Putnam Europe Growth Fund
SEMIANNUAL REPORT
December 31, 1994
[LOGO]
Boston * London * Tokyo
[PAGE]
PERFORMANCE HIGHLIGHTS
For the 12 months ended December 31, 1994, the fund's class A
shares 6.44% total return at net asset value placed it ahead of
81% of all European region funds tracked by Lipper over the same
period. For three years, the fund's cumulative total return
surpassed 87% of similar funds, placing it third out of the 23
funds tracked by Lipper.*
Performance should always be considered in light of a fund's
investment strategy. Putnam Europe Growth Fund is designed for
investors seeking capital appreciation by investing its assets
primarily in common stocks and other securities of European
companies.
SEMIANNUAL RESULTS AT A GLANCE
<TABLE><CAPTION>
<S> <C> <C> <C> <C> <C> <C>
CLASS A CLASS B CLASS M
TOTAL RETURN NAV POP NAV CDSC NAV POP
- ----------------------------------------------------------------
(change in value
during period plus
reinvested
distributions)
6 months ended
12/31/94 7.17% 1.01% 6.84% 1.84% -- --
- ----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SHARE VALUE NAV POP NAV NAV POP
- ----------------------------------------------------------------
6/30/94 $11.64 $12.35 $11.62 -- --
12/1/94 $12.35 $12.80
12/31/94 12.31 13.06 12.25 12.31 12.76
- ----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CAPITAL GAINS
DISTRIBUTIONS NO. INCOME LONG- SHORT-
TERM TERM TOTAL
- ----------------------------------------------------------------
Class A 1 -- $0.046 $0.116 $0.162
Class B 1 -- 0.046 0.116 0.162
Class M 1 -- 0.046 0.116 0.162
- ----------------------------------------------------------------
<FN>
Performance data represent past results and will differ for
each share class. For performance over longer periods, see page
8. POP assumes 5.75% maximum sales charge for class A shares
and 3.50% for class M shares. Performance for class M shares,
which became effective 12/1/94, is not shown because of the
brevity of the reporting period. CDSC for class B shares
assumes 5% maximum contingent deferred sales charge.
* Lipper Analytical Services is an industry research firm whose
rankings vary over time and do not include the effects of sales
charges. For periods ended 12/31/94, the fund's class A shares
ranked as follows: 6 out of 31 European region funds and 3 out
of 23 European region funds for 1-year and 3-year performance,
respectively. Past performance is not indicative of future
results. Class B shares, which were introduced on 2/1/94, were
not ranked by Lipper for the period ended 12/31/94.
</TABLE>
<PAGE>
FROM THE CHAIRMAN
[PHOTO]
(c) Karsh, Ottawa
DEAR SHAREHOLDER:
THE YEAR JUST ENDED WAS NOT AN EASY ONE FOR U.S. INVESTORS IN
EUROPEAN EQUITIES. FOR MOST OF 1994, THE WIDESPREAD WEAKNESS IN
THE BOND MARKETS DAMPENED EQUITY PERFORMANCE THROUGHOUT BOTH THE
CONTINENT AND THE BRITISH ISLES.
IN THIS ERRATIC ENVIRONMENT, WE THINK YOU'LL APPRECIATE THE
RELATIVELY CAUTIOUS STRATEGY OF PUTNAM EUROPE GROWTH FUND'S
MANAGER, JUSTIN SCOTT. JUSTIN HAS GENERALLY BEEN INVESTING IN THE
MORE MATURE ECONOMIES OF WESTERN EUROPE. INDEED, THE UNITED
KINGDOM, FRANCE, AND THE NETHERLANDS HAVE SEEN CORPORATE EARNINGS
GROW OVER THE PAST FEW MONTHS, A POSITIVE DEVELOPMENT HE EXPECTS
MAY CONTINUE IN THE COMING YEAR.
IN THE REPORT THAT FOLLOWS, JUSTIN REVIEWS THE SEMIANNUAL PERIOD
JUST ENDED AND DISCUSSES HIS INVESTMENT STRATEGY FOR THE
REMAINING MONTHS OF FISCAL 1995.
RESPECTFULLY YOURS,
[SIGNATURE]
GEORGE PUTNAM
CHAIRMAN OF THE TRUSTEES
FEBRUARY 15, 1995
<PAGE>
REPORT FROM THE FUND MANAGER
JUSTIN SCOTT
Despite the dampening effects of weak European bonds on European
equity markets, Putnam Europe Growth Fund delivered superior
results during the first half of fiscal 1995. The fund's class A
shares and class B shares returned 7.17% and 6.84%, respectively,
at net asset value, surpassing two Morgan Stanley Capital
International indexes over the period: the Europe 14 Index, at
5.24%, and the broader Europe, Australia, and Far East (EAFE)
Index, at -0.92%. The six months ended December 31, 1994, marked
yet another period of consistently strong relative performance,
which dates back to the fund's inception in September 1990.
MARKET OVERVIEW: STRONG EARNINGS OUTLOOK OUTWEIGHED BY BOND-
MARKET DIFFICULTIES
Calendar 1994 had the potential of being a terrific year for
European investors. After a prolonged recession, clear signs of
economic recovery appeared by the middle of the year. Forecasts
of improving corporate profits in 1994 and 1995 were becoming
increasingly prevalent as the rewards of dramatic restructuring
and cost-cutting measures coincided with the region's developing
economic expansion. In addition, high levels of unemployment
continued to be the norm throughout Europe. Consequently, at the
beginning of calendar 1994, European markets appeared poised for
a "best-of-all-possible-worlds" scenario: recovering economies,
rising corporate earnings, and prospects for low inflation due to
tight monetary conditions and high unemployment.
Despite such a favorable outlook, most European equity markets
declined in local currency terms. European bond markets, weakened
by both the spillover effects of the flagging U.S. bond market
and the heavy liquidations by various leveraged investors, were
primarily to blame. (Europe's bond markets declined an average of
- -3.42% in local currency terms over the 12 months ended December
31, 1994.) Commentators continue to debate the reasons for 1994's
international bond-market travails. Nonetheless, it was extremely
difficult for equity markets to make progress in the face of
declining fixed-income markets.
In the European equity markets, calendar 1994 was characterized
by shifting leadership between cyclical and growth stocks. The
fund's mix of undervalued growth and cyclical stocks did well in
these changing conditions.
STOCK SELECTION: PAYING A LITTLE LESS TO EARN A LITTLE MORE
The fund's outperformance relative to the above indexes is
attributable to stock selection rather than country selection.
Our approach to stock selection can be summarized as a process of
comparing price with payback. When assessing any investment
opportunity we always ask two questions: what price are we being
asked to pay for corporate assets and what is the long-term
payback likely to be from owning these assets? In effect, we try
to pay a little less and earn a little more and do this
consistently over a long period of time.
The long-term return to a shareholder in any corporation is a
combination of the change in value of the corporation's assets
DIVERSIFICATION BY COUNTRY*
<TABLE><CAPTION>
<S> <C>
AUSTRIA 3.5%
- ----------------------------
BELGIUM 2.4%
- ----------------------------
DENMARK 4.6%
- ----------------------------
FINLAND 0.9%
- ----------------------------
FRANCE 16.6%
- ----------------------------
GERMANY 7.3%
- ----------------------------
IRELAND 4.8%
- ----------------------------
ITALY 1.0%
- ----------------------------
NETHERLANDS 14.0%
- ----------------------------
NORWAY 1.2%
- ----------------------------
PORTUGAL 1.1%
- ----------------------------
SPAIN 5.3%
- ----------------------------
SWEDEN 4.6%
- ----------------------------
SWITZERLAND 8.2%
- ----------------------------
UNITED KINGDOM 21.4%
<FN>
* Based on net assets on 12/31/94. Holdings will vary over time.
</TABLE>
<PAGE>
- -- created by genuinely retained earnings -- and the distributed
income (the dividend). The greater the corporate payback, the
greater the long-term value of the corporation. We endeavor to
buy companies whose stock is selling for significantly less than
our determination of the company's long-term value.
This method of comparing price and payback applies equally to
growth companies, cyclical companies, and even companies that are
downsizing. We will invest in any type of company provided the
potential payback more than justifies its stock price. Our
approach will steer us toward growth stocks when, in our opinion,
they offer the best value and likewise toward cyclical stocks
when we believe they offer the best value. Moreover, this
approach keeps us from merely following the latest market fad.
U.S. DOLLAR MAY STRENGTHEN AGAINST EUROPEAN CURRENCIES
The U.S. dollar has been weak against most major European
currencies for the past year. However, we believe it may be
poised to recover over the next six months. If this occurs, local
currency returns in Europe could be eroded by a stronger dollar.
In order to minimize this risk, we have implemented dollar hedges
against 25% of the fund's European investments. This includes
investments in countries such as France, the Netherlands, and
Switzerland, where we anticipate the greatest weakness in local
currencies relative to the dollar.
Should the anticipated strengthening of the dollar relative to
European currencies be delayed, the hedged portion of the
portfolio would not fully participate in local-market gains.
Nevertheless, we believe the risk of such a scenario developing
is less than the risk of unhedged exposure to foreign currencies
that may weaken significantly.
THE GREATEST NEED: STABLE BOND MARKETS
The critical issue for European equity markets going forward is
whether the economies of Europe will continue to recover strongly
- -- creating a fear of overheating among investors -- or hesitate
before resuming at a slower, steadier rate. While we believe
economic growth will continue, we also believe many current
growth forecasts are too high. Consequently, while
<PAGE>
NET CHANGE IN STOCK MARKETS
<TABLE><CAPTION>
6 months ended 12/31/94, dividends reinvested
<S> <C> <C>
LOCAL
CURRENCY U.S. $
- ----------------------------------------------------
United Kingdom 6.22% 7.70%
France -0.02 1.88
Netherlands 8.39 11.09
Spain -3.05 -3.49
Germany 3.58 6.03
Switzerland 0.37 2.31
Austria -8.25 -6.15
Finland 16.45 29.80
Greece* 4.54 4.12
Norway 15.26 17.98
Sweden 7.90 11.17
United States 5.11 5.11
MSCI Europe Index -- 5.24
<FN>
Source: Morgan Stanley Capital International
* Price-only return
</TABLE>
we expect the European recovery to persist, we think it's
possible that its pace may slow.
If our expectations prove correct, a slowdown in the pace of
growth could actually be positive for European equity markets.
This is because bond markets are likely to respond favorably to a
moderating rate of economic growth, especially in light of the
disinflationary factors still at work in most European economies
(i.e., high unemployment, relatively high interest rates, and
major corporate restructuring). If the bond markets do stabilize,
they would likely provide a platform for strong corporate
earnings to translate into strong equity returns. Should GDP
growth rates come in under the levels being forecast for 1995,
some cyclical stocks could suffer a temporary setback.
Nevertheless, for the equity market as a whole, slower GDP growth
may be just what the doctor ordered.
[FN]
The views expressed throughout the report are exclusively those
of Putnam Management. They are not meant as investment advice.
Although the described holdings are viewed favorably as of
12/31/94, there is no guarantee the fund will continue to hold
these securities in the future. Investments in non-U.S.
securities may be subject to certain risks such as currency
fluctuations and political developments.
<PAGE>
PERFORMANCE SUMMARY
This section provides, at a glance, information about your fund's
performance. Total return shows how the value of the fund's
shares changed over time, assuming you held the shares through
the entire period and reinvested all distributions back into the
fund. We show total return in two ways: on a cumulative long-term
basis and on average how the fund might have grown each year over
varying periods. For comparative purposes, we show how the fund
performed relative to appropriate indexes and benchmarks.
TOTAL RETURN FOR PERIODS ENDED 12/31/94
<TABLE>
<S> <C> <C> <C> <C> <C>
MORGAN STANLEY
CAPITAL
INTERNATIONAL
CLASS A CLASS B EUROPE
NAV POP NAV CDSC INDEX
- -----------------------------------------------------------------
6 months 7.17% 1.01% 6.84% 1.84% 5.24%
- -----------------------------------------------------------------
1 year 6.44 0.28 -- -- 2.28
- -----------------------------------------------------------------
3 years 37.63 29.68 -- -- 26.01
Annual average 11.23 9.05 -- -- 8.01
- -----------------------------------------------------------------
Life of class A 59.53 50.33 -- -- 35.72
Annual average 11.42 9.90 -- -- 7.30
- -----------------------------------------------------------------
Life of class B -- -- -0.60 -5.51 -2.67
Annual average -- -- -- -- --
- -----------------------------------------------------------------
<FN>
Fund performance data do not take into account any adjustment
for taxes payable on reinvested distributions. On 9/7/90, the
fund began offering what are now known as class A shares.
Effective 2/1/94, the fund began offering class B shares. Class
M shares were introduced on 12/1/94; performance is not shown
because of the brevity of the reporting period. Performance of
share classes will differ. Performance data represent past
results. Investment returns and principal value will fluctuate
so an investor's shares, when sold, may be worth more or less
than their original cost.
</TABLE>
<PAGE>
TERMS AND DEFINITIONS
CLASS A SHARES are generally subject to an initial sales charge.
CLASS B shares may be subject to a sales charge upon redemption.
CLASS M shares have a lower initial sales charge and a higher
12b-1 fee than class A shares and no sales charge on redemption.
NET ASSET VALUE (NAV) is the value of all your fund's assets,
minus any liabilities, divided by the number of outstanding
shares, not including any initial or contingent deferred sales
charge.
PUBLIC OFFERING PRICE (POP) is the price of a mutual fund share
plus the maximum sales charge levied at the time of purchase. POP
performance figures shown here assume the maximum 5.75% sales
charge for class A shares and 3.50% for class M shares.
CONTINGENT DEFERRED SALES CHARGE (CDSC) is a charge applied at
the time of the redemption of class B shares and assumes
redemption at the end of the period. Your fund's CDSC declines
from a 5% maximum during the first year to 1% during the sixth
year. After the sixth year, the CDSC no longer applies.
COMPARATIVE BENCHMARKS
MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE INDEX is an unmanaged
list of approximately 627 equity securities originating in one of
the 14 European countries, with all values expressed in U.S.
dollars. Performance figures reflect changes in market prices and
reinvestment of distributions net of withholding taxes. The
securities in the index may change over time.
[FN]
The fund's portfolio contains securities that do not match
those in the indexes.
[/FN]
<PAGE>
THE PUTNAM FUND SELECTOR(TM)
The Putnam Fund Selector(TM) shows the many opportunities for
investors within every investment strategy. All investors should
first accumulate a base of conservative, cash-equivalent
investments. Then, with the help of your investment advisor,
diversify your portfolio by investing in the Putnam Family of
Funds.
[PYRAMID CHART SHOWING RISK/REWARDS]
Putnam Growth Funds
Putnam Growth & Income Funds
Putnam Income or Tax-Free Income Funds
Most Conservative Investments
<PAGE>
PUTNAM FAMILY OF FUNDS
PUTNAM GROWTH FUNDS
Asia Pacific Growth Fund
Capital Appreciation Fund
Diversified Equity Trust
Europe Growth Fund
Global Growth Fund
Health Sciences Trust
Investors Fund
Natural Resources Fund*
New Opportunities Fund
OTC Emerging Growth Fund
Overseas Growth Fund
Vista Fund
Voyager Fund
PUTNAM GROWTH AND INCOME FUNDS
Convertible Income-Growth Trust
Dividend Growth Fund
Equity Income Fund
The George Putnam Fund of Boston
The Putnam Fund for Growth and Income
Managed Income Trust
Utilities Growth and Income Fund
PUTNAM INCOME FUNDS
Adjustable Rate U.S. Government Fund
American Government Income Fund
Balanced Government Fund
Corporate Asset Trust
Diversified Income Trust
Federal Income Trust
Global Governmental Income Trust
High Yield Advantage Fund
High Yield Trust
Income Fund
U.S. Government Income Trust
PUTNAM TAX-FREE FUNDS
Intermediate Tax Exempt Fund
Municipal Income Fund
Tax Exempt Income Fund
Tax-Free High Yield Fund
Tax-Free Insured Fund
STATE TAX-FREE INCOME FUNDS(+)
Arizona, California, Florida, Massachusetts, Michigan, Minnesota,
New Jersey, New York, Ohio, and Pennsylvania
LIFESTAGE(SM)FUNDS
Putnam Asset Allocation Funds -- three investment portfolios that
spread your money across a variety of stocks, bonds, and money
market investments to help maximize your return and reduce your
risk.
THE THREE PORTFOLIOS:
Putnam Asset Allocation: Balanced Portfolio
Putnam Asset Allocation: Conservative Portfolio
Putnam Asset Allocation: Growth Portfolio
MOST CONSERVATIVE INVESTMENTS(++)
PUTNAM MONEY MARKET FUNDS:
Money Market Fund(S)
California Tax Exempt Money Market Fund
New York Tax Exempt Money Market Fund
Tax Exempt Money Market Fund
CDS AND SAVINGS ACCOUNTS**
[FN]
* Formerly Energy-Resources Trust.
+ Not available in all states.
(++) Relative to above.
(S) Formerly Daily Dividend Trust.
** Not offered by Putnam Investments. Certificates of deposit
offer a fixed rate of return and may be insured, up to
certain limits, by federal/state agencies. Savings accounts
may also be insured up to certain limits.
Please call your financial advisor or Putnam to obtain a
prospectus for any Putnam fund. It contains more complete
information, including charges and expenses. Please read it
carefully before you invest or send money.
[/FN]
<PAGE>
PORTFOLIO OF INVESTMENTS OWNED
December 31, 1994 (Unaudited)
<TABLE><CAPTION>
<C> <S> <C>
COMMON STOCKS (95.3%)(a)
NUMBER OF SHARES VALUE
UNITED KINGDOM (21.4%)
- -----------------------------------------------------------------
30,967 Argyll Group PLC $129,965
125,100 Associated British Ports PLC 532,863
250,000 BAT Industries PLC 1,689,325
1,112,100 British Steel PLC 2,677,603
185,553 Burmah Oil PLC 2,368,194
24,200 East Midlands Electric PLC 318,716
240,000 General Electric Co. (The) PLC 1,033,560
55,000 Guinness PLC 387,585
99,900 Meyer International PLC 556,943
290,700 Molins PLC 2,253,419
279,067 North West Water Group PLC 2,368,637
85,000 Pearson PLC 738,761
114,000 Rothmans International PLC 809,605
149,000 Royal Insurance Holdings PLC 650,996
1,350,000 Sears PLC 2,325,510
30,000 Securicor Group PLC Class A 471,210
113,900 Security Services PLC 1,466,178
355,000 Senior Engineering Group PLC 455,856
45,000 Shell Transportation & Trading Co. PLC 490,473
94,727 Siebe PLC 827,014
16,000 South Wales Electricity PLC 224,000
45,500 South Western Electric PLC 628,451
23,000 Southern Electric PLC 290,665
361,000 Tate & Lyle PLC 2,391,336
- ----------
26,086,865
FRANCE (16.6%)
- -----------------------------------------------------------------
5,500 Chargeurs Sa Ord 1,201,834
15,000 Credit Local de France 1,073,838
2,825 Docks de France 345,713
28,008 Elf Aquitaine 1,973,052
15,000 Essilor ADP 1,391,492
1,323 Financiere et Industrielle Gaz et Eaux 421,495
3,000 Galeries Layfayette 1,287,481
21,000 Lafarge Coppee (Bearer Shares) 1,495,502
43,000 Michelin Class B (b) 1,565,759
18,700 Pechiney International 560,720
90,000 Sgs-Thomson Microelec Ny Shs 2,047,500
21,000 Societe Generale D'Enterprises 2,207,833
4,000 Sommer-Allibert 1,262,369
12,000 Sovac 841,080
24,000 Technip 144A 543,000
20,400 Ugine 1,433,659
1,220 Zodiac S.A. 537,294
- ----------
20,189,621
<PAGE>
NUMBER OF SHARES VALUE
NETHERLANDS (14.0%)
- -----------------------------------------------------------------
43,929 ABN AMRO Holding N.V. $1,527,372
15,192 Aegon N.V. (Bearer) 972,331
17,600 Akzo N.V. 2,033,696
9,300 DSM N.V. 739,475
39,000 Elsevier N.V. 407,024
10,600 Evc International Nv 470,010
74,500 Getronics Electric N.V. 2,719,168
914 Hollandsche Beton Group N.V. 141,240
25,000 IHC Caland N.V. 632,820
49,000 Randstad Holdings (b) 2,653,002
53,000 Royal Ptt Nederland N.V (b) 1,787,748
2,525 Unilever N.V. 296,862
35,000 Wolters Kluwer N.V. 2,591,246
- ----------
16,971,994
SWITZERLAND (8.2%)
- -----------------------------------------------------------------
824 BBC Brown Boveri AG (Bearer) 709,705
700 Baer Holding AG 716,851
9,370 C S Holdings (Bearer) 802,018
6,500 Georg Fischer (Registered) (b) 1,460,451
1,000 George Fischer (Bearer) (b) 1,169,278
208 Nestle S.A. (Registered) 198,224
1,400 Nestle S.A. (Registered) ADR 63,875
40 Nestle S.A. (Registered) ADR 144A 1,825
1,125 Rieter Holding AG (Registered) 1,547,574
375 Rieter Holding AG 96,007
780 SGS Societe Generale De Surveillance
Holdings S.A. (Bearer) 1,078,945
275 SGS Societe Generale De Surveillance
Holdings S.A. (Registered) 716,660
3,450 Sandoz AG (Registered) 179,817
4,000 Swiss Bank Corp. (Registered) 534,964
1193 Swiss Reinsurance Co. (Registered) 719,356
- ---------
9,995,550
GERMANY (7.3%)
- -----------------------------------------------------------------
11,500 BASF AG 2,340,833
9,300 Jungheinrich Prior 2,131,375
3,000 Schering AG 1,965,785
1,650 Spar Preferred Handels N.V. 346,191
6,000 VEBA AG 2,079,277
- ---------
8,863,461
SPAIN (5.3%)
- -----------------------------------------------------------------
26,000 Argentaria ADS 921,307
40,000 Hidrolectrica del Cantabrico 1,093,808
170,000 Iberduero S.A. 1,048,543
125,000 Repsol S.A. 3,389,675
- ---------
6,453,333
<PAGE>
IRELAND (4.8%)
- -----------------------------------------------------------------
530,001 Allied Irish Banks $2,210,475
115,000 Bank of Ireland 532,922
350,000 CRH PLC 1,930,110
199,175 Greencore PLC 1,230,662
- ---------
5,904,169
SWEDEN (4.6%)
- -----------------------------------------------------------------
61,000 Arjo AB (b) 1,116,751
56,500 Autoliv AB (b) 2,175,210
145,000 Svenska Cellulosa AB 2,273,948
- ---------
5,565,909
DENMARK (3.6%)
- -----------------------------------------------------------------
60,000 Danisco A/S 2,130,528
89,600 Tele Danmark A/S ADR (b) 2,284,800
- ---------
4,415,328
AUSTRIA (3.5%)
- -----------------------------------------------------------------
31,300 Austria Mikro Systeme Intl 2,359,341
42,500 Mayr-Melnhof Karton AG ADS 144A (b) 621,563
13,000 VA Technologie AG (b) 1,308,941
- ---------
4,289,845
BELGIUM (2.4%)
- -----------------------------------------------------------------
2,415 Bekaert S.A. 1,711,163
2,600 Solvay SA 1,239,069
- ---------
2,950,232
NORWAY (1.2%)
- -----------------------------------------------------------------
37,500 Christiana Bank Kreditkass ADR 144A (b) 759,375
365,000 Christiana Bank OG Kreditkass (b) 744,637
- ---------
1,504,012
PORTUGAL (1.1%)
- -----------------------------------------------------------------
62,300 Banco Totta and Accores (BTA)
Nationalisert 1,394,891
Italy (0.8%)
- -----------------------------------------------------------------
77,000 Danieli & Co. 491,699
130,000 Danieli & Co. (Savings Shares) 465,647
- -------
957,346
FINLAND (0.5%)
- -----------------------------------------------------------------
60,000 Effjohn Oy Ser. A 646,632
- -----------------------------------------------------------------
TOTAL COMMON STOCKS (cost $108,649,416) $116,189,188
- -----------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE><CAPTION>
<C> <S> <C>
FOREIGN BONDS AND NOTES (1.6%)(A) (COST $2,065,878)
PRINCIPAL AMOUNT VALUE
- -----------------------------------------------------------------
DENMARK (1.0%)
- -----------------------------------------------------------------
$8,000,000 Danisco Cv. bond 5s, 2004 $ 1,205,000
FINLAND (0.4%)
- -----------------------------------------------------------------
3,500,000 Effjohn Oy--AB Cv. bond 7s, 2004 518,437
ITALY (0.2%)
- -----------------------------------------------------------------
310,500,000 Danieli & Co 7 1/4s, 2000 194,063
- -----------------------------------------------------------------
$1,917,500
- -----------------------------------------------------------------
</TABLE>
<TABLE><CAPTION>
<C> <S> <C> <C>
WARRANTS (0.0%)(A)(B)(COST --%) EXPIRATION DATE VALUE
- -----------------------------------------------------------------
ITALY (0.0%)
- -----------------------------------------------------------------
51,750 Danieli & Co 11/30/99 $41,224
- -----------------------------------------------------------------
</TABLE>
<TABLE><CAPTION>
<C> <S> <C>
SHORT-TERM INVESTMENTS (3.4%)(A)
PRINCIPAL AMOUNT VALUE
- -----------------------------------------------------------------
$ 3,001,953 Federal Farm Credit Bank 4.8s,
January 6, 1995 $2,997,558
1,104,361 Interest in $267,187,000 joint
repurchase agreement dated December
30, 1994 with JP Morgan Sec. due
January 3, 1995 with respect to various
U.S.Treasury obligations--maturity
value of $1,104,361 for an effective
yield of 5.3% 1,104,361
- -----------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(cost $4,101,919) $4,101,919
- -----------------------------------------------------------------
TOTAL INVESTMENTS
(cost $114,817,213)(c) $122,249,831
- -----------------------------------------------------------------
</TABLE>
<PAGE>
NOTES
- -----------------------------------------------------------------
[FN]
(A) Percentages indicated are based on total net assets of
$121,862,117, which correspond to a net asset value per
class A, class B and class M shares of $12.31, $12.25, and
$12.31, respectively.
(B) Non-income-producing security.
(C) The aggregate identified cost on a tax basis is
$115,354,602, resulting in gross unrealized appreciation and
depreciation of $12,260,727 and $5,365,498, respectively, or
net unrealized appreciation of $6,895,229. ADR or ADS after
the name of a foreign holding stands for American Depository
Receipt or American Depository Shares, respectively,
representing ownership of securities on deposit with a
domestic custodian bank. 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.
FORWARD CURRENCY CONTRACTS OUTSTANDING at December 31, 1994
<TABLE><CAPTION>
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------
Contracts Market Face Delivery Unrealized
Value Value Date Depreciation
- -----------------------------------------------------------------
French Francs (Sell) $11,244,000 $11,094,264 3/8/95 $(149,736)
Dutch Guilders (Sell) 9,243,200 9,070,809 3/8/95 (172,391)
- -----------------------------------------------------------------
($322,127)
</TABLE>
<TABLE>
Percentage of net assets invested in foreign countries at
December 31, 1994:
<S> <C>
United Kingdom 21.4%
France 16.6
Netherlands 14.0
Switzerland 8.2
Germany 7.3
Spain 5.3
Ireland 4.8
Sweden 4.6
Denmark 4.6
Austria 3.5
Belgium 2.4
Norway 1.2
Portugal 1.1
Italy 1.0
Finland 0.9
</TABLE>
[FN]
The accompanying notes are an integral part of these financial
statements.
[/FN]
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1994 (Unaudited)
<TABLE><CAPTION>
<S> <C>
ASSETS
- ----------------------------------------------------------------
Investments in securities, at value (identified cost
$114,817,213) (Note 1) $122,249,831
- ----------------------------------------------------------------
Cash 721
- ----------------------------------------------------------------
Dividends, interest and foreign tax receivables 563,449
- ----------------------------------------------------------------
Receivable for shares of the fund sold 383,230
- ----------------------------------------------------------------
Unamortized organization expenses (Note 1) 4,556
- ----------------------------------------------------------------
TOTAL ASSETS 123,201,787
- ----------------------------------------------------------------
LIABILITIES
- ----------------------------------------------------------------
Payable for securities purchased 145,789
- ----------------------------------------------------------------
Payable for shares of the fund repurchased 393,071
- ----------------------------------------------------------------
Payable for compensation of Manager (Note 2) 238,431
- ----------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 17,113
- ----------------------------------------------------------------
Payable for administrative services (Note 2) 4,390
- ----------------------------------------------------------------
Payable for compensation of Trustees 1,006
- ----------------------------------------------------------------
Payable for distribution fees (Note 2) 83,904
- ----------------------------------------------------------------
Payable for open forward currency contracts 322,127
- ----------------------------------------------------------------
Other accrued expenses 133,839
- ----------------------------------------------------------------
TOTAL LIABILITIES 1,339,670
- ----------------------------------------------------------------
NET ASSETS $121,862,117
- ----------------------------------------------------------------
REPRESENTED BY
- ----------------------------------------------------------------
Paid-in capital (Notes 1 and 4) 114,664,726
- ----------------------------------------------------------------
Distributions in excess of net investment income (Note 1) (90,398)
- ----------------------------------------------------------------
Accumulated net realized gain on investment transactions 169,903
- ----------------------------------------------------------------
Net unrealized foreign currency translation gain 7,395
- ----------------------------------------------------------------
Net unrealized appreciation of investments and
forward currency contracts 7,110,491
- ----------------------------------------------------------------
TOTAL --REPRESENTING NET ASSETS APPLICABLE TO
CAPITAL SHARES OUTSTANDING $121,862,117
- ----------------------------------------------------------------
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE
- ----------------------------------------------------------------
Net asset value and redemption price per class A
share ($82,635,743 divided by 6,711,102 shares) $12.31
- ----------------------------------------------------------------
Offering price per share (100/94.25 of $12.31)* $13.06
- ----------------------------------------------------------------
Net asset value and offering price of class B
shares ($39,179,209 divided by 3,197,888 shares)(+) $12.25
- ----------------------------------------------------------------
Net asset value and offering price of class M
shares ($47,165 divided by 3,831 shares) $12.31
- ----------------------------------------------------------------
Offering price per share (100/96.5 of $12.31) $12.76
- ----------------------------------------------------------------
<FN>
* 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>
<PAGE>
STATEMENT OF OPERATIONS
Six months ended December 31, 1994 (Unaudited)
<TABLE><CAPTION>
<S> <C>
INVESTMENT INCOME
- -----------------------------------------------------------------
Interest $111,994
- -----------------------------------------------------------------
Dividends (net of foreign tax of $102,493) 891,319
- -----------------------------------------------------------------
Total investment income $1,003,313
- -----------------------------------------------------------------
Expenses:
- -----------------------------------------------------------------
Compensation of Manager (Note 2) 454,065
- -----------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 25,657
- -----------------------------------------------------------------
Compensation of Trustees (Note 2) 4,853
- -----------------------------------------------------------------
Reports to shareholders 48,629
- -----------------------------------------------------------------
Auditing 10,715
- -----------------------------------------------------------------
Legal 5,288
- -----------------------------------------------------------------
Postage 32,268
- -----------------------------------------------------------------
Distribution fees--class A (Note 2) 100,489
- -----------------------------------------------------------------
Distribution fees--class B (Note 2) 165,161
- -----------------------------------------------------------------
Distribution fees--class M (Note 2) 17
- -----------------------------------------------------------------
Administrative services (Note 2) 4,400
- -----------------------------------------------------------------
Registration fees 46,607
- -----------------------------------------------------------------
Amortization of organization expenses (Note 1) 3,477
- -----------------------------------------------------------------
Other 5,966
- -----------------------------------------------------------------
TOTAL EXPENSES 907,592
- -----------------------------------------------------------------
NET INVESTMENT INCOME 95,721
- -----------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 1,278,889
- -----------------------------------------------------------------
Net realized gain on foreign currency (Note 1) 2,509
- -----------------------------------------------------------------
Net unrealized foreign currency translation loss
during the period (1,901)
- -----------------------------------------------------------------
Net unrealized appreciation of investments and
forward currency contracts during the period 4,784,929
- -----------------------------------------------------------------
NET GAIN ON INVESTMENTS 6,064,426
- -----------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $6,160,147
<FN>
The accompanying notes are an integral part of these financial
statements.
</TABLE>
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE><CAPTION>
<S> <C> <C>
Six months
ended Year ended
December 31 June 30
----------- ----------
1994* 1994
- -----------------------------------------------------------------
INCREASE IN NET ASSETS
- -----------------------------------------------------------------
Operations:
- -----------------------------------------------------------------
Net investment income $95,721 $566,879
- -----------------------------------------------------------------
Net realized gain on investments,
forward foreign currency contracts
and foreign currency 1,281,398 502,348
- -----------------------------------------------------------------
Net unrealized foreign currency
translation gain (loss) (1,901) 14,023
- -----------------------------------------------------------------
Net unrealized appreciation of
investments and forward currency
contracts 4,784,929 1,085,294
- -----------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS 6,160,147 2,168,544
- -----------------------------------------------------------------
Distributions to shareholders from:
- -----------------------------------------------------------------
Net investment income -- class A -- (330,137)
- -----------------------------------------------------------------
Net realized gain on
investments -- class A (1,072,392) --
- -----------------------------------------------------------------
Net realized gain on
investments -- class B (505,129) --
- -----------------------------------------------------------------
Net realized gain on
investments -- class M (599) --
- -----------------------------------------------------------------
Increase from capital share
transactions (Note 4) 28,441,529 69,448,071
- -----------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 33,023,556 71,286,478
- -----------------------------------------------------------------
NET ASSETS
- -----------------------------------------------------------------
Beginning of period/year 88,838,561 17,552,083
- -----------------------------------------------------------------
END OF PERIOD/YEAR (including
distributions in excess of net
investment income of $90,398
and $186,119, respectively) $121,862,117 $88,838,561
- -----------------------------------------------------------------
<FN>
* Unaudited
The accompanying notes are an integral part of these financial
statements.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
<TABLE><CAPTION>
<S> <C> <C>
For the period
December 1, 1994
(commencement of
operations) to Six months ended
December 31* December 31*
--------------- ---------------
1994 1994
--------------- ----------------- ---
Class M
- -----------------------------------------------------------------
Net asset value, beginning of period $12.35 $11.62
- -----------------------------------------------------------------
INVESTMENT OPERATIONS
Net investment income (.01) (.01)
Net realized and unrealized gain
(loss) on investments .13 .80
- -----------------------------------------------------------------
Total from investment operations .12 .79
- -----------------------------------------------------------------
Distributions to shareholders from:
Net investment income -- --
- -----------------------------------------------------------------
In excess of net investment income -- --
- -----------------------------------------------------------------
Net realized gain on investments (.16) (.16)
- -----------------------------------------------------------------
Total distributions (.16) (.16)
- -----------------------------------------------------------------
Net asset value, end of period $12.31 $12.25
- -----------------------------------------------------------------
Total investment return at net
asset value (%)(b) 1.01(c) 6.84(c)
- -----------------------------------------------------------------
Net assets, end of period (in thousands) $47 $39,179
- -----------------------------------------------------------------
Ratio of expenses to average
net assets (%) .18(c) 1.07(c)
- -----------------------------------------------------------------
Ratio of net investment income
to average net assets (%) (.10)(c) (.22)(c)
- -----------------------------------------------------------------
Portfolio turnover (%) 15.40(c) 15.40(c)
- -----------------------------------------------------------------
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<C> <C> <C> <C> <C> <C>
For the period For the period
February 1, 1994 September 7, 1990
(commencement of Six months (commencement
operations) to ended of operations)
June 30 December 31* Year ended June 30 to June 30
- ---------------------------------------------------------------------
1994 1994 1994 1993 1992 1991
- ---------------------------------------------------------------------
Class B Class A
- ---------------------------------------------------------------------
$12.49 $11.64 $9.84 $10.10 $8.74 $8.50
- ---------------------------------------------------------------------
(.04) .03 .18 .18 .15(a) .19(a)
(.91) .80 1.73 (.14) 1.49 .14
- ---------------------------------------------------------------------
(.87) .83 1.91 .04 1.64 .33
- ---------------------------------------------------------------------
-- -- (.11) (.15) (.22) (.09)
- ---------------------------------------------------------------------
-- -- -- (.11) -- --
- ---------------------------------------------------------------------
-- .16 -- (.04) (.06) --
- ---------------------------------------------------------------------
-- (.16) (.11) (.30) (.28) (.09)
- ---------------------------------------------------------------------
$11.62 $12.31 $11.64 $9.84 $10.10 $8.74
- ---------------------------------------------------------------------
(6.97)(c) 7.17(c) 19.45 0.70 19.10 3.91(c)
- ---------------------------------------------------------------------
$21,368 $82,636 $67,471 $17,552 $9,618 $3,369
- ---------------------------------------------------------------------
.95(c) .70(c) 1.50 1.81 2.14(a) 1.81(a)(c)
- ---------------------------------------------------------------------
.54(c) .21(c) 1.17 1.38 1.63(a) 2.28(a)(c)
- ---------------------------------------------------------------------
36.73(c) 15.40(c) 36.73 58.56 54.45 30.83(c)
- ---------------------------------------------------------------------
<FN>
* Unaudited.
(a) Reflects an expense limitation applicable during the period.
As a result of such limitation, net investment income for
the year ended June 30, 1992, and the period ended June 30,
1991 reflect expense reductions of approximately $0.04 and
$0.15, respectively.
(b) Total investment return assumes dividend reinvestment and
does not reflect the effect of sales charges.
(c) Not annualized.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTSDECEMBER 31, 1994 (UNAUDITED)
NOTE 1
SIGNIFICANT ACCOUNTING POLICIES
The fund is registered under the Investment Company Act of 1940,
as amended, as a diversified, open-end management investment
company. The fund seeks capital appreciation by investing
primarily in common stocks and other securities of European
companies.
The fund offers class A, class B, and class M shares. The fund
commenced its public offering of class B shares on February 1,
1994 and class M shares on December 1, 1994. Class A shares are
sold with a maximum front-end sales charge of 5.75%. Class B
shares do not pay a front-end sales charge, but do pay a higher
ongoing distribution fee than class A shares, and may be subject
to a contingent deferred sales charge, if those shares are
redeemed within six years of purchase. Class M shares are sold
with a maximum front-end sales charge of 3.50%. 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 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 should receive
their pro-rata share of the net assets of the fund, if the fund
were liquidated. In addition, the Trustees declare separate
dividends on each class of shares.
The following is a summary of significant accounting policies
consistently followed by the fund in the preparation of its
financial statements. The policies are in conformity with
generally accepted accounting principles.
A SECURITY VALUATION Investments for which market quotations are
readily available are stated at market value, which is determined
using the last reported sale price on the principal market in
which the securities are traded, or, if no sales are reported --
as in the case of some securities traded over-the-counter --the
last reported bid price. Short-term investments having remaining
maturities of 60 days or less are stated at amortized cost, which
approximates market value, 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. The order
permits the fund's cash balance to be deposited into a single
joint account, along with the cash of other registered investment
companies managed by Putnam Investment Management, Inc., (Putnam
Management), the fund's manager, a wholly owned subsidiary of
Putnam Investments, Inc. These balances may be invested in one or
more repurchase agreements and/or short-term money market
instruments.
C REPURCHASE AGREEMENTS The fund or any joint trading account,
through its custodian, receives delivery of the underlying
securities, the market value of which at the time of purchase is
required to be in an amount at least equal to the resale price,
including accrued interest. The fund's Manager is responsible for
determining that the value of these underlying securities is at
all times at least equal to the resale price, including accrued
interest.
D SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME Security
transactions are accounted for on the trade date (date the order
to buy or sell is executed). Interest income is recorded on the
accrual basis and dividend income is recorded on the ex-dividend
date, except that certain dividends from foreign securities are
recorded as soon as the fund is informed of the ex-dividend date.
E FOREIGN CURRENCY TRANSLATION Securities quoted in foreign
currencies are translated into U.S. dollars at the current
exchange rate. The fund does not isolate that portion of the
results of operations resulting from changes in foreign exchange
rates on investments from the fluctuations arising from changes
in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from
investment.
Foreign currency-denominated receivables and payables are
"marked-to-market" using the current exchange rate. The
fluctuation between the original exchange rate and the current
exchange rate is recorded as unrealized translation gain or loss.
Upon receipt of payment, the fund realizes a gain or loss on
foreign currency amounting to the difference between the original
value and the ending value of the receivable or payable.
F FORWARD CURRENCY CONTRACTS A forward currency contract
("contract") is an agreement between two parties to buy and sell
a currency at a set price on a future date. The market value of
the contract will fluctuate with changes in currency exchange
rates. The contract is "marked-to-market" daily and the change in
market value is recorded by the fund as an unrealized gain or
loss. When the contract is closed, the fund records a realized
gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it
was closed. The maximum potential loss from such contracts is the
aggregate face value in U.S. dollars at the time the contract was
opened; however, management of the fund believes the likelihood
of such a loss to be remote.
The fund may enter into forward foreign currency contracts in
connection with planned purchases or sales of securities or to
hedge the U.S. dollar value of portfolio securities denominated
in a particular currency. The fund will not enter into contracts
or maintain a net exposure to such contracts where the
consummation of the contracts would obligate the fund to deliver
an amount of foreign currency in excess of the value of the funds
securities or their assets denominated in that currency.
G FEDERAL TAXES It is the policy of the fund to distribute all
of its income within the prescribed time and otherwise comply
with the provisions of the Internal Revenue Code applicable to
regulated investment companies. It is also the intention of the
fund to distribute an amount sufficient to avoid imposition of
any excise tax under Section 4982 of the Internal Revenue Code of
1986. Therefore, no provision has been made for federal taxes on
income, capital gains or unrealized appreciation of securities
held and excise tax on income and capital gains.
H DISTRIBUTIONS TO SHAREHOLDERS Distributions to shareholders
from net investment income are recorded by the fund on the ex-
dividend date. Capital gain distributions, if any, are recorded
on the ex-dividend date and paid annually.
The amount and character of income and gains to be distributed
are determined in accordance with income tax regulations which
may differ from generally accepted accounting
<PAGE>
principles. The differences include treatment of losses on wash
sales transactions, realized and unrealized gains and losses on
forward foreign currency contracts, post-October loss deferrals,
organization expenses, foreign taxes and utilization of capital
loss carryover. 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.
I UNAMORTIZED ORGANIZATION EXPENSES Expenses incurred by the
fund in connection with its organization, its registration with
the Securities and Exchange Commission and with various states
and the initial public offering of its shares were $34,512. These
expenses are being amortized on a straight-line basis over a
five-year period.
NOTE 2
MANAGEMENT FEE, ADMINISTRATIVE SERVICES, AND OTHER TRANSACTIONS
Compensation of Putnam Management, for management and investment
advisory services is paid quarterly based on the average net
assets of the fund for the quarter. Such fee is an annual rate of
0.80% of the first $500 million of average net assets, 0.70% of
the next $500 million, 0.65% of the next $500 million, and 0.60%
of any amount over $1.5 billion. The fee is subject to reduction
in any year to the extent that expenses (exclusive of
distribution fees, brokerage, interest, taxes and extraordinary
expenses) of the fund exceed 2.5% of the first $30 million of
average net assets, 2% of the next $70 million and 1.5% of any
amount over $100 million and by the amount of certain brokerage
commissions and fees (less expenses) received by affiliates of
the Manager on the fund's portfolio transactions.
The fund also reimburses the Manager for the compensation and
related expenses of certain officers of the fund and their staff
who provide administrative services to the fund. The aggregate
amount of all such reimbursements is determined annually by the
Trustees.
Trustees of the fund receive an annual Trustee's fee of $650 and
an additional fee for each Trustees' meeting attended. Trustees
who are not interested persons of the Manager and who serve on
committees of the Trustees receive additional fees for attendance
at certain committee meetings.
Custodial functions for the fund's assets are provided by Putnam
Fiduciary Trust Company (PFTC), a subsidiary of Putnam
Investments, Inc. Investor servicing agent functions are provided
by Putnam Investor Services, a division of PFTC.
Investor servicing and custodian fees reported in the Statement
of operations for the six months ended December 31, 1994 have
been reduced by credits allowed by PFTC.
The fund has adopted a distribution plan with respect to its
class A shares (the "Class A Plan") pursuant to Rule 12b-1 under
the Investment Company Act of 1940. The purpose of the Class A
Plan is to compensate Putnam Mutual Funds Corp., a wholly-owned
subsidiary of Putnam Investments, Inc., for services provided and
expenses incurred by it in distributing class A shares. The
Trustees have approved payment by the fund to Putnam Mutual Funds
Corp. at an annual rate of 0.25% of the fund's average net assets
attributable to class A shares.
During the six months ended December 31, 1994, Putnam Mutual
Funds Corp., acting as an underwriter, received net commissions
of $48,915 from the sales of class A shares of the fund.
A deferred sales charge of up to 1% is assessed on certain
redemptions of
<PAGE>
class A shares purchased as part of an investment of $1 million
or more. For the six months ended December 31, 1994, Putnam
Mutual Funds Corp., acting as underwriter, received $30,853 on
such redemptions.
On February 1, 1994, the fund adopted a separate distribution
plan with respect to its class B shares (the "Class B Plan")
pursuant to Rule 12b-1 under the Investment Company Act of 1940.
The purpose of the Class B Plan is to compensate Putnam Mutual
Funds Corp. for services provided and expenses incurred by it in
distributing class B shares. The Class B Plan provides for
payments by the fund to Putnam at an annual rate of 1.00% of the
fund's average net assets attributable to class B shares.
Putnam Mutual Funds Corp. also receives the proceeds of
contingent deferred sales charges levied on class B share
redemptions within six years of purchase. The charge is based on
declining rates, which begin at 5.0% of the net asset value of
the redeemed shares. Putnam Mutual Funds Corp. received
contingent deferred sales charges of $17,810 from such
redemptions for the six months
ended December 31, 1994.
On December 1, 1994 the fund adopted a separate distribution plan
with respect to its class M shares (the "Class M Plan") pursuant
to rule 12b-1 under the Investment Company Act of 1940. The
purpose of the Class M Plan is to compensate Putnam Mutual Funds
Corp. for services provided and expenses incurred by it in
distributing class M shares. The Class M Plan provides for
payments by the fund to Putnam Mutual Funds Corp. at an annual
rate of 1.00% of the fund's average net assets attributable to
class M shares. The Trustees have approved payment by the fund to
Putnam Mutual Funds Corp. at an annual rate of 0.75% of the
fund's average net assets attributable to class M shares.
For the period December 1, 1994 (commencement of operations) to
December 31, 1994, Putnam Mutual Funds Corp., acting as an
underwriter, received no commissions of from the sales of class M
shares of the fund.
NOTE 3
PURCHASES AND SALES OF SECURITIES
During the six months ended December 31, 1994, purchases and
sales of investment securities other than short-term investments
aggregated $14,699,068 and $16,039,894, respectively. There
were no purchases or sales of U.S. government obligations during
the six months ended December 31, 1994. 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 December 31, 1994, there was an unlimited number of shares of
beneficial interest authorized. Transactions in capital shares
were as follows:
<TABLE><CAPTION>
<S> <C> <C>
SIX MONTHS ENDED DECEMBER 31
- --------------------------------------------------------------
1994
- --------------------------------------------------------------
CLASS A SHARES AMOUNT
- --------------------------------------------------------------
Shares sold 2,764,247 $34,587,621
- --------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 81,351 984,465
- --------------------------------------------------------------
2,845,598 35,572,086
- --------------------------------------------------------------
Shares repurchased (1,932,493) (24,145,642)
- --------------------------------------------------------------
NET INCREASE 913,105 $11,426,444
- --------------------------------------------------------------
</TABLE>
<TABLE><CAPTION>
<S> <C> <C>
YEAR ENDED JUNE 30
- --------------------------------------------------------------
1994
- --------------------------------------------------------------
CLASS A SHARES AMOUNT
- --------------------------------------------------------------
Shares sold 7,296,505 $85,591,114
Shares issued in
connection with
reinvestment of
distributions 24,694 285,705
- --------------------------------------------------------------
7,321,199 85,876,819
- --------------------------------------------------------------
Shares repurchased (3,306,648) (38,636,334)
- --------------------------------------------------------------
NET INCREASE 4,014,551 $47,240,485
- --------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE><CAPTION>
<S> <C> <C>
SIX MONTHS ENDED DECEMBER 31
- --------------------------------------------------------------
1994
- --------------------------------------------------------------
CLASS B SHARES AMOUNT
- --------------------------------------------------------------
Shares sold 2,271,940 $28,336,647
Shares issued in
connection with
reinvestment of
distributions 36,702 441,893
- --------------------------------------------------------------
2,308,642 28,778,540
- --------------------------------------------------------------
Shares repurchased (949,562) (11,810,142)
- --------------------------------------------------------------
NET INCREASE 1,359,080 $16,968,398
- --------------------------------------------------------------
FOR THE PERIOD
FEBRUARY 1, 1994
(COMMENCEMENT
OF OPERATIONS)
TO JUNE 30
- --------------------------------------------------------------
1994
- --------------------------------------------------------------
CLASS B SHARES AMOUNT
- --------------------------------------------------------------
Shares sold 2,468,324 $29,611,768
Shares repurchased (629,516) (7,404,182)
- --------------------------------------------------------------
NET INCREASE 1,838,808 $22,207,586
- --------------------------------------------------------------
FROM DECEMBER 1, 1994
(COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1994
- --------------------------------------------------------------
1994
- --------------------------------------------------------------
CLASS M SHARES AMOUNT
- --------------------------------------------------------------
Shares sold 3,784 $46,116
Shares issued in
connection with
reinvestment of
distributions 47 571
- --------------------------------------------------------------
3,831 46,687
- --------------------------------------------------------------
Shares repurchased -- --
- --------------------------------------------------------------
NET INCREASE 3,831 $46,687
- --------------------------------------------------------------
</TABLE>
<PAGE>
FUND INFORMATION
INVESTMENT MANAGER
Putnam Investment
Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
TRUSTEES
George Putnam, Chairman
William F. Pounds, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
John A. Hill
Elizabeth T. Kennan
Lawrence J. Lasser
Robert E. Patterson
Donald S. Perkins
George Putnam, III
A.J.C. Smith
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Peter Carman
Vice President
Anthony W. Regan
Vice President
Justin M. Scott
Vice President and Fund Manager
William N. Shiebler
Vice President
John R. Verani
Vice President
Paul M. O'Neil
Vice President
John D. Hughes
Vice President and Treasurer
Beverly Marcus
Clerk and Assistant Treasurer
This report is for the information of shareholders of Putnam
Europe 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.
Shares of mutual funds are not deposits 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.
<PAGE>
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
Bulk Rate
U.S. Postage
PAID
Putnam
Investments
057/234-16663
<PAGE>
APPENDIX TO FORM N-30D FILINGS TO DESCRIBE DIFFERENCES BETWEEN
PRINTED AND EDGAR-FILED TEXTS.
(1) Rule lines for tables are omitted.
(2) Boldface and italic typefaces are displayed in normal type.
(3) Headers (e.g. the names of the fund) and footers (e.g. page
numbers and The accompanying notes are an integral part of
these financial statements) are omitted.
(4) Because the printed page breaks are not reflected, certain
tabular and columnar headings and symbols are displayed
differently in this filing.
(5) Bullet points and similar graphic symbols are omitted.
(6) Page Numbering is different.
