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Putnam
Overseas
Growth
Fund
Semiannual
Report
December 31, 1993
For investors seeking
capital appreciation
through equity securities
of issuers located outside
North America
Contents
2 How your fund performed
3 From the Chairman
4 Report from Putnam Management
Semiannual Report
6 Portfolio of investments owned
9 Financial statements
15 Fund performance supplement
A member
of the Putnam
Family of Funds
<PAGE>
How your
fund performed
For period ended December 31, 1993
Morgan Stanley
Fund Capital International S&P 500
Total return* NAV POP EAFE Index Price Index
6 months 26.55% 19.33% 7.73% 4.95%
1 year 43.99 35.76 32.86 10.04
Life-of-fund 42.69 34.43 15.35 38.72
(since 2/28/91)
annualized 13.33 10.98 5.16 12.22
Share data NAV POP
June 30, 1993 $9.58 $10.16
December 31, 1993 $11.90 $12.63
Distributions Investment Capital
6 months ended Number income gains Total
December 31, 1993 1 -- $0.215 $0.215
* Performance data represent past results. 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.
<PAGE>
Terms you need to know
Total return is the change in value of an investment from the
beginning to the end of a period, assuming the reinvestment of
all distributions.
Net asset value (NAV) is the value of all your fund's assets,
minus any liabilities, divided by the number of outstanding
shares, not reflecting any sales charge.
Public offering price (POP) is the price of a mutual fund share
plus the fund's 5.75% maximum sales charge levied at the time of
purchase.
Please see the fund performance supplement on page 15 for
additional information about performance comparisons.
<PAGE>
From
the Chairman
Dear Shareholder:
I am very pleased to report that Putnam Overseas Growth Fund
turned in a strong performance during the six months ended
December 31, 1993. Overseas markets were substantially stronger
than the U.S. market. As a result, your fund significantly
outperformed the Standard & Poor's 500 Index, which most
investors use as a measure of U.S. equity portfolio performance.
Your fund also outpaced the Morgan Stanley Capital International
EAFE Index, which is used as a measure of international equity
performance.
Your fund is designed to provide you with potential capital
appreciation by investing primarily in a diversified portfolio of
stocks in companies located outside North America. Holdings are
diversified across a minimum of eight countries, with an emphasis
on undervalued stocks.
Putnam Management remains optimistic about the long-term growth
prospects for overseas stocks. Your Fund Manager, Justin Scott,
expects that lower interest rates outside the U.S., eventual
economic recovery in Europe, and continued growth in the emerging
Pacific Basin markets will provide further opportunities for
growth in the international arena. Aided by a combination of
quantitative and fundamental analysis, Justin will continue to
monitor economic conditions worldwide to take advantage of
attractive buying opportunities as they arise.
The combination of careful stock selection, country
diversification, and currency hedging should serve your fund well
during the second half of fiscal 1993 and beyond.
Respectfully yours,
George Putnam
Chairman of the Trustees
February 16, 1994
<PAGE>
Report from
Putnam Management
Putnam Overseas Growth Fund's stellar performance for the six
months ended December 31, 1993, helps bring home the point that
for investors seeking long-term growth opportunities, looking
overseas can be invaluable to investment success. During the
period your fund returned 26.55% at net asset value and 19.33% at
public offering price. By comparison, the Morgan Stanley EAFE
Index, an unmanaged index of stocks, returned 7.73% during the
same period.
Country and sector strategies Returns in Southeast Asia were
spectacular, especially during December, when overseas investors
charged into the region boosting demand -- and, consequently,
stock prices. The returns in Hong Kong, Malaysia, and Thailand
were exceptional by any standards, and your fund's overweighting
in these stock markets, combined with an underweighting in Japan,
was the dominant contributor to its superior performance.
While European markets did not match the returns of the smaller
Southeast Asia market, their performance during the period was
still quite rewarding, with returns typically ranging from 15% to
30%. Markets in Europe were primarily driven by falling interest
rates as individual countries took advantage of the widening of
the Exchange Rate Mechanism (ERM) currency guidelines. The wider
trading bands gave ERM countries the freedom to lower interest
rates -- and thus relieve pressure on their currencies -- without
waiting for Germany's Bundesbank to take the lead.
The U.S. dollar strengthened against most currencies during the
period. To help protect the value of your investment, currency
hedges were kept in place against a portion of the fund's
investments in France, the Netherlands, and Switzerland.
Global economic overview The sluggish pattern of economic
recovery we have experienced in the U.S. has also characterized
rebounds in the U.K., Canada, and Australia. We expect the same
trends to occur elsewhere in countries not yet visibly on the
mend. Just as 0% or negative real interest rates were necessary
to generate a rebound in the U.S., a similar interest-rate
scenario will probably be required in other countries. We believe
that policies favoring lower official interest rates will
eventually be adopted almost everywhere. Therefore, we should
ultimately see the unfolding of classic economic recovery
patterns, beginning with improvement in the housing sector and
followed by gains in motor vehicles and capital goods. Even so,
initial recoveries are apt to be slow.
<PAGE>
Europe Germany is making progress against inflation, which we
believe is soon likely to fall to under 3% annualized. This will
allow the Bundesbank to accommodate a significant further
reduction in interest rates. Both interest rate and currency
developments in Germany should provide welcome relief to France
and Germany's other partners in the European Union.
The sputtering British recovery should persist, but we do not
expect it to gain much steam until the rest of Europe starts to
recover. Interest rates in the U.K. should fall from current
levels but less so than in Germany. Likewise, any decline of the
pound against the U.S. dollar should be less than that of the
deutschemark.
Far East Japan's economy has deteriorated markedly since the
summer. Industrial production fell a sharp 5.5% month-to-month in
October. Meanwhile, capital spending has continued to fall,
business and consumer sentiment are at new lows and recurrent
governmental crises have created a semiparalysis under which
serious economic problems remain unaddressed. Among the world's
major economies, Japan is perhaps the most threatened by
deflation. Japanese export industries have lost competitiveness
with the yen at current levels, and the nation's trade surplus is
poised to shrink substantially. It seems evident that Japan must
find a way to revive consumer spending, and perhaps only a
massive tax cut has the potential to accomplish this. Interest
rates, although already low, remain well above inflation,
suggesting the potential for further declines.
The Southeast Asian region remains an island of prosperity and
rapid growth accompanied by low inflation. Conditions are less
favorable in China, where an austerity program has had only
limited success in restraining runaway economic growth and
accelerating inflation. Signals are mixed as to whether China's
policy of restraint will continue, and developments there must be
monitored very closely.
Australia is showing only moderate economic improvement, subpar
even by recent U.S. standards. The worst is undoubtedly over, but
conditions -- especially in key commodity markets -- will improve
only slowly. The outlook for Australian interest rates is one of
relative stability.
Investment outlook The economic recovery in continental Europe
is still very fragile, but eventually, we believe lower interest
rates and improved demand from the U.S. will stimulate activity
there. Investors are now looking to 1995, and the potential for
recovery in corporate profits in the next 12 to 18 months should
be attractive enough to encourage a positive trend in European
stock markets. We expect to emphasize the selection of companies
that have implemented sufficiently aggressive cost-reduction
policies to ensure improved profitability in a business
environment that will remain very price-competitive.
International stock market returns in 1993 were the best since
the mid-1980s. We are not prepared to predict a repeat of this
strong performance in 1994, but conditions are favorable enough
to justify optimism for satisfyingly positive results.
<PAGE>
Portfolio of
investments owned
December 31, 1993 (Unaudited)
Common Stocks (97.2%) (a)(b)
Number of Shares Value
Japan (17.2%)
1,000 Aoyama Trading Co. Ltd. $ 57,245
4,000 Asahi Organic Chemical Ind. 28,229
124 Chain Store Okuwa Co., Ltd. 1,886
5,000 Daiwa Securities Ltd. 55,904
1,000 Hirose Electric Co. Ltd. 54,115
1,000 Ito Yokado Ltd. 45,617
2,000 Kurita Water Ltd. 40,608
5,000 Matsushita Electric Ind. Ltd. 66,637
7,000 Mitsubishi Cable Ind. Ltd. 44,768
3,000 Mitsui Fudosan Co., Ltd. 30,322
1,000 Murata Manufacturing Co. Ltd. 33,810
400 SEGA Enterprises Ltd. 31,020
2,000 Sankyo Co., Ltd. 39,535
1,000 Santen Pharmaceutical 25,403
4,000 Sonton Food Ind. Co. Ltd. 54,383
5,000 Suzuki Motor Corp. 46,959
6,000 Toho Bank 35,635
2,000 Tostem Corp. 66,190
758,266
United Kingdom (15.6%)
4,000 Associated British Ports 32,323
5,700 BAT Industries PLC 46,608
7,000 Baird (William) PLC 23,888
6,000 British Telecommunications PLC 19,057
3,000 Burmah Oil 37,007
5,500 East Midlands Electric PLC 52,814
8,500 General Electric Co. (The) PLC 42,883
3,200 Guinness PLC 22,573
4,900 Molins PLC 41,623
4,961 North West Water Group PLC 42,947
5,000 Pearson PLC 44,910
5,300 Rothmans International PLC 37,504
5,100 Royal Insurance Holdings PLC 25,616
10,000 Scotia Holdings PLC(c) 42,103
2,850 Securicor Group PLC Class A 36,461
29,000 Senior Engineering Group PLC 54,195
1,200 SmithKline Beecham PLC ADR 32,850
5,000 South Western Electric PLC 51,336
686,698<PAGE>
Common Stocks
Number of Shares Value
Singapore (7.7%)
4,000 Asia Pacific Breweries $ 42,288
6,000 Clipsal Industries (Holdings) Ltd. 34,500
5,000 Genting Berhad 69,612
14,000 Informatics Holdings Ltd.(d) 18,805
5,000 Jurong Shipyard Ltd. 45,087
5,000 Singapore Airlines Ltd. 41,978
18,000 Singapore Ind. Leasing(d) 24,179
4,750 United Overseas Bank Ltd.
(Foreign Register) 46,378
7,000 Venture Manufacturing Inc. 16,542
339,369
France (7.5%)
100 Alcatel Alsthom CGE S.A. 14,229
80 Alcatel Cable 10,112
630 Credit Local de France 52,146
350 Docks de France 42,940
132 Financiere et Industrielle Gaz et Eaux 46,889
785 Pechiney International 27,221
350 Societe Generale D'Enterprises 45,306
200 Societe Generale D'Enterprises 9,463
60 Sommer-Allibert 20,573
125 Sovac 41,487
52 ZODIAC 18,814
329,180
Hong Kong (7.3%)
9,000 Cheung Kong Holdings Ltd. 55,034
500 Dao Heng Bank Group Ltd. 2,168
10,000 Guoco Group Ltd. 49,825
2,800 HSBC Holdings PLC 41,672
13,000 Hong Kong Land Co. Ltd. (The) 46,098
5,000 New World Development Co. Ltd. 26,531
6,000 Swire Pacific Ltd. Class A 53,966
32,000 Varitronix International Ltd. 44,726
320,020
Common Stocks
Number of Shares Value
Switzerland (7.1%)
35 Baer Holdings AG $ 42,302
100 Ciba-Geigy AG (Registered) 60,431
40 Nestle S.A. (Registered) 34,459
20 Rieter Holding AG (Registered) 21,084
40 SMH Bearer(d) 27,933
40 Sulzer PC 21,755
110 Swiss Bank Corp. (Registered) 17,136
71 Swiss Reinsurance Co. (Registered) 35,040
60 Union Bank of Switzerland (Bearer) 54,549
314,689<PAGE>
Netherlands (4.9%)
580 ABN AMRO Holding N.V. 21,323
725 Aegon N.V.(Bearer) 39,325
450 Akzo N.V. 43,496
1,736 Getronics Electric N.V. 39,004
1,500 IHC Caland N.V. 30,000
700 Wolters Kluwer N.V. 44,159
217,307
Mexico (4.6%)
1,200 Grupo Embotellador de
Mexico (Gemex) ADR(c)(d) 43,500
2,750 Grupo Financiero Banacci (Registered) 23,913
137 Grupo Financiero Banacci
(Registered), Class L 1,055
600 Grupo Financiero Banacci ADS 25,050
700 Grupo Financiero Serfin ADR 20,650
500 Grupo Televisa S.A. ADS(c) 32,250
500 Telefonos de Mexico S.A., Ser. L, ADR 33,750
1,750 Tolmex S.A. De C.V. 24,376
204,544
Malaysia (3.9%)
19,000 Development & Commercial Bank 45,146
15,000 Maruichi Malaysia Steel Tube BHD 38,148
20,500 Pilecon Engineering Berhad 47,187
8,000 United Engineers 42,473
172,954
Common Stocks
Number of Shares Value
Ireland (2.9%)
7,000 Allied Irish Banks PLC $ 30,018
4,600 Bank of Ireland 19,532
11,639 CRH PLC 61,040
4,000 Greencore PLC 19,403
129,993
Spain (2.7%)
300 Argentaria ADS 12,667
1,000 Hidrolectrica del Cantabrico 30,409
1,300 Inmobiliaria Metropolitana Vasco Central 47,074
900 Repsol S.A. 27,997
118,147
Australia (2.0%)
7,271 Amcor, Ltd. 48,199
1,600 CRA Ltd. 19,954
10,128 MIM Holdings Ltd. 18,261
115 Western Mining Holdings, Ltd. 548
86,962
Thailand (1.9%)
6,000 Bangkok Bank Co. Ltd. 59,294
1,500 Siam City Cement 25,529
84,823
<PAGE>
Portugal (1.9%)
2,300 Banco Commercial Portugues,
S.A. ADR 35,075
400 Banco Commercial Portugues, S.A. ADR 6,016
2,295 Banco Totta and Acores (BTA)
Nationalisert 42,576
83,667
Germany (1.8%)
65 Deutsche Bank AG 32,967
195 Spar Preferred Handels AG 44,741
77,708
Argentina (1.6%)
1,000 Baesa (Registered) ADS 45,000
500 Ciadea(d) 26,500
71,500
Sweden (1.5%)
30,000 Foreningsbanken AB(d) 67,416
Austria (1.0%)
1,000 Austria Mikro Systeme(c) 42,494
Common Stocks
Number of Shares Value
Greece (0.9%)
3,500 Greek Progress Fund-Units $ 38,998
Belgium (0.8%)
60 Bekaert S.A. 34,619
Italy (0.7%)
9,000 Credito Italiano S.A. 12,144
1,750 Danieli & Co. 11,222
2,500 Danieli & Co. (Savings Shares) 8,439
31,805
Denmark (0.7%)
750 NKT Holdings 29,639
Norway (0.6%)
1,500 Christiana Bank Kreditkass ADR(c) 26,625
Canada (0.4%)
500 Imperial Oil Ltd. 16,932
Total Common Stocks
(cost $3,471,444) $4,284,355
Warrants (0.1%)(a)(b)(d)
Number of Warrants Expiration Date Value
1,600 Clipsal Industries 8/12/98 $ 4,320
32 Sulzer PC, Ser. A 7/29/94 172
30 Sulzer PC, Ser. B 7/29/94 149
65 Swiss Reinsurance Co., Ser. A 10/14/94 502
65 Swiss Reinsurance Co., Ser. B 6/30/95 447
Total Warrants (cost $1,362) $ 5,590
<PAGE>
Short-Term Investments (13.9%)(a)(cost $610,000)
Principal Amount Value
$ 610,000 Interest in $402,391,000 joint repurchase
agreement dated December 31, 1993, with
Kidder Peabody due January 3, 1994, with
respect to various U.S. Treasury obligations--
maturity value of $610,000 for an effective
yield of 3.15% $ 610,000
Total Investments
(cost $4,082,806)(e) $4,899,945
Notes
(a) Percentages indicated are based on total net assets of
$4,407,513, which correspond to a net asset value per share of
$11.90.
(b) Securities whose value is determined or significantly
influenced by trading on exchanges not in the United States or
Canada. ADR or ADS after the name of a foreign holding stands for
American Depository Receipt or American Depository Shares,
respectively, representing ownership of foreign securities on
deposit with a domestic custodian bank.
(c) Securities 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. At June 30,1993, these securities amounted
to $186,972 or 4.2% of net assets.
(d) Non-income-producing security.
(e) The aggregate identified cost on a tax basis is $4,117,878,
resulting in gross unrealized appreciation and depreciation of
$937,535 and $155,469, respectively, or net unrealized
appreciation of $782,067.
<PAGE>
<TABLE>
CAPTION>
Forward Currency Contracts Outstanding
at December 31, 1993
Contracts Market Aggregate Delivery Unrealized
Value Face Date Appreciation/
Value (Depreciation)
<S> <C> <C> <C>
French Francs (Sell) $201,960 $201,444 2/14/94 ($ 516)
Dutch Guilders (Sell) 158,939 161,956 2/14/94 3,017
Swiss Francs (Sell) 100,590 99,960 2/14/94 ( 630)
$1,871
/TABLE
<PAGE>
Statement of
assets and liabilities
December 31, 1993 (Unaudited)
Assets
Investments in securities, at value
(identified cost $3,472,806) (Note 1) 4,289,945
Repurchase Agreement, at value
(cost $610,000) 610,000
Total investments, at value
(identified cost $4,082,806) $4,899,945
Dividends, and interest receivable 3,655
Receivable for foreign tax 9,596
Receivable for securities sold 181,537
Receivable for open forward currency contracts 3,017
Unamortized organization expenses (Note 1) 6,135
Total assets 5,103,885
Liabilities
Payable for securities purchased $ 503,017
Payable for compensation of Manager (Note 2)2,213
Payable for compensation of Trustees (Note 2) 133
Payable for investor servicing
and custodian (Note 2) 4,147
Payable for distribution fees (Note 2) 2,150
Payable for administrative services (Note 2) 10
Payable to subcustodian (Note 2) 180,766
Payable for open forward currency contracts 1,146
Other accrued expenses 2,790
Total liabilities 696,372
Net assets $4,407,513
Represented by
Paid-in capital (Note 4) $3,388,649
Undistributed net investment income 11,251
Accumulated net realized gain on investment transactions 189,255
Net unrealized foreign currency translation loss (652)
Net unrealized appreciation of investments and
forward currency contracts 819,010
Total -- Representing net assets applicable to
capital shares outstanding $4,407,513
Computation of net asset value and offering price
Net asset value and redemption price per share ($4,407,513
divided by 370,458 shares) $11.90
Offering price per share (100/94.25 of $11.90)* $12.63
*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.<PAGE>
Statement of
operations
Six months ended December 31, 1993 (Unaudited)
Investment income
Dividends (net of foreign tax of $2,460) $27,850
Interest 216
Total investment income 28,066
Expenses:
Compensation of Manager (Note 2) 13,281
Investor servicing and
custodian fees (Note 2) 12,305
Compensation of Trustees (Note 2) 791
Administrative fees (Note 2) 20
Auditing 6,194
Legal 4,552
Distribution fees (Note 2) 7,467
Amortization of organization expenses
(Note 1) 1,389
Reports to shareholders 327
Postage14
Other expenses 530
Fees waived by Manager (Note 2) (6,971)
Total expenses 39,899
Net investment loss (11,833)
Net realized gain on investments
(Notes 1 and 3) 434,956
Net realized gain on foreign
currency (Note 1) 440
Net realized gain on forward currency
contracts (Note 1) 22,068
Net unrealized foreign currency
translation loss (161)
Net unrealized appreciation of investments
and forward currency contracts during the year 358,906
Net gain on investment transactions 816,209
Net increase in net assets resulting
from operations $804,376
<PAGE>
Statement of
changes in net assets
Six months ended Year ended
December 31 June 30
1993* 1993
Increase in net assets
Operations:
Net investment income (loss) $(11,833) $ 20,199
Net realized gain (loss)
on investments 434,956 (71,834)
Net realized gain (loss)
on foreign currency 440 (303)
Net realized gain (loss) on forward
currency contracts 22,068 (26,175)
Net unrealized foreign currency
translation (loss) (161) (1,153)
Net unrealized appreciation
of investments 358,906 305,046
Net increase in net assets
resulting from operations 804,376 225,780
Distributions to shareholders from
net gain on investments (70,167) --
Increase from capital share transactions
(Note 4) 814,522 130,947
Total increase in net assets 1,548,731 356,727
Net assets
Beginning of period 2,858,782 2,502,055
End of period (including distributions
in excess of net investment income
undistributed net investment income of
$63,269 and $23,084, respectively) $4,407,513 $2,858,782
*Unaudited.
<PAGE>
<TABLE>
<CAPTION>
Financial highlights*
(For a share outstanding throughout the period)
For the period
February 28, 1991
Six months (commencement
ended Year ended of operations) to
December 31 June 30 June 30
1993** 1993 1992 1991
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $9.58 $8.82 $8.18 $8.63
Investment Operations:
Net Investment Income (loss)(.05)(b) .07(b) .06 .07(b)
Net Realized and Unrealized
Gain (Loss) on Investments 2.59 .69 .71 (.52)
Total from Investment Operations2.54 .76 .77 (.45)
Less Distributions from:
From Net Investment Income -- -- (.13) --
From Net Realized Gain
on Investments (.22) -- -- --
Total Distributions (.22) -- (.13) --
Net Asset Value, End of Period$11.90 $9.58 $8.82 $8.18
Total Investment Return
at Net Asset Value (%)(a) 53.10(d) 8.62 9.52 (15.32)(d)
Net Assets,
End of Period (in thousands) $4,408 $2,859 $2,502 $2,054
<PAGE>
Ratio of Expenses to
Average Net Assets (%) 2.40(b)(d) 1.80(b) 1.98 2.33(b)(d)
Ratio of Net Investment Income (loss)
to Average Net
Assets(%) (0.71)(b)(d) .81(b) .76 2.57(b)(d)
Portfolio Turnover (%) 75.99(c) 80.92 82.45 14.54(c)
* Financial Highlights for periods ended through June 30, 1992, have been restated to
conform with requirements issued by the SEC in April 1993.
** Unaudited.
(a) Total investment return assumes dividend reinvestment and does not reflect the effect
of sales charges.
(b) Reflects a voluntary expense limitation during the period. As a result of such
limitation, expenses of the Fund for the periods ended December 31, 1993, June 30, 1993,
and June 30, 1991, reflect a per-share reduction of approximately $0.03, $0.05 and $0.10
respectively.
(c) Not annualized.
(d) Annualized.
/TABLE
<PAGE>
Notes to
financial statements
December 31, 1993 (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 equity securities of companies located outside North
America.
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, except that certain U.S. government
obligations are stated at the mean between the last reported bid
and asked prices. 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. (See
Section D of Note 1 with respect to valuation of options and
forward currency contracts.)
Securities quoted in foreign currencies are translated into U.S.
dollars at the current exchange rate. Gains and losses that arise
from changes in exchange rates are not segregated from gains and
losses that arise from changes in market prices of investments.
The effects on net investment income arising from changes in
exchange rates are also not segregated.
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 managed by
Putnam Investment Management, Inc. (formerly known as The Putnam
Management Company, Inc.), the Fund's Manager, a wholly-owned
subsidiary of Putnam Investments, Inc. (formerly known as The
Putnam Companies, Inc.), and certain accounts. These balances may
be invested in one or more repurchase agreements and/or
short-term money market instruments.
C) Repurchase agreements The Fund, 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.
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 or payment, the Fund realizes a gain or loss
amounting to the difference between the original value and the
ending value of the receivable or payable. Foreign currency gains
and losses related to interest receivable are reported as part of
interest income.
E) Option accounting principles The premium paid by the Fund for
the purchase of a call or put option is included in the Fund's
"Statement of assets and liabilities" as an investment and
subsequently "marked-to-market" to reflect the current market
value of the option. If an option which the Fund has purchased
expires on the stipulated expiration date, the Fund realizes a
loss in the amount of the cost of the option. If the Fund enters
into a closing sale transaction, the Fund realizes a gain or
loss, depending on whether proceeds from the closing sale
transaction are greater or less than the cost of the option. If
the Fund exercises a call option, the cost of the securities or
currencies acquired by exercising the call is increased by the
premium paid to buy the call. If the Fund exercises a put option,
it realizes a gain or loss from the sale of the underlying
security and the proceeds from such sale are decreased by the
premium originally paid.
Options on foreign currencies The Fund writes and purchases put
and call options on foreign currencies. The accounting principles
and risks involved are similar to those described above relating
to options on securities. The amount of potential loss to the
Fund upon exercise of a written call option is the value (in U.S.
dollars) of the currency sold, converted at the spot price, less
the value of U.S. dollars received in exchange. The amount of
potential loss to the Fund upon exercise of a written put option
is the value (in U.S. dollars) of the currency received converted
at the spot price, less the value of the U.S. dollars paid in
exchange.
Forward currency contracts A forward currency 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 forward currency contracts is that
the aggregate face value in U.S. dollars at the time the contract
was opened; however, management believes the likelihood of such a
loss to be remote.
F) 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.
G) Distributions to shareholders Distributions to shareholders
are recorded by the Fund on the ex-dividend date.
H) 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 $14,123. 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 Investment Management, Inc. (formerly
known as Putnam Management), the Fund's Manager, a wholly-owned
subsidiary of Putnam Investments, Inc. (formerly known as The
Putnam Companies, Inc.), for management and investment advisory
services is paid quarterly based on the average net assets of the
Fund for the quarter. Such fee is at 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, subject to reduction in any year by the
amount of certain brokerage commissions and fees (less expenses)
received by affiliates of the Manager on the Fund's portfolio
transactions.
Until further notice, the Manager has voluntarily agreed to
reduce its compensation, and to the extent necessary absorb
certain Fund expenses, to the extent that expenses of the Fund
exceed an annual rate of 1.90% of average net assets. The Fund's
expenses subject to this limitation are exclusive of brokerage,
interest, taxes, deferred organizational and extraordinary
expenses, and payments required under the Fund's Distribution
Plan. This limitation is accomplished by a reduction of the
compensation payable under the management contract to the Manager
and, if necessary, payment of additional Fund expenses by the
Manager. For the six months ended December 31, 1993, the Fund's
expenses were reduced by $6,971. For the purpose of determining
any such reduction in Putnam Management's compensation, expenses
of the Fund shall not reflect the application of commissions or
cash management credits that may reduce designated Fund expenses.
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. For the six months ended December 31, 1993, the Fund
incurred $20 in fees for these services.
Trustees of the Fund receive an annual Trustee's fee of $100 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. Fees paid for
these investor servicing and custodial functions for the six
months ended December 31, 1993, amounted to $12,305.
Investor servicing and custodian fees reported in the Statement
of operations for the six months ended December 31, 1993, have
been reduced by credits allowed by PFTC.
As part of the custodian contract between Putnam Fiduciary Trust
Company and the subcustodian bank, the subcustodian has a lien on
the securities of the Fund to the extent permitted by the Fund's
investment restrictions to cover any advances made by the
subcustodian for the settlement of securities purchased by the
Fund. At December 31, 1993, the payable to subcustodian
represents the amount due for cash advanced for the settlement of
a security purchase.
Pursuant to the Fund's underwriting agreement and to a
distribution plan adopted under Rule 12b-1 of the Investment
Company Act of 1940. The purpose of the 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 shares of the Fund. The Trustees have approved
payment by the Fund to Putnam Mutual Funds Corp. at an annual
rate of 0.25% of average net asset value of shares of the Fund
attributable to qualifying investment dealers of record for Fund
shareholders. For the six months ended December 31, 1993, the
Fund incurred distribution fees of $7,467.
During the six months ended December 31, 1993, Putnam Mutual
Funds Corp., acting as an underwriter, received no commissions
from the sale of shares of the Fund.
At December 31, 1993, Putnam Investments, Inc. owned 239,995
shares outstanding of the Fund, valued at $2,855,941.
<PAGE>
Note 3 Purchases and sales of securities
During the six months ended December 31, 1993, purchases and
sales of investment securities other than short-term investments
aggregated $3,412,880 and $2,152,328, respectively. There were no
purchases or sales of U.S. government obligations during the
period. In determining the net gain or loss on securities sold,
the cost of securities has been determined on the identified cost
basis.
Transactions in forward currency contracts during the year are
summarized as follows:
Sales of Forward Currency Contracts
Number of Aggregate
Contracts Face Value
Contracts open at the beginning
of period 1,769 $ 576,226
Contracts opened 3,320 914,991
5,089 1,491,217
Contracts closed (3,429) (1,027,857)
Contracts open at end of period 1,660 $ 463,360
<PAGE>
<TABLE>
<CAPTION>
Note 4 Capital Shares
At December 31, 1993, there was an unlimited number of shares of beneficial interest
authorized. Transactions in capital shares were as follows:
Six months ended Year ended
December 31 June 30
1993 1993
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Shares sold 92,790 $1,025,550 15,778 $138,604
Shares issued in connection
with reinvestment of distributions 6,133 70,167 -- --
98,923 1,095,717 15,778 138604
Shares repurchased (26,963) (281,195) (911) (7,657)
Net increase 71,960 $814,522 14,867 $130,947
</TABLE>
<PAGE>
Note 5 Reclassification of Capital Account
Effective July 1, 1993, Putnam Overseas Growth Fund has adopted
the provisions of Statement of Position 93-2 "Determination,
Disclosure and Financial Statement Presentation of Income,
Capital Gain and Return of Capital Distributions by Investment
Companies (SOP)." The purpose of this SOP is to report the
accumulated net investment income (loss) and accumulated net
realized gain (loss) accounts in such a manner as to approximate
amounts available for future distributions (or to offset future
realized capital gains) and to achieve uniformity in the
presentation of distributions by investment companies.
As a result of the SOP, the Fund has reclassified $
to increase undistributed net investment income and $
to decrease accumulated net realized gain with a
decrease of $ to additional paid in capital.
These adjustments represent the cumulative amounts necessary to
report these balances through June 30, 1993, the close of the
Fund's most recent fiscal year-end, for financial reporting and
tax purposes.
Fund performance supplement
Overseas Growth Fund is a portfolio managed for capital
appreciation through investments in common stocks and other
securities of companies located outside North America. The
Europe, Australia, and the Far East (EAFE) component of the
Morgan Stanley Capital International World Index is an unmanaged
list of international equity securities, excluding U.S., with all
values expressed in U.S. dollars. Standard & Poor's 500 Index is
an unmanaged list of U.S. large-capitalization common stocks; it
assumes reinvestment of all distributions. The indexes do not
take into account brokerage commissions or other costs. The
fund's portfolio contains securities that do not match those in
the indexes, especially with respect to the S&P 500 index.
Fund performance data do not take into account any adjustment for
taxes that may have been payable.
The fund performance supplement has been prepared by Putnam
Management to provide additional information about the fund and
the indexes used for performance comparisons. The information is
not part of the portfolio of investments owned or the financial
statements.
<PAGE>
Putnam
Overseas
Growth
Fund
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
Investor servicing agent
Putnam Investor Services
Mailing address:P.O. Box 41203
Providence, RI 02940-1203
1-800-225-1581
Custodian
Putnam Fiduciary
Trust Company
Legal counsel
Ropes & Gray
(DALBAR logo)
Putnam Investor Services has
received the DALBAR award
each year since
the award's 1990 inception.
In more than 10,000 tests
of 38 shareholder
service components,
Putnam outperformed
the industry standard
in every category.
10469
<PAGE>
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
John R. Verani
Vice President
Anthony W. Regan
Vice President
Justin M. Scott
Vice President and
Fund Manager
William N. Shiebler
Vice President
John D. Hughes
Vice President and Treasurer
Beverly Marcus
Clerk and Assistant Treasurer
Trustees
George Putnam, Chairman
William F. Pounds, Vice Chairman
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
This report is for the information of shareholders of Putnam
Overseas 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.
<PAGE>
APPENDIX TO FORM N30D 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 name 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 signals are omitted.
(6) Page numbering is different.
