Putnam
Global
Growth
Fund
ANNUAL REPORT
October 31, 1996
[LOGO: BOSTON * LONDON * TOKYO]
Fund highlights
* "[Putnam Global Growth Fund] might be found attractive by conservative
investors looking to diversify globally."
-- Value Line Mutual Fund Advisor, August 31, 1996
* According to CitiBank, U.S. investment in international securities has
grown from $17 billion in 1981 to over $300 billion as of October 1996.
CONTENTS
4 Report from Putnam Management
8 Fund performance summary
14 Portfolio holdings
24 Financial statements
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
(copyright) Karsh, Ottawa
Dear Shareholder:
The task of managing a portfolio of global securities has changed
considerably since Putnam Global Growth Fund began operations some two
decades ago. Indeed, it is far more complex now than it was as recently
as two or three years ago.
This growing complexity has led Putnam Management to bring additional
expertise to your fund's management team. Ami Kuan and Robert Swift have
joined Lead Manager Anthony Regan on the international equities side and
Kim Goodwin has joined Carol McMullen in U.S. equities.
Ami came to Putnam from Fidelity Investments in 1993 as an international
equities analyst. She has 8 years of investment experience. Robert
brought his expertise in Pacific Basin investments to Putnam in 1995;
prior to that, he was with IAI International/Hill Samuel in London and
Pring Dean in Sydney. He has 13 years of investment experience. Kim
joined Putnam in 1996 from Prudential Investments. She has 9 years of
investment experience.
Respectfully yours,
/S/George Putnam
George Putnam
Chairman of the Trustees
December 18, 1996
Report from the Fund Managers
Anthony W. Regan, lead manager,
Ami T. Kuan, Robert Swift, Carol C. McMullen, Kim Goodwin
Bolstered by the ongoing rally in U.S. equities and by broadly positive
conditions in markets in Europe and Asia, Putnam Global Growth Fund
enjoyed a strong fiscal year. For the 12 months ended October 31, 1996,
your fund's class A shares gained 16.10% at net asset value and 9.41% at
public offering price. These results closely match the Morgan Stanley
Capital International (MSCI) World Index, which rose 16.30% over the
same period. For long-term performance and information about other share
classes, please turn to page 8 of this report.
* U.S. STOCK MARKET REACHES RECORD LEVELS AS RALLY PROVES RESILIENT
Domestic equities continued to move upward throughout your fund's fiscal
year, fueled by a potent blend of low inflation, stable interest rates,
and temperate economic growth. Approximately 26% of your fund's
portfolio is invested in U.S. stocks as of October 31, 1996, a sizable
position that contributed substantially to performance. In the coming
months, we are cautiously optimistic that at least moderately favorable
investing conditions will prevail in domestic markets. As we anticipate
a slower-growth environment, we are favoring stocks of companies that
have the potential to do well regardless of the overall economic
activity.
Over the past six months, we have seen strong performance from holdings
in three important economic sectors: finance, health care, and
technology. Within finance, bank stocks were particularly noteworthy, as
fund holdings including BankAmerica and Citicorp thrived. In the health-
care sector, we concentrated on highly profitable industries such as
pharmaceuticals, medical technology, and hospital supplies. Within
technology, telecommunications and software companies were generally
robust. Among your fund's technology holdings were Computer Associates,
a software vendor, and Cascade Communications, a networking company.
Your fund also benefited from owning shares of large-capitalization
growth stocks. Portfolio stocks such as Nike, chemical giant Monsanto,
and health-care leader Johnson & Johnson were all strong performers over
the past year. In the coming months, we believe that such
internationally competitive firms are best positioned to do well as
investors seek companies with proven earnings. While these stocks, along
with others discussed in this report, were viewed favorably at the end
of the fiscal period, all portfolio holdings are subject to review and
adjustment in accordance with the fund's investment strategy and may
vary in the future.
* WESTERN EUROPE REFLECTS MUCH OF U.S. STRENGTH
Many Western European markets performed very well over your fund's
fiscal year. Exchanges in Germany, France, Denmark, the United Kingdom,
and Sweden all experienced strong returns. Generally Continental markets
benefited from conditions similar to those that prevailed in the United
States: low inflation, stable interest rates, and increasing political
consensus on fiscal responsibility. On the corporate level, many
European companies are reaping the rewards of restructuring and efforts
to boost competitiveness -- changes reminiscent of those that have
underpinned the U.S. bull market.
[GRAPHIC OMITTED: HORIZONTAL BAR CHART OF COUNTRY ALLOCATION*]
COUNTRY ALLOCATION*
United States 25.6%
Japan 17.9%
United Kingdom 7.7%
Netherlands 7.6%
France 5.5%
Hong Kong 5.1%
Sweden 4.2%
Switzerland 4.1%
Australia 3.4%
Germany 3.3%
*Based on net assets as of 10/31/96. Holdings will vary over time.
Germany's market performed well over the fund's fiscal year despite a
slowing economy -- a testament to the beneficial reforms that many
German companies have made. The United Kingdom is enjoying continuing
economic expansion; some economists anticipate U.K. gross domestic
product (GDP) will rise a robust 3.4% in 1997. Strong U.K. fund holdings
include Vodafone, which sells cellular equipment and services, and
Securicor, another excellent company in cellular telecommunications.
Elsewhere in Europe, we saw several Swedish companies perform quite
well, notably Pharmacia & Upjohn, a leading pharmaceuticals firm. There
were also upbeat results from some Netherlands firms in the fund's
portfolio, such as Getronics Electric.
* ASIA'S DIVERSE MARKETS POST MIXED RESULTS
In contrast to European markets, which generally moved in concert, Asian
equity returns varied from country to country. Strength in Hong Kong,
Australia, and Malaysia contrasted with weakness in Thailand, Japan, and
Singapore. In the months ahead, we envision more of this disparate
performance among Asian exchanges as investors watch regional economic
and export numbers warily -- and react to disappointments.
Over the past several months, moderate optimism about Japanese stocks
has gradually faded, with financial, political, and economic uncertainty
continuing to afflict Japan. A weakening yen, however, offers some
encouragement to corporate Japan by making Japanese exports more
attractive in world markets. Your fund's weighting in Japan is around
17.9% of net assets, which we have invested in Japanese companies that
we believe have the products and strategy to adapt to changes in the
Japanese economy.
We remain optimistic about the Hong Kong market, which accounts for
around 5% of your fund's net assets. As we approach the July 1997
transfer of rule over Hong Kong from Great Britain to China, indications
are that the changeover will be fairly smooth. Among your fund's more
successful Hong Kong holdings was Varitronix, a maker of computer
displays. To the south, Australia was also buoyant. Australian banks,
such as fund holding Westpac, have benefited nicely from lower interest
rates and corporate restructuring.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
TOP 10 HOLDINGS
Bayer AG (Germany)
Pharmaceuticals
Cheung Kong Holdings (Hong Kong)
Infrastructure
Greencore Group PLC (Ireland)
Food services
Nestle (Switzerland)
Food products
Ciba Geigy (Switzerland)
Pharmaceuticals
Allied Irish Banks (Ireland)
Financial services
Veba AG (Germany)
Conglomerate
IHC Caland (Netherlands)
Energy products
Total SA (France)
Conglomerate
Telebras Co. (Brazil)
Communications
Footnote reads:
These holdings represent 10.2% of the fund's net assets as of 10/31/96.
Portfolio holdings will vary over time.
* GLOBAL EQUITY INVESTING CONDITIONS CAUSE FOR CAUTIOUS OPTIMISM
We believe that a number of exchanges in Western Europe and Asia, as
well as the U.S. market appear poised for continued strength in the
coming months. Of course, several scenarios could overturn the stable
interest-rate and low inflation environment that has supported many
markets. Too dramatic a slowdown in the U.S. economy, a sharp rise in
the yen, or political uncertainties from Russia to the Middle East could
negatively affect a range of stock markets. Nevertheless, we remain
upbeat about the prospects for global equities as your fund begins its
new fiscal year.
The views expressed here are exclusively those of Putnam Management.
They are not meant as investment advice. Although the described holdings
were viewed favorably as of 10/31/96, there is no guarantee the fund
will continue to hold these securities in the future. International
investing involves certain risks, including currency fluctuations,
political developments, and economic instability, not present with
domestic investments.
Performance summary
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.
This section provides, at a glance, information about your fund's
performance. Total return shows how the value of the fund's shares
changed over time, assuming you held the shares through the entire
period and reinvested all distributions in the fund.
TOTAL RETURN FOR PERIODS ENDED 10/31/96
Class A Class B Class M
(inception date) (9/1/67) (4/27/92) (3/1/95)
NAV POP NAV CDSC NAV POP
- ------------------------------------------------------------------------
1 year 16.10% 9.41% 15.25% 10.25% 15.54% 11.46%
- -----------------------------------------------------------------------
5 years 70.07 60.22 -- -- -- --
Annual average 11.20 9.89 -- -- -- --
- ------------------------------------------------------------------------
10 years 169.20 153.68 -- -- -- --
Annual average 10.41 9.76 -- -- -- --
- ------------------------------------------------------------------------
Life of class -- -- 61.19 59.19 31.59 27.00
Annual average -- -- 11.17 10.86 17.86 15.39
- ------------------------------------------------------------------------
Performance data represent past results, do not reflect future
performance, and will differ for each share class. They do not take into
account any adjustment for taxes payable on reinvested distributions or
for payments under the fund's class A distribution plan prior to its
implementation in fiscal 1990. Investment returns and net asset value
will fluctuate so that an investor's shares, when sold, may be worth
more or less than their original cost. POP assumes 5.75% maximum sales
charge for class A shares and 3.50% for class M shares. CDSC for class B
shares declines from a 5% maximum during the first year to 1% during the
sixth year.
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 10/31/96
MSCI MSCI S&P 500 Consumer
World EAFE Index Price Index
- -----------------------------------------------------------------------
1 year 16.30% 10.47% 24.08% 2.99%
- ------------------------------------------------------------------------
5 years 64.98 44.54 105.60 15.21
Annual average 10.53 7.64 15.50 2.87
- ------------------------------------------------------------------------
10 years 180.22 143.54 292.00 43.52
Annual average 10.85 9.31 14.64 3.68
- ------------------------------------------------------------------------
Life of class B 72.86 62.82 91.57 13.48
Annual average 12.92 11.43 15.53 2.84
- ------------------------------------------------------------------------
Life of class M 32.03 19.83 50.48 4.90
Annual average 18.07 11.42 27.67 2.91
- ------------------------------------------------------------------------
[GRAPHIC OF WORM CHART OMITTED:]
GROWTH OF A $10,000 INVESTMENT
Cumulative total return of a $10,000 investment since 10/31/86
Starting value (Insert ending Total)
$9,425 Fund's class A shares at POP $25,368
$10,000 MSCI World Index $28,022
$10,000 Consumer Price Index $14,352
(plot points for 10-year total return mountain chart)
MSCI World
Date/year Fund at POP Index CPI
- --------- ----------- ----------- -------
10/31/86 9,425 10,000 10,000
10/31/87 10,204 12,132 10,453
10/31/88 11,032 14,581 10,898
10/31/89 12,978 16,540 11,387
10/31/90 12,803 14,674 12,103
10/31/91 14,916 16,985 12,457
10/31/92 14,692 16,097 12,856
10/31/93 19,043 20,444 13,209
10/31/94 20,684 22,008 13,554
10/31/95 21,850 24,095 13,935
10/31/96 25,368 28,022 14,352
Footnote reads:
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 $16,119 on 10/31/96 ($15,919 with a redemption at the end of
the period). A $10,000 investment in the fund's class M shares at
inception on 3/1/95 would have been valued at $13,159 at net asset value
on 10/31/96 ($12,700 at public offering price).
PRICE AND DISTRIBUTION INFORMATION
12 months ended 10/31/96
Class A Class B Class M
- ------------------------------------------------------------------------
Distributions (number) 1 1 1
- ------------------------------------------------------------------------
Income $0.1758 $0.1108 $0.1318
- ------------------------------------------------------------------------
Capital gains
- ------------------------------------------------------------------------
Long-term 0.4062 0.4062 0.4062
- ------------------------------------------------------------------------
Short-term -- -- --
- ------------------------------------------------------------------------
Total $0.5820 $0.5170 $0.5380
- ------------------------------------------------------------------------
Share value: NAV POP NAV NAV POP
- ------------------------------------------------------------------------
10/31/95 $10.13 $10.75 $9.86 $10.09 $10.46
- ------------------------------------------------------------------------
10/31/96 11.10 11.78 10.78 11.05 11.45
- ------------------------------------------------------------------------
TOTAL RETURN FOR PERIODS ENDED 9/30/96
(most recent calendar quarter)
Class A Class B Class M
(inception date) (9/1/67) (4/27/92) (3/1/95)
NAV POP NAV CDSC NAV POP
- ------------------------------------------------------------------------
1 year 14.74% 8.10% 13.96% 8.96% 14.28% 10.29%
- ------------------------------------------------------------------------
5 years 70.45 60.56 -- -- -- --
Annual average 11.25 9.93 -- -- -- --
- ------------------------------------------------------------------------
10 years 176.19 160.33 -- -- -- --
Annual average 10.69 10.04 -- -- -- --
- ------------------------------------------------------------------------
Life of class -- -- 61.49 59.49 31.82 27.23
Annual average -- -- 11.43 11.11 18.98 16.35
- ------------------------------------------------------------------------
Performance data represent past results, do not reflect future
performance, and will differ for each share class. Investment returns
and net asset value will fluctuate so that an investor's shares, when
sold, may be worth more or less than their original cost.
TERMS AND DEFINITIONS
Class A shares are generally subject to an initial sales charge.
Class B shares may be subject to a sales charge upon redemption.
Class M shares have a lower initial sales charge and a higher 12b-1 fee
than class A shares and no sales charge on redemption.
Net asset value (NAV) is the value of all your fund's assets, minus any
liabilities, divided by the number of outstanding shares, not including
any initial or contingent deferred sales charge.
Public offering price (POP) is the price of a mutual fund share plus the
maximum sales charge levied at the time of purchase. POP performance
figures shown here assume the maximum 5.75% sales charge for class A
shares and 3.50% for class M shares.
Contingent deferred sales charge (CDSC) is a charge applied at the time
of the redemption of class B 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.
COMPARATIVE BENCHMARKS
Standard & Poor's (S&P) 500 Index* is an unmanaged list of common stocks
that is frequently used as a general measure of stock market
performance.
Morgan Stanley Capital International (MSCI) World Index* is an unmanaged
list of global equity securities, with all values expressed in U.S.
dollars.
Morgan Stanley Capital International (MSCI) EAFE Index* is an unmanaged
list of equity securities from Europe, Australia and the Far East, with
all values expressed in U.S. dollars.
Consumer Price Index (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
Footnote reads:
*These indexes assume reinvestment of all distributions and interest
payments and do not take in account commissions or other costs.
Securities in the fund do not match those in the indexes and performance
of the fund will differ. It is not possible to invest directly in an
index.
PUTNAM GROWTH FUNDS
Asia Pacific Growth Fund
Capital Appreciation Fund
Diversified Equity Trust
Europe Growth Fund
Global Growth Fund
Global Natural Resources Fund *
Health Sciences Trust
International Growth Fund +
International New Opportunities Fund
Investors Fund
New Opportunities Fund
OTC & Emerging Growth Fund [DBL. DAGGER]
Vista Fund
Voyager Fund
Voyager Fund II
PUTNAM GROWTH
AND INCOME FUNDS
Balanced Retirement Fund
Convertible Income-Growth Trust
Equity Income Fund
The George Putnam Fund of Boston
The Putnam Fund for Growth and Income
Growth and Income Fund II
International Growth and Income Fund
New Value Fund
Utilities Growth and Income Fund
PUTNAM INCOME FUNDS
American Government Income Fund
Diversified Income Trust
Diversified Income Trust II
Federal Income Trust
Global Governmental Income Trust
High Yield Advantage Fund
High Yield Trust
Income Fund
Intermediate U.S. Government
Income Fund
Preferred Income Fund
U.S. Government Income Trust
PUTNAM TAX-FREE
INCOME FUNDS
Municipal Income Fund
Tax Exempt Income Fund
Tax-Free High Yield Fund
Tax-Free Insured Fund
State tax-free income funds [SECTION MARK]
Arizona, California, Florida, Massachusetts, Michigan, Minnesota, New
Jersey, New York, Ohio and Pennsylvania
LIFESTAGESM FUNDS
Putnam Asset Allocation Funds--three investment portfolios that spread
your money across a variety of stocks, bonds, and money market
investments.
The three portfolios:
Asset Allocation: Balanced Portfolio
Asset Allocation: Conservative Portfolio
Asset Allocation: Growth Portfolio
MOST CONSERVATIVE
INVESTMENTS **
Putnam money market funds: ++
California Tax Exempt Money Market Fund
Money Market Fund
New York Tax Exempt Money Market Fund
Tax Exempt Money Market Fund
CDs and savings accounts [2 DBL. DAGGERS]
* Formerly Natural Resources Fund
+ Formerly Overseas Growth Fund
[DBL. DAGGER] Formerly OTC Emerging Growth Fund
[SECTION MARK] Not available in all states.
** Relative to above.
++ An investment in a money market fund is neither insured
nor guaranteed by the U.S. government. These funds are
managed to maintain a price of $1.00 per share, although
there is no assurance that this price will be maintained
in the future.
[2 DBL. DAGGERS] 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 at 1-800-225-1581
to obtain a prospectus for any Putnam fund. It contains
more complete information, including charges and expenses.
Please read it carefully before you invest or send money.
Report of independent accountants
For the fiscal year ended October 31, 1996
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, 1996, and the related statement of operations for the
year then ended, the statements 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, 1996, 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, 1996,
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 11, 1996
<TABLE>
<CAPTION>
Portfolio of investments owned
October 31, 1996
<S> <C> <C> <C> <C>
COMMON STOCKS (96.4%) *
NUMBER OF SHARES VALUE
Argentina (0.3%)
- ------------------------------------------------------------------------------------------------------------
615,230 Astra Cia Argentina de Petro 1,107,636
74,667 Banco De Galicia y Buenos Aires Class B ADR 1,353,339
57,500 Banco Frances del Rio de la Plata S.A. ADR 1,509,375
397,325 Banco Frances del Rio de la Plata S.A. 3,477,289
70,000 Capex S.A. 144A GDR 980,000
226,411 Cia Naviera Perez Co. 1,437,997
34,979 Inversiones Y Represent ADR + 1,066,860
15,300 Siderar S.A. 144A ADR + 325,125
75,000 Telecom Argentina S.A. Class B + 283,182
19,000 Telecom Argentina S.A. ADR + 717,250
--------------
12,258,053
Australia (3.4%)
- ------------------------------------------------------------------------------------------------------------
3,000,000 Biota Holdings Ltd. + 8,190,990
827,400 Commonwealth Bank of Australia (Installment shares) 4,983,061
1,443,000 Commonwealth Bank of Australia 13,532,584
12,146,500 Goodman Fielder Ltd. ADR 14,226,855
17,515,000 MIM Holdings Ltd. 22,732,648
2,352,625 QBE Insurance Group Ltd. 12,437,274
9,600 S.A. Brewing Holdings Ltd. 144A ADR + 247,200
11,389,000 Sydney Harbor Casino + 16,223,858
5,310,000 Westpac Banking Corp. + 30,256,805
--------------
122,831,275
Austria (0.5%)
- ------------------------------------------------------------------------------------------------------------
410,000 Mayr-Melnhof Karton AG 144A ADS + 4,920,000
91,000 VA Technologies AG 12,704,020
--------------
17,624,020
Belgium (0.6%)
- ------------------------------------------------------------------------------------------------------------
12,540 N.V. Bekaert S.A. 10,126,165
21,100 Solvay S.A. 12,601,700
--------------
22,727,865
Brazil (1.2%)
- ------------------------------------------------------------------------------------------------------------
62,400 Brazil Realty S.A. + 1,248,000
1,637,357 Centrais Electricas de Santa Catarina S.A. + 1,386,645
36,200 Comp Energetica De Minas Gerais (Cemig) 144A ADS 1,144,825
24,700 Compania Siderurgica Nacional 613,112
10,770 Light Participacoes S.A. + 1,695,229
55,927 Multinacanal Participacoes S.A. 782,978
445,500 Telebras Co. ADR 33,189,750
1,246 Telecomunicacoes do Rio de Janeiro + 120,110
11,562 Telemig (Telec De Minas Gerais) 1,290,918
53,500 Usiminas Siderurg Minas 144A ADR 557,186
--------------
42,028,753
Canada (0.3%)
- ------------------------------------------------------------------------------------------------------------
93,100 Indochina Goldfelds Ltd. 664,205
225,000 Magna International, Inc. Class A 11,278,125
--------------
11,942,330
Chile (0.1%)
- ------------------------------------------------------------------------------------------------------------
80,000 Banco Santander Chile ADR 1,130,000
45,000 Santa Isabel S.A. ADR + 1,265,625
--------------
2,395,625
China (--%)
- ------------------------------------------------------------------------------------------------------------
46,500 Ek Chor China Motorcycle Co., Ltd. 273,188
Denmark (0.6%)
- ------------------------------------------------------------------------------------------------------------
351,300 Danisco A/S 20,063,613
France (5.5%)
- ------------------------------------------------------------------------------------------------------------
62,304 Cetelem Group + 13,264,966
313,100 Credit Locale de France S.A. 26,872,233
362,100 Lafarge Coppee 21,679,504
507,000 Michelin Corp. Class B 24,388,795
171,000 Peugeot Citroen S.A. + 17,786,430
511,000 SGS-Thomson Microelectronics ADR + 26,763,625
319,324 Societe Nationale Elf Aquitaine 25,474,631
362,000 Sommer Allibert 10,031,419
425,500 Total S.A. Class B 33,205,990
--------------
199,467,593
Germany (3.3%)
- ------------------------------------------------------------------------------------------------------------
1,240,500 Bayer AG ADR 46,759,822
53,300 Bayerische Motoren Werke (BMW) AG 31,109,223
28,500 Preussag AG 6,845,257
650,000 Veba (Vereinigte Elektrizitaets Bergwerks) AG + 34,585,310
--------------
119,299,612
Hong Kong (5.1%)
- ------------------------------------------------------------------------------------------------------------
21,678,000 Amoy Properties Ltd. 26,775,770
20,000 Asia Satellite Telecommunications Holdings Ltd. ADR + 535,000
1,200,000 Chen Hsong Holdings 690,654
5,370,000 Cheung Kong Holdings Ltd. 43,061,125
490,000 Cheung Kong Infrastructure Holdings + 912,595
2,928,000 Citic Pacific Ltd. 14,238,961
362,000 Consolidated Electric Power Asia Ltd. 842,753
301,293 First Pacific Co., Ltd. 415,009
3,100,000 Golden Resources Development Intl. Ltd. 364,857
1,501,200 Guoco Group Ltd. 7,941,111
4,060,000 Hong Kong Electric Holdings Ltd. 12,996,327
5,106,000 Hong Kong Land Holdings Ltd. 11,386,380
310,000 Hong Kong Telecommunications Ltd. 547,285
9,000 Hong Kong Telecommunications Ltd. ADR 158,625
2,425,000 Hutchison Whampoa, Ltd. + 16,936,548
405,400 New World Infrastructure Ltd. + 1,009,332
2,398,000 Sun Hung Kai Properties Ltd. 27,292,998
1,977,700 Swire Pacific Ltd. Class A 17,457,516
337,000 Varitronix International Ltd. 614,566
--------------
184,177,412
Hungary (--%)
- ------------------------------------------------------------------------------------------------------------
31,200 Gedeon Richter Ltd. GDR + 1,638,000
India (0.2%)
- ------------------------------------------------------------------------------------------------------------
58,000 Ashok Leyland Ltd. 144A GDR + 623,500
107,000 Crompton Greaves Ltd. 144A 428,000
36,000 East India Hotel Ltd. 144A GDR + 630,000
101,800 India Cements Ltd. 144A GDR + 241,775
31,400 Indian Hotels Ltd. 144A GDR + 730,050
55,600 Indian Petrochemicals Corp. Ltd. 144A ADR + 486,500
105,000 Industrial Credit & Investment Corp. of India Ltd. + 866,250
157,500 Kec International Ltd. + 301,690
64,000 State Bank of India Ltd. 144A GDR + 960,000
102,000 State Bank of India Ltd. 662,282
55,680 Telco 144A GDR (Tata Engineering & Locomotive Co., Ltd.) 668,160
--------------
6,598,207
Indonesia (0.1%)
- ------------------------------------------------------------------------------------------------------------
513,500 Daya Guna Samudera + 501,747
50,000 PT Pasifik Satelit Nusantara ADR + 675,000
26,000 PT Telekomunikasi Indonesia ADR + 780,000
103,000 Quilmes Industrial S.A. ADR + 1,081,500
100,000 Sampoerna Industries 929,868
--------------
3,968,115
Ireland (2.9%)
- ------------------------------------------------------------------------------------------------------------
5,551,306 Allied Irish Banks PLC 35,155,977
3,076,566 CRH PLC 31,554,492
6,581,192 Greencore Group PLC + 37,606,774
--------------
104,317,243
Italy (0.1%)
- ------------------------------------------------------------------------------------------------------------
63,700 Gucci Group + 4,395,300
Japan (17.9%)
- ------------------------------------------------------------------------------------------------------------
1,450,000 Bridgestone Corp. 24,425,340
1,638,000 Canon Inc. 31,328,658
424,000 Chiba Kogyo Bank Ltd. 2,135,252
74,200 Chubu Electric Power, Inc. 1,529,830
1,897,000 Cosmo Oil Co. Ltd. 10,252,256
1,314,000 Dai Nippon Printing Co., Ltd. 22,134,412
751,000 Daikin Industries Ltd. 7,115,986
4,600 East Japan Railway Co. 21,107,214
269,000 Hirose Electric Co. Ltd. 15,954,029
480,000 Ito-Yokado Co., Ltd. 23,919,989
1,855,000 KAO Corp. 21,808,214
416,000 Komori Printing Machinery Co. 9,343,395
715,000 Kurita Water Industries Ltd. 14,365,241
155,800 Kyushu Electric Power Inc. 3,184,892
1,168,000 Marui Co., Ltd. 21,622,041
1,100,000 Mitsubishi Bank Ltd. 22,389,895
2,123,000 Mitsubishi Motors Corp. 17,545,764
2,525,000 Mitsui and Co. 20,380,771
556,000 Murata Manufacturing Co. 17,853,661
1,060,000 Nippon Express Co., Ltd. 8,602,387
3,168 Nippon Telegraph and Telephone Corp. 22,096,511
1,163,000 Nippondenso Co., Ltd. 24,080,368
1,380,000 Obayashi Corp. 10,630,287
850,000 Omron Corp. 15,138,622
402,000 Onward Kashiyama Co. Ltd. 5,607,827
473,000 Santen Pharmaceutical 10,001,142
225,000 Secom Co. 13,383,928
1,569,000 Sekisui Chemical Co. Ltd. 17,482,280
1,778,000 Sharp Corp. 26,986,667
1,080,000 Shimizu Corp. + 9,759,608
871,000 Sumitomo Trust & Banking 9,628,532
417,000 TDK Corp. 24,439,027
1,769,000 Tokio Marine & Fire Insurance Co. Ltd. (The) 19,400,336
1,218,000 Tokyo Electric Power Co., Inc. 27,890,686
3,534,000 Toray Industries Inc. 21,300,739
650,000 Tostem Corp. 18,648,010
1,038,000 Yamanouchi Pharmaceutical Co. Ltd. 21,036,851
1,000,000 Yamatake-Honeywell 16,757,328
1,023,000 Yamato Transport Co. Ltd. 10,590,807
410,000 Yasuda Fire & Marine Insurance Co. 2,600,720
--------------
644,459,503
Malaysia (0.2%)
- ------------------------------------------------------------------------------------------------------------
150,000 KFC Holdings Berhad 593,707
300,000 Malayan Banking Berhad 2,968,534
261,000 Malaysian Assurance Alliance 1,280,982
285,000 Maruichi Malaysia Steel Tube 998,318
169,000 Sungei Way Holdings Berhad 963,230
177,750 YTL Corp. Berhad + 956,818
--------------
7,761,589
Mexico (0.5%)
- ------------------------------------------------------------------------------------------------------------
216,000 Apasco S.A. 1,329,648
300,000 Cemex S.A. de C.V. 998,744
990,000 Cifra S.A. Class C + 1,281,030
15,700 Controladora Comercial Mexicana S.A. GDR + 276,713
345,000 Fomento Economico Mexicano, S.A. de C.V. Class B 1,057,538
268,300 Panamerican Beverages, Inc. Class A 11,704,588
143,000 Sears Roebuck de Mexico S.A. + 256,897
22,500 Telefonos de Mexico S.A. ADR Class L 686,250
--------------
17,591,408
Morocco (--%)
- ------------------------------------------------------------------------------------------------------------
59,300 Banque Marocaine Du Commerce Exterieur 144A GDR 926,563
Netherlands (7.6%)
- ------------------------------------------------------------------------------------------------------------
560,662 ABN AMRO Holding N.V. 31,607,481
457,247 Aegon N.V. 23,197,000
187,110 Akzo-Nobel N.V. 23,516,618
187,600 Dutch States Mines N.V. 17,920,757
1,022,424 Getronics Electric N.V. 25,063,242
600,000 IHC Caland N.V. 33,401,917
804,696 Internationale Nederlanden Groep 25,024,054
487,600 K.L.M.-Royal Dutch Airlines 11,580,178
756,000 Philips Electronics N.V. 26,576,216
520,600 Royal PTT 18,790,688
133,600 Unilever N.V. 20,262,654
403,910 Vendex International N.V. 16,264,673
--------------
273,205,478
Pakistan (0.1%)
- ------------------------------------------------------------------------------------------------------------
82,695 Hubco Power 144A GDR + 1,674,574
62,530 Pakistan State Oil 539,806
8,000 Pakistan Telecomm Ltd. 144A GDR + 628,000
--------------
2,842,380
Peru (--%)
- ------------------------------------------------------------------------------------------------------------
36,000 Telefonica del Peru S.A. ADR 742,500
Philippines (0.3%)
- ------------------------------------------------------------------------------------------------------------
10,600,000 Alsons Consolidated Resources, Inc. + 945,275
7,600,000 Belle Corp. + 2,027,439
23,210 Benpres Holdings Corp. 144A GDR + 162,470
1,249,700 Fil-Estate Land, Inc. 1,166,831
3,330,000 Filinvest Land, Inc. + 1,129,459
1,000,000 HI Cement Corp. + 308,689
1,900,000 International Container Terminal Services, Inc. + 1,249,047
94,300 Philippine Commercial International + 1,221,875
18,500 Philippine Long Distance Telephone Co. ADR 1,107,688
--------------
9,318,773
Portugal (--%)
- ------------------------------------------------------------------------------------------------------------
107,300 Portucel Industrial Empresa S.A. 144A + 630,388
Russia (0.1%)
- ------------------------------------------------------------------------------------------------------------
41,500 AO Mosenergo 144A ADS + 1,182,750
36,600 Gazprom 144A ADR + 672,525
30,300 Lukoil Oil Co. ADR 1,189,275
--------------
3,044,550
Singapore (2.2%)
- ------------------------------------------------------------------------------------------------------------
995,000 Cycle & Carriage Ltd. 10,458,807
764,000 Development Bank of Singapore Ltd. 9,170,170
2,189,000 Far East Levingston Shipbuilding Ltd. 10,494,141
2,943,200 Jardine Matheson Holdings Ltd. 16,629,080
1,106,000 Malayan Banking Berhad 10,943,994
96,000 Overseas Union Bank Ltd. 654,545
1,104,000 Singapore Airlines Ltd. 9,722,727
1,120,000 United Overseas Bank Ltd. 10,897,727
--------------
78,971,191
South Africa (0.2%)
- ------------------------------------------------------------------------------------------------------------
108,200 Barlow Ltd. 942,774
69,000 Energy Africa Ltd. 144A GDR + 1,017,750
74,284 Nedcor Ltd. 144A GDR 1,058,547
1,050,300 SA Iron & Steel Industrial Corp. 747,337
97,100 Sasol Ltd. 1,185,419
28,597 South African Breweries Ltd. 743,254
--------------
5,695,081
South Korea (0.2%)
- ------------------------------------------------------------------------------------------------------------
715,600 Cho Hung Bank Co. Ltd. 7,034,405
51,700 Korea Mobile Telecommunications ADR + 646,250
--------------
7,680,655
Spain (1.2%)
- ------------------------------------------------------------------------------------------------------------
285,231 Banco de Bilbao Vizcaya 13,859,185
250,800 Repsol S.A. ADS 8,182,350
544,560 Tabacalera S.A. 19,930,212
--------------
41,971,747
Sweden (4.2%)
- ------------------------------------------------------------------------------------------------------------
657,000 Astra AB 30,148,146
384,610 Electrolux AB 21,388,974
280,860 Pharmacia & Upjohn, Inc. 10,110,960
617,000 Pharmacia & Upjohn, Inc. + 21,515,733
797,530 Sandvik AB Class B 18,783,089
979,000 Skandia Forsakrings AB 27,445,261
1,111,840 Svenska Cellulosa AB Class B 23,313,618
--------------
152,705,781
Switzerland (4.1%)
- ------------------------------------------------------------------------------------------------------------
18,060 ABB AG Baden 22,238,644
28,970 Ciba-Geigy AG 35,558,762
33,280 Nestle S.A. 36,021,632
32,500 Rieter Holding AG 9,172,251
7,950 Societe Generale de Surveillance Holdings S.A. 17,986,993
25,206 Swiss Reinsurance Co. 26,944,688
--------------
147,922,970
Taiwan (--%)
- ------------------------------------------------------------------------------------------------------------
536 Tung Ho Steel 144A GDR + 4,824
58,538 Yageo Corp 144A GDR + 541,477
--------------
546,301
Thailand (0.1%)
- ------------------------------------------------------------------------------------------------------------
220,000 Industrial Finance Corp. 633,944
302,000 Siam Makro Public Co. + 1,290,548
130,000 Thai Farmers Bank Public Co. 993,845
--------------
2,918,337
United Kingdom (7.7%)
- ------------------------------------------------------------------------------------------------------------
1,200,000 Anglian Water PLC 10,666,587
3,069,628 B A T Industries PLC 21,368,970
1,418,538 Barclays Bank PLC 22,253,446
72,900 British Petroleum Co. PLC ADR 9,376,763
1,194,500 British Petroleum Co. PLC 12,842,267
1,060,603 Burmah Castrol PLC 18,518,633
836,000 East Midlands Electricity + 7,376,665
4,203,000 General Electric Co. 25,943,301
2,000,000 Guinness PLC 14,313,200
1,463,554 HSBC Holdings PLC 29,813,207
995,000 Molins PLC 16,021,838
618,182 North West Water Group PLC 5,731,196
836,900 RTZ Corp. PLC 13,373,965
3,752,310 Scottish Power PLC 19,194,351
3,751,838 Securior Group PLC 16,995,085
800,000 Shell Transportation & Trading 13,109,589
14 Tate & Lyle PLC 109
5,012,186 Vodafone Group PLC 19,361,761
--------------
276,260,933
United States (25.6%)
- ------------------------------------------------------------------------------------------------------------
284,200 360 Communications Co. + 6,430,025
166,300 3Com Corp. + 11,246,038
298,900 Abbott Laboratories 15,131,813
224,400 Avon Products, Inc. 12,173,700
137,200 BankAmerica Corp. 12,553,800
39,600 Basic Petroleum International, Ltd. + 1,207,800
247,300 Becton Dickinson & Co. 10,757,550
243,300 Belo (A.H.) Corp. 9,488,700
178,200 Boeing Co. 16,995,825
28,100 Cabletron Systems, Inc. + 1,752,738
118,300 Cardinal Health, Inc. 9,286,550
128,800 Cascade Communications Corp. + 9,354,100
142,900 Case Corp. 6,644,850
96,300 Cincinnati Bell Inc. 4,754,813
260,900 Cisco Systems, Inc. + 16,143,188
201,500 Citicorp 19,948,500
131,900 Clorox Co. 14,393,588
318,200 Coca-Cola Enterprises, Inc. 13,563,275
142,700 Compaq Computer Corp. + 9,935,488
144,800 CompUSA, Inc. + 6,697,000
303,200 Computer Associates Intl., Inc. 17,926,700
117,100 Computer Sciences Corp. + 8,694,675
188,400 Conagra, Inc. 9,396,450
203,700 du Pont (E.I.) de Nemours & Co., Ltd. 18,893,175
205,900 Eastman Kodak Co. 16,420,525
269,500 EMC Corp. + 7,074,375
231,100 Enron Corp. 10,746,150
226,300 Estee Lauder Cos. Class A 9,730,900
248,600 Federated Department Stores Inc. + 8,203,800
177,202 First Data Corp. 14,131,860
94,800 Franklin Resources, Inc. 6,683,400
113,900 Gannett Co., Inc. 8,642,163
196,600 General Electric Co. 19,021,050
284,900 Gillette Co. 21,296,275
353,500 Halliburton Co. 20,016,938
171,100 HBO & Co. 10,287,388
239,900 Healthsouth Rehabilitation Corp. + 8,996,250
125,800 HFS, Inc. + 9,214,850
323,400 Home Depot, Inc. (The) 17,706,150
193,000 Honeywell, Inc. 11,990,125
247,200 Intel Corp. 27,161,100
136,000 Jacor Communications, Inc. + 3,808,000
510,400 Johnson & Johnson 25,137,200
141,600 Jones Apparel Group, Inc. + 4,425,000
133,600 Lilly (Eli) & Co. 9,418,800
121,100 Liz Claiborne, Inc. 5,116,475
190,600 Marriott International, Inc. 10,840,375
196,000 MBNA Corp. 7,399,000
217,800 Medtronic, Inc. 14,020,875
348,300 Merck & Co., Inc. 25,817,738
135,700 Microsoft Corp. + 18,624,825
41,300 Millicom International Cellular S.A. + 1,641,675
85,600 Mirage Resorts, Inc. + 1,883,200
452,200 Monsanto Co. 17,918,425
204,600 Nautica Enterprises, Inc. + 6,291,450
283,600 Nike, Inc. 16,696,950
174,000 Nine West Group, Inc. + 8,678,250
173,000 Omnicom Group, Inc. 8,606,750
54,800 Oxford Health Plans Inc. + 2,493,400
173,100 Parametric Technology Corp. + 8,460,263
131,600 PeopleSoft, Inc. + 11,811,100
81,300 Perkin-Elmer Corp. 4,359,713
239,900 Pfizer, Inc. 19,851,725
252,400 Praxair, Inc. 11,168,700
150,800 Safeway, Inc. + 6,465,550
367,200 Sears, Roebuck & Co. 17,763,300
286,400 Service Corp. International 8,162,400
167,300 Sherwin Williams Co. 8,385,913
187,100 Starbucks Corp. + 6,080,750
44,625 Sun Bancorp, Inc. 892,500
196,000 SunAmerica, Inc. 7,350,000
211,000 Sun Micro Systems 12,871,000
192,300 Symbol Technologies, Inc. + 8,629,463
86,100 Tellabs, Inc. + 7,329,263
105,800 Textron, Inc. 9,389,750
287,500 Thermo Electron Corp. + 10,493,750
238,100 TJX Cos., Inc. (The) 9,524,000
214,000 Travelers Group Inc. 11,609,500
90,300 Tribune Co. 7,382,025
229,100 USA Waste Services Inc. 7,331,200
218,500 U.S. Surgical Corp. 9,149,688
86,600 United Technologies Corp. 11,149,750
232,500 Walgreen Co. 8,776,875
277,300 Warner-Lambert Co. 17,643,213
--------------
921,543,419
Venezuela (--%)
- ------------------------------------------------------------------------------------------------------------
225,040 Venepal 144A GDR 618,860
184,000 Venezolana de Prerreducidos Caroni C.A. + 897,000
--------------
1,515,860
--------------
Total Common Stocks (cost $2,990,402,804) 3,474,261,611
- ------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS (0.6%) *
NUMBER OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------
924,350 Banco Bradesco BRC .01 pfd. (Brazil) 7,882,124
2,600 CIA Cervejaria Brahma BRC 4.55 pfd. (Brazil) 1,607,125
4,500 CIA Tecidos Norte de Minas BRC 9.642 No Par Value (NPV) pfd. (Brazil) 1,511,243
38,400 CIA Vale Do Rio Doce BRC .1735 NPV pfd. (Brazil) 796,184
76,900 Petroleo Brasileiro S.A. BRC 5.352 S.A. pfd. (Brazil) 9,955,904
--------------
Total Preferred Stocks (cost $18,205,404) 21,752,580
INVESTMENT FUNDS (0.2%) *
NUMBER OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------
104,200 Fleming Russia Securities Fund Ltd. + (Russia) 1,055,025
21,800 India Magnum Fund Class A +(double dagger) (India)
(acquired 3/23/95, cost $1,177,200) 915,600
3,250 Nordic Recovery Fund N.V. + (Switzerland) 4,137,250
57,700 Taiwan Fund, Inc. (Taiwan) 1,233,338
--------------
Total Investment Funds (cost $6,720,760) 7,341,213
UNITS (0.3%) *(cost $11,138,400)
NUMBER OF UNITS VALUE
- ------------------------------------------------------------------------------------------------------------
7,000,000 Grand Hotel Group + 9,971,640
WARRANTS (--%) +*(cost $--) EXPIRATION
NUMBER OF WARRANTS DATE VALUE
- ------------------------------------------------------------------------------------------------------------
32,500 Rieter Holding AG (Switzerland)+ 2/28/97 39,712
SHORT-TERM INVESTMENTS (1.5%) *
PRINCIPAL AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------
$25,000,000 Household Finance Corp. effective yield of 5.39%, November 19, 1996 24,932,624
20,000,000 Sheffield Receivables Corp. effective yield of 5.32%, December 4, 1996 19,902,466
10,000,000 Interest in $500,000,000 joint repurchase agreement dated
October 31, 1996, with Lehman Brothers Inc., due November 1, 1996,
with respect to various U.S. Treasury obligations -- maturity value of
$10,001,536 for an effective yield of 5.53% 10,001,536
--------------
Total Short-Term Investments (cost $54,836,626) 54,836,626
- ------------------------------------------------------------------------------------------------------------
Total Investments (cost $3,081,303,994)*** 3,568,203,382
- ------------------------------------------------------------------------------------------------------------
* Percentages indicated are based on net assets of $3,604,559,477.
*** The aggregate identified cost on a tax basis is
$3,092,382,800, resulting in gross unrealized appreciation and
depreciation of $601,601,012 and $125,780,430, respectively,
or net unrealized appreciation of $475,820,582.
+ Non-income-producing security.
(double dagger) Restricted, excluding 144A securities, as to public resale.
The total market value of restricted securities held at
October 31, 1996, was $915,600 or less than
0.1% of net assets.
ADR, ADS or GDR after the name of a foreign holding
stands for American Depository Receipts, American Depository
Shares or Global Depository Receipts, respectively, representing
securities on deposit with a domestic custodian bank.
144A after the name of a security represents those exempt
from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers.
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Forward Currency Contracts to Sell at October 31, 1996
(agregate face value $770,635,803)
Unrealized
Market Aggregate Face Delivery Appreciation/
Value Value Date (Depreciation)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
British Pounds $52,552,764 $49,029,835 11/12/96 $(3,522,929)
Deutschemarks 92,827,732 94,872,451 11/12/96 2,044,719
Dutch Guilders 87,277,352 88,406,315 11/12/96 1,128,963
French Francs 149,170,272 147,188,954 11/12/96 (1,981,318)
Japanese Yen 374,310,653 391,138,248 1/6/97 16,827,595
- ------------------------------------------------------------------------------------------------------------
$14,497,030
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statements of assets and liabilities
October 31, 1996
<S> <C>
Assets
- ----------------------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $3,081,303,994) (Note 1) $3,568,203,382
- ----------------------------------------------------------------------------------------------------------
Cash 2,131,728
- ----------------------------------------------------------------------------------------------------------
Foreign currency 249,607
- ----------------------------------------------------------------------------------------------------------
Dividends and other receivables 8,669,630
- ----------------------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 14,248,107
- ----------------------------------------------------------------------------------------------------------
Receivable for securities sold 28,392,637
- ----------------------------------------------------------------------------------------------------------
Receivable for open forward currency contracts 20,001,277
- ----------------------------------------------------------------------------------------------------------
Receivable for closed forward currency contracts 2,824,009
- ----------------------------------------------------------------------------------------------------------
Total assets 3,644,720,377
Liabilities
- ----------------------------------------------------------------------------------------------------------
Payable for securities purchased 22,070,280
- ----------------------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 2,110,024
- ----------------------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 5,716,055
- ----------------------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 1,531,937
- ----------------------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 15,729
- ----------------------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 14,251
- ----------------------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 1,608,587
- ----------------------------------------------------------------------------------------------------------
Payable for open forward currency contracts 5,504,247
- ----------------------------------------------------------------------------------------------------------
Payable for closed forward currency contracts 1,086,801
- ----------------------------------------------------------------------------------------------------------
Other accrued expenses 502,989
- ----------------------------------------------------------------------------------------------------------
Total liabilities 40,160,900
- ----------------------------------------------------------------------------------------------------------
Net Assets $3,604,559,477
Represented by
- ----------------------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $2,868,192,704
- ----------------------------------------------------------------------------------------------------------
Undistributed net investment income (Note 1) 66,835,636
- ----------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investment and foreign
currency transactions (Note 1) 168,133,827
- ----------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and assets
and liabilities in foreign currencies 501,397,310
- ----------------------------------------------------------------------------------------------------------
Total - Representing net assets applicable to capital shares outstanding $3,604,559,477
Computation of net asset value and offering price
- ----------------------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($2,186,425,771 divided by 196,914,289 shares) $11.10
- ----------------------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $11.10)* $11.78
- ----------------------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($1,327,246,365 divided by 123,127,673 shares)** $10.78
- ----------------------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($24,179,439 divided by 2,188,420 shares) $11.05
- ----------------------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $11.05)* $11.45
- ----------------------------------------------------------------------------------------------------------
Net asset value, offering price and redemption price
per class Y share ($66,707,902 divided by 5,932,774 shares) $11.24
- ----------------------------------------------------------------------------------------------------------
* 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.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
Year ended October 31, 1996
<S> <C>
Investment income:
- --------------------------------------------------------------------------------------------------------
Dividends (net of foreign tax of $4,199,014) $ 56,824,669
- --------------------------------------------------------------------------------------------------------
Interest 9,616,200
- --------------------------------------------------------------------------------------------------------
Total investment income 66,440,869
- --------------------------------------------------------------------------------------------------------
Expenses
- --------------------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 20,951,734
- --------------------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 10,176,556
- --------------------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 84,520
- --------------------------------------------------------------------------------------------------------
Administrative services (Note 2) 43,424
- --------------------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 4,902,301
- --------------------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 11,722,821
- --------------------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 104,009
- --------------------------------------------------------------------------------------------------------
Reports to shareholders 169,367
- --------------------------------------------------------------------------------------------------------
Auditing 100,586
- --------------------------------------------------------------------------------------------------------
Legal 61,231
- --------------------------------------------------------------------------------------------------------
Postage 1,134,567
- --------------------------------------------------------------------------------------------------------
Other 91,193
- --------------------------------------------------------------------------------------------------------
Total expenses 49,542,309
- --------------------------------------------------------------------------------------------------------
Expense reduction (Note 2) (1,244,308)
- --------------------------------------------------------------------------------------------------------
Net expenses 48,298,001
- --------------------------------------------------------------------------------------------------------
Net investment income 18,142,868
- --------------------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 179,608,669
- --------------------------------------------------------------------------------------------------------
Net realized gain on foreign currency transactions (Note 1) 74,260,376
- --------------------------------------------------------------------------------------------------------
Net unrealized depreciation of assets and liabilities in
foreign currencies during the year (2,485,792)
- --------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investment during the year 182,562,917
- --------------------------------------------------------------------------------------------------------
Net gain on investments 433,946,170
- --------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $452,089,038
- --------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
Year ended October 31
----------------------------------
1996 1995
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets
- ----------------------------------------------------------------------------------------------------------------
Operations: --
- ----------------------------------------------------------------------------------------------------------------
Net investment income $18,142,868 $19,339,153
- ----------------------------------------------------------------------------------------------------------------
Net realized gain on investments and foreign
currency transactions 253,869,045 $100,455,864
- ----------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and assets
and liabilities in foreign currency 180,077,125 $26,307,148
- ----------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 452,089,038 146,102,165
- ----------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ----------------------------------------------------------------------------------------------------------------
From net investment income
Class A (29,547,833) (1,159,070)
- ----------------------------------------------------------------------------------------------------------------
Class B (11,187,413) (644,782)
- ----------------------------------------------------------------------------------------------------------------
Class M (95,055) --
- ----------------------------------------------------------------------------------------------------------------
Class Y (836,209) (22,144)
- ----------------------------------------------------------------------------------------------------------------
From net realized gain on investments:
Class A (68,153,175) (46,984,247)
- ----------------------------------------------------------------------------------------------------------------
Class B (40,919,727) (26,094,046)
- ----------------------------------------------------------------------------------------------------------------
Class M (292,366) --
- ----------------------------------------------------------------------------------------------------------------
Class Y (1,697,504) (896,166)
- ----------------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 591,315,666 305,193,194
- ----------------------------------------------------------------------------------------------------------------
Total increase in net assets 890,675,422 375,494,904
- ----------------------------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------
Beginning of year 2,713,884,055 2,338,389,151
- ----------------------------------------------------------------------------------------------------------------
End of year (including undistributed net investment income of
$66,835,636 and $18,553,417, respectively) $3,604,559,477 $2,713,884,055
- ----------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
March 1, 1995
(commencement
Year ended of operations) to
October 31 October 31 Year ended October 31
-------------------------------------------------------------------
1996 1995 1996
-------------------------------------------------------------------
Class M Class Y
-------------------------------------------------------------------
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.09 $8.86 $10.25
- ----------------------------------------------------------------------------------------------------------------------------
Investment operations
- ----------------------------------------------------------------------------------------------------------------------------
Net investment income .03 (b) .01 .12 (b)
- ----------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 1.47 1.22 1.48
- ----------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.50 1.23 1.60
- ----------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ----------------------------------------------------------------------------------------------------------------------------
From net investment income (.13) -- (.20)
- ----------------------------------------------------------------------------------------------------------------------------
From net realized gain on investments (.41) -- (.41)
- ----------------------------------------------------------------------------------------------------------------------------
Total distributions (.54) -- (.61)
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.05 $10.09 $11.24
- ----------------------------------------------------------------------------------------------------------------------------
Total investment return at net asset value (%) (a) 15.54 13.88* 16.39
- ----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $24,179 $5,853 $66,708
- ----------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (%)(c) 1.80 1.23* 1.02
- ----------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets (%) .32 .17* 1.09
- ----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 72.88 63.31 72.88
- ----------------------------------------------------------------------------------------------------------------------------
Average commission rate paid (d) $.0298 $.0298
- ----------------------------------------------------------------------------------------------------------------------------
See page 29 for notes to Financial Highlights.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights (continued)
(For a share outstanding throughout the period)
June 15, 1994
(commencement
Year ended of operations) to Year ended
October 31 October 31 October 31
----------------------------------------------------------
1995 1994 1996
----------------------------------------------------------
Class Y
----------------------------------------------------------
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.00 $9.46 $9.86
- -----------------------------------------------------------------------------------------------------------------
Investment operations
- -----------------------------------------------------------------------------------------------------------------
Net investment income .09 .01 .01 (b)
- -----------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments .47 .53 1.43
- -----------------------------------------------------------------------------------------------------------------
Total from investment operations .56 .54 1.44
- -----------------------------------------------------------------------------------------------------------------
Less distributions:
- -----------------------------------------------------------------------------------------------------------------
From net investment income (.01) -- (.11)
- -----------------------------------------------------------------------------------------------------------------
From net realized gain on investments (.30) -- (.41)
- -----------------------------------------------------------------------------------------------------------------
Total distributions (.31) -- (.52)
- -----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.25 $10.00 $10.78
- -----------------------------------------------------------------------------------------------------------------
Total investment return at net asset value (%) (a) 6.00 5.71* 15.25
- -----------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $42,582 $29,396 $1,327,246
- -----------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (%)(c) 1.06 .37* 2.02
- -----------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets (%) 1.20 .42* .09
- -----------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 63.31 17.45 72.88
- -----------------------------------------------------------------------------------------------------------------
Average commission rate paid (d) $.0298
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
Financial highlights (continued)
(For a share outstanding throughout the period)
Year ended October 31
-----------------------------------------------------------
1995 1994 1993
-----------------------------------------------------------
Class B
-----------------------------------------------------------
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $9.74 $9.19 $7.22
- ------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------
Net investment income .03 .01 .05
- ------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments .40 .71 1.99
- ------------------------------------------------------------------------------------------------------------------
Total from investment operations .43 .72 2.04
- ------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------
From net investment income (.01) -- (.06)
- ------------------------------------------------------------------------------------------------------------------
From net realized gain on investments (.30) (.17) (.01)
- ------------------------------------------------------------------------------------------------------------------
Total distributions (.31) (.17) (.07)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.86 $9.74 $9.19
- ------------------------------------------------------------------------------------------------------------------
Total investment return at net asset value (%) (a) 4.80 7.95 28.44
- ------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $975,794 $801,443 $233,195
- ------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (%)(c) 2.04 2.11 2.09
- ------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets (%) .29 .12 .23
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 63.31 17.45 49.53
- ------------------------------------------------------------------------------------------------------------------
Average commission rate paid (d)
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
Financial highlights (continued)
(For a share outstanding throughout the period)
April 27, 1992
(commencement of
operations) to
October 31 Year ended October 31
--------------------------------------------------------
1992 1996 1995
--------------------------------------------------------
Class A
--------------------------------------------------------
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $7.50 $10.13 $9.92
- --------------------------------------------------------------------------------------------------------------------
Investment operations
- --------------------------------------------------------------------------------------------------------------------
Net investment income .01 .09 (b) .09
- --------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (.29) 1.47 .43
- --------------------------------------------------------------------------------------------------------------------
Total from investment operations (.28) 1.56 .52
- --------------------------------------------------------------------------------------------------------------------
Less distributions:
- --------------------------------------------------------------------------------------------------------------------
From net investment income -- (.18) (.01)
- --------------------------------------------------------------------------------------------------------------------
From net realized gain on investments -- (.41) (.30)
- --------------------------------------------------------------------------------------------------------------------
Total distributions -- (.59) (.31)
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.22 $11.10 $10.13
- --------------------------------------------------------------------------------------------------------------------
Total investment return at net asset value (%) (a) (3.73)* 16.10 5.64
- --------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $18,154 $2,186,426 $1,689,656
- --------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (%)(c) 1.16* 1.27 1.28
- --------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets (%) .21* .84 1.05
- --------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 61.84 72.88 63.31
- --------------------------------------------------------------------------------------------------------------------
Average commission rate paid (d) $.0298
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
Financial highlights (continued)
(For a share outstanding throughout the period)
Year ended October 31
----------------------------------------------------------
1994 1993 1992
----------------------------------------------------------
Class A
----------------------------------------------------------
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $9.30 $7.25 $7.64
- -------------------------------------------------------------------------------------------------------------------
Investment operations
- -------------------------------------------------------------------------------------------------------------------
Net investment income .02 .07 .10
- -------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments .77 2.06 (.22)
- -------------------------------------------------------------------------------------------------------------------
Total from investment operations .79 2.13 (.12)
- -------------------------------------------------------------------------------------------------------------------
Less distributions:
- -------------------------------------------------------------------------------------------------------------------
From net investment income -- (.07) (.12)
- -------------------------------------------------------------------------------------------------------------------
From net realized gain on investments (.17) (.01) (.15)
- -------------------------------------------------------------------------------------------------------------------
Total distributions (.17) (.08) (.27)
- -------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.92 $9.30 $7.25
- -------------------------------------------------------------------------------------------------------------------
Total investment return at net asset value (%) (a) 8.62 29.62 (1.51)
- -------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $1,507,550 $940,985 $630,764
- -------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (%)(c) 1.33 1.39 1.56
- -------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets (%) .83 .85 1.28
- -------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 17.45 49.53 61.84
- -------------------------------------------------------------------------------------------------------------------
Average commission rate paid (d)
- -------------------------------------------------------------------------------------------------------------------
* Not annualized.
(a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) Per share net investment income has been determined on the basis of the weighted average number of shares
outstanding during the period.
(c) The ratio of expenses to average net assets for the period ended October 31, 1995, and thereafter, includes
amounts paid through brokerage service and expense offset arrangements. Prior period ratios exclude these
amounts (Note 2).
(d) Average commission rate paid on security trades is presented for fiscal periods beginning on or after
September 1, 1995.
</TABLE>
Notes to financial statements
October 31, 1996
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, class M and class Y shares. Class A
shares are sold with a maximum front-end sales charge of 5.75%. Class B
shares, which convert to class A shares after approximately eight years,
do not pay a front-end sales charge but pay a higher ongoing
distribution fee than class A shares, and may be subject to a contingent
deferred sales charge, if those shares are redeemed within six years of
purchase. Class M shares are sold with a maximum front end sales charge
of 3.50% and pay an ongoing distribution fee that is higher than class A
shares but lower than class B shares. Class Y shares, which are sold at
net asset value, are generally subject to the same expenses as class A,
class B and class M shares, but do not bear a distribution fee. Class Y
shares are sold to defined contribution plans that initially invest at
least $250 million in a combination of Putnam Funds.
Expenses of the fund are borne pro-rata by the holders of each class of
shares, except that each class bears expenses unique to that class
(including the distribution fees applicable to such class). Each class
votes as a class only with respect to its own distribution plan or other
matters on which a class vote is required by law or determined by the
Trustees. Shares of each class would receive their pro-rata share of the
net assets of the fund, if that fund were liquidated. In addition, the
Trustees declare separate dividends on each class of shares.
The following is a summary of significant accounting policies followed
by the fund in the preparation of its financial statements. The
preparation of financial statements is in conformity with generally
accepted accounting principles and requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities. Actual results could differ from those estimates.
A) Security valuation Investments for which market quotations are
readily available are stated at market value, which is determined using
the last reported sale price, or, if no sales are reported -- as in the
case of some securities traded over-the-counter -- the last reported bid
price. Securities quoted in foreign currencies are translated into U.S.
dollars at the current exchange rate. Short-term investments having
remaining maturities of 60 days or less are stated at amortized cost
which approximates market, 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 and certain other accounts managed by
Putnam Investment Management, Inc. ("Putnam Management"), the fund's
Manager, a wholly-owned subsidiary of Putnam Investments, Inc.. These
balances may be invested in one or more repurchase agreements and/or
short-term money market instruments.
C) Repurchase agreements The fund, or any joint trading account, through
its custodian, receives delivery of the underlying securities, the
market value of which at the time of purchase is required to be in an
amount at least equal to the resale price, including accrued interest.
Putnam Management is responsible for determining that the value of these
underlying securities is at all times at least equal to the resale
price, including accrued interest.
D) Security transactions and related investment income Security
transactions are accounted for on the trade date (date the order to buy
or sell is executed).
Interest income is recorded on the accrual basis. Dividend income is
recorded on the ex-dividend date except that certain dividends from
foreign securities are recorded as soon as the fund is informed of the
ex-dividend date.
E) Foreign currency translation The accounting records of the fund are
maintained in U.S. dollars. The market value of foreign securities,
currency holdings, other assets and liabilities are recorded in the
books and records of the fund after translation to U.S. dollars based on
the exchange rates on that day. The cost of each security is determined
using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when accrued or incurred. The
fund does not isolate that portion of realized or unrealized gains or
losses resulting from changes in the foreign exchange rate on
investments from fluctuations arising from changes in the market prices
of the securities. Such fluctuations are included with the net realized
and unrealized gain or loss on investments. Net realized gains and
losses on foreign currency transactions represent net exchange gains or
losses on closed forward currency contracts, disposition of foreign
currencies and the difference between the amount of investment income
and foreign withholding taxes recorded on the fund's books and the U.S.
dollar equivalent amounts actually received or paid. Net unrealized
gains and losses on foreign currency transactions arise from changes in
the value of open forward currency contracts and assets and liabilities
other than investments at the period end, resulting from changes in the
exchange rate.
F) Forward currency contracts The fund may engage in forward currency
contracts, which are agreements between two parties to buy and sell
currencies at a set price on a future date, to protect against a decline
in value relative to the U.S. dollar of the currencies in which its
portfolio securities are denominated or quoted (or an increase in the
value of a currency in which securities a fund intends to buy are
denominated, when a fund holds cash reserves and short-term
investments). The U.S. dollar value of forward currency contracts is
determined using forward currency exchange rates supplied by a quotation
service. The market value of the contract will fluctuate with changes in
currency exchange rates. The contract is "marked to market" daily and
the change in market value is recorded as an unrealized gain or loss.
When the contract is closed, the fund records a realized gain or loss
equal to the difference between the value of the contract at the time it
was opened and the value at the time it was closed. The fund could be
exposed to risk if the value of the currency changes unfavorably, if the
counterparties to the contracts are unable to meet the terms of their
contracts or if the fund is unable to enter into a closing position.
G) Federal taxes It is the policy of the fund to distribute all of its
taxable income within the prescribed time and otherwise comply with the
provisions of the Internal Revenue Code applicable to regulated
investment companies. It is also the intention of the fund to distribute
an amount sufficient to avoid imposition of any excise tax under Section
4982 of the Internal Revenue Code of 1986. Therefore, no provision has
been made for federal taxes on income, capital gains or unrealized
appreciation on securities held nor for excise tax on income and capital
gains.
H) Distributions to shareholders Distributions to shareholders from net
investment income are recorded by the fund on the ex-dividend date.
Capital gain distributions, if any, are recorded on the ex-dividend date
and paid annually. The amount and character of income and gains to be
distributed are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles.
These differences include treatment of losses on wash sale transactions,
realized and unrealized gains and losses on forward foreign currency
contracts and realized and unrealized gains on passive foreign
investment companies. 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, 1996, the fund reclassified $71,805,861 to
increase undistributed net investment income and $3,035,101 to increase
paid-in-capital, with a decrease to accumulated net realized gain on
investments of $74,840,962. The calculation of net investment income per
share in the financial highlights table excludes these adjustments.
Note 2
Management fee, administrative services, and other transactions
Compensation of Putnam Management, for management and investment
advisory services is paid quarterly based on the average net assets of
the fund. Such fee is based on the following annual rates: 0.80% of the
first $500 million of average net assets, 0.70% of the next $500
million, 0.65% of the next $500 million, 0.60% of any amount over $1.5
billion subject, under current law, to reduction in any year by the
amount of certain brokerage commissions and fees (less expenses)
received by affiliates of Putnam Management on the fund's portfolio
transactions.
The fund reimburses Putnam Management 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.
Trustees of the fund receive an annual Trustees fee of $4,770 and an
additional fee for each Trustee's meeting attended. Trustees who are not
interested persons of Putnam Management and who serve on committees of
the Trustees receive additional fees for attendance at certain committee
meetings.
The fund adopted a Trustee Fee Deferral Plan (the "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 in the fund
and are invested in the fund or in other Putnam funds until distribution
in accordance with the 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 Trustee for at least five years. Benefits under the Pension
Plan are equal to 50% of the Trustee's average total retainer and
meeting fees for the three years preceding retirement. Pension expense
for the fund is included in Compensation of trustees in the Statement of
operations for the year ended October 31, 1996. Accrued pension
liability is included in Payable for compensation of Trustees in the
Statement of assets and liabilities.
Custodial functions for the fund's assets are provided by Putnam
Fiduciary Trust Company (PFTC), a wholly-owned subsidiary of Putnam
Investments, Inc.
Investor servicing agent functions are provided by Putnam Investor
Services, a division of PFTC.
For the year ended October 31, 1996, fund expenses were reduced by
$1,244,308 under expense offset arrangements with PFTC and brokerage
service arrangements. Investor servicing and custodian fees reported in
the Statement of operations exclude these credits. The fund could have
invested a portion of these assets utilized in connection with the
expense offset arrangements in an income producing asset if it had not
entered into such arrangements.
The fund has adopted distribution plans (the "Plans") with respect to
its class A, class B and class M shares pursuant to Rule 12b-1 under the
Investment Company Act of 1940. The purpose of the Plans is to
compensate Putnam Mutual Funds Corp., a wholly-owned subsidiary of
Putnam Investments Inc., for services provided and expenses incurred by
it in distributing shares of the fund. The Plans provide for payments by
the fund to Putnam Mutual Funds Corp. at an annual rate up to 0.35%,
1.00% and 1.00% of the average net assets attributable to class A, class
B and class M shares, respectively. The Trustees have approved payment
by the fund at an annual rate of 0.25%, 1.00% and 0.75% of the average
net assets attributable to class A, class B and class M shares
respectively.
For the year ended October 31, 1996, Putnam Mutual Funds Corp., acting
as underwriter received net commissions of $1,199,012 and $34,883 from
the sale of class A and class M shares, respectively and received
$1,502,966 in contingent deferred sales charges from redemptions of
class B shares. A deferred sales charge of up to 1% is assessed on
certain redemptions of class A shares. For the year ended October 31,
1996, Putnam Mutual Funds Corp., acting as underwriter received $20,996
on class A redemptions.
Note 3
Purchases and sales of securities
During the year ended October 31, 1996, purchases and sales of
investment securities other than short-term investments aggregated
$2,798,873,068 and $2,195,518,161, respectively. There were no purchases
and sales of U.S. government obligations. In determining the net gain or
loss on securities sold, the cost of securities has been determined on
the identified cost basis.
Note 4
Capital shares
At October 31, 1996, there was an unlimited number of shares of
beneficial interest authorized. Transactions in capital shares were as
follows:
Year ended
October 31, 1996
- ----------------------------------------------------
Class A Shares Amount
- ----------------------------------------------------
Shares sold 74,479,884 $786,801,972
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 9,384,293 91,684,535
- ----------------------------------------------------
83,864,177 878,486,507
Shares
repurchased (53,754,835) (567,550,801)
- ----------------------------------------------------
Net increase 30,109,342 $310,935,706
- ----------------------------------------------------
Year ended
October 31, 1995
- ----------------------------------------------------
Class A Shares Amount
- ----------------------------------------------------
Shares sold 68,492,496 $649,257,185
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 4,941,635 44,870,047
- ----------------------------------------------------
73,434,131 694,127,232
Shares
repurchased (58,666,136) (560,108,246)
- ----------------------------------------------------
Net increase 14,767,995 $134,018,986
- ----------------------------------------------------
Year ended
October 31, 1996
- ----------------------------------------------------
Class B Shares Amount
- ----------------------------------------------------
Shares sold 38,966,921 $400,645,801
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 5,083,057 48,543,206
- ----------------------------------------------------
44,049,978 449,189,007
Shares
repurchased (19,905,910) (204,642,212)
- ----------------------------------------------------
Net increase 24,144,068 $244,546,795
- ----------------------------------------------------
Year ended
October 31, 1995
- ----------------------------------------------------
Class B Shares Amount
- ----------------------------------------------------
Shares sold 36,604,976 $339,453,881
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 2,773,499 24,656,265
- ----------------------------------------------------
39,378,475 364,110,146
Shares
repurchased (22,718,652) (210,414,554)
- ----------------------------------------------------
Net increase 16,659,823 $153,695,592
- ----------------------------------------------------
Year ended
October 31, 1996
- ----------------------------------------------------
Class M Shares Amount
- ----------------------------------------------------
Shares sold 1,976,000 $20,965,783
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 37,518 366,551
- ----------------------------------------------------
2,013,518 21,332,334
Shares
repurchased (404,965) (4,274,542)
- ----------------------------------------------------
Net increase 1,608,553 $17,057,792
- ----------------------------------------------------
For the period
March 1, 1995
(commencement of
operations)
to October 31, 1995
- ----------------------------------------------------
Class M Shares Amount
- ----------------------------------------------------
Shares sold 618,124 $6,076,061
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- ----------------------------------------------------
618,124 6,076,061
Shares
repurchased (38,257) (382,704)
- ----------------------------------------------------
Net increase 579,867 $5,693,357
- ----------------------------------------------------
Year ended
October 31, 1996
- ----------------------------------------------------
Class Y Shares Amount
- ----------------------------------------------------
Shares sold 3,135,536 $33,518,710
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 256,720 2,533,713
- ----------------------------------------------------
3,392,256 36,052,423
Shares
repurchased (1,614,376) (17,277,050)
- ----------------------------------------------------
Net increase 1,777,880 $18,775,373
- ----------------------------------------------------
Year ended
October 31, 1995
- ----------------------------------------------------
Class Y Shares Amount
- ----------------------------------------------------
Shares sold 2,547,793 $24,844,353
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 100,142 918,308
- ----------------------------------------------------
2,647,935 25,762,661
- ----------------------------------------------------
Shares
repurchased (1,433,258) (13,977,402)
- ----------------------------------------------------
Net increase 1,214,677 $11,785,259
- ----------------------------------------------------
Federal tax information
(Unaudited)
The fund has designated 5.49% of the distributions from net investment
income as qualifying for the dividends received deduction for
corporations.
Pursuant to section 852 of the Internal Revenue Code, the Fund hereby
designates $.4062 per share (or if different, the amount necessary to
offset net capital gain earned by the Fund) for all share classes as
capital gain dividends for its taxable year ended October 31, 1996.
For the period, dividends from foreign countries were $50,770,206 or
$.155 per share for all share classes. Taxes paid to foreign countries
were $4,199,014 or $.013 for all share classes.
The form 1099 that you will have received in January 1997 shows the tax
status of all distributions paid to your account in calendar year 1996.
Results of July 31, 1996 shareholder meeting
A meeting of shareholders of the fund was held on July 31, 1996. At the
meeting, each of the nominees for Trustees was elected, as follows:
Votes
Votes for withheld
--------- --------
Jameson Adkins Baxter 162,068,300 2,966,597
Hans H. Estin 162,030,693 3,004,204
John A. Hill 162,149,162 2,885,735
R.J. Jackson 162,097,048 2,937,849
Elizabeth T. Kennan 161,974,520 3,060,377
Lawrence J. Lasser 162,059,993 2,974,804
Robert E. Patterson 162,140,522 2,894,385
Donald S. Perkins 162,039,392 2,995,505
William F. Pounds 162,101,167 2,933,730
George Putnam 162,109,920 2,924,977
George Putnam, III 162,025,742 3,009,155
Eli Shapiro 161,763,281 3,271,616
A.J.C. Smith 162,111,632 2,923,265
W. Nicholas Thorndike 162,022,726 3,012,171
A proposal to ratify the selection of Coopers & Lybrand L.L.P. as
auditors for the fund was approved as follows: 157,609,651 votes for,
and 1,764,647 votes against, with 5,660,599 abstentions and broker non-
votes.
A proposal to amend the fund's fundamental investment restriction with
respect to diversification of investments was approved as follows:
137,771,916 votes for, and 9,998,599 votes against, with 17,264,382
abstentions and broker non-votes.
A proposal to amend the fund's fundamental investment restriction with
respect to investments in the securities of a single issuer was approved
as follows: 135,709,627 votes for, and 11,140,432 votes against, with
18,184,838 abstentions and broker non-votes.
A proposal to amend the fund's fundamental investment restriction with
respect to making loans through purchases of debt obligations,
repurchase agreements and securities loans was approved as follows:
129,802,658 votes for, and 16,744,494 votes against, with 18,487,745
abstentions and broker non-votes.
A proposal to amend the fund's fundamental investment restriction with
respect to investments in real estate was approved as follows:
132,476,198 votes for, and 14,537,644 votes against, with 18,021,055
abstentions and broker non-votes.
A proposal to amend the fund's fundamental investment restriction with
respect to concentration of its assets was approved as follows:
137,749,323 votes for, and 9,285,242 votes against, with 18,000,332
abstentions and broker non-votes.
A proposal to amend the fund's fundamental investment restriction with
respect to investments in commodities or commodity contracts was
approved as follows: 132,845,691 votes for, and 14,209,233 votes
against, with 17,979,973 abstentions and broker non-votes.
A proposal to amend the fund's fundamental investment restriction with
respect to underwriting was approved as follows: 136,709,115 votes for,
and 9,499,765 votes against, with 18,826,017 abstentions and broker non-
votes.
A proposal to eliminate the fund's fundamental investment restriction
with respect to investments in certain oil, gas and mineral interests
was approved as follows: 135,397,712 votes for, and 12,001,629 votes
against, with 17,635,556 abstentions and broker non-votes.
A proposal to eliminate the fund's fundamental investment restriction
with respect to investments in securities of issuers in which management
of the fund or Putnam Investment Management, Inc. owns securities was
approved as follows: 134,209,440 votes for, and 12,633,648 votes
against, with 18,191,809 abstentions and broker non-votes.
A proposal to eliminate the fund's fundamental investment restriction
with respect to margin transactions was approved as follows: 130,721,075
votes for, and 15,884,647 votes against, with 18,429,175 abstentions and
broker non-votes.
A proposal to eliminate the fund's fundamental investment restriction
with respect to short sales was approved as follows: 132,339,879 votes
for, and 13,846,508 votes against, with 18,848,510 abstentions and
broker non-votes.
A proposal to eliminate the fund's fundamental investment restriction
which limits the fund's ability to pledge assets was approved as
follows: 130,534,763 votes for, and 15,417,013 votes against, with
19,083,121 abstentions and broker non-votes.
A proposal to eliminate the fund's fundamental investment restriction
with respect to invest to gain control of a company's management was
approved as follows: 134,401,057 votes for, and 12,067,948 votes
against, with 18,565,892 abstentions and broker non-votes.
A proposal to eliminate the fund's fundamental investment restriction
with respect to investments in issuers that have been in operation for
less than three years was approved as follows: 134,231,817 votes for,
and 12,145,434 votes against, with 18,657,646 abstentions and broker
non-votes.
A proposal to amend the fund's Agreement and Declaration of Trust with
respect to purchase of certain illiquid securities was approved as
follows: 130,513,018 votes for, and 15,493,920 votes against, with
19,027,959 abstentions and broker non-votes.
All tabulations are rounded to nearest whole number.
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
Ronald J. Jackson
Elizabeth T. Kennan
Lawrence J. Lasser
Robert E. Patterson
Donald S. Perkins
George Putnam, III
Eli Shapiro
A.J.C. Smith
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
John D. Hughes
Senior Vice President and Treasurer
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Ian C. Ferguson
Vice President
Anthony V. Regan
Vice President and
Lead Fund Manager
Robert Swift
Vice President and Fund Manager
Ami T. Kuan
Vice President and Fund Manager
Carol McMullen
Vice President and Fund Manager
Jeffrey R. Lindsey
Vice President and Fund Manager
William N. Shiebler
Vice President
John R. Verani
Vice President
Paul M. O'Neil
Vice President
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.
You can also learn more at Putnam Investments' website:
http://www.putnaminv.com.
Shares of mutual funds are not deposits or obligations of, or guaranteed
or endorsed by, any financial institution, are not insured by the
Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board
or any other agency, and involve risk, including the possible loss of
principal amount invested.
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
- ---------------------
Bulk Rate
U.S. Postage
PAID
Putnam
Investments
- ---------------------
29198-005/882/907 12/31/96
