Capital Gain and
Return of Capital Distributions by Investment Companies." The purpose of this
SOP is to report the accumulated net investment income and accumulated net
realized gain (loss) accounts in such a manner as to approximate amounts
available for future distributions (or to offset future realized capital
gains) and to achieve uniformity in the presentation of distributions by
investment companies.
As a result of the SOP, the fund has reclassified $2,392,541 to decrease
undistributed net investment income and $20,658,232 to increase accumulated
net realized gain and $18,265,691 to decrease paid-in capital.
These adjustments represent the cumulative amounts necessary to report these
balances through October 31, 1993, the close of the fund's prior fiscal year
end for financial reporting and tax purposes. These reclassifications have no
impact on the total net asset value of the fund.
<PAGE>
Federal tax information
The distribution shown in the table from "short-term capital gain" totaling
$.037 per share constitutes "dividend income" for federal income tax
purposes. The Fund has designated 100% as qualifying for the
dividends-received deduction for corporations.
Of the total distributions made, $.135 per share was classified as a
long-term capital gain, whether received in cash or additional Fund shares,
and regardless of how long you had owned your shares before the distribution
was made.
The Form 1099 you receive in January 1995 will show the tax status of all
distributions paid to your account in calendar 1994.
If you are a shareholder in an IRA or other tax-sheltered retirement plan,
this statement is for information only and will serve as a record of
distributions reinvested in your account during the fiscal year. Money
invested in these plans generally is not subject to federal income tax until
you withdraw it.
As required by law, your Fund reports to the Internal Revenue Service on a
calendar year basis the amount of distributions paid to each shareholder.
<TABLE>
<CAPTION>
Investment Short-Term Long-Term Total
Date Paid Income Capital Gain Capital Gain Paid
<S> <C> <C> <C> <C>
December 31, 1993 $-- $.037 $.135 $.172
</TABLE>
The Fund has elected under Section 853 of the Internal Revenue Code to pass
through to its shareholders the opportunity to claim a foreign tax credit or
deduction. Therefore, you will be deemed to have received in your December
1994 dividend, the allocable amount of foreign taxes and to have paid those
taxes directly. When you file your federal income tax return (Form 1040), you
may claim the amount of foreign taxes paid either as a foreign tax credit or
as an itemized deduction but not both. A foreign tax credit will generally
result in a direct reduction in your U.S. tax liability, subject to the
limitations of Section 904 of the Code. The amount of your foreign tax credit
will be reflected on the Form 1099 that you will receive after December 31,
1994. During the fiscal year ended October 31, 1994, the Fund earned
$30,020,267 from foreign countries and paid $2,895,543 in taxes to those
foreign countries for which it has received a foreign tax credit.
<PAGE>
Fund information
INVESTMENT MANAGER
Putnam Investment
Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
TRUSTEES
George Putnam, Chairman
William F. Pounds, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
John A. Hill
Elizabeth T. Kennan
Lawrence J. Lasser
Robert E. Patterson
Donald S. Perkins
George Putnam, III
A.J.C. Smith
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
John R. Verani
Vice President
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Peter Carman
Vice President
Brett C. Browchuk
Vice President
Anthony W. Regan
Vice President
and Fund Manager
Gerald S. Zukowski
Vice President
and Fund Manager
William N. Shiebler
Vice President
Paul M. O'Neil
Vice President
John D. Hughes
Vice President and Treasurer
Beverly Marcus
Clerk and Assistant Treasurer
This report is for the information of shareholders of Putnam Global Growth
Fund. It may also be used as sales literature when preceded or accompanied by
the current prospectus, which gives details of sales charges, investment
objectives and operating policies of the fund, and the most recent copy of
Putnam's Quarterly Performance Summary. For more information, or to request a
prospectus, call toll free: 1-800-225-1581.
<PAGE>
Bulk Rate
U.S. Postage
PAID
Putnam
Investments
A05/A53-15439
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
<PAGE>
APPENDIX TO FORM N-30D FILINGS TO DESCRIBE DIFFERENCES BETWEEN PRINTED
AND EDGAR-FILED TEXTS:
(1) Bold and italic typefaces are displayed in normal type.
(2) Headers (e.g., the name of the fund) are omitted.
(3) Certain tabular and columnar headings and symbols are displayed
differently in this filing.
(4) Bullet points and similar graphic signals are omitted.
(5) Page numbering is omitted.
(6) Trademark symbol replaced with (TM)
