Putnam
Global
Growth
Fund
ANNUAL REPORT
October 31, 1997
[LOGO: BOSTON * LONDON * TOKYO]
Fund highlights
* Morningstar, an independent mutual fund rating agency, gave Putnam
Global Growth Fund's class A shares 4 out of 5 stars for overall
performance as of September 30, 1997 (based on the fund's average
annual returns for the 3-, 5-, and 10-year periods). This rating
put the fund among 22.5% of the 601 international equity funds
rated.*
* "Despite the economic problems that have developed in Asia, the
International Monetary Fund predicts that the global economy may
be entering its best five-year stretch in the past 25 years."
-- The Wall Street Journal, September 17, 1997
CONTENTS
4 Report from Putnam Management
9 Fund performance summary
13 Portfolio holdings
22 Financial statements
*Morningstar ratings reflect risk-adjusted performance through 9/30/97 and
are subject to change every month. Morningstar ratings are calculated
from a fund's 3-, 5-, and 10-year returns (with fee adjustments) in
excess of 90-day Treasury bill returns and a risk factor that reflects
performance below 90-day Treasury bill returns. For the 3-, 5-, and
10-year performance, the fund received 4 stars. There were 601, 258,
and 91 international equity funds rated, respectively, 10% of the
funds in an investment category receive 5 stars; the next 22.5%
receive 4 stars. Performance of other share classes will vary. Past
performance is not indicative of future results.
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
[copyright] Karsh, Ottawa
Dear Shareholder:
Putnam Global Growth Fund closed the books on fiscal 1997 solidly in the
black, thanks in no small measure to careful security selection within each of
the market sectors in which the fund invests. Besides its gratifyingly
positive results, the fund afforded investors the opportunity to diversify
assets across a broad band of the world's equity markets.
As you might expect, the skill and experience of a wide variety of
professionals are required to undertake such a challenge. I am pleased to
announce the addition of Michael K. Arends to the fund's management team.
Michael joined Putnam in 1997 as senior vice president and senior portfolio
manager in the Core Growth Equity Group, where he focuses on large-company
growth stocks. Before joining Putnam, he was with Phoenix Duff and Phelps,
Kemper Financial Services, Institutional Capital Corporation, and Mathers and
Company. He has 20 years of investment experience.
In the report that follows, your fund's management team reviews the
performance and strategies employed during fiscal 1997 and looks at prospects
for the fiscal year just begun.
Respectfully yours,
/S/GEORGE PUTNAM
George Putnam
Chairman of the Trustees
December 17, 1997
Report from the Fund Managers
Michael K. Arends, lead manager
Robert Swift
Anthony W. Regan
Ami Kuan Danoff
Kelly A. Morgan
Thomas R. Haslett
Carol McMullen
During a fiscal year characterized by bouts of market volatility and sector
rotation, Putnam Global Growth Fund generally navigated the world's financial
landscape with aplomb. For the year ended October 31, 1997, the fund had a
total return of 16.40% at net asset value, just ahead of the 15.13% gain of
the Morgan Stanley Capital International World Index. The class A share
performance at public offering price was 9.68%. For performance of other share
classes and over longer periods, please turn to page 9 of this report.
Skillful stock selection played a pivotal role for much of the year in
allowing us to sidestep some of the pitfalls and seize some of the
opportunities the world markets presented. Additionally, our defensive
currency hedging techniques shielded the fund from the continued weakness of
the Japanese yen. Unfortunately, some of the fund's technology holdings came
under pressure just before the close of the fiscal year.
* U.S. MARKET STRONG BUT STUMBLES AT END OF PERIOD
The U.S. stock market continued to post solid gains but not without some
turbulence. As has been the case for quite a while, economic growth remained
steady and inflation was virtually nonexistent. However, in late spring,
market leadership began to shift away from large, multinational companies to
smaller, more domestically oriented firms, based on their higher profit
expectations. Then, in the summer, investors became concerned about the effect
of a strong dollar on the earnings of multinational corporations. Finally, at
the end of October, the Southeast Asian currency devaluations and resulting
global market volatility forced a brief but sharp decline in U.S. stocks.
In terms of specific sectors of your fund's portfolio, technology performed
well throughout the year but was hurt in October by a worldwide selloff in
semiconductor stocks. For much of the fund's reporting period, however,
companies involved with all aspects of the personal computer industry -- PCs,
data storage, software, computer services, and semiconductors -- contributed
significantly to the fund's returns. Some important technology holdings
included leading PC maker Compaq Computer Corp., software developer Computer
Associates International, Inc., National Semiconductor Corp., and Intel Corp.
While these holdings, along with others discussed in this report, were viewed
favorably at the end of the fiscal period, all are subject to review and
adjustment in accordance with the fund's investment strategy and may vary in
the future.
Financial companies continued to perform well. The industry has enjoyed a
benign interest-rate environment, rapid industry consolidation, and active
stock markets. Financial holdings were generally strong, particularly among
asset managers, credit-card issuers, and savings and loans. Money-center banks
were attractive but were affected by uncertainty in the emerging markets. Some
significant examples from this area include banking and credit-card company
MBNA Corp. and insurance and brokerage giant The Travelers Group Inc.
Based on rising global demand and improved product pipelines, we believe
pharmaceutical companies are an attractive growth area. One new fund holding
intended to benefit from this trend is Pfizer, Inc., a globally competitive
pharmaceutical company with a rich new-product portfolio. Pfizer's stock has
performed relatively well since we purchased it.
[GRAPHIC OMITTED: horizontal bar chart COUNTRY ALLOCATIONS]
COUNTRY ALLOCATIONS*
United States 34.0%
United Kingdom 15.8%
Japan 10.9%
Germany 5.0%
France 4.3%
Footnote reads:
*Based on net assets as of 10/31/97. Holdings will vary over time.
* EUROPE ANCHORS PORTFOLIO; CANADA PROVES A PLUS
European markets had solid returns during the period with the peripheral
countries such as Finland and Italy offering the strongest gains. These
countries -- as well as the United Kingdom in the last few months of the
fund's fiscal year -- benefited from investors' positive view of their
participation in Europe's Economic and Monetary Union (EMU). The U.K.
government has since made clear that if it was to join, it wouldn't be until
after 2002.
Our overweighting of U.K. stocks relative to our benchmark was a major
contributor to the fund's overall returns. Key holdings included
pharmaceutical companies SmithKline Beecham PLC and Glaxo Wellcome PLC. We
believe both companies offer even stronger product portfolios than their
American counterparts. Additionally, Vodafone Group PLC, the U.K.'s leading
cellular phone operator, enjoys a booming domestic business and an
international business that is gaining in profitability.
The fund also enjoyed solid returns from other top European companies. Total
S.A., a French integrated oil company, is one of the world's production
leaders. With political and macroeconomic issues clouding the French market at
various times in the past year, investors at first failed to take into account
Total's exploration and production profile, but subsequently the stock's price
soared. Scandinavian telecommunications equipment manufacturers Oy Nokia AB
and L.M. Ericsson have benefited from the rapid proliferation of mobile
telephony. European technology companies such as German business software
developer SAP AG and the Dutch company ASM Lithography Holding N.V., which
manufactures specialized equipment for the semiconductor industry, also helped
boost the fund's returns for much of the period.
Across the Atlantic, we sought opportunities in the improving Canadian market.
Over the past year, Canada's economy has rebounded, its interest rates have
fallen, and its government budget deficit has been reduced. During the period,
we added Northern Telecom Ltd., a mobile phone manufacturer, and Newbridge
Ltd. Networks Corp., a Canadian manufacturer of switching equipment, to the
portfolio. The favorable environment in Canada also benefited banking stocks
such as Toronto-Dominion Bank and the Bank of Nova Scotia.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
TOP 10 HOLDINGS
General Electric Co. (United States)
Electronics and electrical equipment
SmithKline Beecham PLC ADR (United Kingdom)
Pharmaceuticals
Vodafone Group PLC (United Kingdom)
Telecommunications
Total S.A. Class B (France)
Oil and gas
Nestle S.A. (Switzerland)
Food and beverages
Shiseido Co., Ltd. (Japan)
Cosmetics
SAP AG (Germany)
Computer services and software
Enterprise Oil PLC (United Kingdom)
Oil and gas
Bayerische Motoren Werke (BMW) AG (Germany)
Automotive
Portugal Telecom S.A. (Portugal)
Telecommunications
Footnote reads:
These holdings represent 13.6% of the fund's net assets as of 10/31/97.
Portfolio holdings will vary over time.
* ECONOMIC, CURRENCY PROBLEMS MARK ASIAN MARKETS; TURMOIL HITS TECHNOLOGY
SECTOR LATE IN PERIOD
The Japanese market continues to struggle with anemic economic growth.
Additionally, stocks there suffered from the negative effects of the slow pace
of economic and financial reform and an April sales tax increase on the
profits of consumer-oriented companies. Fortunately your fund was
underweighted in Japanese securities relative to its benchmark. Those Japanese
stocks the fund did hold, however, resulted in some profitable situations. One
such company was Sony Corp. Known around the globe as a leader in the consumer
electronics industry, Sony has a superior product line and what we believe to
be significant growth potential. The company also recently issued a very
positive earnings report.
Some of the year's weakest returns were recorded by the Southeast Asian
markets. Export growth has slowed in that region and much of the Southeast
Asian markets have spent the past summer mired in currency devaluations. In
October, investors began to question the value of the Hong Kong dollar, which
hastened declines in that market and set off a spate of worldwide volatility.
Because of your fund's global diversification, overall performance was not
substantially affected by these events. Additionally, as downward earnings
estimates were issued, we lowered several positions in the region.
In the midst of the volatility in world markets, investors began to believe
that the economic problems in Asia would result in a fall in demand for
semiconductors. This belief was compounded by a disappointing earnings report
by a leading semiconductor producer, SGS-Thomson Microelectronics of France,
and an expected price cut from industry giant Intel Corp.
* POSITIVE BUT CAUTIOUS OUTLOOK
We are encouraged by the fact that many of the stocks we have selected have
recorded consistent earnings improvement, and for many of them, we see no
reason why that trend can't continue. Going forward, we plan to add stocks of
companies in rapidly growing industry sectors or those that are leaders in
their respective fields. Of course, we are cognizant of certain risks in any
market, including higher interest rates, the possibility of slowing earnings
growth, and unforeseen events that can impact corporate profits, such as the
Asian currency crisis. Despite these important risks, our current investment
strategy focuses on high-quality growth companies that we anticipate will
outperform during this unpredictable market uptrend.
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 10/31/97, there is no guarantee the fund will continue to hold
these securities in the future. International investing involves certain
risks, including economic instability, political developments, and currency
fluctuations, not present with U.S. investments.
Performance summary
This section provides information about your fund's performance, which
should always be considered in light of its investment strategy. Putnam
Global Growth Fund is designed for investors seeking capital appreciation
through a globally diversified equity portfolio.
TOTAL RETURN FOR PERIODS ENDED 10/31/97
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 16.40% 9.68% 15.54% 10.54% 15.72% 11.68%
- ------------------------------------------------------------------------------
5 years 100.99 89.49 93.46 91.46 95.79 88.95
Annual average 14.98 13.64 14.11 13.87 14.38 13.57
- ------------------------------------------------------------------------------
10 years 189.4 172.77 166.61 166.61 173.32 163.75
Annual average 11.21 10.56 10.30 10.30 10.58 10.18
- ------------------------------------------------------------------------------
Annual average
(life of fund) 10.56 10.35 9.52 9.52 9.80 9.67
- ------------------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 10/31/97
MSCI EAF MSCI S & P 500 Consumer
Index* World Index* Index Price Index
- ------------------------------------------------------------------------------
1 year 3.04% 15.13% 32.10% 2.08%
- ------------------------------------------------------------------------------
5 years 61.23 87.42 147.06 13.96
Annual average 10.03 13.39 19.83 2.65
- ------------------------------------------------------------------------------
10 years 63.45 126.60 387.00 40.16
Annual average 5.04 8.52 17.15 3.43
- ------------------------------------------------------------------------------
Annual average
(life of fund) -- -- 11.97 5.35
- ------------------------------------------------------------------------------
Returns for class A and class M shares reflect the current maximum initial
sales charges of 5.75% and 3.50%, respectively. Class B share returns for
the 1-, 5-, 10-year, and life-of-fund periods reflect the applicable
contingent deferred sales charge (CDSC), which is 5% in the first year,
declines to 1% in the sixth year, and is eliminated thereafter. Returns
shown for class B and class M shares for periods prior to their inception
are derived from the historical performance of class A shares, adjusted to
reflect both the initial sales charge or CDSC, if any, currently
applicable to each class and, in the case of class B and class M shares,
the higher operating expenses applicable to such shares. All returns
assume reinvestment of distributions at NAV and represent past
performance; they do not guarantee future results. Returns do not take
into account any adjustment for taxes payable on reinvested distributions
or, for class A shares, distribution fees prior to implementation of the
class A distribution plan in 1990. Investment return and principal value
will fluctuate so that an investor's shares when redeemed may be worth
more or less than their original cost.
*Indexes did not exist prior to 1969.
[GRAPHIC OMITTED: worm chart GROWTH OF A $10,000 INVESTMENT]
GROWTH OF A $10,000 INVESTMENT
Cumulative total return of a $10,000 investment since 10/31/87
Fund's class A shares at POP $27,277
MSCI World Index $22,660
Consumer Price Index $14,106
Fund's MSCI Consumer
class A shares World Price
at POP Index Index
-------------- ----- --------
10/87 9425 10000 10000
10/88 10191 11810 10425
10/89 11988 13181 10893
10/90 11826 11476 11578
10/91 13778 13021 11916
10/92 13571 12091 12298
10/93 17590 15083 12636
10/94 19106 15973 12966
10/95 20183 17192 13330
10/96 23433 19682 13729
10/97 27277 22660 14016
Footnote reads:
Past performance is no assurance of future results. At the end of the
same time period, a $10,000 investment in the fund's class B shares
would have been valued at $26,661, and no contingent deferred sales
charges would apply; a $10,00 investment in the fund's class M shares
would have been valued at $27,332 ($26,375 at public offering price).
See first page of performance section for performance calculation
method.
PRICE AND DISTRIBUTION INFORMATION
12 months ended 10/31/97
Class A Class B Class M
- ------------------------------------------------------------------------------
Distributions (number) 1 1 1
- ------------------------------------------------------------------------------
Income $0.275 $0.203 $0.249
- ------------------------------------------------------------------------------
Capital gains
- ------------------------------------------------------------------------------
Long-term 0.296 0.296 0.296
- ------------------------------------------------------------------------------
Short-term 0.249 0.249 0.249
- ------------------------------------------------------------------------------
Total $0.820 $0.748 $0.794
- ------------------------------------------------------------------------------
Share value: NAV POP NAV NAV POP
- ------------------------------------------------------------------------------
10/31/96 $11.10 $11.78 $10.78 $11.05 $11.45
- ------------------------------------------------------------------------------
10/31/97 12.00 12.73 11.62 11.90 12.33
- ------------------------------------------------------------------------------
TOTAL RETURN FOR PERIODS ENDED 9/30/97
(most recent calendar quarter)
Class A Class B Class M
NAV POP NAV CDSC NAV POP
(inception date) (9/1/67) (4/27/92) (3/1/95)
- ------------------------------------------------------------------------------
1 year 25.89% 18.63% 24.85% 19.85% 25.12% 20.76%
- ------------------------------------------------------------------------------
5 years 113.45 101.20 105.45 103.45 107.90 100.51
Annual average 16.37 15.01 15.49 15.26 15.76 14.93
- ------------------------------------------------------------------------------
10 years 148.44 134.15 128.68 128.68 134.67 126.45
Annual average 9.53 8.88 8.62 8.62 8.90 8.52
- ------------------------------------------------------------------------------
Annual average
(life of fund) 10.89 10.67 9.84 9.84 10.12 9.99
- ------------------------------------------------------------------------------
Performance data represent past results, do not reflect future
performance, and will differ for each share class. Investment returns and
principal value will fluctuate so that an investor's shares when sold may
be worth more or less than their original cost. See first page of
performance section for performance calculation method.
TERMS AND DEFINITIONS
Total return shows how the value of the fund's shares changed over time,
assuming you held the shares through the entire period and reinvested all
distributions in the fund.
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 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) EAFE Index* is an unmanaged
list of equity securities from Europe, Australia and the Far East, with
all values expressed in U.S. dollars.
Morgan Stanley Capital International (MSCI) World Index* is an unmanaged
list of global equity securities, 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.
*Securities indexes assume reinvestment of all distributions and interest
payments and do not take in account brokerage fees or taxes. 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.
Past performance is no assurance of future results. At the end of the same
time period, a $10,000 investment in the fund's class B shares would have been
valued at $26,661, and no contingent deferred sales charges would apply; a
$10,000 investment in the fund's class M shares would have been valued at
$27,332 ($26,375 at public offering price). See first page of performance
section for performance calculation method.
Report of independent accountants
For the fiscal year ended October 31, 1997
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, 1997, and the related statement of operations for the year then
ended and 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, 1997, 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, 1997, the results of its
operations for the year then ended and 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 10, 1997
Portfolio of investments owned
October 31, 1997
<TABLE>
<CAPTION>
COMMON STOCKS (97.2%) *
NUMBER OF SHARES VALUE
Argentina (0.3%)
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
116,067 Banco De Galicia y Buenos Aires S.A. de C.V. Class B ADR $ 2,812,811
474,623 Banco Frances del Rio de la Plata S.A. ADR 3,917,991
48,000 Inversiones Y Representaciones S.A. GDR 1,620,000
105,000 Telefonica de Argentina S.A. ADR 2,953,125
122,000 YPF S.A. ADR 3,904,000
--------------
15,207,927
Australia (2.9%)
- ------------------------------------------------------------------------------------------------------------
3,269,755 Australia & New Zealand Banking Group Ltd. 22,737,615
1,328,000 Lend Lease Corp. Limited 27,108,623
2,961,358 QBE Insurance Group Ltd. 13,804,815
3,028,000 Woodside Petroleum Ltd. 25,492,762
11,132,456 Woolworth Co. 35,819,679
--------------
124,963,494
Brazil (0.9%)
- ------------------------------------------------------------------------------------------------------------
493,000 Banco Bradesco S.A. BRC 3,666,757
123,200 Brazil Realty S.A. 144A GDR 3,141,600
2,609,400 Centrais Electricas de Santa Catarina S.A. 2,816,495
173,500 Companhia Brasileira de Distribuicao Grupo Pao
de Acucar ADR + 3,209,750
112,500 Companhia Energetica de Minas Gerais (Cemig) 144A ADS 4,443,750
242,216 Companhia Paranaense de Energia-Copel 2,924,168
221,000 Companhia Vale do Rio Doce ADR 4,254,250
67,600 Compania Siderurgica Nacional 2,452,608
3,100 Companhia de Tecidos Norte de Minas 1,152,806
3,100 Empresa Nacional De Compercio, Redito E Participacoes S.A.
(ENCOPAR) 366
7,370 Light Participacoes, S.A. 1,885,116
143,000 Madeco S. A. ADR 3,020,875
109,300 Multicanal Participacoes S.A. ADR + 676,294
47,200 Telebras Co. ADR 4,790,800
--------------
38,435,635
Canada (3.0%)
- ------------------------------------------------------------------------------------------------------------
279,200 Bank of Nova Scotia 12,313,568
77,100 Bell Canada International Inc. + 1,291,425
1,069,700 Bombardier, Inc. 20,495,246
648,600 Newbridge Networks Corp. + 34,588,625
450,495 Northern Telecom Ltd. 40,343,783
638,000 Toronto-Dominion Bank 23,383,977
--------------
132,416,624
Chile (0.2%)
- ------------------------------------------------------------------------------------------------------------
230,500 Compania de Tele Chile ADS 6,396,375
55,200 Distribucion y Servicio D&S S.A. ADR + 969,450
--------------
7,365,825
China (--%)
- ------------------------------------------------------------------------------------------------------------
1,000,000 Guangdong Kelon Elec Holding 1,268,034
Finland (1.7%)
- ------------------------------------------------------------------------------------------------------------
783,000 Enso Oy Class R 7,334,009
505,900 Oy Nokia AB Class A 44,161,221
992,600 UPM-Kymmene Oyj 22,064,168
--------------
73,559,398
France (4.3%)
- ------------------------------------------------------------------------------------------------------------
4,323,600 Ayala Land, Inc. Class B 1,703,424
94,577 L'OREAL 33,406,844
586,400 SGS-Thomson Microelectronics ADR + 41,781,000
569,400 Total S.A. Class B 62,974,751
717,454 Valeo S.A. 47,696,363
--------------
187,562,382
Germany (5.0%)
- ------------------------------------------------------------------------------------------------------------
176,130 Adidas AG 25,475,035
108,300 Adidas AG 144A 15,692,513
70,755 Bayerische Motoren Werke (BMW) AG 51,148,687
392,711 Deutsche Bank AG 25,679,884
120,110 Mannesmann AG 50,689,901
184,190 SAP AG 52,801,133
--------------
221,487,153
Hong Kong (1.4%)
- ------------------------------------------------------------------------------------------------------------
250,000 Asia Satellite Telecommunications Holdings Ltd. 601,669
2,114,000 Beijing Datang Power Generation Co., Ltd. Class H + 1,066,779
1,346,000 Cheung Kong Holdings Ltd. 9,361,131
860,000 Cheung Kong Infrastructure Holdings 2,225,529
276,000 China Resources Enterprise Ltd. 757,094
824,000 Guangnan Holdings 756,990
191,200 Guoco Group Ltd. 417,928
132,000 Hutchison Whampoa, Ltd. 913,761
15,507,000 National Mutual Asia Ltd. 14,045,286
999,400 New World Infrastructure Ltd. + 1,978,498
930,000 Ng Fung Hong Ltd. 872,420
3,373,000 Sun Hung Kai Properties Ltd. 24,876,883
906,000 Television Broadcasts Ltd. 2,520,411
--------------
60,394,379
Hungary (0.1%)
- ------------------------------------------------------------------------------------------------------------
186,500 MOL Magyar Olaj-es 144A GDR 3,986,438
India (0.4%)
- ------------------------------------------------------------------------------------------------------------
98,000 BSES Ltd. GDR + 1,582,700
260,000 Gujarat Ambuja Cements Ltd. GDR + 2,080,000
120,000 Hindalco Industries Ltd. 3,137,190
73,000 Hindustan Petroleum Corp. Ltd. GDR 960,262
321,000 Mahanagar Telephone Nigam Ltd. 2,239,484
75,000 Ranbaxy Laboratories Ltd. 1,462,810
64,000 State Bank of India 144A GDR 1,144,000
102,000 State Bank of India Ltd. 739,008
156,000 Tata Engineering and Locomotive Co., Ltd. 1,368,760
95,680 Tata Engineering and Locomotive Co., Ltd.
GDR 144A 956,800
76,300 Videsh Sanchar Nigam Ltd. GDR + 1,030,050
--------------
16,701,064
Indonesia (0.2%)
- ------------------------------------------------------------------------------------------------------------
700,000 PT Astra International Inc. 523,045
645,000 PT Daya Guna Samudera 837,781
400,000 PT Gudang Garam 1,139,666
2,100,000 PT Indah Kiat Pulp & Paper Corp. 806,565
3,074,500 PT Indah Kiat Pulp & Paper Corp. Class F 1,180,850
412,000 PT Indosat ADR 935,057
217,500 PT London Sumatra Indonesia 235,423
830,000 PT Ramayana Lestari Sentosa 1,414,248
146,900 PT Telekomunikasi Indonesia ADR 2,855,369
--------------
9,928,004
Israel (0.2%)
- ------------------------------------------------------------------------------------------------------------
1,057,000 Bank Hapoalim Ltd. + 2,498,945
733,000 Supersol Ltd. 2,101,926
86,000 Supersol Ltd. ADR + 1,268,500
83,500 Tadiran Ltd. 3,020,650
36,500 Tefron Ltd. + 700,344
--------------
9,590,365
Italy (2.7%)
- ------------------------------------------------------------------------------------------------------------
6,177,000 Credito Italiano SPA 16,456,275
7,888,100 Ente Nazionale Idrocarburi SPA ADR + 44,310,386
888,000 La Rinascente SPA 6,575,865
6,821,000 Telecom Italia Mobile SPA 25,275,739
4,038,300 Telecom Italia SPA 25,281,924
--------------
117,900,189
Japan (10.9%)
- ------------------------------------------------------------------------------------------------------------
93,700 Acom Co. Ltd. 144A 5,147,066
416,000 Acom Co. Ltd. 22,851,436
384,902 AFLAC Inc. 19,581,889
1,724,000 Canon, Inc. 41,898,295
426,500 Hirose Electric Co. Ltd. 27,865,378
405,000 Hoya Corp. 14,089,888
175,400 Keyence Corp 26,277,155
4,129,000 NEC Corp. 45,362,299
227,000 Promise Co. Ltd. 13,300,708
2,744,000 Ricoh Co., Ltd. 35,399,086
236,000 Rohm Co. Ltd. 23,374,117
707,000 Sankyo Co., Ltd. 23,360,717
762,000 Shin-Etsu Chemical Co. 18,645,694
4,020,000 Shiseido Co., Ltd. 54,871,412
94,000 Shohkoh Fund & Co., Ltd. 30,511,861
347,900 Sony Corp. 28,926,518
647,000 Tokyo Broadcasting System 11,092,968
757,900 Tokyo Electron Ltd. 37,847,692
--------------
480,404,179
Lebanon (0.1%)
- ------------------------------------------------------------------------------------------------------------
107,200 Commerce Bank of Lebanon 144A GDR 2,342,320
Malaysia (0.1%)
- ------------------------------------------------------------------------------------------------------------
605,000 Berjaya Sports Toto Berhad 1,643,433
263,000 Malakoff Berhard 628,060
235,100 Malaysian Assurance Alliance + 421,075
937,000 Perusahaan Otomobil Nasional Berhad 2,237,612
23,000 Tan Chong Motor Holdings Berhad 13,113
--------------
4,943,293
Mexico (0.9%)
- ------------------------------------------------------------------------------------------------------------
300,000 Cemex S.A. de C.V. 1,164,875
895,000 Cemex S.A. de C.V. Class B + 3,935,006
1,300,000 Cifra S.A. de CV Class B 2,587,575
1,388,200 Corporacion Moctezuma, S.A. de C.V. 1,575,615
837,000 Fomento Economico Mexicano, S.A. de C.V. Class B 5,900,000
142,200 Grupo Accion, S.A. de C.V. 144A ADR + 1,422,000
188,600 Grupo Imsa S.A. de C.V. ADR + 4,491,038
145,000 Grupo Televisa S.A.GDR 4,495,000
1,067,400 Kimberly-Clark de Mexico, S.A. de C.V. Class A 4,641,978
222,600 Panamerican Beverages, Inc. Class A 6,900,600
97,700 Telefonos de Mexico S.A. ADR Class L 4,225,525
--------------
41,339,212
Netherlands (3.4%)
- ------------------------------------------------------------------------------------------------------------
418,000 Aegon N.V. 32,830,595
413,300 ASM Lithography Holding N.V. + 29,915,452
551,104 Getronics Electric N.V. 18,134,377
759,919 Internationale Nederlanden Groep 31,793,326
539,700 Ispat International NV + 13,714,143
188,400 Wolters Kluwer N.V. 23,056,756
--------------
149,444,649
New Zealand (0.9%)
- ------------------------------------------------------------------------------------------------------------
8,065,400 Telecom Corp. of New Zealand Ltd. 38,985,837
Pakistan (--%)
- ------------------------------------------------------------------------------------------------------------
30 Pakistan State Oil 318
Philippines (0.2%)
- ------------------------------------------------------------------------------------------------------------
13,943,300 Belle Corp. + 1,278,469
150,000 Benpres Holdings Corp. GDR + 525,000
3,202,400 Fil-Estate Land, Inc. 189,024
8,509,900 International Container Terminal Services, Inc. 1,706,857
505,000 Manila Electric Co. Class B 1,562,751
13,000 Philippine Long Distance Telephone Co. 325,931
74,400 Philippine Long Distance Telephone Co. ADR 1,804,200
11,220,000 SM Prime Holdings Inc. 1,993,238
--------------
9,385,470
Poland (0.1%)
- ------------------------------------------------------------------------------------------------------------
41,100 Bank Handlowy 144A + 552,724
291,000 KGHM Polska Miedz S.A. GDR + 2,851,800
--------------
3,404,524
Portugal (1.4%)
- ------------------------------------------------------------------------------------------------------------
125,000 Colep-Companhia Portuguesa de Embalagens + 1,804,532
54,600 Electricidade de Portugal S.A. 955,886
111,200 Investec Consultadoria International S.A. + 3,465,154
1,241,900 Portugal Telecom S.A. 50,766,599
35,500 Telecel-Comunicacaoes Pessoais, S.A. + 3,195,000
--------------
60,187,171
Russia (0.4%)
- ------------------------------------------------------------------------------------------------------------
2,000 AO Tatneft ADR 287,000
44,500 AO Tatneft 144A ADR 6,385,750
47,000 Lukoil Holding ADR 3,901,000
78,000 Mosenergo 144A ADR 3,276,000
11,400,000 Unified Energy Systems 3,534,000
--------------
17,383,750
Singapore (0.3%)
- ------------------------------------------------------------------------------------------------------------
3,635,600 Overseas Union Bank Ltd. 12,134,077
South Africa (0.5%)
- ------------------------------------------------------------------------------------------------------------
1,171,000 Billiton PLC + 3,431,948
76,100 Energy Africa Ltd. 144A + 1,978,600
596,000 First National Bank Holdings Ltd. 4,503,139
193,280 Gencor Ltd. 433,886
128,000 Liberty Life Association of Africa Ltd. 3,192,683
1,488,000 Lonrho PLC 2,397,007
438,400 Sasol Ltd. 5,285,221
--------------
21,222,484
South Korea (--%)
- ------------------------------------------------------------------------------------------------------------
83,800 Housing & Commercial Bank (GDR) + 733,250
75,002 Kookmin Bank 144A GDR + 468,763
2,648 SK Telecom Co., Ltd. 887,745
--------------
2,089,758
Spain (0.6%)
- ------------------------------------------------------------------------------------------------------------
68,960 Banco de Bilbao Vizcaya 1,838,618
543,700 Gas Natural SDG, S.A. Class E 25,116,780
--------------
26,955,398
Sweden (0.9%)
- ------------------------------------------------------------------------------------------------------------
929,105 Telefonaktiebolaget LM Ericsson Class B 40,861,551
Switzerland (2.7%)
- ------------------------------------------------------------------------------------------------------------
41,321 Nestle S.A. 58,104,435
8,417 Novartis AG ADR 13,155,499
181,510 Schweizerischer Bankverein 48,705,378
--------------
119,965,312
Taiwan (0.4%)
- ------------------------------------------------------------------------------------------------------------
115,800 @Entertainment, Inc. + 1,331,700
1,173,750 Acer Inc. + 1,626,373
54,000 Ase Test Limited + 2,956,500
80,000 Asustek Computer, Inc. + 1,014,379
335,000 Aurora Corp. + 574,755
2,287,800 Bank Sinopac + 1,682,206
177,000 China Steel Corp. GDR 2,522,250
108,150 Chung Hwa Pulp Corp. + 60,083
469,000 Delta Electronics, Inc. 1,509,690
120,000 Siliconware Precision Industries Co. GDR + 1,155,000
2,400,000 U-Ming Marine Transport Corp. 1,427,451
55,750 Yieh Phui Enterprise 31,519
--------------
15,891,906
Thailand (0.1%)
- ------------------------------------------------------------------------------------------------------------
162,000 Advanced Info Service Public Co., Ltd. 853,463
522,300 Electricity Generating Public Co. Ltd. 853,514
892,400 Industrial Finance Corp. of Thailand (The) 740,039
132,000 PTT Exploration & Production PLC 1,320,000
--------------
3,767,016
Turkey (0.2%)
- ------------------------------------------------------------------------------------------------------------
252,700 Haci Omer Sabanci Holdings ADR + 3,285,100
125,300 Yapi ve Kredi Bankasi A.S. + 3,759,000
--------------
7,044,100
United Kingdom (15.8%)
- ------------------------------------------------------------------------------------------------------------
2,448,300 Argos PLC 25,895,653
4,764,000 British Airways PLC 46,439,081
2,747,500 Compass Group PLC 29,244,363
1,673,981 Dixons Group PLC 19,542,143
2,840,000 Electrocomponents PLC 21,999,812
4,656,600 Enterprise Oil PLC 51,943,618
2,090,054 Glaxo Wellcome PLC 44,738,070
2,296,197 Granada Group PLC 31,613,301
1,802,400 HSBC Holdings PLC 44,829,770
166,000 Ramco Energy PLC ADR 2,261,750
3,810,000 Reuters Holdings PLC ADR 41,287,457
3,310,657 Rio Tinto PLC 42,585,749
1,339,000 Royal & Sun Alliance Insurance Group PLC 12,816,980
1,572,400 SEMA Group PLC 35,264,075
2,077,200 Siebe PLC 39,835,721
7,783,096 SmithKline Beecham PLC ADR 73,652,877
2,690,000 Smiths Industries PLC 38,972,411
3,072,000 Unilever PLC 22,845,100
11,975,213 Vodafone Group PLC 65,186,171
--------------
690,954,102
United States (34.0%)
- ------------------------------------------------------------------------------------------------------------
325,000 Adaptec, Inc. + 15,742,188
429,100 AES Corp. + 17,003,088
373,900 American Express Co. 29,164,200
215,250 American International Group, Inc. 21,968,953
304,400 Apollo Group, Inc. Class A + 12,860,900
272,500 BMC Software, Inc. + 16,452,188
517,400 Bristol-Myers Squibb Co. 45,401,850
398,900 Campbell Soup Co. 20,568,281
273,150 Cardinal Health, Inc. 20,281,388
242,300 Cisco Systems, Inc. + 19,876,172
116,400 Citicorp 14,557,275
220,200 Clorox Co. 15,414,000
817,600 Coca-Cola Enterprises, Inc. 22,995,000
250,200 Colgate-Palmolive Co. 16,200,450
339,950 Compaq Computer Corp. 21,671,813
300,800 Computer Associates Intl., Inc. 22,428,400
271,500 Compuware Corp. + 17,952,938
713,600 ConAgra, Inc. 21,497,200
383,475 Consolidated Stores Corp. + 15,291,066
502,900 Costco Companies, Inc. + 19,361,650
450,779 CVS Corp. 27,638,387
136,800 Data General Corp. 2,633,400
304,100 Dayton Hudson Corp. 19,101,281
223,800 Diebold, Inc. 9,861,188
181,700 Electronics for Imaging, Inc. + 8,494,475
352,900 EMC Corp. + 19,762,400
159,950 Franklin Resources, Inc. 14,375,506
226,500 Gannett Co., Inc. 11,905,406
1,161,200 General Electric Co. 74,969,975
513,500 Halliburton Co. 30,617,438
413,400 HBO & Co. 17,982,900
778,100 HEALTHSOUTH Corp. + 19,890,181
226,500 Herman Miller, Inc. 11,070,188
617,700 Intel Corp. 47,562,900
268,600 Interpublic Group Cos. Inc. 12,758,500
254,100 Jones Apparel Group, Inc. + 12,927,338
332,500 KLA Instruments Corp. + 14,609,219
467,400 Lilly (Eli) & Co. 31,257,375
293,600 Lucent Technologies, Inc. 24,203,650
222,500 Marriott International, Inc. 15,519,375
175,100 Masco Corp. 7,682,513
690,225 MBNA Corp. 18,161,545
256,200 Merck & Co., Inc. 22,865,850
343,600 Microsoft Corp. + 44,668,000
334,400 Motorola, Inc. 20,649,200
434,800 National Semiconductor Corp. + 15,652,800
649,900 Omnicare, Inc. 18,075,344
362,100 Parametric Technology Corp. + 15,977,663
371,300 Paychex, Inc. 14,155,813
160,600 Payless Shoesource, Inc. + 8,953,450
319,900 PeopleSoft, Inc. + 20,113,713
641,200 PepsiCo, Inc. 23,604,175
387,100 Pfizer, Inc. 27,387,325
629,300 Procter & Gamble Co. 42,792,400
250,200 Quintiles Transnational Corp. + 18,139,500
564,800 Quorum Health Group, Inc. + 13,696,400
293,600 Rite Aid Corp. 17,432,500
411,500 Schering-Plough Corp. 23,069,719
387,000 SCI Systems, Inc. + 17,028,000
339,700 Solectron Corp. + 13,333,225
432,500 SunAmerica, Inc. 15,542,969
316,000 Tellabs, Inc. + 17,064,000
445,200 Teradyne, Inc. + 16,667,175
339,700 Tiffany & Co. 13,418,150
641,200 TJX Cos., Inc. (The) 18,995,550
342,300 Tosco Corp. 11,295,900
264,633 Travelers Group Inc. 18,524,310
309,400 USA Waste Services, Inc. + 11,447,800
621,400 Wal-Mart Stores, Inc. 21,826,675
526,600 Walgreen Co. 14,810,625
235,700 Warner-Lambert Co. 33,749,294
238,300 Washington Mutual, Inc. 16,308,656
235,700 Western Atlas, Inc. + 20,314,394
919,000 Westinghouse Electric Corp. 24,296,063
--------------
1,491,530,778
--------------
Total Common Stocks (cost $3,986,877,115) $4,261,004,116
CONVERTIBLE BONDS AND NOTES (0.2%) *
PRINCIPAL AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------
$4,200,000 Alfa S.A. 144A cv. sub. notes 8s, 2000 (Mexico) $ 6,489,000
1,901,000 Qingling Motors Co., Ltd. 144A cv. bonds
3 1/2s, 2002 (China) 2,110,110
--------------
Total Convertible Bonds and Notes (cost $7,276,446) $ 8,599,110
PREFERRED STOCKS (0.2%) *
NUMBER OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------
5,900 Banco Itau S.A. BRC 16.02 No par value (NPV) pfd. (Brazil) $ 2,381,406
23,200 Petroleo Brasileiro S.A. BRC 6.258 NPV pfd. (Brazil) 4,313,832
--------------
Total Preferred Stocks (cost $6,702,103) $ 6,695,238
INVESTMENT FUNDS (0.1%) *
NUMBER OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------
148,000 Fleming Russia Securities Fund Ltd. (Russia) + $ 3,256,000
21,800 India Magnum Fund Class A (India) + 1,013,700
--------------
Total Investment Funds (cost $3,338,440) $ 4,269,700
WARRANTS (--%)*+ (cost $--) EXPIRATION
NUMBER OF WARRANTS DATE VALUE
- ------------------------------------------------------------------------------------------------------------
2,788,660 Belle Corp. (Phillipines) 9/11/00 $ 519
SHORT-TERM INVESTMENTS (1.4%) *(cost $62,418,795)
PRINCIPAL AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------
$62,409,000 Interest in $269,350,000 joint repurchase agreement dated
October 31, 1997 with SBC Warburg due November 3,1997
with respect to various U.S. Treasury obligations -- maturity
value of $62,438,384 for an effective yield of 5.65% $ 62,418,795
- ------------------------------------------------------------------------------------------------------------
Total Investments (cost $4,066,612,899) *** $4,342,987,478
- ------------------------------------------------------------------------------------------------------------
* Percentages indicated are based on net assets of $4,383,810,494.
*** The aggregate identified cost on a tax basis is $4,086,738,259,
resulting in gross unrealized appreciation and depreciation of
$493,814,734 and $237,565,515, respectively, or net unrealized
appreciation of $256,249,219.
+ Non-income-producing security.
144A after the name of a security represents those exempt from
registration under Rule 144A of the Securities Act of 1933. These
securities may be resold in transactions exempt from registration,
normally to qualified institutional buyers.
ADR, ADS or GDR after the name of a foreign holding stands for
American Depository Receipts, American Depository Shares or Global
Depository Receipts, respectively, representing ownership of foreign
securities on deposit with a domestic custodian bank.
The fund had the following industry group concentrations greater
than 10% at October 31, 1997 (as a percentage of net assets):
Insurance and Finance 14.1%
Electronics and Electrical Equipment 12.5
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Forward Currency Contracts to Sell at October 31,1997
(aggregate face value $372,440,595)
Market Aggregate Face Delivery Appreciation/
Value Value Date (Depreciation)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------
British Pounds $212,445,095 $200,673,845 11/14/97 $(11,771,250)
Japanese Yen 164,497,192 171,766,750 11/14/97 7,269,558
- ----------------------------------------------------------------------------------------
$ (4,501,692)
- ----------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
October 31, 1997
<S> <C>
Assets
- ---------------------------------------------------------------------------------------------------
Investments in securities, at value (identified cost $4,066,612,899) (Note 1) $4,342,987,478
- ---------------------------------------------------------------------------------------------------
Cash 383,592
- ---------------------------------------------------------------------------------------------------
Foreign currency (cost $4,099,041) 3,983,522
- ---------------------------------------------------------------------------------------------------
Dividends and interest receivable 8,957,422
- ---------------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 10,969,038
- ---------------------------------------------------------------------------------------------------
Receivable for securities sold 128,519,133
- ---------------------------------------------------------------------------------------------------
Receivable for open forward currency contracts 7,269,558
- ---------------------------------------------------------------------------------------------------
Receivable for closed forward currency contracts 3,486,275
- ---------------------------------------------------------------------------------------------------
Total assets 4,506,556,018
Liabilities
- ---------------------------------------------------------------------------------------------------
Payable for securities purchased 94,293,548
- ---------------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 4,651,686
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 7,484,693
- ---------------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 1,111,313
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 73,248
- ---------------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 3,155
- ---------------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 2,140,082
- ---------------------------------------------------------------------------------------------------
Payable for open forward currency contracts 11,771,250
- ---------------------------------------------------------------------------------------------------
Payable for closed forward currency contracts 1,033,150
- ---------------------------------------------------------------------------------------------------
Other accrued expenses 183,399
- ---------------------------------------------------------------------------------------------------
Total liabilities 122,745,524
- ---------------------------------------------------------------------------------------------------
Net assets $4,383,810,494
Represented by
- ---------------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $3,322,667,726
- ---------------------------------------------------------------------------------------------------
Undistributed net investment income (Note 1) 84,713,761
- ---------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and
foreign currency transactions (Note 1) 704,748,625
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and
assets and liabilities in foreign currencies 271,680,382
- ---------------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to capital shares outstanding $4,383,810,494
Computation of net asset value and offering price
- ---------------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($2,628,933,168 divided by 219,025,915 shares) $12.00
- ---------------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $12.00)* $12.73
- ---------------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($1,664,215,132 divided by 143,241,908 shares)** $11.62
- ---------------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($43,662,133 divided by 3,668,503) $11.90
- ---------------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $11.90)* $12.33
- ---------------------------------------------------------------------------------------------------
Net asset value, offering price and redemption price per class Y share
($47,000,061 divided by 3,861,684) $12.17
- ---------------------------------------------------------------------------------------------------
* 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, 1997
<S> <C>
Investment income:
- --------------------------------------------------------------------------------------------------
Dividends (net of foreign tax of $4,317,707) $ 56,706,645
- --------------------------------------------------------------------------------------------------
Interest 6,806,968
- --------------------------------------------------------------------------------------------------
Total investment income 63,513,613
Expenses:
- --------------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 27,176,359
- --------------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 12,854,671
- --------------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 128,958
- --------------------------------------------------------------------------------------------------
Administrative services (Note 2) 38,368
- --------------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 6,351,743
- --------------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 15,821,816
- --------------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 271,415
- --------------------------------------------------------------------------------------------------
Reports to shareholders 422,747
- --------------------------------------------------------------------------------------------------
Registration fees 137,321
- --------------------------------------------------------------------------------------------------
Auditing 107,808
- --------------------------------------------------------------------------------------------------
Legal 41,206
- --------------------------------------------------------------------------------------------------
Postage 655,760
- --------------------------------------------------------------------------------------------------
Other 293,015
- --------------------------------------------------------------------------------------------------
Total expenses 64,301,187
- --------------------------------------------------------------------------------------------------
Expense reduction (Note 2) (2,005,174)
- --------------------------------------------------------------------------------------------------
Net expenses 62,296,013
- --------------------------------------------------------------------------------------------------
Net investment income 1,217,600
- --------------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 727,145,124
- --------------------------------------------------------------------------------------------------
Net realized gain on foreign currency transactions (Note 1) 98,481,300
- --------------------------------------------------------------------------------------------------
Net unrealized depreciation of assets and liabilities in
foreign currencies during the year (19,192,119)
- --------------------------------------------------------------------------------------------------
Net unrealized depreciation of investments during the year (210,524,809)
- --------------------------------------------------------------------------------------------------
Net gain on investments 595,909,496
- --------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $597,127,096
- --------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
Year ended October 31
---------------------------------
1997 1996
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets
- ----------------------------------------------------------------------------------------------------------------------
Operations:
- ----------------------------------------------------------------------------------------------------------------------
Net investment income $ 1,217,600 $ 18,142,868
- ----------------------------------------------------------------------------------------------------------------------
Net realized gain on investments and
foreign currency transactions 825,626,424 253,869,045
- ----------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments
and assets and liabilities in foreign currencies (229,716,928) 180,077,125
- ----------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 597,127,096 452,089,038
- ----------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ----------------------------------------------------------------------------------------------------------------------
From net investment income
Class A (54,577,493) (29,547,833)
- ----------------------------------------------------------------------------------------------------------------------
Class B (25,358,432) (11,187,413)
- ----------------------------------------------------------------------------------------------------------------------
Class M (590,659) (95,055)
- ----------------------------------------------------------------------------------------------------------------------
Class Y (1,800,840) (836,209)
- ----------------------------------------------------------------------------------------------------------------------
From net realized gain on investments
Class A (108,162,646) (68,153,175)
- ----------------------------------------------------------------------------------------------------------------------
Class B (68,080,503) (40,919,727)
- ----------------------------------------------------------------------------------------------------------------------
Class M (1,292,807) (292,366)
- ----------------------------------------------------------------------------------------------------------------------
Class Y (3,260,656) (1,697,504)
- ----------------------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 445,247,957 591,315,666
- ----------------------------------------------------------------------------------------------------------------------
Total increase in net assets 779,251,017 890,675,422
Net assets
- ----------------------------------------------------------------------------------------------------------------------
Beginning of year 3,604,559,477 2,713,884,055
- ----------------------------------------------------------------------------------------------------------------------
End of year (including undistributed
net investment income of $84,713,761 and
$66,835,636, respectively) $4,383,810,494 $3,604,559,477
- ----------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS A
- ------------------------------------------------------------------------------------------------------------------------------------
Per-share
operating performance Year ended October 31
- ------------------------------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $11.10 $10.13 $9.92 $9.30 $7.25
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment (loss) income .04 (b) .09 (b) .09 .02 .07
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 1.68 1.47 .43 .77 2.06
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 1.72 1.56 .52 .79 2.13
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.27) (.18) (.01) -- (.07)
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.55) (.41) (.30) (.17) (.01)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.82) (.59) (.31) (.17) (.08)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $12.00 $11.10 $10.13 $9.92 $9.30
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 16.40 16.10 5.64 8.62 29.62
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $2,628,933 $2,186,426 $1,689,656 $1,507,550 $940,985
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) 1.24 1.27 1.28 1.33 1.39
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) .31 .84 1.05 .83 .85
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 154.98 72.88 63.31 17.45 49.53
- ------------------------------------------------------------------------------------------------------------------------------------
Average commission
rate paid (d) $.0241 $.0298
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) Per share net investment income (loss) 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>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS B
- ------------------------------------------------------------------------------------------------------------------------------------
Per-share
operating performance Year ended October 31
- ------------------------------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $10.78 $9.86 $9.74 $9.19 $7.22
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment (loss) income (.05)(b) .01 (b) .03 .01 .05
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 1.64 1.43 .40 .71 1.99
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 1.59 1.44 .43 .72 2.04
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.20) (.11) (.01) -- (.06)
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.55) (.41) (.30) (.17) (.01)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.75) (.52) (.31) (.17) (.07)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $11.62 $10.78 $9.86 $9.74 $9.19
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 15.54 15.25 4.80 7.95 28.44
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $1,664,215 $1,327,246 $975,794 $801,443 $233,195
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) 1.99 2.02 2.04 2.11 2.09
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) (.45) .09 .29 .12 .23
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 154.98 72.88 63.31 17.45 49.53
- ------------------------------------------------------------------------------------------------------------------------------------
Average commission
rate paid (d) $.0241 $.0298
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) Per share net investment income (loss) 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>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS M
- ------------------------------------------------------------------------------------------------------------------------------------
For the period
Per-share March 1, 1995+
operating performance Year ended October 31 to October 31
- ------------------------------------------------------------------------------------------------------------------------------------
1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value,
beginning of period $11.05 $10.09 $8.86
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment (loss) income (.02)(b) .03 (b) .01
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 1.66 1.47 1.22
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 1.64 1.50 1.23
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.24) (.13) --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.55) (.41) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.79) (.54) --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $11.90 $11.05 $10.09
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 15.72 15.54 13.88*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $43,662 $24,179 $5,853
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) 1.74 1.80 1.23*
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) (.21) .32 .17*
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 154.98 72.88 63.31
- ------------------------------------------------------------------------------------------------------------------------------------
Average commission
rate paid (d) $.0241 $.0298
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) Per share net investment income (loss) 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>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS Y
- ------------------------------------------------------------------------------------------------------------------------------------
For the period
Per-share June 15, 1994+
operating performance Year ended October 31 to October 31
- ------------------------------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $11.24 $10.25 $10.00 $9.46
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment (loss) income .08 (b) .12 (b) .09 .01
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 1.70 1.48 .47 .53
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 1.78 1.60 .56 .54
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.30) (.20) (.01) --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.55) (.41) (.30) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.85) (.61) (.31) --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $12.17 $11.24 $10.25 $10.00
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 16.75 16.39 6.00 5.71*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $47,000 $66,708 $42,582 $29,396
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .99 1.02 1.06 .37*
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) .69 1.09 1.20 .42*
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 154.98 72.88 63.31 17.45
- ------------------------------------------------------------------------------------------------------------------------------------
Average commission
rate paid (d) $.0241 $.0298
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) Per share net investment income (loss) 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, 1997
Note 1
Significant accounting policies
Putnam Global Growth Fund (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 shares, class B shares and class M shares, but do not bear
a distribution fee. Class Y shares are sold to defined contribution plans that
invest at least $250 million in a combination of Putnam Funds and other
accounts managed by affiliates of Putnam Management.
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 the
fund were liquidated. In addition, the Trustees declare separate dividends on
each class of shares.
The following is a summary of significant accounting policies consistently
followed by the fund in the preparation of its financial statements. The
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 gains and losses are included with the
net realized and unrealized gain or loss on investments. Net realized gains
and losses on foreign currency transactions represent net exchange gains or
losses on closed forward currency contracts, disposition of foreign currencies
and the difference between the amount of investment income and foreign
withholding taxes recorded on the fund's books and the U.S. dollar equivalent
amounts actually received or paid. Net unrealized appreciation and
depreciation of assets and liabilities in foreign currencies arise from
changes in the value of open forward currency contracts and assets and
liabilities other than investments at the period end, resulting from changes
in the exchange rate.
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 current forward currency
exchange rates supplied by a quotation service. The market value of the
contract will fluctuate with changes in currency exchange rates. The contract
is "marked to market" daily and the change in market value is recorded as an
unrealized gain or loss. When the contract is closed, the fund records a
realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was closed.
The fund could be exposed to risk if the value of the currency changes
unfavorably, if the counterparties to the contracts are unable to meet the
terms of their contracts or if the fund is unable to enter into a closing
position.
G) Line of credit The fund has entered into a committed line of credit with
certain banks. This line of credit agreement includes restrictions that the
fund maintain an asset coverage ratio of at least 300% and borrowings must not
exceed prospectus limitations. For the year ended October 31, 1997, the fund
had no borrowings against the line of credit.
H) Federal taxes It is the policy of the fund to distribute all of its taxable
income within the prescribed time and otherwise comply with the provisions of
the Internal Revenue Code applicable to regulated investment companies. It is
also the intention of the fund to distribute an amount sufficient to avoid
imposition of any excise tax under Section 4982 of the Internal Revenue Code
of 1986, as amended. Therefore, no provision has been made for federal taxes
on income, capital gains or unrealized appreciation on securities held nor for
excise tax on income and capital gains.
I) 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 at
least annually. The amount and character of income and gains to be distributed
are determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences include temporary
and permanent differences 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 under income tax regulations. For the
year ended October 31, 1997, the fund reclassified $98,987,949 to increase
undistributed net investment income and $9,227,065 to increase
paid-in-capital, with a decrease to accumulated net realized gain on
investments and foreign currency transactions of 108,215,014. 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 the next $5 billion, 0.575% of the next $5 billion, 0.555%
of the next $5 billion, 0.54% of the next $5 billion and 0.53% thereafter.
Prior to February 20, 1997, any amount over $1.5 billion was based on a rate
of 0.60%.
The fund reimburses Putnam Management an allocated amount for the compensation
and related expenses of certain officers of the fund and their staff who
provide administrative services to the fund. The aggregate amount of all such
reimbursements is determined annually by the Trustees.
Custodial functions for the fund's assets are provided by Putnam Fiduciary
Trust Company (PFTC), a 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, 1997, fund expenses were reduced by $2,005,174
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
the assets utilized in connection with the expense offset arrangements in an
income producing asset if it had not entered into such arrangements.
Trustees of the funds receive an annual Trustees fee of which $3,914 has been
allocated to the fund 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 has adopted a Trustee Fee Deferral Plan (the "Deferral Plan") which
allows the Trustees to defer the receipt of all or a portion of Trustees Fees
payable on or after July 1, 1995. The deferred fees remain in the fund and are
invested in certain Putnam funds until distribution in accordance with the
Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension plan
(the "Pension Plan") covering all Trustees of the fund who have served as
Trustee for at least five years. Benefits under the Pension Plan are equal to
50% of the Trustee's average total retainer and meeting fees for the three
years preceding retirement. Pension expense for the fund is included in
Compensation of trustees in the Statement of operations. Accrued pension
liability is included in Payable for compensation of Trustees in the Statement
of assets and liabilities.
The fund has adopted distribution plans (the "Plans") with respect to its
class A, class B 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 currently limit payment by the fund to 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, 1997, Putnam Mutual Funds Corp., acting as
underwriter received net commissions of $991,161 and $28,403 from the sale of
class A and class M shares, respectively and $1,818,267 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, 1997, Putnam Mutual Funds Corp., acting as underwriter
received $38,023 on class A redemptions.
Note 3
Purchases and sales of securities
During the year ended October 31, 1997, purchases and sales of investment
securities other than short-term investments aggregated $6,551,229,406 and
$6,300,255,512, 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, 1997, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Year ended
October 31, 1997
- ------------------------------------------------------------
Class A Shares Amount
- ------------------------------------------------------------
Shares sold 101,249,030 $1,191,480,880
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 14,409,751 154,040,248
- ------------------------------------------------------------
115,658,781 1,345,521,128
Shares
repurchased (93,547,155) (1,107,228,654)
- ------------------------------------------------------------
Net increase 22,111,626 $ 238,292,474
- ------------------------------------------------------------
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, 1997
- ------------------------------------------------------------
Class B Shares Amount
- ------------------------------------------------------------
Shares sold 38,781,150 $444,244,122
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 8,389,558 87,335,290
- ------------------------------------------------------------
47,170,708 531,579,412
Shares
repurchased (27,056,473) (312,278,426)
- ------------------------------------------------------------
Net increase 20,114,235 $219,300,986
- ------------------------------------------------------------
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, 1997
- ------------------------------------------------------------
Class M Shares Amount
- ------------------------------------------------------------
Shares sold 3,715,074 $44,560,643
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 168,896 1,798,748
- ------------------------------------------------------------
3,883,970 46,359,391
Shares
repurchased (2,403,887) (29,285,638)
- ------------------------------------------------------------
Net increase 1,480,083 $17,073,753
- ------------------------------------------------------------
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
- ------------------------------------------------------------
Year ended
October 31, 1997
- ------------------------------------------------------------
Class Y Shares Amount
- ------------------------------------------------------------
Shares sold 4,445,438 $51,918,759
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 470,446 5,061,496
- ------------------------------------------------------------
4,915,884 56,980,255
Shares
repurchased (6,986,974) (86,399,511)
- ------------------------------------------------------------
Net decrease (2,071,090) $(29,419,256)
- ------------------------------------------------------------
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
- ------------------------------------------------------------
Federal tax information
(Unaudited)
Pursuant to Section 852 of the Internal Revenue Code, as amended, the
Fund hereby designates $620,151,357 (or if different, the amount
necessary to offset net capital gain earned by the Fund) (for all
classes of shares) as capital gain dividends for its taxable year
ended October 31, 1997.
For the period, interest and dividends from foreign countries were
$49,319,695 of $0.133 (for all share classes). Taxes paid to foreign
countries were $4,317,707 or $0.012 (for all classes of shares).
The fund has designated 3.97% of the distributions from net investment
income as qualifying for the dividends received deduction for
corporations.
The Form 1099 you receive in January 1998 will show the tax status of
all distributions paid to your account in calendar 1997.
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
A.J.C. Smith
W. Thomas Stephens
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
Brett C. Browchuk
Vice President
Robert Swift
Vice President and Fund Manager
Anthony W. Regan
Vice President and Fund Manager
Ami Kuan Danoff
Vice President and Fund Manager
Kelly A. Morgan
Vice President and Fund Manager
Thomas R. Haslett
Vice President and Fund Manager
Carol McMullen
Vice President and Fund Manager
Michael K. Arends
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 the principal amount
invested.
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
- --------------------
Bulk Rate
U.S. Postage
PAID
Putnam
Investments
- --------------------
36859-005/882/907/513 12/97
PUTNAM INVESTMENTS [SCALE LOGO OMITTED]
- ------------------------------------------------------------------------------
Putnam Global Growth Fund
Supplement to Annual Report dated 10/31/97
The following information has been prepared to provide class Y shareholders
with a performance overview specific to their holdings. Class Y shares are
offered exclusively to defined contribution plans investing $250 million or
more in one or more of Putnam's funds or private accounts. Performance of
class Y shares, which incur neither a front-end load, distribution fee, nor
contingent deferred sales charge, will differ from performance of class A, B,
and M shares, which are discussed more extensively in the annual report.
ANNUAL RESULTS AT A GLANCE
- ------------------------------------------------------------------------------
Total return: NAV
One year ended 10/31/97 16.75%
Five years 104.41
Annual average 15.37
Ten years 194.32
Annual average 11.40
Life of class (since 9/1/67)
Annual average 10.62
- ------------------------------------------------------------------------------
Share value: NAV
10/31/96 $11.24
10/31/97 12.17
- ------------------------------------------------------------------------------
Distributions: No. Income Capital gains Total
Short Long
1 $0.301 $0.249 $0.296 $0.846
- ------------------------------------------------------------------------------
Please note that past performance does not indicate future results.
Investment return and principal value will fluctuate so your shares, when
redeemed, may be worth more or less than their original cost. See full report
for information on comparative benchmarks. If you have questions, please
consult your fund prospectus or call Putnam toll free at 1-800-752-9894.
