Putnam
Global
Growth
Fund
ANNUAL REPORT ON PERFORMANCE AND OUTLOOK
10-31-98
[LOGO: BOSTON * LONDON * TOKYO]
Fund highlights
* Putnam Global Growth Fund's class A shares were ranked in the top 16% by
Lipper Analytical Services for the 1-year period ended October 31, 1998.
The fund ranked 33 out of 211 global funds ranked.*
CONTENTS
4 Report from Putnam Management
9 Fund performance summary
15 Portfolio holdings
21 Financial statements
* Past performance is not indicative of future results. Lipper is an
industry research firm whose rankings are based on total return
performance, vary over time, and do not reflect the effects of sales
charges. For the five-year period ended 10/31/98, the fund ranked 23 out
of 66 funds. For the 10-year period, the fund ranked 7 out of 21 funds.
Performance of other share classes will vary.
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
[copyright] Karsh, Ottawa
Dear Shareholder:
It should come as no surprise that Putnam Global Growth Fund's portfolio
has undergone some significant shifting in industry and sector focus
during the past year; most equity portfolios have had to make adjustments
in the wake of the worldwide disruption in securities markets. In your
fund's case, the managers increased the weighting in U.S. stocks, shifting
assets out of the emerging markets and much of Asia.
While it is the big global issues that have grabbed the headlines, in the
final analysis the painstaking company-by-company search for high-quality
growth stocks is what drives your fund's investment decisions. To help
with that search are two newly appointed members of the management team,
Manuel Weiss Herrero and Olivier M. Rudigoz. Manny has been with Putnam
since 1987 and has 11 years of investment experience. Olivier, who has
been managing investments for 9 years, joined Putnam earlier this year
from Paribas Asset Management.
Respectfully yours,
/S/GEORGE PUTNAM
George Putnam
Chairman of the Trustees
December 16, 1998
Report from the Fund Managers
Robert Swift
Lisa Svensson
Kelly A. Morgan
Olivier M. Rudigoz
Michael Arends
Manuel Weiss Herrero
The unusual level of financial market volatility experienced in late
summer and early fall of this year created an uncertain and unnerving
environment for investors. Although the markets rebounded in late fall,
the overriding theme that emerged from the rapid-fire series of negative
events was that economic and corporate earnings growth rates would most
likely slow in the near future.
These destabilizing events led the management team of Putnam Global Growth
Fund to reaffirm the growth potential of many of the large, high-quality
growth companies the fund has owned for some time as well as to reassess
the prospects of several companies in this new environment. For the year
ended October 31, 1998, the fund's class A shares returned 13.02% (6.54%
at public offering price). For comparison purposes, the fund's benchmark
index, the Morgan Stanley Capital International All Country World Free
Index, rose 13.03%. For performance of other share classes and over longer
periods, please turn to page 9 of this report.
* POSITIONING FOR NEW ENVIRONMENT
Financial markets fell abruptly in late summer as corporate earnings
expectations were sharply reduced in the face of economic weakness in Asia
and other parts of the world and the insolvency of several large hedge
funds.
Shareholders may notice we made several broad changes to the portfolio. We
raised the fund's weighting in companies located in the United States,
mainly at the expense of holdings in Europe. Although the fund maintains a
significant portion of its assets in Europe, we believe growth
expectations there in many cases are too high. The United States offers
the largest selection of high-quality growth companies as well as a more
stable situation in which the government has the fiscal and monetary tools
needed to mitigate an extended slowdown.
We also substantially eliminated the fund's emerging-markets position and,
with the exception of Japan, its holdings in developed Asian economies.
This change was made in response to the deteriorating economic and company
fundamentals in these markets. Although the markets subsequently rallied
following the easing of high interest rates and the sudden strengthening
of the Japanese yen -- both positive developments for non-Japanese
exporters -- we believe any short-term rewards are far outweighed by the
lack of any earnings growth momentum in these markets.
* SEARCH FOR GROWTH POTENTIAL LEADS TO FOOD RETAILERS
We looked for companies that had the ability to grow in a more difficult
environment. Supermarket companies and food retailers in the United
States, Europe, and Asia have offered steady growth for some time.
Additionally, in the United States, we saw increased takeover activity in
this area. Consequently we maintained significant weightings in Safeway
and Kroger as well as in Netherlands-based Koninklijke Ahold, which
operates supermarkets in both Europe and the United States.
Near the end of the period, we also added some Asian food retailing
companies. One of these, Seven Eleven Japan, is the largest company in the
Japanese convenience store market. It has an aggressive expansion plan and
is installing sophisticated information systems in order to improve profit
margins and overall earnings growth. Woolworths Australia, a leading food
retailer, has posted strong comparable sales results and has also expanded
aggressively in a move to attain future growth. While these holdings,
along with others discussed in this report, were viewed favorably at the
end of the period, all are subject to review and adjustment in accordance
with the fund's investment strategy and may vary in the future.
[GRAPHIC OMITTED: horizontal bar chart COUNTRY ALLOCATIONS]
COUNTRY ALLOCATIONS*
United States 46.1%
United Kingdom 9.4%
France 8.9%
Japan 6.9%
Netherlands 6.1%
Footnote reads:
*Based on net assets as of October 31, 1998. Holdings will vary over time.
* FINANCIAL FOCUS SHIFTS TO REGIONAL BANKS
Following Russia's devaluation of its currency and default on its foreign
debt, global financial institutions located in the United States and
Europe -- particularly money-center banks, brokerages, and large insurance
companies -- came under intense selling pressure. We reduced the fund's
positions in global financial companies that are highly dependent on
trading gains to deliver their targeted earnings growth. This selloff was
based on the companies' exposure to trading losses and our belief that
their investment banking operations would suffer in the event of a
slowdown in equity issuance and corporate financing activities.
In the financial sector, our current focus is on regional banks, insurance
companies, and specialty finance companies that we believe have better
growth prospects than larger financial companies. Companies in these areas
focus on more stable businesses such as retail banking, mortgage lending,
and asset management. Some recent additions to the fund in the banking
area include the Spanish banking company Bankinter, the Italian bank Banca
Intesa, the Dutch banking and insurance company Fortis Amev, and the U.S.
super regional bank Wells Fargo.
* SEMICONDUCTORS SHOW SIGNS OF LIFE
Because of your fund's focus on growth, it has been -- and remains --
heavily invested in technology. Within technology, however, we have made
several important changes. As the fund's fiscal period progressed, it
became clear that corporate technology spending would slow to the
detriment of software and information technology (IT) service companies.
Thus we began buying more of the inexpensively priced stocks in the
hardware and components areas, favoring them over stocks of software and
IT service companies. As a result, we added hardware companies such as Sun
Microsystems and eliminated the fund's positions in companies such as
Veritas and PeopleSoft.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
TOP 10 HOLDINGS
Microsoft Corp. (United States)
Computer services and software
Warner-Lambert Co. (United States)
Pharmaceuticals
Intel Corp. (United States)
Electronics and electrical equipment
Wolters Kluwer N.V. (Netherlands)
Business equipment and services
Glaxo Wellcome PLC (United Kingdom)
Pharmaceuticals
General Electric Co. (United States)
Electronics and electrical equipment
Pfizer, Inc. (United States)
Pharmaceuticals
Vodafone Group PLC (United Kingdom)
Telecommunications
KAO Corp. (Japan)
Consumer nondurables
Wal-Mart Stores, Inc. (United States)
Retail
Footnote reads:
These holdings represent 15.2% of the fund's net assets as of 10/31/98.
Portfolio holdings will vary over time.
One significant development was the improvement in the outlook for the
long-suffering semiconductor sector. Semiconductor prices have been held
back for some time by a worldwide supply glut. Lately we have observed a
large amount of production capacity removed from the industry,
particularly that of Southeast Asian producers of basic memory chips, a
development that has resulted in a stabilization of chip prices.
Additionally the move to a new generation of chips as well as to new
technology in the industry could also support higher prices. Positive
earnings announcements and the indication of higher future sales from
well-known companies such as Intel have only served to confirm this
positive trend for investors.
* POSITIVE BUT CAUTIOUS OUTLOOK
Although market volatility in the second half of the fund's fiscal year
resulted in some rather indiscriminate selling of growth stocks, we remain
convinced that a company-by-company, research-driven strategy of
evaluating individual stocks is still the best method for selecting
long-term investments. In this current period of relative calm, we plan to
take the opportunity to continue to reassess each of the fund's holdings
to determine if each company can meet our price targets and maintain its
growth prospects. In general, we expect economic and corporate earnings
growth to slow but not contract. Lower interest rates around the world and
any improvement in the Japanese economy should help stocks. However,
should growth deteriorate more than we expect, we stand at the ready to
reallocate our resources to more attractive relative growth opportunities.
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 October 31, 1998, there is no guarantee the fund
will continue to hold these securities in the future. International
investing involves certain risks, such as currency fluctuations, economic
instability, and political developments, not present with domestic
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 10/31/98
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 13.02% 6.54% 12.13% 7.57% 12.48% 8.56%
- ------------------------------------------------------------------------------
5 years 75.26 65.13 68.90 66.90 70.73 64.84
Annual average 11.88 10.55 11.05 10.79 11.29 10.51
- ------------------------------------------------------------------------------
10 years 202.51 185.12 179.32 179.32 186.49 176.46
Annual average 11.71 11.05 10.82 10.82 11.10 10.70
- ------------------------------------------------------------------------------
Annual average
(Life of fund) 10.64 10.43 9.60 9.60 9.89 9.76
- ------------------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 10/31/98
MSCI MSCI MSCI S&P Consumer
EAFE World World 500 Price
Index* Index Free Index* Index Index
- ------------------------------------------------------------------------------
1 year 9.65% 15.26% 13.03% 21.99% 1.36%
- ------------------------------------------------------------------------------
5 years 39.01 84.48 79.34 162.66 12.42
Annual average 6.81 13.03 12.39 21.31 2.37
- ------------------------------------------------------------------------------
10 years 67.20 158.65 163.83 418.25 36.27
Annual average 5.28 9.97 10.19 17.89 3.14
- ------------------------------------------------------------------------------
Annual average
(Life of fund) -- -- -- 12.28 5.22
- ------------------------------------------------------------------------------
Past performance is no assurance of future results. 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-, and
10-year (where available) 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. 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. Putnam Management has recently
undertaken a review of benchmarks for various funds. The MSCI All-Country
World Free Index replaces the MSCI All-Country World Index as a
performance benchmark for this fund because, in Putnam Management's
opinion, the securities tracked by this index more accurately reflect the
types of securities generally held by the fund.
This performance information does not reflect any market volatility that
may have occurred since the date of the information. As a result, more
recent returns may be more or less than those shown.
<TABLE>
<CAPTION>
[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
10/31/88
Fund's class A MSCI EAFE Consumer Price MSCI World S&P 500 MSCI World
Date shares at POP Index Index Index Index Free Index
<S> <C> <C> <C> <C> <C> <C>
10/31/88 9,427 10,000 10,000 10,000 10,000 10,000
10/31/89 11,089 10,814 10,449 11,433 12,640 11,344
10/31/90 10,940 9,428 11,106 10,205 11,695 10,064
10/31/91 12,745 10,083 11,431 11,957 15,612 11,649
10/31/92 12,553 8,751 11,797 11,471 17,166 11,040
10/31/93 16,272 12,028 12,121 14,711 19,731 14,021
10/31/94 17,674 13,242 12,438 16,085 20,494 15,094
10/31/95 18,670 13,193 12,787 17,359 25,913 16,525
10/31/96 21,676 14,575 13,170 20,111 32,157 19,218
10/31/97 25,231 15,249 13,444 23,342 42,483 22,442
10/31/98 $28,512 $16,720 $13,627 $26,383 $51,825 $25,865
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 $27,932 and no contingent deferred sales charges would
apply; a $10,000 investment in the fund's class M shares would have been
valued at $28,649 ($27,646 at public offering price). See first page of
performance section for performance calculation method.
</TABLE>
PRICE AND DISTRIBUTION INFORMATION
12 months ended 10/31/98
Class A Class B Class M
- ------------------------------------------------------------------------------
Distributions (number) 1 1 1
- ------------------------------------------------------------------------------
Income $0.255 $0.169 $0.204
- ------------------------------------------------------------------------------
Capital gains
- ------------------------------------------------------------------------------
Long-term 1.417 1.417 1.417
- ------------------------------------------------------------------------------
Short-term 0.547 0.547 0.547
- ------------------------------------------------------------------------------
Total $2.219 $2.133 $2.168
- ------------------------------------------------------------------------------
Share value: NAV POP NAV NAV POP
- ------------------------------------------------------------------------------
10/31/97 $12.00 $12.73 $11.62 $11.90 $12.33
- ------------------------------------------------------------------------------
10/31/98 11.01 11.68 10.59 10.90 11.30
- ------------------------------------------------------------------------------
TOTAL RETURN FOR PERIODS ENDED 9/30/98
(most recent calendar quarter)
Class A Class B Class M
(inception date) (9/1/67) (4/27/92) (3/1/95)
NAV POP NAV CDSC NAV POP
- ------------------------------------------------------------------------------
1 year -0.24% -5.95% -1.03% -5.05% -0.73% -4.23%
- ------------------------------------------------------------------------------
5 years 73.62 63.59 67.04 65.04 69.08 63.22
Annual average 11.67 10.34 10.81 10.54 11.08 10.29
- ------------------------------------------------------------------------------
10 years 201.76 184.40 178.37 178.37 185.74 175.73
Annual average 11.68 11.02 10.78 10.78 11.07 10.67
- ------------------------------------------------------------------------------
Annual average
(Life of fund) 10.51 10.30 9.47 9.47 9.75 9.63
- ------------------------------------------------------------------------------
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 5.75% maximum 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, Australasia and the Far East, with
all values expressed in U.S. dollars.
Morgan Stanley Capital International (MSCI) All-Country World Index* is an
unmanaged list of global equity securities, with all values expressed in
U.S. dollars.
Morgan Stanley Capital International (MSCI) All-Country World Free Index*
is an unmanaged list of global equity securities available to non-domestic
investors, 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.
PUTNAM GROWTH FUNDS
Asia Pacific Growth Fund
Capital Appreciation Fund [DBL. DAGGER]
Capital Opportunities Fund
Diversified Equity Trust
Europe Growth Fund
Global Growth Fund
Global Natural Resources Fund
Growth Opportunities Fund
Health Sciences Trust
International Growth Fund
International New Opportunities Fund
Investors Fund
New Opportunities Fund [DBL. DAGGER]
OTC & Emerging Growth Fund
Research Fund
Vista Fund
Voyager Fund
Voyager Fund II
PUTNAM GROWTH
AND INCOME FUNDS
Balanced Retirement Fund
Convertible Income-Growth Trust
Equity Income Fund
The George Putnam Fund of Boston
Global Growth and Income Fund
The Putnam Fund for Growth and Income
Growth and Income Fund II
International Growth and Income Fund
New Value Fund
Utilities Growth and Income Fund
PUTNAM INCOME FUNDS
American Government Income Fund
Diversified Income Trust
Global Governmental Income Trust
High Quality Bond Fund +
High Yield Advantage Fund [DBL. DAGGER]
High Yield Total Return Fund
High Yield Trust [DBL. DAGGER]
High Yield Trust II
Income Fund
Intermediate U.S. Government
Income Fund
Money Market Fund **
Preferred Income Fund
Strategic Income Fund *
U.S. Government Income Trust
PUTNAM TAX-FREE
INCOME FUNDS
Municipal Income Fund
Tax Exempt Income Fund
Tax Exempt Money Market Fund**
Tax-Free High Yield Fund
Tax-Free Insured Fund
State tax-free income funds [SECTION MARK]
Arizona, California, Florida, Massachusetts, Michigan, Minnesota,
New Jersey, New York, Ohio and Pennsylvania
State tax-free money market funds [SECTION MARK]
California, New York
LIFESTAGE SM FUNDS
Putnam Asset Allocation Funds-three investment portfolios that spread
your money across a variety of stocks, bonds, and money market
investments.
The three portfolios:
Asset Allocation: Balanced Portfolio
Asset Allocation: Conservative Portfolio
Asset Allocation: Growth Portfolio
*Formerly Putnam Diversified Income Trust II
+Formerly Putnam Federal Income Trust
[DBL. DAGGER] Closed to new investors. Some exceptions may apply.
Contact Putnam for details.
[SECTION MARK] Not available in all states.
**An investment in a money market fund is neither insured nor guaranteed
by the U.S. government. These funds are managed to maintain a price of
$1.00 per share, although there is no assurance that this price will
be maintained in the future.
Please call your financial advisor or Putnam at 1-800-225-1581 to obtain
a prospectus for any Putnam fund. It contains more complete information,
including charges and expenses. Please read it carefully before you
invest or send money.
Report of independent accountants
For the fiscal year ended October 31, 1998
To the Trustees and Shareholders of
Putnam Global Growth Fund
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments owned, and the related statements
of operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of Putnam
Global Growth Fund (the "fund") at October 31, 1998, and the results of
its operations, the changes in its net assets and the financial highlights
for the periods indicated, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility
of the fund's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of
these financial statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included
confirmation of investments owned at October 31, 1998 by correspondence
with the custodian, provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 10, 1998
<TABLE>
<CAPTION>
Portfolio of investments owned
October 31, 1998
COMMON STOCKS (95.9%) (a)
NUMBER OF SHARES VALUE
<S> <C> <C>
Australia (0.9%)
- --------------------------------------------------------------------------------------------------------------------------
2,151,200 AMP Ltd. (NON) $ 25,548,925
1,127,200 AMP Ltd.144A (NON) 13,387,295
30,839 Australia & New Zealand Banking Group Ltd. 176,078
1,009,800 Woolworth Ltd. 3,547,549
--------------
42,659,847
Brazil (--%)
- --------------------------------------------------------------------------------------------------------------------------
50,348 Companhia Energetica de Minas Gerais (Cemig) 144A ADS 969,199
Canada (1.6%)
- --------------------------------------------------------------------------------------------------------------------------
1,003,100 BCE Mobile Communications, Inc. (NON) 24,459,507
2,238,300 Bombardier, Inc. (NON) 26,490,905
1,812,000 CGI Group, Inc. (NON) 24,912,062
--------------
75,862,474
Denmark (0.8%)
- --------------------------------------------------------------------------------------------------------------------------
355,900 Tele Danmark AS 38,811,465
Finland (0.8%)
- --------------------------------------------------------------------------------------------------------------------------
382,100 Oy Nokia AB Class A 34,819,901
France (8.9%)
- --------------------------------------------------------------------------------------------------------------------------
90,693 Accor S.A. 19,080,356
343,834 Axa S.A. (NON) 38,926,943
357,305 Cap Gemini S.A. 53,785,772
43,856 L'OREAL 25,102,362
73,120 Promodes 46,123,469
154,021 Sanofi S.A. 24,156,890
460,290 Sidel S.A. 34,021,796
233,557 Societe Television Francaise 1 38,652,484
207,129 Sodexho Alliance S.A. 40,290,643
220,190 STMicroelectronics 13,496,413
269,352 Total S.A. Class B 31,125,768
233,182 Vivendi 53,345,585
--------------
418,108,481
Germany (3.1%)
- --------------------------------------------------------------------------------------------------------------------------
94,700 Allianz Versicherungs AG (NON) 32,513,056
652,616 Bayerische Vereinsbank AG 51,873,189
372,000 Mannesmann AG 36,651,354
60,544 SAP AG 25,434,042
--------------
146,471,641
Greece (0.3%)
- --------------------------------------------------------------------------------------------------------------------------
340 Bank of Greece S.A. 48,374
576,977 Hellenic Telecommunication Organization S.A. 13,134,581
20,922 Hellenic Telecommunication Organization S.A. GDR 237,465
--------------
13,420,420
India (--%)
- --------------------------------------------------------------------------------------------------------------------------
50 Hindalco Industries Ltd. 605
500 Hindustan Petroleum Corp. Ltd. 3,147
10 Housing Development Finance Corporation Ltd. 528
1,337 Larsen & Toubro Ltd. GDR 4,570
10 Ranbaxy Laboratories Ltd. 118
50 State Bank of India Ltd. 193
--------------
9,161
Ireland (2.0%)
- --------------------------------------------------------------------------------------------------------------------------
2,014,200 Allied Irish Banks PLC 29,110,011
1,537,000 CRH PLC 22,531,075
608,700 Elan Corp. PLC ADR (NON) 42,647,044
--------------
94,288,130
Italy (5.3%)
- --------------------------------------------------------------------------------------------------------------------------
3,667,680 Alleanza Assicurazioni SPA 45,268,722
1,182,400 Assicurazioni Generali SPA 42,408,992
3,917,700 Banca Intesa SPA (NON) 19,820,606
8,240,400 Credito Italiano SPA 44,308,433
3,965,700 La Rinascente SPA 38,285,328
455,500 Mediolanum SPA 11,355,440
8,647,500 Telecom Italia Mobile SPA 50,275,314
--------------
251,722,835
Japan (6.9%)
- --------------------------------------------------------------------------------------------------------------------------
103,100 Advantest Corp. 6,529,818
419,200 Aiful Corp. 19,614,452
300 Fujitsu Ltd. 3,206
3,188,520 KAO Corp. 64,841,975
1,050,000 Matsushita Communication Industrial Co., Ltd. 48,767,798
472,300 Promise Co., Ltd. 21,447,844
404,000 Secom Co. 30,112,898
145,000 Seven-Eleven Japan Co., Ltd. (NON) 11,070,234
80,100 Shohkoh Fund & Co., Ltd. 24,468,302
1,459,000 Takeda Chemical Industries 47,648,539
416,000 Takefuji Corp. 22,260,761
134,400 Takefuji Corp. 144A 7,191,938
600 Tokyo Electron Ltd. 19,595
837,000 Yamanouchi Pharmaceutical Co., Ltd. 24,089,457
--------------
328,066,817
Netherlands (6.1%)
- --------------------------------------------------------------------------------------------------------------------------
645,510 Aegon N.V. 56,087,677
194,540 Benckiser N.V. Class B (NON) 11,042,981
594,800 Fortis Amev N.V. 38,673,477
754,900 Heineken N.V. 40,261,873
1,614,176 Koninklijke Ahold N.V. 53,730,880
524,600 VNU N.V. 18,165,287
358,200 Wolters Kluwer N.V. 69,504,931
--------------
287,467,106
Pakistan (--%)
- --------------------------------------------------------------------------------------------------------------------------
6 Pakistan State Oil 6
Philippines (--%)
- --------------------------------------------------------------------------------------------------------------------------
2,361,650 International Container Terminal Services, Inc. (NON) 158,618
Portugal (1.8%)
- --------------------------------------------------------------------------------------------------------------------------
769,277 Banco Comercial Portugues, S.A. 24,126,102
643,850 Banco Portugues Do Atlantico (NON) 12,926,360
237,700 Banco Portugues Do Atlantico 144A (NON) 4,772,223
233,740 Telecel-Comunicacaoes Pessoais, S.A. 43,137,184
--------------
84,961,869
Spain (1.4%)
- --------------------------------------------------------------------------------------------------------------------------
182,400 Banco Popular Espanol S.A. 11,282,479
395,900 Bankinter, S.A. (NON) 12,131,743
1,382,190 Centros Comerciales Continente, S.A. 41,274,087
--------------
64,688,309
Switzerland (0.5%)
- --------------------------------------------------------------------------------------------------------------------------
40,552 Zurich Allied AG (NON) 24,712,548
Taiwan (--%)
- --------------------------------------------------------------------------------------------------------------------------
85,301 Bank Sinopac (NON) 36,492
Turkey (--%)
- --------------------------------------------------------------------------------------------------------------------------
80,659 Yapi ve Kredi Bankasi A.S. GDR 935,644
United Kingdom (9.4%)
- --------------------------------------------------------------------------------------------------------------------------
5,648,500 Cable & Wireless Communications (NON) 42,550,151
1,052,700 CMG PLC 24,671,077
13,751,900 Coca-Cola Beverages PLC 29,006,058
583,500 Coca-Cola Beverages PLC 144A 1,230,742
4,291,300 Compass Group PLC 43,460,999
2,226,704 Glaxo Wellcome PLC 69,182,446
1,034,000 HSBC Holdings PLC 23,700,284
5,633,435 Misys PLC (NON) 39,513,251
3,663,700 Orange PLC ADR (NON) 34,069,003
3,061,000 SEMA Group PLC 24,800,712
3,779,873 Smithkline Beecham PLC ADR 47,266,486
4,918,697 Vodafone Group PLC 65,871,190
--------------
445,322,399
United States (46.1%)
- --------------------------------------------------------------------------------------------------------------------------
693,500 Abbott Laboratories 32,551,156
105,900 America Online, Inc. (NON) 13,455,919
569,325 American International Group, Inc. 48,534,956
534,200 Ascend Communications, Inc. (NON) 25,775,150
195,700 Associates First Capital Corp. 13,796,850
287,800 Biogen, Inc. (NON) 20,002,100
524,000 BMC Software, Inc. (NON) 25,184,750
507,200 Bristol-Myers Squibb Co. 56,077,300
525,400 Cablevision Systems Corp. Class A (NON) 25,350,550
243,250 Cardinal Health, Inc. 23,002,328
692,700 Centocor, Inc. (NON) 30,825,150
741,975 Cisco Systems, Inc. (NON) 46,744,425
230,500 Clorox Co. 25,182,125
260,600 Colgate-Palmolive Co. 23,030,525
855,800 Compaq Computer Corp. 27,064,675
329,300 Computer Sciences Corp. (NON) 17,370,575
421,000 Compuware Corp. (NON) 22,812,938
484,900 ConAgra, Inc. 14,759,144
560,800 Costco Companies, Inc. (NON) 31,825,400
1,032,558 CVS Corp. 47,174,994
470,500 Dell Computer Corp. (NON) 30,817,750
522,500 EMC Corp. (NON) 33,635,938
144,700 Exxon Corp. 10,309,875
489,300 Fannie Mae 34,648,556
607,300 Federal Home Loan Mortgage Corp. 34,919,750
269,000 Firstar Corp. 15,265,750
787,800 General Electric Co. 68,932,500
917,300 HBO & Co. 24,079,125
847,300 Home Depot, Inc. (The) 36,857,550
287,900 IBM Corp. 42,735,156
245,900 IMS Health Inc. (NON) 16,352,350
867,600 Intel Corp. 77,379,075
355,900 Interpublic Group Cos. Inc. 20,820,150
79,300 Kroger Co. (NON) 4,397,352
639,700 Lilly (Eli) & Co. 51,775,719
444,900 Lowe's Cos., Inc. 14,987,569
317,200 Lucent Technologies, Inc. 25,435,475
551,100 MCI WorldCom, Inc. (NON) 30,448,275
819,800 MediaOne Group Inc. (NON) 34,687,788
576,300 Medtronic, Inc. 37,459,500
406,700 Merck & Co., Inc. 55,006,175
885,500 Microsoft Corp. (NON) 93,752,313
862,200 Office Depot, Inc. (NON) 21,555,000
586,800 Omnicare, Inc. 20,281,275
708,000 Peco Energy Co. 27,390,750
628,200 Pfizer, Inc. 67,413,713
1,156,000 Philip Morris Cos., Inc. 59,100,500
783,800 PLATINUM Technology, Inc. (NON) 12,883,713
572,000 Quintiles Transnational Corp. (NON) 25,883,000
323,400 Rite Aid Corp. 12,834,938
548,700 Safeway, Inc. (NON) 26,234,719
256,100 SBC Communications, Inc. 11,860,631
1,035,400 ServiceMaster Co. (The) 21,872,825
531,100 Schering-Plough Corp. 54,636,913
563,500 Southtrust Corp. 20,567,750
231,600 Sprint Corp. 17,775,300
141,900 Star Banc Corp. 10,731,188
192,000 Sun Microsystems, Inc. (NON) 11,195,290
754,100 Tele-Communications, Inc. Class A (NON) 31,766,463
296,100 Time Warner, Inc. 27,481,781
1,919,900 TJX Cos., Inc. (The) 36,358,106
427,900 Tommy Hilfiger Corp. (NON) 19,870,606
576,200 Tyco International Ltd. 35,688,388
453,300 Viacom, Inc. Class B (NON) 27,141,338
883,400 Wal-Mart Stores, Inc. 60,954,600
639,700 Walgreen Co. 31,145,394
1,057,100 Warner-Lambert Co. 82,850,206
627,400 Waste Management, Inc. (NON) 28,311,425
29,500 Wells Fargo & Co. 10,915,000
--------------
2,179,925,513
--------------
Total Common Stocks (cost $3,860,566,143) $4,533,418,875
INVESTMENT COMPANIES (--%) (a) (cost $1,177,200)
NUMBER OF SHARES VALUE
- --------------------------------------------------------------------------------------------------------------------------
21,800 India Magnum Fund Class A
(acquired 3/23/95, cost $1,177,200) (NON) (RES) (India) $ 588,600
SHORT-TERM INVESTMENTS (3.7%) (a)
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------
$ 324,000 Ciesco L.P., effective yield of 5.08%, December 8, 1998 $ 322,312
25,000,000 Commonwealth Bank of Australia, effective yield
of 5.14%, November 30, 1998 24,896,486
25,000,000 Corporate Asset Funding Corp., effective yield of 5 1/8%,
January 11, 1999 24,747,309
24,000,000 Diageo Capital PLC, effective yield of 5.17%,
December 4, 1998 (United Kingdom) 23,887,100
30,000,000 USAA Capital Corp., effective yield of 5.06%,
December 2, 1998 29,869,284
877,000 Windmill Funding Corp., effective yield of 5.13%,
November 16, 1998 874,874
27,401,000 Windmill Funding Corp., effective yield of 5.17%,
December 11, 1998 27,243,596
44,744,000 Interest in $750,000,000 joint tri-party repurchase
agreement dated October 30, 1998 with Goldman Sachs
due November 2, 1998 with respect to various
U.S. Treasury obligations -- maturity value of
$44,764,060 for an effective yield of 5.38% 44,757,373
--------------
Total Short-Term Investments (cost $176,598,334) $ 176,598,334
- --------------------------------------------------------------------------------------------------------------------------
Total Investments (cost $4,038,341,677) (b) $4,710,605,809
- --------------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $4,728,205,095.
(b) The aggregate identified cost on a tax basis is $4,065,513,098, resulting in gross unrealized appreciation and
depreciation of $791,984,332 and $146,891,621, respectively, or net unrealized appreciation of $645,092,711.
(NON) Non-income-producing security.
(RES) Restricted, excluding 144A securities, as to public resale. The total market value of restricted securities held
at October 31, 1998 was $588,600 or less than 0.01% of net assets.
ADR, ADS, or GDR after the name of a foreign holding stands for American Depository Receipts, American
Depository Shares, or Global Depository Receipts, respectively, representing 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, 1998 (as a percentage
of net assets):
Insurance and finance 17.4%
Pharmaceuticals 11.4
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
October 31, 1998
<S> <C>
Assets
- -----------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $4,038,341,677) (Note 1) $4,710,605,809
- -----------------------------------------------------------------------------------------------
Cash 111,199
- -----------------------------------------------------------------------------------------------
Foreign currency (cost $3,884,675) 3,593,377
- -----------------------------------------------------------------------------------------------
Dividends and interest receivable 3,422,255
- -----------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 6,078,842
- -----------------------------------------------------------------------------------------------
Receivable for securities sold 73,723,395
- -----------------------------------------------------------------------------------------------
Receivable for closed forward currency contracts 43,203
- -----------------------------------------------------------------------------------------------
Total assets 4,797,578,080
Liabilities
- -----------------------------------------------------------------------------------------------
Distributions payable to shareholders 34,197
- -----------------------------------------------------------------------------------------------
Payable for securities purchased 51,907,377
- -----------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 5,402,249
- -----------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 7,505,885
- -----------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 1,075,878
- -----------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 77,052
- -----------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 5,915
- -----------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 1,970,731
- -----------------------------------------------------------------------------------------------
Payable for closed forward currency contracts 139,729
- -----------------------------------------------------------------------------------------------
Other accrued expenses 1,253,972
- -----------------------------------------------------------------------------------------------
Total liabilities 69,372,985
- -----------------------------------------------------------------------------------------------
Net assets $4,728,205,095
Represented by
- -----------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $3,930,615,362
- -----------------------------------------------------------------------------------------------
Undistributed net investment income (Note 1) 12,854,506
- -----------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and
foreign currency transactions (Note 1) 112,566,884
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and
assets and liabilities in foreign currencies 672,168,343
- -----------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $4,728,205,095
Computation of net asset value and offering price
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($2,882,999,583 divided by 261,754,179 shares) $11.01
- -----------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $11.01)* $11.68
- -----------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($1,732,139,238 divided by 163,550,587 shares)** $10.59
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($50,699,608 divided by 4,649,688 shares) $10.90
- -----------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $10.90)* $11.30
- -----------------------------------------------------------------------------------------------
Net asset value, offering price and redemption price per class Y share
($62,366,666 divided by 5,570,176 shares) $11.20
- -----------------------------------------------------------------------------------------------
* 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, 1998
<S> <C>
Investment income:
- -----------------------------------------------------------------------------------------------
Dividends (net of foreign tax of $3,399,665) $ 48,530,309
- -----------------------------------------------------------------------------------------------
Interest 6,262,586
- -----------------------------------------------------------------------------------------------
Total investment income 54,792,895
Expenses:
- -----------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 30,359,299
- -----------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 12,180,823
- -----------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 89,988
- -----------------------------------------------------------------------------------------------
Administrative services (Note 2) 38,614
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 7,172,973
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 17,991,491
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 369,162
- -----------------------------------------------------------------------------------------------
Reports to shareholders 251,708
- -----------------------------------------------------------------------------------------------
Registration fees 177,078
- -----------------------------------------------------------------------------------------------
Auditing 98,897
- -----------------------------------------------------------------------------------------------
Legal 38,575
- -----------------------------------------------------------------------------------------------
Postage 848,839
- -----------------------------------------------------------------------------------------------
Other 543,288
- -----------------------------------------------------------------------------------------------
Total expenses 70,160,735
- -----------------------------------------------------------------------------------------------
Expense reduction (Note 2) (1,464,258)
- -----------------------------------------------------------------------------------------------
Net expenses 68,696,477
- -----------------------------------------------------------------------------------------------
Net investment loss (13,903,582)
- -----------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 133,668,133
- -----------------------------------------------------------------------------------------------
Net realized gain on foreign currency transactions (Note 1) 22,171,474
- -----------------------------------------------------------------------------------------------
Net realized loss on swap contracts (Note 1) (890,965)
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of assets and liabilities in
foreign currencies during the year 4,598,408
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments during the year 395,889,553
- -----------------------------------------------------------------------------------------------
Net gain on investments 555,436,603
- -----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $541,533,021
- -----------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
Year ended October 31
-------------------------------
1998 1997
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
Increase in net assets
- ---------------------------------------------------------------------------------------------------------------
Operations:
- ---------------------------------------------------------------------------------------------------------------
Net investment income (loss) $ (13,903,582) $ 1,217,600
- ---------------------------------------------------------------------------------------------------------------
Net realized gain on investments and
foreign currency transactions 154,948,642 825,626,424
- ---------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments
and assets and liabilities in foreign currencies 400,487,961 (229,716,928)
- ---------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 541,533,021 597,127,096
- ---------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ---------------------------------------------------------------------------------------------------------------
From net investment income
Class A (55,521,899) (54,577,493)
- ---------------------------------------------------------------------------------------------------------------
Class B (24,067,329) (25,358,432)
- ---------------------------------------------------------------------------------------------------------------
Class M (740,570) (590,659)
- ---------------------------------------------------------------------------------------------------------------
Class Y (1,101,259) (1,800,840)
- ---------------------------------------------------------------------------------------------------------------
From net realized gain on investments
Class A (427,627,489) (108,162,646)
- ---------------------------------------------------------------------------------------------------------------
Class B (279,693,689) (68,080,503)
- ---------------------------------------------------------------------------------------------------------------
Class M (7,129,800) (1,292,807)
- ---------------------------------------------------------------------------------------------------------------
Class Y (7,589,027) (3,260,656)
- ---------------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 606,332,642 445,247,957
- ---------------------------------------------------------------------------------------------------------------
Total increase in net assets 344,394,601 779,251,017
Net assets
- ---------------------------------------------------------------------------------------------------------------
Beginning of year 4,383,810,494 3,604,559,477
- ---------------------------------------------------------------------------------------------------------------
End of year (including undistributed
net investment income of $12,854,506 and
$84,713,761, respectively) $4,728,205,095 $4,383,810,494
- ---------------------------------------------------------------------------------------------------------------
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
- ------------------------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $12.00 $11.10 $10.13 $9.92 $9.30
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment (loss) income --(b) .04(b) .09(b) .09 .02
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 1.23 1.68 1.47 .43 .77
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 1.23 1.72 1.56 .52 .79
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.26) (.27) (.18) (.01) --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (1.96) (.55) (.41) (.30) (.17)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (2.22) (.82) (.59) (.31) (.17)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $11.01 $12.00 $11.10 $10.13 $9.92
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 13.02 16.40 16.10 5.64 8.62
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $2,882,999 $2,628,933 $2,186,426 $1,689,656 $1,507,550
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) 1.18 1.24 1.27 1.28 1.33
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average net assets (%) (.01) .31 .84 1.05 .83
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 162.35 154.98 72.88 63.31 17.45
- ------------------------------------------------------------------------------------------------------------------------------------
+ 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).
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS B
- ------------------------------------------------------------------------------------------------------------------------------------
Per-share
operating performance Year ended October 31
- ------------------------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $11.62 $10.78 $9.86 $9.74 $9.19
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment (loss) income (.08)(b) (.05)(b) .01(b) .03 .01
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 1.18 1.64 1.43 .40 .71
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 1.10 1.59 1.44 .43 .72
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.17) (.20) (.11) (.01) --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (1.96) (.55) (.41) (.30) (.17)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (2.13) (.75) (.52) (.31) (.17)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $10.59 $11.62 $10.78 $9.86 $9.74
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 12.13 15.54 15.25 4.80 7.95
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $1,732,139 $1,664,215 $1,327,246 $975,794 $801,443
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) 1.93 1.99 2.02 2.04 2.11
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average net assets (%) (.75) (.45) .09 .29 .12
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 162.35 154.98 72.88 63.31 17.45
- ------------------------------------------------------------------------------------------------------------------------------------
+ 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).
</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
- ------------------------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $11.90 $11.05 $10.09 $8.86
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment (loss) income (.06)(b) (.02)(b) .03(b) .01
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 1.22 1.66 1.47 1.22
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 1.16 1.64 1.50 1.23
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.20) (.24) (.13) --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (1.96) (.55) (.41) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (2.16) (.79) (.54) --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $10.90 $11.90 $11.05 $10.09
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 12.48 15.72 15.54 13.88*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $50,700 $43,662 $24,179 $5,853
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) 1.68 1.74 1.80 1.23*
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average net assets (%) (.50) (.21) .32 .17*
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 162.35 154.98 72.88 63.31
- ------------------------------------------------------------------------------------------------------------------------------------
+ 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).
</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
- ------------------------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $12.17 $11.24 $10.25 $10.00 $9.46
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment (loss) income .03(b) .08(b) .12(b) .09 .01
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 1.25 1.70 1.48 .47 .53
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 1.28 1.78 1.60 .56 .54
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.29) (.30) (.20) (.01) --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (1.96) (.55) (.41) (.30) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (2.25) (.85) (.61) (.31) --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $11.20 $12.17 $11.24 $10.25 $10.00
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 13.35 16.75 16.39 6.00 5.71*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $62,367 $47,000 $66,708 $42,582 $29,396
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .93 .99 1.02 1.06 .37*
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average net assets (%) .24 .69 1.09 1.20 .42*
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 162.35 154.98 72.88 63.31 17.45
- ------------------------------------------------------------------------------------------------------------------------------------
+ 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).
</TABLE>
Notes to financial statements
October 31, 1998
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 are subject to a contingent deferred sales
charge, if those shares are redeemed within six years of purchase. Class M
shares are sold with a maximum front end sales charge of 3.50% and pay an
ongoing distribution fee that is higher than class A shares but lower than
class B shares. Class Y shares, which are sold at net asset value, are
generally subject to the same expenses as class A, class B, and class M
shares, but do not bear a distribution fee. Class Y shares are sold to
defined contribution plans that invest at least $250 million in a
combination of Putnam Funds and other accounts managed by affiliates of
Putnam Investment Management, Inc., ("Putnam Management"), the fund's
manager, a wholly-owned subsidiary of Putnam Investments, Inc.
Expenses of the fund are borne pro-rata by the holders of each class of
shares, except that each class bears expenses unique to that class
(including the distribution fees applicable to such class). Each class
votes as a class only with respect to its own distribution plan or other
matters on which a class vote is required by law or determined by the
Trustees. Shares of each class would receive their pro-rata share of the
net assets of the fund, if that fund were liquidated. In addition, the
Trustees declare separate dividends on each class of shares.
The following is a summary of significant accounting policies 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 Management. 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. Collateral
for certain tri-party repurchase agreements is held at the counterparty's
custodian in a segregated account for the benefit of the fund and the
counterparty. 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, and 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 realized 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) Swap contracts The fund may engage in swap agreements, which are an
agreement to exchange the return generated by one instrument for the
return generated by another instrument. The fund may enter into equity
swap agreements, to manage its exposure to equity markets, which involve a
commitment by one party to pay interest in exchange for a market linked
return based on a notional amount. To the extent that the total return of
the security or index underlying the transaction exceeds or falls short of
the offsetting interest rate obligation, the fund will receive a payment
from or make a payment to the counterparty, respectively. Equity swaps are
marked to market daily based upon quotations from market makers and the
change, if any, is recorded as unrealized gain or loss. Payments received
or made at the end of the measurement period are recorded as realized
gains or losses. The fund could be exposed to credit or market risk due to
unfavorable changes in the fluctuation of interest rates or in the price
of the underlying security or index, the possibility that there is no
liquid market for these agreements or that the counterparty may default on
its obligation to perform.
H) 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, 1998, the fund had no borrowings against the line of credit.
I) 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.
J) 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, foreign taxes, realized and unrealized gains and losses
on passive foreign investment companies. Reclassifications are made to the
fund's capital accounts to reflect income and gains available for
distribution (or available capital loss carryovers) under income tax
regulations. For the year ended October 31, 1998, the fund reclassified
$23,475,384 to increase undistributed net investment income and $1,614,994
to increase paid-in-capital, with a decrease to accumulated net realized
gains of $25,090,378. 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.
As part of the subcustodian contract between the subcustodian bank and
Putnam Fiduciary Trust Company (PFTC), a subsidiary of Putnam Investments,
Inc., the subcustodian bank has a lien on the securities of the fund to
the extent permitted by the fund's investment restrictions to cover any
advances made by the subcustodian bank for the settlement of securities
purchased by the fund. At October 31, 1998, the payable to the
subcustodian bank represents the amount due for cash advance for the
settlement of a security purchased.
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 PFTC. Investor
servicing agent functions are provided by Putnam Investor Services, a
division of PFTC.
For the year ended October 31, 1998, fund expenses were reduced by
$1,464,258 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.
Each Trustee of the fund receives an annual Trustee fee, of which $4,000
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, class M shares,
respectively. The Trustees have approved payment by the fund at an annual
rate of 0.25%, 1.00%, and 0.75% of the average net assets attributable to
class A, class B, and class M shares respectively.
For the year ended October 31, 1998 Putnam Mutual Funds Corp., acting as
underwriter received net commissions of $577,977 and $17,991 from the sale
of class A and class M shares, respectively and received $2,076,679 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, 1998, Putnam Mutual Funds
Corp., acting as underwriter received $27,335 on class A redemptions.
Note 3
Purchases and sales of securities
During the year ended October 31, 1998, purchases and sales of investment
securities other than short-term investments aggregated $7,530,171,122 and
$7,805,725,388, 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, 1998, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Year ended
October 31, 1998
- -----------------------------------------------------------------------------
Class A Shares Amount
- -----------------------------------------------------------------------------
Shares sold 67,632,824 $ 765,441,417
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 48,094,524 460,264,719
- -----------------------------------------------------------------------------
115,727,348 1,225,706,136
Shares
repurchased (72,999,084) (818,734,753)
- -----------------------------------------------------------------------------
Net increase 42,728,264 $ 406,971,383
- -----------------------------------------------------------------------------
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, 1998
- -----------------------------------------------------------------------------
Class B Shares Amount
- -----------------------------------------------------------------------------
Shares sold 32,103,540 $ 347,176,136
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 30,698,837 284,271,233
- -----------------------------------------------------------------------------
62,802,377 631,447,369
Shares
repurchased (42,493,698) (459,737,498)
- -----------------------------------------------------------------------------
Net increase 20,308,679 $ 171,709,871
- -----------------------------------------------------------------------------
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, 1998
- -----------------------------------------------------------------------------
Class M Shares Amount
- -----------------------------------------------------------------------------
Shares sold 2,198,969 $ 24,442,916
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 789,181 7,505,074
- -----------------------------------------------------------------------------
2,988,150 31,947,990
Shares
repurchased (2,006,965) (22,548,855)
- -----------------------------------------------------------------------------
Net increase 981,185 $ 9,399,135
- -----------------------------------------------------------------------------
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, 1998
- -----------------------------------------------------------------------------
Class Y Shares Amount
- -----------------------------------------------------------------------------
Shares sold 2,546,489 $ 29,156,167
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 895,004 8,690,286
- -----------------------------------------------------------------------------
3,441,493 37,846,453
Shares
repurchased (1,733,001) (19,594,200)
- -----------------------------------------------------------------------------
Net increase 1,708,492 $ 18,252,253
- -----------------------------------------------------------------------------
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)
- -----------------------------------------------------------------------------
Federal tax information
(Unaudited)
Pursuant to Section 852 of the Internal Revenue Code, as amended, the Fund
hereby designates $139,685,652 as a 20% capital gain.
For the period, interest and dividends from foreign countries were
$35,182,799. Taxes paid to foreign countries were $3,399,665 or $.008 (for
all classes of shares).
The fund has designated 69.03% of the distributions from net investment
income as qualifying for the dividends received deduction for
corporations.
The Form 1099 you receive in January 1999 will show the tax status of all
distributions paid to your account in calendar 1998.
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
PricewaterhouseCoopers LLP
TRUSTEES
George Putnam, Chairman
William F. Pounds, Vice Chairman
John A. Hill, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John H. Mullin III
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
Lisa Svensson
Vice President and Fund Manager
Kelly A. Morgan
Vice President and Fund Manager
Olivier M. Rudigoz
Vice President and Fund Manager
Michael Arends
Vice President and Fund Manager
Manuel Weiss Herrero
Vice President and Fund Manager
John R. Verani
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.
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
www.putnaminv.com
- ---------------------
BULK RATE
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
- ---------------------
AN006 47848 005/882/907/513 12/98
PUTNAM INVESTMENTS [SCALE LOGO OMITTED]
- ----------------------------------------------------------------------------
Putnam Global Growth Fund
Supplement to Annual Report dated 10/31/98
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
Six months ended 10/31/98 -5.64%
One year ended 10/31/98 13.35
Life of class (since 6/15/94) 72.58
Annual average 13.27
- ----------------------------------------------------------------------------
Share value: NAV
10/31/97 $12.17
10/31/98 11.20
- ----------------------------------------------------------------------------
Distributions: No. Income Capital gains Total
1 $0.285 $1.964 $2.249
- ----------------------------------------------------------------------------
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.
