Putnam
Global
Growth
Fund
ANNUAL REPORT ON PERFORMANCE AND OUTLOOK
10-31-99
[LOGO: BOSTON * LONDON * TOKYO]
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
[copyright] Karsh, Ottawa
Dear Shareholder:
It is rare that we are able to report fiscal year results of the magnitude
delivered by Putnam Global Growth Fund during the 12 months ended October
31, 1999. Pleased as we are by such numbers, we are moved to caution,
almost unnecessarily, that such results should not be taken as a standard
against which future performance is gauged.
In some measure, the results came as a consequence of a happy confluence
of global equity market exuberance and investors' favor with the growth
stocks in which your fund invests. At the same time, we cannot help but be
gratified by the management team's skill in assembling a portfolio, stock
by individual stock, that took maximum advantage of the opportunities that
presented themselves.
In the following report, your fund's managers discuss their strategy
during fiscal 1999, some of the fund's holdings that contributed to the
results, and then provide a comment on their view of prospects for the
fiscal year just recently begun.
Respectfully yours,
/S/GEORGE PUTNAM
George Putnam
Chairman of the Trustees
December 15, 1999
Report from the Fund Managers
Robert Swift
Lisa Svensson
Kelly A. Morgan
Manuel Weiss Herrero
David Santos
The year ended October 31, 1999, will long be remembered by
growth-oriented investors as a tremendous time of change and opportunity.
The close of Putnam Global Growth Fund's fiscal year capped a rewarding
period as investors all over the world gravitated to the growth potential
of many of the companies we favor.
Backed by our disciplined and research-oriented investment process of
stock-by-stock analysis, solid stock selection in rapidly growing areas of
the global economy helped your fund post strong returns relative to the
Morgan Stanley Capital International All-Country World Free Index as well
as its Lipper peers (please see page 3). For the year through October 31,
1999, the index returned 26.02%.
Total return for 12 months ended 10/31/99
Class A Class B Class C Class M
NAV POP NAV CDSC NAV CDSC NAV POP
- -------------------------------------------------------------------------
41.04% 32.94% 40.00% 35.00% 39.93% 38.93% 40.34% 35.37%
- -------------------------------------------------------------------------
Past performance is no indication of future results. Performance
information for longer periods and explanation of performance calculation
methods begin on page 7.
* TELECOMMUNICATIONS, TECHNOLOGY FOCUS PROVES VALUABLE
Our emphasis on many key technology companies in the U.S., Japanese and
British markets proved to be the driving force behind the fund's
performance. Within the vast and diverse sector of technology, however, we
did reduce the fund's holdings in the European information technology
service companies that had once been significant parts of the portfolio.
After reviewing these companies, we concluded their future growth would be
much slower than expected. One exception, though, is Logica of the United
Kingdom. Logica has begun to differentiate itself from its industry peers
by selling short messaging software, a service that is becoming
increasingly popular with mobile phone operators.
[GRAPHIC OMITTED: horizontal bar chart COUNTRY ALLOCATIONS]
COUNTRY ALLOCATIONS*
United States 49.3%
Japan 15.2%
United Kingdom 13.1%
France 7.3%
Finland 2.9%
Footnote reads:
*Based on net assets as of 10/31/99. Holdings will vary over time.
From the United States to China, surging cellular subscriptions, the
rising importance of data over voice communications resulting from the
exponential growth of the Internet, and the development of new-generation
wireless technology and products are all having a profound impact on
people's daily lives. These factors have led not only to the astounding
growth of telecommunications-related companies but also to a frenetic pace
of industrial consolidation.
The fund holds substantial investments in companies that are building the
backbone of the world's data and voice communications networks or that are
providing the equipment, such as those ubiquitous cellular handsets.
Companies such as Vodafone AirTouch, Energis, and Colt Telecom of the
United Kingdom, Matsushita Communications of Japan, QUALCOMM in the United
States, and Mannesmann of Germany are all rapidly growing global leaders
in infrastructure and equipment.
Vodafone and Mannesmann have also been the direct beneficiaries of
consolidation through acquisitions over the past year that have added to
their subscriber bases and their global presence. (Following the close of
the fund's fiscal period, Vodafone made a hostile bid for Mannesmann at a
significant premium to Mannesmann's market value. This development quickly
followed Mannesmann's recent takeover of Vodafone's U.K. rival, Orange.)
The AirTouch acquisition gave Vodafone a presence in the western United
States while the company's relationship with Bell Atlantic has helped it
gain a foothold in the east. Mannesmann, meanwhile, added to its
formidable fixed and cellular franchise when it purchased the fixed and
cellular businesses of Olivetti, following that company's highly
publicized acquisition of Telecom Italia.
An important holding for the fund for some time has been the world's
leading cellular handset manufacturer, Nokia of Finland. In what has
become a routine event, the company recently reported 38% year-over-year
net income growth in its third quarter and it continued to confound its
competitors with its commanding market share as well as its innovative
development of new cellular technologies. Related to Nokia's growth is
also the success of the French company, STMicroelectronics, which is
Nokia's leading supplier of microprocessors. Like many other
chip-producers, STMicroelectronics benefited from the turnaround in
semiconductor prices as a result of shrinking supply and surging demand.
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.
Putnam Global Growth Fund's class A shares were ranked in the top quartile
Lipper for the 1-year period ended October 31, 1999. The fund ranked in the
top 10%, or 23 out of 238 global funds ranked.
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. Performance of other
share classes will vary. The fund was ranked 19 out of 92 funds (21%) for the
five-year period and 3 out of 21 (14%) for the 10-year period.
* JAPAN TAKES LEAD IN NEW COMMUNICATIONS TECHNOLOGIES
Among the leaders in the development of communications technology is
Japan, which boasts one of the world's largest cellular markets -- about
37 mobile subscribers per 100 people. The country is at the forefront of
the next generation of mobile technology, IMT-2000, and according to
Japanese government figures, ranks just behind the United States in
Internet subscribers with an expected 20 million this year.
The potential of Internet-related businesses is only just beginning to be
realized
According to Nua Internet Surveys, an Internet research company, there are
more than 200 million people online in the world today. This number is expected
to grow exponentially as more people embrace this relatively low cost and
virtually limitless medium. Your fund takes advantage of this growth through
companies around the world that are building the infrastructure, content, and
capabilities of the Internet and e-commerce. With the nascent growth of
wireless technologies as additional ways to utilize the Internet, it is not
surprising how much attention Internet-related companies receive from
investors. We believe there is still ample potential to find Internet-related
companies with strong business models, large market shares, and exceptional
rates of revenue growth.
One of the fund's key holdings is NTT DoCoMo (NTT Mobile Communications
Network), which was spun off from its parent NTT earlier this year. NTT
DoCoMo is a cutting-edge provider of data transmission over cellular
networks, which is considered to be a precursor to the way cellular phones
will be used in the future. Every time a user sends a data message such as
a request for dinner reservations or for the purchase of theater tickets,
the company collects a fee. We believe the company is capable of producing
double-digit earnings gains over time as it continues to add to its
significant market share.
Complementing the growth of NTT DoCoMo's market are the products of Hikari
Tsushin, one of the largest distributors of cellular phones in Japan. The
company has grown with the rise of cellular subscriptions, especially
following the development of data transmission technology. Hikari Tsushin
is also benefiting from its presence in satellite TV systems and cable
set-top boxes as well as its position as a leading provider of Internet
infrastructure to small and midsize businesses.
* NETWORKING, SELECTED "PURE-PLAY" INTERNET HOLDINGS BOOST PERFORMANCE
The fund also has substantial investments in companies that make the
Internet work or in selected "pure-play" Internet companies with dominant
brands. Cisco Systems of the United States has long been the leader in the
networking equipment industry and has recorded consistently strong
earnings growth. Another strong U.S. performer related to networking was
Juniper Networks, which develops hardware and software for router systems.
Juniper recently reported quarter-to-quarter revenue growth of 68%.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
TOP 10 HOLDINGS
Microsoft Corp
United States
Computer services and software
Oy Nokia AB Class A
Finland
Telecommunications
General Electric Co.
United States
Electronics and electrical equipment
Vodafone Group PLC
United Kingdom
Telecommunications
Bristol-Myers Squibb Co.
United States
Pharmaceuticals
NTT Mobile Communications
Japan
Telecommunications
Intel Corp.
United States
Electronics and electrical equipment
Citigroup, Inc.
United States
Insurance and finance
Colt Telecom Group PLC
United Kingdom
Telecommunications
Cisco Systems, Inc.
United States
Business equipment and services
Footnote reads:
These holdings represent 24.8% of the fund's net assets as of 10/31/99.
Portfolio holdings will vary over time.
Well known Internet portal Yahoo! has also become a key holding for the
fund. The company's revenue, operating margin, and net profits all
exceeded Wall Street estimates for the third quarter. Yahoo! continues to
gain share in terms of page views and Internet advertising revenues.
Softbank of Japan has also become a dominant player in the Internet, both
in the United States and Japan, through its investments in businesses that
are capturing the astounding growth of key areas of electronic commerce.
* DRUGS, FINANCIALS OFFER RENEWED OPPORTUNITY
Outside of technology, we raised the fund's weighting in pharmaceutical
and biotech companies, particularly in the United States, while
maintaining some of our favorite positions in Europe and Japan. The stock
prices of biotechnology companies have enjoyed a renaissance this year and
pharmaceutical stocks have begun to come back after concerns about
possible U.S. Medicare reform began to fade. We believe U.S.
pharmaceutical and biotech companies have better product pipelines than
many analysts realize and, given strong expected prescription growth, we
are optimistic about their earnings growth prospects.
We have also raised the fund's weighting in financial stocks, particularly
those that focus on the gathering and managing of assets. Companies such
as Citigroup, American Express, and Charles Schwab have all found
innovative ways to meet the public's growing demand for comprehensive
financial services. Financial stocks have also benefited from the recent
passage of the financial services reform legislation in the United States.
* OUTLOOK: TECHNOLOGY WILL REMAIN MAJOR FOCUS
As always, in evaluating high-quality large-capitalization companies from
around the world, we will maintain our company-by-company, research-driven
strategy of selecting individual stocks. Going forward, we may increase
the fund's U.S. positions as we search for companies in a variety of
growing industries that offer better business models and higher growth
rates than their peers located outside the United States. Within the
industries and companies we have discussed in this report, we anticipate
maintaining holdings in technologically-related areas, since many of these
companies have demonstrated strong fundamental growth characteristics.
Within technology, we have also begun to find many attractive
opportunities among software companies that derive a good deal of their
growth from the expansion of the Internet.
The views expressed here are exclusively those of Putnam Management. They
are not meant as investment advice. Although the described holdings were
viewed favorably as of 10/31/99, there is no guarantee the fund will
continue to hold these securities in the future. International investing
involves certain risks, including economic instability, political
developments, and currency fluctuations.
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.
<TABLE>
<CAPTION>
TOTAL RETURN FOR PERIODS ENDED 10/31/99
Class A Class B Class C Class M
(inception dates) (9/1/67) (4/27/92) (2/1/99) (3/1/95)
NAV POP NAV CDSC NAV CDSC NAV POP
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 year 41.04% 32.94% 40.00% 35.00% 39.93% 38.93% 40.34% 35.37%
- -------------------------------------------------------------------------------------------
5 years 127.57 114.38 119.06 117.06 119.09 119.09 121.73 114.05
Annual average 17.87 16.48 16.98 16.77 16.98 16.98 17.26 16.44
- -------------------------------------------------------------------------------------------
10 years 262.70 241.95 235.91 235.91 236.21 236.21 244.21 232.22
Annual average 13.75 13.08 12.88 12.88 12.89 12.89 13.16 12.76
- -------------------------------------------------------------------------------------------
Annual average
(life of fund) 11.48 11.28 10.44 10.44 10.65 10.65 10.72 10.06
- -------------------------------------------------------------------------------------------
</TABLE>
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 10/31/99
MSCI
All-Country World Consumer
Free Index* price index
- -------------------------------------------------------------------
1 year 26.02% 2.69%
- -------------------------------------------------------------------
5 years 106.70 12.51
Annual average 15.63 2.39
- -------------------------------------------------------------------
10 years 190.81 33.92
Annual average 11.27 2.96
- -------------------------------------------------------------------
Annual average
(life of fund) -- 5.14
- -------------------------------------------------------------------
Past performance is no assurance of future results. More recent returns
may be more or less than those shown. 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. For class C
shares, returns for periods prior to their inception are derived from
the historical performance of class A shares, adjusted to reflect both
the CDSC currently applicable to class C shares, which is 1% for the first
year and is eliminated thereafter, and the higher operating expenses
applicable to class C shares. All returns assume reinvestment of
distributions at NAV. 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.
*The index did not exist at the time of the fund's inception.
[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 10/31/89
MSCI All-Country
Fund's class A World Free Consumer price
Date shares at POP Index index
10/31/89 9,425 10,000 10,000
10/31/90 9,301 8,926 10,629
10/31/91 10,837 10,458 10,939
10/31/92 10,673 10,033 11,290
10/31/93 13,835 12,867 11,600
10/31/94 15,027 14,069 11,903
10/31/95 15,874 15,183 12,237
10/31/96 18,429 17,590 12,604
10/31/97 21,452 20,416 12,866
10/31/98 24,246 23,076 13,041
10/31/99 $34,195 $29,081 $13,392
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 or class C shares
would have been valued at $33,591 and $33,621, respectively, and no
contingent deferred sales charges would apply; a $10,000 investment in the
fund's class M shares would have been valued at $34,421 ($33,222 at public
offering price). See first page of performance section for performance
calculation method.
<TABLE>
<CAPTION>
PRICE AND DISTRIBUTION INFORMATION 12 MONTHS ENDED 10/31/99
Class A Class B Class C Class M
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Distributions (number) 1 1 0 1
- -----------------------------------------------------------------------------------
Income $0.048 $-- $-- $--
- -----------------------------------------------------------------------------------
Capital gains
Long-term 0.323 0.323 -- 0.323
- -----------------------------------------------------------------------------------
Short-term -- -- -- --
- -----------------------------------------------------------------------------------
Total $0.371 $0.323 -- $0.323
- -----------------------------------------------------------------------------------
Share value: NAV POP NAV NAV NAV POP
- -----------------------------------------------------------------------------------
10/31/98 $11.01 $11.68 $10.59 $-- $10.90 $11.30
- -----------------------------------------------------------------------------------
2/1/99* -- -- -- 12.97 -- --
- -----------------------------------------------------------------------------------
10/31/99 15.07 15.99 14.43 14.98 14.90 15.44
- -----------------------------------------------------------------------------------
*Inception date of class C shares.
</TABLE>
<TABLE>
<CAPTION>
TOTAL RETURN FOR PERIODS ENDED 9/30/99 (most recent calendar quarter)
Class A Class B Class C Class M
(inception dates) (9/1/67) (4/27/92) (2/1/99) (3/1/95)
NAV POP NAV CDSC NAV CDSC NAV POP
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 year 35.75% 27.97% 34.73% 29.73% 34.68% 33.68% 34.98% 30.23%
- -------------------------------------------------------------------------------------------
5 years 113.16 100.99 105.02 103.02 105.17 105.17 107.59 100.28
Annual average 16.34 14.98 15.44 15.22 15.46 15.46 15.73 14.90
- -------------------------------------------------------------------------------------------
10 years 219.37 201.00 195.38 195.38 195.99 195.99 203.00 192.40
Annual average 12.31 11.65 11.44 11.44 11.46 11.46 11.72 11.33
- -------------------------------------------------------------------------------------------
Life of fund
Annual average 11.22 11.02 10.18 10.18 10.39 10.39 10.46 10.34
- -------------------------------------------------------------------------------------------
Past performance is no assurance of future results. More recent returns may be more or less
than those shown. They do not take into account any adjustment for taxes payable on
reinvested distributions. 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.
</TABLE>
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 C shares are not subject to an initial sales charge and are subject
to a contingent deferred sales charge only if the shares are redeemed
during the first year.
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 or class C shares and assumes redemption at the
end of the period. Your fund's class B 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. The CDSC for class C shares is 1% for one year
after purchase.
Comparative benchmarks
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.
A guide to the financial statements
These sections of the report, preceded by the Report of independent
accountants, constitute the fund's financial statements.
The fund's portfolio lists all the fund's investments and their values as
of the last day of the reporting period. Holdings are organized by asset
type and industry sector, country, or state to show areas of concentration
and diversification.
Statement of assets and liabilities shows how the fund's net assets and
share price are determined. All investment and noninvestment assets are
added together. Any unpaid expenses and other liabilities are subtracted
from this total. The result is divided by the number of shares to
determine the net asset value per share, which is calculated separately
for each class of shares. (For funds with preferred shares, the amount
subtracted from total assets includes the net assets allocated to
remarketed preferred shares.)
Statement of operations shows the fund's net investment gain or loss for
the reporting period. This is determined by adding up all the fund's
earnings -- from dividends and interest income -- and subtracting its
operating expenses. This statement also lists any net gain or loss the
fund realized on the sales of its holdings and -- for holdings that remain
in the portfolio -- any change in unrealized gains or losses over the
period.
Statement of changes in net assets shows how the fund's net assets were
affected by distributions to shareholders and by changes in the number of
the fund's shares. It lists distributions and their sources (net
investment income or realized capital gains) over the current reporting
period and the most recent fiscal year-end. The distributions listed here
may not match the sources listed in the Statement of operations because
the distributions are determined on a tax basis and may be paid in a
different period from the one in which they were earned.
Financial highlights provide an overview of the fund's investment results,
per-share distributions, expense ratios, net investment income ratios and
portfolio turnover in one summary table, reflecting the five most recent
reporting periods. In a semiannual report, the highlight table also
includes the current reporting period. For open-end funds, a separate
table is provided for each share class.
Report of independent accountants
For the fiscal year ended October 31, 1999
The Board of Trustees and Shareholders
Putnam Global Growth Fund
We have audited the accompanying statement of assets and liabilities of
Putnam Global Growth Fund, including the fund's portfolio, as of October
31, 1999, and the related statement of operations, statement of changes in
net assets and financial highlights for the year or period then ended.
These financial statements and financial highlights are the responsibility
of the Fund's management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on our audit.
The statement of changes in net assets for the year ended October 31,
1998, and the financial highlights for each of the years in the four-year
period ended October 31, 1998 were audited by other auditors whose report
dated December 10, 1998 expressed an unqualified opinion on that financial
statement and those financial highlights.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform our audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of securities owned as of October 31, 1999 by correspondence
with the custodian and brokers. An audit also includes assessing the
accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Putnam Global Growth Fund as of October 31, 1999, the results of its
operations, changes in its net assets and financial highlights for the
year or period then ended, in conformity with generally accepted
accounting principles.
KPMG LLP
Boston, Massachusetts
December 7, 1999
<TABLE>
<CAPTION>
The fund's portfolio
October 31, 1999
COMMON STOCKS (97.2%) (a)
NUMBER OF SHARES VALUE
<S> <C> <C>
Canada (0.9%)
- --------------------------------------------------------------------------------------------------------------------------
1,004,907 Nortel Networks Corp. (NON) $ 61,867,210
Finland (2.9%)
- --------------------------------------------------------------------------------------------------------------------------
1,690,734 Oy Nokia AB Class A 193,903,080
France (7.3%)
- --------------------------------------------------------------------------------------------------------------------------
390,126 Axa S.A. 55,140,955
424,759 Carrefour Supermarche S.A. 78,794,494
230,457 Castorama Dubois 69,178,398
65,770 L'OREAL 43,984,543
84,654 LVMH 25,607,666
1,346,470 Sanofi-Synthelabo S.A. (NON) 59,534,575
704,867 STMicroelectronics 62,034,640
200,191 Television Francaise I 62,878,392
203,756 Total S.A. Class B 27,596,509
--------------
484,750,172
Germany (0.9%)
- --------------------------------------------------------------------------------------------------------------------------
395,055 Mannesmann AG 62,250,002
Hong Kong (0.7%)
- --------------------------------------------------------------------------------------------------------------------------
13,271,000 China Telecom Ltd. (NON) 45,446,875
India (--%)
- --------------------------------------------------------------------------------------------------------------------------
250 Larsen & Toubro Ltd. GDR (NON) 2,297
50 State Bank of India Ltd. (NON) 286
--------------
2,583
Ireland (0.3%)
- --------------------------------------------------------------------------------------------------------------------------
1,163,537 CRH PLC (NON) 22,013,306
Italy (2.2%)
- --------------------------------------------------------------------------------------------------------------------------
3,772,580 Alleanza Assicurazioni SpA 38,530,340
782,900 Banca Popolare di Brescia SpA 33,213,358
4,312,700 Mediaset SpA 43,137,609
3,848,200 Mediolanum SpA 31,352,902
--------------
146,234,209
Japan (15.2%)
- --------------------------------------------------------------------------------------------------------------------------
254,700 Aiful Corp. 39,621,087
159,200 Fujitsu Support and Services Inc. 144A 44,791,251
106,200 Hikari Tsushin, Inc. 85,559,647
451,200 Itoen, Ltd. 46,359,140
520 KAO Corp. (NON) 15,879
119,400 Keyence Corp. 32,045,618
413,000 Matsushita Communication Industrial Co., Ltd. 69,481,096
561,000 Murata Manufacturing Co., Ltd. 72,185,533
11,544,000 Nikko Securities Co., Ltd. (NON) 108,633,782
6,146 NTT Mobile Communications 163,476,312
199,000 Rohm Co., Ltd. 44,714,815
171,200 Ryohin Keikaku Co., Ltd. 32,977,460
397,000 Seven-Eleven Japan Co., Ltd. 36,406,287
1,990,000 Sharp Corp. 31,720,766
266,000 Shimamura Co., Ltd. 38,313,816
38,500 Shohkoh Fund & Co., Ltd. 23,586,522
132,700 Softbank Corp. 55,174,871
796,000 Takeda Chemical Industries 45,784,913
530,600 Tokyo Electron Ltd. 44,123,265
--------------
1,014,972,060
Netherlands (2.0%)
- --------------------------------------------------------------------------------------------------------------------------
583,900 Aegon N.V. (NON) 54,004,035
688,940 ASM Lithography Holding N.V. (NON) 48,724,179
610,400 Randstad Holding N.V. 31,010,029
--------------
133,738,243
Portugal (0.6%)
- --------------------------------------------------------------------------------------------------------------------------
1,366,800 Banco Comercial Portugues, S.A. 38,579,461
Sweden (1.1%)
- --------------------------------------------------------------------------------------------------------------------------
1,301,492 Hennes & Mauritz AB Class B 34,685,499
1,738,300 Skandia Forsakrings AB 38,799,920
--------------
73,485,419
Switzerland (0.7%)
- --------------------------------------------------------------------------------------------------------------------------
14,243 Julius Baer Holdings AG 42,929,368
United Kingdom (13.1%)
- --------------------------------------------------------------------------------------------------------------------------
60,201 British Telecommunications PLC ADR 1,092,072
2,720,300 Capita Group PLC 35,998,804
4,179,700 Colt Telecom Group PLC 124,983,651
2,176,200 Dixons Group PLC 38,564,967
1,859,700 Energis PLC (NON) 59,339,492
904,300 Energis PLC ADR 28,854,494
2,788,400 Logica PLC 42,652,731
5,247,096 Misys PLC 43,818,562
4,471,900 Next PLC 48,188,141
3,556,300 Orange PLC ADR (NON) 88,686,878
2,347,300 Prudential Corp. PLC 36,831,544
3,733,100 SEMA Group PLC 48,787,893
3,967,600 Smithkline Beecham PLC ADR 51,135,133
8,341,800 Telewest Communications PLC (NON) 35,688,304
758,345 Telewest Communications PLC Rights
(expiration date 11/18/99) (NON) 685,654
38,748,140 Vodafone Group PLC 180,265,531
505,200 WPP Group PLC 5,486,472
--------------
871,060,323
United States (49.3%)
- --------------------------------------------------------------------------------------------------------------------------
517,500 America Online, Inc. (NON) 67,113,281
690,000 American Express Co. 106,260,000
826,025 American International Group, Inc. 85,028,948
916,100 Amgen, Inc. 73,058,975
756,400 Applied Materials, Inc. (NON) 67,934,175
2,477,284 AT&T Corp. 98,317,209
311,200 Biogen, Inc. (NON) 23,067,700
2,163,000 Bristol-Myers Squibb Co. 166,145,438
1,685,250 Cisco Systems, Inc. (NON) 124,708,500
2,481,450 Citigroup, Inc. 134,308,481
567,600 Clear Channel Communications, Inc. (NON) 45,620,850
690,000 Comcast Corp. Class A 29,066,250
1,224,458 CVS Corp. 53,187,394
1,486,200 Dell Computer Corp. 59,633,775
530,800 EMC Corp. (NON) 38,748,400
875,800 Enron Corp. 34,977,263
1,078,300 Estee Lauder Cos. Class A 50,275,738
505,700 Fannie Mae 35,778,275
331,700 Fifth Third Bancorp 24,483,606
1,509,020 Firstar Corp. 44,327,463
437,700 Genentech, Inc. 63,794,775
1,406,600 General Electric Co. 190,682,213
867,200 Home Depot, Inc. (The) 65,473,600
1,791,400 Intel Corp. 138,721,538
1,114,700 Johnson & Johnson 116,764,825
336,800 Juniper Networks, Inc. (NON) 92,830,500
1,273,900 Lucent Technologies, Inc. 81,848,075
2,561,100 Microsoft Corp. 237,061,819
411,200 Omnicom Group, Inc. 36,185,600
312,300 QUALCOMM, Inc. 69,564,825
2,189,500 Schering-Plough Corp. 108,380,250
2,127,700 Schwab (Charles) Corp. 82,847,319
159,200 SMC Corp. 26,890,038
504,000 Solectron Corp. 37,926,000
677,100 Sprint PCS (NON) 56,156,981
875,400 Sun Microsystems, Inc. 92,628,263
750,100 Texas Instruments, Inc. 67,321,475
1,566,200 TJX Cos., Inc. (The) 42,483,175
995,200 Viacom, Inc. Class B 44,535,200
2,081,800 Wal-Mart Stores, Inc. 118,012,038
583,900 Warner-Lambert Co. 46,602,631
623,400 Yahoo!, Inc. 111,627,572
--------------
3,290,380,433
--------------
Total Common Stocks (cost $4,683,918,934) $6,481,612,744
PREFERRED STOCKS (0.4%) (a) (cost $26,340,032)
NUMBER OF SHARES VALUE
- --------------------------------------------------------------------------------------------------------------------------
141,430 Marschollek, Lautenschlaeger und Partner AG DEM $3.05 pfd. $ 29,887,978
SHORT-TERM INVESTMENTS (2.0%) (a) (cost $130,953,000)
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------
$130,953,000 Interest in $545,691,000 joint repurchase agreement dated
October 29, 1999 with Morgan (J.P.) & Co., Inc. due
November 1, 1999 with respect to various
U.S. Treasury obligations -- maturity value of
$131,009,746 for an effective yield of 5.20% $ 130,953,000
- --------------------------------------------------------------------------------------------------------------------------
Total Investments (cost $4,841,211,966) (b) $6,642,453,722
- --------------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $6,668,559,715.
(b) The aggregate identified cost on a tax basis is $4,889,879,585, resulting in gross unrealized appreciation and
depreciation of $1,809,093,731 and $56,519,594, respectively, or net unrealized appreciation of $1,752,574,137.
(NON) Non-income-producing security.
(POR) Banca Popolare di Brescia SpA is involved in a joint venture with Putnam Investments.
144A after the name of a security represents those exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from registration, normally to qualified
institutional buyers.
ADR or GDR after the name of a foreign holding stands for American Depositary Receipts and Global Depositary
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, 1999 (as a percentage of
net assets):
Telecommunications 20.9%
Insurance and finance 15.9
Computer services and software 13.0
Electronics and electrical equipment 12.6
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
October 31, 1999
<S> <C>
Assets
- -----------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $4,841,211,966) (Note 1) $6,642,453,722
- -----------------------------------------------------------------------------------------------
Cash 6,892,200
- -----------------------------------------------------------------------------------------------
Foreign cash 789,022
- -----------------------------------------------------------------------------------------------
Dividends and interest receivable 3,233,211
- -----------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 10,597,468
- -----------------------------------------------------------------------------------------------
Receivable for securities sold 123,097,961
- -----------------------------------------------------------------------------------------------
Total assets 6,787,063,584
Liabilities
- -----------------------------------------------------------------------------------------------
Payable for securities purchased 96,946,451
- -----------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 8,049,604
- -----------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 9,676,425
- -----------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 911,646
- -----------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 22,599
- -----------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 3,100
- -----------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 2,597,343
- -----------------------------------------------------------------------------------------------
Other accrued expenses 296,701
- -----------------------------------------------------------------------------------------------
Total liabilities 118,503,869
- -----------------------------------------------------------------------------------------------
Net assets $6,668,559,715
Represented by
- -----------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $4,102,145,695
- -----------------------------------------------------------------------------------------------
Distributions in excess of net investment income (Note 1) (34,223,643)
- -----------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and
foreign currency transactions (Note 1) 800,686,030
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and
assets and liabilities in foreign currencies 1,799,951,633
- -----------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $6,668,559,715
Computation of net asset value and offering price
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($4,254,992,830 divided by 282,302,546 shares) $15.07
- -----------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $15.07)* $15.99
- -----------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($2,072,050,222 divided by 143,623,578 shares)** $14.43
- -----------------------------------------------------------------------------------------------
Net asset value and offering price per class C share
($19,269,138 divided by 1,286,049 shares)** $14.98
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($76,536,756 divided by 5,135,693 shares) $14.90
- -----------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $14.90)* $15.44
- -----------------------------------------------------------------------------------------------
Net asset value, offering price and redemption price per class Y share
($245,710,769 divided by 16,033,588 shares) $15.32
- -----------------------------------------------------------------------------------------------
* 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, 1999
<S> <C>
Investment income:
- -----------------------------------------------------------------------------------------------
Dividends (net of foreign tax of $2,101,330) $ 35,162,161
- -----------------------------------------------------------------------------------------------
Interest 3,395,161
- -----------------------------------------------------------------------------------------------
Total investment income 38,557,322
Expenses:
- -----------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 35,860,456
- -----------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 10,870,722
- -----------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 61,186
- -----------------------------------------------------------------------------------------------
Administrative services (Note 2) 33,252
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 8,813,173
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 19,620,280
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class C (Note 2) 69,328
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 481,800
- -----------------------------------------------------------------------------------------------
Reports to shareholders 175,319
- -----------------------------------------------------------------------------------------------
Registration fees 41,323
- -----------------------------------------------------------------------------------------------
Auditing 27,867
- -----------------------------------------------------------------------------------------------
Legal 31,491
- -----------------------------------------------------------------------------------------------
Postage 627,813
- -----------------------------------------------------------------------------------------------
Other 542,215
- -----------------------------------------------------------------------------------------------
Total expenses 77,256,225
- -----------------------------------------------------------------------------------------------
Expense reduction (Note 2) (1,501,234)
- -----------------------------------------------------------------------------------------------
Net expenses 75,754,991
- -----------------------------------------------------------------------------------------------
Net investment loss (37,197,669)
- -----------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 830,666,620
- -----------------------------------------------------------------------------------------------
Net realized gain on futures contracts (Note 1) 1,280,686
- -----------------------------------------------------------------------------------------------
Net realized gain on foreign currency transactions (Note 1) 514,757
- -----------------------------------------------------------------------------------------------
Net unrealized depreciation of assets and liabilities in
foreign currencies during the year (1,194,334)
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments during the year 1,128,977,624
- -----------------------------------------------------------------------------------------------
Net gain on investments 1,960,245,353
- -----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $1,923,047,684
- -----------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
Year ended October 31
-------------------------------
1999 1998
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets
- ---------------------------------------------------------------------------------------------------------------
Operations:
- ---------------------------------------------------------------------------------------------------------------
Net investment loss $ (37,197,669) $ (13,903,582)
- ---------------------------------------------------------------------------------------------------------------
Net realized gain on investments and
foreign currency transactions 832,462,063 154,948,642
- ---------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments
and assets and liabilities in foreign currencies 1,127,783,290 400,487,961
- ---------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 1,923,047,684 541,533,021
- ---------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ---------------------------------------------------------------------------------------------------------------
From net investment income
Class A (12,641,971) (55,521,899)
- ---------------------------------------------------------------------------------------------------------------
Class B -- (24,067,329)
- ---------------------------------------------------------------------------------------------------------------
Class M -- (740,570)
- ---------------------------------------------------------------------------------------------------------------
Class Y (427,765) (1,101,259)
- ---------------------------------------------------------------------------------------------------------------
From net realized gain on investments
Class A (85,069,926) (427,627,489)
- ---------------------------------------------------------------------------------------------------------------
Class B (52,122,170) (279,693,689)
- ---------------------------------------------------------------------------------------------------------------
Class M (1,534,321) (7,129,800)
- ---------------------------------------------------------------------------------------------------------------
Class Y (1,818,004) (7,589,027)
- ---------------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 170,921,093 606,332,642
- ---------------------------------------------------------------------------------------------------------------
Total increase in net assets 1,940,354,620 344,394,601
Net assets
- ---------------------------------------------------------------------------------------------------------------
Beginning of year 4,728,205,095 4,383,810,494
- ---------------------------------------------------------------------------------------------------------------
End of year (including distributions in excess of
net investment income and undistributed
net investment income of $34,223,643 and
$12,854,506, respectively) $6,668,559,715 $4,728,205,095
- ---------------------------------------------------------------------------------------------------------------
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
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $11.01 $12.00 $11.10 $10.13 $9.92
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.05)(b) --(b) .04(b) .09(b) .09
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 4.48 1.23 1.68 1.47 .43
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 4.43 1.23 1.72 1.56 .52
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.05) (.26) (.27) (.18) (.01)
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.32) (1.96) (.55) (.41) (.30)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.37) (2.22) (.82) (.59) (.31)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $15.07 $11.01 $12.00 $11.10 $10.13
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 41.04 13.02 16.40 16.10 5.64
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $4,254,993 $2,882,999 $2,628,933 $2,186,426 $1,689,656
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) 1.10 1.18 1.24 1.27 1.28
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average net assets (%) (.39) (.01) .31 .84 1.05
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 165.64 162.35 154.98 72.88 63.31
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total 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) Includes amounts paid through brokerage service and expense offset arrangements. (Note 2)
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS B
- ------------------------------------------------------------------------------------------------------------------------------------
Per-share
operating performance Year ended October 31
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $10.59 $11.62 $10.78 $9.86 $9.74
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.14)(b) (.08)(b) (.05)(b) .01(b) .03
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 4.30 1.18 1.64 1.43 .40
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 4.16 1.10 1.59 1.44 .43
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income -- (.17) (.20) (.11) (.01)
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.32) (1.96) (.55) (.41) (.30)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.32) (2.13) (.75) (.52) (.31)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $14.43 $10.59 $11.62 $10.78 $9.86
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 40.00 12.13 15.54 15.25 4.80
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $2,072,050 $1,732,139 $1,664,215 $1,327,246 $975,794
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) 1.85 1.93 1.99 2.02 2.04
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average net assets (%) (1.14) (.75) (.45) .09 .29
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 165.64 162.35 154.98 72.88 63.31
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total 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) Includes amounts paid through brokerage service and expense offset arrangements. (Note 2)
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS C
- ------------------------------------------------------------------------------------------------------------------------------------
For the period
Per-share February 1, 1999+
operating performance to October 31
- ------------------------------------------------------------------------------------------------------------------------------------
1999
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Net asset value,
beginning of period $12.97
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (b) (.10)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 2.11
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 2.01
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $14.98
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 15.50*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $19,269
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) 1.38*
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss loss
to average net assets (%) (.83)*
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 165.64
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total 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) Includes amounts paid through brokerage service and expense offset arrangements. (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
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $10.90 $11.90 $11.05 $10.09 $8.86
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.11)(b) (.06)(b) (.02)(b) .03(b) .01
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 4.43 1.22 1.66 1.47 1.22
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 4.32 1.16 1.64 1.50 1.23
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income -- (.20) (.24) (.13) --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.32) (1.96) (.55) (.41) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.32) (2.16) (.79) (.54) --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $14.90 $10.90 $11.90 $11.05 $10.09
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 40.34 12.48 15.72 15.54 13.88*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $76,537 $50,700 $43,662 $24,179 $5,853
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) 1.60 1.68 1.74 1.80 1.23*
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average net assets (%) (.89) (.50) (.21) .32 .17*
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 165.64 162.35 154.98 72.88 63.31
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total 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) Includes amounts paid through brokerage service and expense offset arrangements. (Note 2)
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS Y
- ------------------------------------------------------------------------------------------------------------------------------------
Per-share
operating performance Year ended October 31
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $11.20 $12.17 $11.24 $10.25 $10.00
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.02)(b) .03(b) .08(b) .12(b) .09
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 4.54 1.25 1.70 1.48 .47
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 4.52 1.28 1.78 1.60 .56
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.08) (.29) (.30) (.20) (.01)
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.32) (1.96) (.55) (.41) (.30)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.40) (2.25) (.85) (.61) (.31)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $15.32 $11.20 $12.17 $11.24 $10.25
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 41.19 13.35 16.75 16.39 6.00
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $245,711 $62,367 $47,000 $66,708 $42,582
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .85 .93 .99 1.02 1.06
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average net assets (%) (.13) .24 .69 1.09 1.20
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 165.64 162.35 154.98 72.88 63.31
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total 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) Includes amounts paid through brokerage service and expense offset arrangements. (Note 2)
</TABLE>
Notes to financial statements
October 31, 1999
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 C, class M and class Y shares.
Effective February 1, 1999, the fund began offering class C 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 C
shares are subject to the same fees and expenses as class B shares, except
that class C shares have a one-year 1.00% contingent deferred sales charge
and do not convert to class A shares. 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, class C and class M shares, but
do not bear a distribution fee. Class Y shares are sold to defined
contribution plans that invest at least $150 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
of the financial statements and the reported amounts of increases and
decreases in net assets from operations during the reporting period.
Actual results could differ from those estimates.
A) Security valuation Investments for which market quotations are readily
available are stated at market value, which is determined using the last
reported sale price, or, if no sales are reported -- as in the case of
some securities traded over-the-counter -- the last reported bid price.
Securities quoted in foreign currencies are translated into U.S. dollars
at the current exchange rate. Short-term investments having remaining
maturities of 60 days or less are stated at amortized cost which
approximates market, and other investments are stated at fair value
following procedures approved by the Trustees.
B) Joint trading account Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the fund may transfer uninvested cash
balances into a joint trading account along with the cash of other
registered investment companies and certain other accounts managed by
Putnam Investment Management Inc. 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). Gains or losses on securities sold are determined on
the identified cost basis. 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.
Investments in foreign securities involve certain risks, including those
related to economic instability, unfavorable political developments, and
currency fluctuations, not present with domestic investments.
F) Forward currency contracts The fund may engage in forward currency
contracts, which are agreements between two parties to buy and sell
currencies at a set price on a future date, to protect against a decline
in value relative to the U.S. dollar of the currencies in which its
portfolio securities are denominated or quoted (or an increase in the
value of a currency in which securities a fund intends to buy are
denominated, when a fund holds cash reserves and short-term investments).
The U.S. dollar value of forward currency contracts is determined using
current forward currency exchange rates supplied by a quotation service.
The market value of the contract will fluctuate with changes in currency
exchange rates. The contract is "marked to market" daily and the change in
market value is recorded as an unrealized gain or loss. When the contract
is closed, the fund records a realized gain or loss equal to the
difference between the value of the contract at the time it was opened and
the value at the time it was closed. The fund could be exposed to risk if
the value of the currency changes unfavorably, if the counterparties to
the contracts are unable to meet the terms of their contracts or if the
fund is unable to enter into a closing position.
G) Line of credit The fund has entered into a committed line of credit
with certain banks. This line of credit agreement includes restrictions
that the fund maintain an asset coverage ratio of at least 300% and
borrowings must not exceed prospectus limitations. For the year ended
October 31, 1999, the fund had no borrowings against the line of credit.
H) Federal taxes It is the policy of the fund to distribute all of its
taxable income within the prescribed time and otherwise comply with the
provisions of the Internal Revenue Code applicable to regulated investment
companies. It is also the intention of the fund to distribute an amount
sufficient to avoid imposition of any excise tax under Section 4982 of the
Internal Revenue Code of 1986, as amended. Therefore, no provision has
been made for federal taxes on income, capital gains or unrealized
appreciation on securities held nor for excise tax on income and capital
gains.
I) Distributions to shareholders Distributions to shareholders from net
investment income are recorded by the fund on the ex-dividend date.
Capital gain distributions, if any, are recorded on the ex-dividend date
and paid at least annually. The amount and character of income and gains
to be distributed are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles. These
differences include temporary and permanent differences of losses on wash
sale transactions, foreign currency gains and losses, foreign taxes and
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, 1999, the fund reclassified $3,189,256 to decrease distributions in
excess of net investment income and $609,240 to increase paid-in-capital,
with an decrease to accumulated net realized gains of $3,798,496. 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.
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, 1999, fund expenses were reduced by
$1,501,234 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 $3,650
has been allocated to the fund, and an additional fee for each Trustee's
meeting attended. 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
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 a 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, class C 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%,
1.00% and 1.00% of the average net assets attributable to class A, class
B, class C and class M shares, respectively. The Trustees have approved
payment by the fund at an annual rate of 0.25%, 1.00%, 1.00% and 0.75% of
the average net assets attributable to class A, class B, class C and class
M shares respectively.
For the year ended October 31, 1999, Putnam Mutual Funds Corp., acting as
underwriter received net commissions of $639,667 and $21,714 from the sale
of class A and class M shares, respectively and received $2,029,627 and
$6,569 in contingent deferred sales charges from redemptions of class B
and class C shares. A deferred sales charge of up to 1% is assessed on
certain redemptions of class A shares. For the year ended October 31,
1999, Putnam Mutual Funds Corp., acting as underwriter received $9,021 on
class A redemptions.
Note 3
Purchases and sales of securities
During the year ended October 31, 1999, cost of purchases and proceeds
from sales of investment securities other than short-term investments
aggregated $9,316,076,020 and $9,298,959,005, 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, 1999, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Year ended October 31, 1999
- -----------------------------------------------------------------------------
Class A Shares Amount
- -----------------------------------------------------------------------------
Shares sold 93,924,759 $ 1,228,849,004
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 7,629,169 93,152,893
- -----------------------------------------------------------------------------
101,553,928 1,322,001,897
Shares
repurchased (81,005,561) (1,056,235,434)
- -----------------------------------------------------------------------------
Net increase 20,548,367 $ 265,766,463
- -----------------------------------------------------------------------------
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, 1999
- -----------------------------------------------------------------------------
Class B Shares Amount
- -----------------------------------------------------------------------------
Shares sold 32,374,239 $ 400,904,692
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 4,156,972 48,885,999
- -----------------------------------------------------------------------------
36,531,211 449,790,691
Shares
repurchased (56,458,220) (706,424,289)
- -----------------------------------------------------------------------------
Net decrease (19,927,009) $(256,633,598)
- -----------------------------------------------------------------------------
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
- -----------------------------------------------------------------------------
For the period February 1, 1999
(commencement of operations) to
October 31, 1999
- -----------------------------------------------------------------------------
Class C Shares Amount
- -----------------------------------------------------------------------------
Shares sold 1,355,459 $17,881,229
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- -----------------------------------------------------------------------------
1,355,459 17,881,229
Shares
repurchased (69,410) (924,256)
- -----------------------------------------------------------------------------
Net increase 1,286,049 $16,956,973
- -----------------------------------------------------------------------------
Year ended October 31, 1999
- -----------------------------------------------------------------------------
Class M Shares Amount
- -----------------------------------------------------------------------------
Shares sold 3,899,037 $49,882,997
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 121,972 1,478,302
- -----------------------------------------------------------------------------
4,021,009 51,361,299
Shares
repurchased (3,535,004) (45,298,074)
- -----------------------------------------------------------------------------
Net increase 486,005 $ 6,063,225
- -----------------------------------------------------------------------------
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, 1999
- -----------------------------------------------------------------------------
Class Y Shares Amount
- -----------------------------------------------------------------------------
Shares sold 13,118,267 $174,297,460
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 181,284 2,245,769
- -----------------------------------------------------------------------------
13,299,551 176,543,229
Shares
repurchased (2,836,139) (37,775,199)
- -----------------------------------------------------------------------------
Net increase 10,463,412 $138,768,030
- -----------------------------------------------------------------------------
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
- -----------------------------------------------------------------------------
Note 5
Change in independent accountants
(Unaudited)
Based on the recommendation of the Audit Committee of the fund, the Board
of Trustees has determined not to retain PricewaterhouseCoopers LLP as
this fund's independent accountants and voted to appoint KPMG LLP for the
fund's fiscal year ended October 31, 1999. During the two previous fiscal
years, PricewaterhouseCoopers LLP audit reports contained no adverse
opinion or disclaimer of opinion; nor were its reports qualified or
modified as to uncertainty, audit scope, or accounting principle. Further,
in connection with its audits for the two previous fiscal years and
through July 14, 1999, there were no disagreements between the fund and
PricewaterhouseCoopers LLP on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure,
which if not resolved to the satisfaction of PricewaterhouseCoopers LLP
would have caused it to make reference to the disagreements in its report
on the financial statements for such years.
Federal tax information
(Unaudited)
Pursuant to Section 852 of the Internal Revenue Code, as amended, the Fund
hereby designates $476,420,562 as capital gain, for its taxable year ended
October 31, 1999.
The fund has designated 4.90% of the distributions from net investment
income as qualifying for the dividends received deduction for
corporations.
The Form 1099 you receive in January 2000 will show the tax status of all
distributions paid to your account in calendar 1999.
The Putnam family of funds
The following is a complete list of Putnam's open-end mutual funds. 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.
GROWTH FUNDS
Asia Pacific Growth Fund
Capital Appreciation Fund [DBL. DAGGER]
Capital Opportunities Fund
Europe Growth Fund
Global Equity 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
Tax Smart Equity Fund
Vista Fund
Voyager Fund
Voyager Fund II
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
Small Cap Value Fund
Utilities Growth and Income Fund
INCOME FUNDS
American Government Income Fund
Diversified Income Trust
Global Governmental Income Trust
High Yield Advantage Fund [DBL. DAGGER]
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
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
ASSET ALLOCATION 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
[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 not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency.
Although the funds seek to preserve your investment at $1.00 per share,
it is possible to lose money by investing in the fund.
Check your account balances and current performance at www.putnaminv.com.
Fund information
WEB SITE
www.putnaminv.com
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
KPMG 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
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
Kelly A. Morgan
Vice President and Fund Manager
Lisa Svensson
Vice President and Fund Manager
Manuel Weiss Herrero
Vice President and Fund Manager
David Santos
Vice President and Fund Manager
Richard A. Monaghan
Vice President
John R. Verani
Vice President
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' Web site: 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
- ---------------------
BULK RATE
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
- ---------------------
For account balances, economic forecasts, and the latest on Putnam funds, visit
www.putnaminv.com
AN006 56794 005/882/907/513 12/99
PUTNAM INVESTMENTS SCALE LOGO OMITTED
- -----------------------------------------------------------------------------
Putnam Global Growth Fund
Supplement to Annual Report dated 10/31/99
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 10/3199 16.24%
One year ended 10/31/99 41.19
Life of class (since 6/15/94) 143.65
Annual average 18.00
- -----------------------------------------------------------------------------
Share value: NAV
10/31/98 $11.20
10/31/99 15.32
- -----------------------------------------------------------------------------
Distributions: No. Income Capital gains Total
1 $.076 $.323 $.395
- -----------------------------------------------------------------------------
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.
