Putnam
Overseas
Growth
Fund
SEMIANNUAL REPORT
December 31, 1994
(Graphic: Balance Scales)
B O S T O N * L O N D O N * T O K Y O
<PAGE>
Performance highlights
> "According to the World Bank, the global economy will grow roughly 3.5% in
1995, more than twice as fast as it expanded between 1990 and 1993."
- -- U.S. News & World Report, December 12, 1994
> The fund's class A shares outperformed 50% of the funds in Lipper's
international fund category for 1-year performance and 75% of the funds for
2-year and 3-year performance as of December 31, 1994.*
> Performance should always be considered in light of a fund's investment
strategy. Putnam Overseas Growth Fund is designed for investors seeking
capital appreciation through equity securities of issuers located outside
North America.
SEMIANNUAL RESULTS AT A GLANCE
<TABLE>
<CAPTION>
Class A Class B Class M(1)
<S> <C> <C> <C> <C> <C> <C>
Total return: NAV POP NAV CDSC NAV POP
............................................................................................................
(change in value
during
period plus
reinvested
distributions)
6 months ended
12/31/94 0.76% -5.02% 0.34% -4.61% -- --
</TABLE>
<TABLE>
<CAPTION>
Share value: NAV POP NAV NAV POP
<S> <C> <C> <C> <C> <C>
............................................................................................................
6/30/94 $ 11.83 $ 12.55 $11.82 -- --
12/1/94(1) -- -- -- $ 11.87 $12.30
12/31/94 11.75 12.47 11.69 11.75 12.18
</TABLE>
<TABLE>
<CAPTION>
Capital gains
<S> <C> <C> <C> <C> <C>
Distributions: No. Income Long-term Short-term Total
...........................................................................................................
Class A 1 -- $ 0.082 $ 0.086 $0.168
Class B 1 -- 0.082 0.086 0.168
Class M 1 -- 0.082 0.086 0.168
</TABLE>
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. CDSC for class
B shares assumes 5% maximum contingent deferred sales charge.
(1) On 12/2/94, the fund began offering class M shares. Performance for these
shares is not shown because of the brevity of the reporting period.
* Lipper Analytical Services is an independent research organization;
rankings vary over time and do not reflect the effects of sales charges. The
fund's class A shares ranked 78 out of 157 (top 50%) international funds for
1-year performance, 19 out of 111 for 2-year performance, and 18 out of 81
for 3-year performance.
<PAGE>
From the Chairman
Dear Shareholder:
[Photo George Putnam]
(c) Karsh, Ottawa
The year just ended was not an easy one for U.S. investors in international
equities. For most of 1994, the widespread weakness in the world's bond
markets retarded equity performance in Europe and much of the Pacific Rim.
The year's challenges ranged from sharp downturns in the equity markets of
smaller emerging nations to erratic movements in the Japanese stock market,
from the strength of other currencies against the dollar to the devaluation
of the peso in Mexico. Given this environment, we think you'll appreciate the
active management style and disciplined investment strategy employed by
Putnam Overseas Growth Fund's manager, Justin Scott.
At the outset of fiscal 1995 last June, Justin had already reduced the fund's
exposure to the volatile emerging markets of Southeast Asia, shifting a good
portion of the fund's assets into the world's more mature equity markets of
Europe and Japan, a strategy he maintained throughout the past six months and
one that has helped the fund's performance during the period. Indeed, the
United Kingdom, Ireland, France, and Japan have seen recent growth in
corporate earnings, a positive development Justin expects may continue in the
coming year.
Justin's decision to exit Mexico this past summer also proved to be well
timed. Unlike many other international stock funds, your fund was spared the
performance-diminishing effects of the Mexican peso's devaluation.
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,
(George Putnam signature)
George Putnam
Chairman of the Trustees
February 15, 1995
<PAGE>
Report from the fund manager
Justin Scott
With few exceptions, markets around the world experienced mixed and generally
flat performance throughout the six months ended December 31, 1994. The
primary reasons for the indifferent-to-disappointing results was a weak bond
market, caused by investors' overwhelming fear of inflation, and concern
about the repercussions of U.S. interest-rate increases. The expansion of
government borrowing and the subsequent squeeze on global liquidity were
additional factors.
In this less-than-robust environment, Putnam Overseas Growth Fund's class A
shares returned a total of 0.76% at net asset value (NAV) and -5.02% at
public offering price. Class B share performance was 0.34% at NAV. In
comparison, the Morgan Stanley Capital International (MSCI) Europe,
Australia, and Far East Index posted a return of -0.92%, while the MSCI World
Index (excluding the U.S.) returned -0.62%.
> EMPHASIS REMAINS ON CORE EQUITY MARKETS
Our philosophy is that the fund's performance should not depend on any one
country or any one investment position. We prefer to have the majority of the
fund's assets allocated among 8-10 countries, taking an "odds-in-our-favor"
approach.
While it's always desirable to discover and invest in the top-performing
markets, the key to your fund's performance thus far has been our avoidance
of the troubling roller-coaster rides in the markets of Mexico, Brazil, and
Thailand. Former emerging-market darlings, these markets were down
significantly by period's end. The fund did hold positions in Mexico at the
outset of fiscal 1995, but during the market recovery preceding the recent
presidential election, we sold the fund's positions. In retrospect, this was
a fortunate move, given the dramatic devaluation of the peso in December. The
market valuations in Brazil and Thailand have not held our interest for some
time. Other pitfalls included Hong Kong and Malaysia, in which your fund's
positions were relatively low 1.8% and 2.8% of net assets, respectively, on
December 31, 1994.
<PAGE>
In general, your fund's country allocation did not change significantly
during the semiannual period. Japan, the United Kingdom, France, the
Netherlands, and Germany remain the top five markets in which your fund is
invested.
> VALUATION TECHNIQUES DOMINATE STOCK SELECTION
As always, in selecting stocks for your fund's portfolio, we continue to use
our valuation techniques. We look at the price that we have to pay for
corporate assets and compare it with the return we expect to earn. We apply
the same valuation techniques to growth companies, cyclical companies, and
companies that are downsizing. No matter what the sector, we strive to find
stocks we believe are mispriced, selling significantly below what we believe
to be their true long-term worth.
This approach should not be confused with a "basic-value" style of investing,
which focuses solely on low price-to-earnings and low price-to-book ratios.
The higher a company's payback potential, the higher the price we expect to
pay for its stock. We are interested only in companies whose current stock
prices are substantially below their potential relative paybacks.
We conduct intensive research, rigorously comparing price with prospective
payback. We're not deliberately contrarian, but we often purchase companies
that have been ignored or have not been
STOCK MARKET PERFORMANCE
Based on 1994 month-end values in U.S. dollars.
<TABLE>
<CAPTION>
July August September October November December
<S> <C> <C> <C> <C> <C> <C>
Japan -3.59% 0.68% -2.47% 2.74% -5.03% 1.15%
......................................................................................................
United Kingdom 5.38 5.73 -4.61 5.82 -4.34 0.12
......................................................................................................
France 9.88 0.52 -6.77 3.56 -1.07 -3.43
......................................................................................................
Netherlands 6.11 3.56 -2.79 6.71 -5.09 2.68
......................................................................................................
Germany 4.92 3.67 -5.93 5.58 -5.26 3.60
......................................................................................................
Switzerland -2.32 4.17 -0.67 0.94 -2.14 2.48
......................................................................................................
Singapore/Malaysia 2.56 5.00 4.25 4.80 -5.56 0.77
......................................................................................................
Finland 11.92 9.49 1.83 12.34 -9.92 2.79
......................................................................................................
Spain 6.00 -1.12 -2.90 2.93 -1.73 -6.26
</TABLE>
Table compares month-by-month stock market performance of top 10 countries
represented in the portfolio (Singapore and Malaysia markets combined). These
10 markets represented 68.5% of the fund's net assets on 12/31/94. Portfolio
weightings may vary in the future. Returns are based on U.S. dollars and
assume dividend reinvestment net of each country's respective foreign tax
rates. Source: Morgan Stanley Capital International.
<PAGE>
as well followed by other international investors. This approach has enabled
the majority of our stock selections to outperform their respective indexes
during this semiannual period.
> CURRENCY HEDGES INCREASED
The persistent weakness of the U.S. dollar has certainly been a factor in the
fund's performance. At present, this weakness has been further exacerbated by
the Mexican crisis. However, we believe the dollar has tested its 12-month
lows against the European currencies and may recover, going forward. A
stronger dollar, in turn, creates the possibility that positive returns in
European local currency may be eroded. In defense, we've begun to hedge the
underlying value of the fund's invested assets in the French franc, Dutch
guilder, Swiss franc, and British pound sterling.
Your fund's Japanese yen holdings have also been hedged, but for a different
reason. This move was based on the high value of the yen rather than the low
value of the dollar. Although a weak yen would probably prove favorable for
the Japanese market -- in particular, Japanese exporting stocks -- it would
hamper the performance of these stocks in dollar terms. Should Japanese
stocks rise in value while the yen is depreciating, the dollar value of these
securities would not appreciate as much as we would prefer. Thus, our
currency hedging strategy overall is not a money-making one, but rather a
defensive, performance-protecting move.
> OUTLOOK
Europe. In the core European countries, we anticipate continued recovery in
corporate earnings with industrial production and exports showing continued
growth. The combination of high real yields on long-term bonds and an
increase in short-term rates should eventually slow, but not reverse, the
momentum of economic growth. This trend could prove favorable for general
stock-market performance and could help dampen inflationary fears, taking the
pressure off bond markets. In France, Germany, and the United Kingdom, stock
market valuations are looking increasingly attractive as higher profit levels
are established, a trend we believe will persist throughout the remainder of
fiscal 1995. Peripheral markets such as Italy, Spain, and Sweden face weaker
currencies and bond markets amidst large budget deficits and political
instability, a combination that could possibly interrupt economic recovery.
<PAGE>
Japan. The recent earthquake in Kobe has struck Japan's industrial heartland
and the cost will be well in excess of that incurred by the Los Angeles
earthquake in early 1994. The disaster will necessitate yet another
stimulatory package by the Japanese parliament, spurring construction
activity and perhaps raising inflationary fears. In the short term, the
result could be further weakness in the bond market. Your fund's portfolio is
reasonably well represented in the industrial, steel, and construction
sectors, which are likely to benefit from the rebuilding.
Southeast Asia. For the most part, there has been no deterioration in the
economic fundamentals of the smaller Southeast Asian markets. The exception
is Hong Kong, which has been negatively affected by China's rising inflation,
as well as numerous bankruptcies and a real estate decline of its own. We
believe the inherent long-term growth rates of these emerging economies
remain high. However, the possibility exists for further interest-rate
increases over the short term. On a valuation basis, stocks prices are
becoming more reasonable. We are on the lookout to make selective investments
in the region once again, should future setbacks produce more attractive
valuations.
Latin America. The fund has virtually no exposure to the emerging Latin
American markets, the exception being a very small holding in Argentina,
representing less than 0.25% of the fund's net assets. Having been
significantly damaged by the devaluation of the peso, the stocks of Latin
American companies, particularly those of Mexico, remain unattractive for the
time being.
As we enter the second half of fiscal 1995, we're looking for the
stabilization of domestic and foreign bond markets -- which would be a
long-term plus for global equity markets. We believe the fundamentals for
investing in equities around the world remain strong and we will continue to
search the globe for attractive individual investments in the months ahead.
The views expressed here are exclusively those of Putnam Management. They are
not meant as investment advice. Although the described holdings were viewed
favorably as of December 31, 1994, 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>
<CAPTION>
Standard MSCI
Class A Class B & Poor's((r)) EAFE
NAV POP NAV POP 500 Index Index
<S> <C> <C> <C> <C> <C> <C>
6 months 0.76% -5.02% 0.34% -4.61% 4.87% -0.92%
1 year 0.17 -5.62 -- -- 1.36 7.78
3 years 38.79 30.86 -- -- 20.01 25.48
Annual average 11.55 9.38 -- -- 6.27 7.86
Life of class A 42.93 34.66 -- -- 40.72 23.10
Annual average 9.75 8.06 -- -- 9.30 5.57
Life of class B -- -- 0.68 -4.28 2.84 0.48
</TABLE>
Fund performance data do not take into account any adjustment for taxes
payable on reinvested distributions. The fund began offering what are now
known as class A shares on 2/28/91. Effective 6/1/94, the fund began offering
class B shares and on 12/1/94 it began offering class M shares. Performance
for class M shares 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.
<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 higher 12b-1 fees than
class A shares and no sales charge on redemptions.
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
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. The Europe component of the World Index is an unmanaged list of
597 companies representing 14 European countries, with values expressed in
U.S. dollars.
Standard & Poor's 500 Index is an unmanaged list of U.S. large-capitalization
common stocks and assumes reinvestment of all distributions. The index is a
widely used measure of stock market performance and does not take into
account brokerage commissions or other costs.
The fund's portfolio contains securities that differ from those in the
indexes.
<PAGE>
The Putnam Fund Selector(tm)
The Putnam Fund Selector 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.
(Graphic-Pyramid showing risk\rewards.)
Putnam Growth Funds
Putnam Growth and Income Funds
Putnam Income or Tax-Free 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
Please call your financial advisor or Putnam to obtain a prospectus for any
Putnam fund. It contains more complete information, including charges and
expenses. Read it carefully before you invest or send money.
PUTNAM TAX-FREE
INCOME 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(section)
California Tax Exempt Money Market Fund
New York Tax Exempt Money Market Fund
Tax Exempt Money Market Fund
CDs and savings accounts**
*Formerly Energy-Resources Trust.
+Not available in all states.
++Relative to above.
(section)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.
<PAGE>
Portfolio of investments owned
December 31, 1994 (Unaudited)
Common Stocks (81.3%)(a)
Number of Shares Value
Japan (29.8%)
25,000 Bridgestone Corp. Japan 391,173
10,000 CSK Corp. (b) 324,975
25,000 Dai Nippon Printing Co., Ltd. 426,280
31,000 Daiwa Securities Ltd. 447,742
40,000 Fujitsu, Ltd. (b) 405,216
7,000 Futaba Industrial Co., Ltd. 374,925
15,000 Glory Ltd. (Glory Kogyo) 485,958
10,000 Ito Yokado Ltd. 534,604
4,000 Japan CBM Corp. (b) 148,445
44,000 Komatsu, Ltd. 397,192
13,000 Komori Corp. 348,144
16,000 Kurita Water Ltd. 414,042
17,600 Ktk Telecommunications 197,713
40,000 Maeda Corp. 417,252
26,000 Marui Co., Ltd. 474,625
12,000 Maruichi Steel Tube Ltd. 215,447
28,000 Matsushita Electric Ind. Ltd. 460,583
40,000 Mitsubishi Motors Corp. (b) 391,976
50,000 Mitsui Fudoscan Co. Ltd. 426,280
10,500 Murata Manufacturing Co. Ltd. 405,467
31,000 Nichicon 453,961
20,000 Nippondenso Co., Ltd. (b) 421,264
83,000 Nisshin Steel Co., Ltd. 417,913
25,000 Omron Corp. 461,385
6,000 Sony Corp. (b) 340,020
8,000 Taihei Dengyo (b) 190,973
14,000 Takuma Co. Ltd. (b) 252,759
36,000 Tokio Marine & Fire Insurance Co. Ltd. (b) 440,521
65,000 Toray Industries, Inc. (b) 472,667
35,000 Yamanashi Chuo Bank Limited Ordinary 389,669
18,000 Yamanouchi Pharm Co. Ltd. 370,111
16,000 Yamato Transport Co. Ltd. (b) 197,392
----------
12,096,674
United Kingdom (9.9%)
30,000 Argyll Group PLC 125,907
27,000 Associated British Ports PLC 115,007
50,114 BAT Industries PLC 338,635
180,000 British Steel PLC 433,386
25,265 Burmah Oil PLC 322,455
38,500 General Electric Co. (The) PLC 165,800
8,200 Guinness PLC 57,785
13,500 Meyer International PLC 75,263
58,000 Molins PLC 449,599
40,000 North West Water Group PLC 339,508
25,000 Pearson PLC 217,283
35,100 Royal Insurance Holdings PLC 153,355
225,000 Sears PLC 387,585
2,850 Securicor Group PLC Class A 44,765
17,500 Security Services PLC 225,269
29,000 Senior Engineering Group PLC 37,239
4,600 Shell Transport & Trading Co. PLC (Registered) 50,137
5,000 South Western Electric PLC 69,061
60,000 Tate & Lyle PLC 397,452
----------
4,005,491
France (7.4%)
3,000 Credit Local de France 214,768
489 Docks de France 59,842
5,400 Elf Aquitaine (Bearer) 380,408
2,200 Essilor Intl. Pfd. ADP 204,085
375 Galeries Layfayette 160,935
3,450 Lafarge Coppee (Bearer Shares) 245,690
5,000 Michelin Class B (b) 182,065
585 Pechiney International 17,541
2,300 Peugeot S.A. 315,517
16,400 Sgs-Thomson Microelec Ny Shs ADR 373,100
3,200 Societe Generale D'Enterprises 336,432
204 Societe Generale D'Enterprises 7,551
350 Sommer-Allibert 110,457
2,300 Sovac 161,207
2,300 Ugine (Bearer) 161,638
153 Zodiac S.A. 67,382
----------
2,998,618
<PAGE>
Netherlands (5.1%)
10,040 ABN AMRO Holding N.V. 349,082
2,936 Aegon N.V. (Bearer) 187,912
2,200 Akzo N.V. 254,212
800 DSM N.V. 63,611
7,000 Getronics Electric N.V. 255,492
3,900 IHC Caland N.V. 98,720
4,700 Randstad Holdings (b) 254,472
7,000 Royal Ptt Nederland N.V (b) 236,118
5,250 Wolters Kluwer N.V. 388,687
----------
2,088,306
Germany (3.9%)
2,200 BASF AG 447,812
900 Jungheinrich Prior 206,262
1,500 Mayr-Melnhof Karton AG (Bearer) (b) 88,171
600 Schering AG 393,157
1,300 VEBA AG 450,510
----------
1,585,912
Switzerland (3.3%)
116 BBC Brown Boveri AG (Bearer) 99,910
35 Baer Holding AG (b) 35,843
200 Ciba-Geigy AG (Registered) 119,373
450 George Fischer (Bearer) (b) 526,175
180 Nestle S.A. (Registered) 171,540
130 Rieter Holding AG (Registered) 178,831
25 Rieter Holding AG 6,400
150 SGS Societe Generale De Surveillance Holdings S.A.
(Bearer) 207,489
110 Swiss Bank Corp. (Registered) 14,711
----------
1,360,272
Singapore (3.1%)
26,000 Cycle & Carriage Ltd. 233,769
7,500 Genting Berhad 64,361
112,000 Informatics Holdings Ltd. 86,094
17,000 Singapore Airlines Ltd. (Foreign Registered) 156,349
13,000 Singapore Press Holdings (Foreign Registered) 236,445
37,750 United Overseas Bank Ltd. (b) (Foreign Registered) 399,006
32,000 Venture Manufacturing Ltd. (b) 70,282
----------
1,246,306
Malaysia (2.8%)
20,000 Genting Berhad 171,630
31,000 Hong Leong Industries Berhad 160,344
50,000 Malayan Banking Berhad 301,725
55,000 SungeiWay Holdings 219,830
30,000 Telekom Malaysia Berhad 203,370
20,000 United Engineers Berhad 98,746
----------
1,155,645
Spain (2.6%)
4,380 Argentaria ADS (Registered) 155,205
5,000 Hidrolectrica del Cantabrico 136,726
55,000 Iberduero S.A. 339,235
1,700 Inmobiliaria Metropolitana Vasco Central 54,687
13,250 Repsol S.A. 359,306
----------
1,045,159
Ireland (2.4%)
53,426 Allied Irish Banks 222,824
35,000 Bank of Ireland 162,194
62,000 CRH PLC 341,905
42,109 Greencore PLC 260,183
----------
987,106
Austria (1.9%)
5,300 Austria Mikro Systeme Intl (b) 399,505
2,500 Mayr-Melnhof Karton AG ADS 144A (b) 36,563
3,500 VA Technologie AG (Bearer) (b) 352,407
----------
788,475
Hong Kong (1.8%)
35,000 Cheung Kong Holdings Ltd. 142,499
31,000 Guoco Group Ltd. 132,621
29,000 Hong Kong Land Holdings Ltd. 56,599
50,000 Hutchison Whampoa, Ltd. 202,275
12,800 Jardine Matheson Holdings Ltd. 91,405
80,000 Varitronix International Ltd. 113,736
----------
739,135
Denmark (1.6%)
10,500 Danisco A/S 372,842
750 NKT Holdings 40,317
9,000 Tele Danmark A/S ADR (b) 229,500
----------
642,659
<PAGE>
Sweden (1.3%)
3,000 Arjo AB 54,922
4,600 Autoliv AB 177,097
30,000 Foreningsbanken AB 58,557
14,500 Svenska Cellulosa AB (b) 227,395
----------
517,971
Belgium (1.2%)
270 Bekaert S.A. 191,310
600 Solvay S.A 285,939
----------
477,249
Taiwan (1.2%)
8,500 Hocheng Group Corp. Gdr 144A (b) 204,531
15,500 Yageo Gdr 144A 263,500
----------
468,031
Australia (0.9%)
27,400 Amcor, Ltd. 197,910
12,000 Brambles Industries, Ltd. 114,576
40,000 MIM Holdings Ltd. 66,652
----------
379,138
Finland (0.5%)
8,000 Effjohn OY Ser.A (Bearer) 86,218
6,500 Repola 117,440
----------
203,658
Italy (0.3%)
4,950 Danieli & Co. 31,609
20,000 Danieli & Co. (Savings Shares) 71,638
----------
103,247
Portugal (0.1%)
400 Banco Commercial Portugues, S.A. (Registered) 5,233
2,295 Banco Totta and Accores (BTA) Nationalisert
(Registered) 51,385
-----------
56,618
Argentina (0.1%)
6,400 Ciadea 56,000
Norway (0.1%)
1,500 Christiana Bank Kreditkass ADR 144A (b) 30,375
5,000 Christiana Bank OG Kreditkass 10,201
-----------
40,576
Mexico (--%)
600 Grupo Iusacell S.A. Ser. D ADR (b) 9,900
Total Common Stocks
(cost $33,018,403) $33,052,146
Foreign Bonds and Notes (0.6%) (a)(b)
(cost $268,417)
Denmark (0.4%)
1,200 Danisco Cv. Bond 5s, 2004 $180,750
Finland (0.1%)
350,000 Effjohn OYy - AB Cv. bond 7s, 2004 51,843
Italy (0.1%)
37,422,000 Danieli & Co 7-1/4s, 2000 23,389
$255,982
Warrants (--%) (a)(b) (cost $--)
Expiration
Number of Warrants Date Value
Italy (--%)
6,237 Danieli & Co 11/30/99 $4,968
Short-Term Investments (17.8%)(a)
Principal Amount Value
$6,000,000 Federal Home Loan Banks, 5.75s, January 3, 1995 $5,998,080
1,227,000 Interest in $267,187,000 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 $1,227,361
for an effective yield of 5.3% 1,227,361
Total Short-Term Investments
(cost $7,225,441) $7,225,441
Total Investments
(cost $40,512,261)(c) $40,538,537
<PAGE>
(a) Percentages indicated are based on total net assets of $40,634,207, which
correspond to a net asset value per share for class A, class B and class M
shareholders of $11.75, $11.69, and $11.75 respectively.
(b) Non-income-producing security.
(c) The aggregate identified cost on a tax basis is $40,523,730 resulting in
gross unrealized appreciation and depreciation of $2,166,709 and $2,151,902
respectively, or net unrealized appreciation of $14,807.
ADR or ADS after the name of a foreign holding stands for American Depository
Receipt or American Depository Shares, respectively, representing foreign
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>
Unrealized
Aggregate Delivery Appreciation/
Contracts Market Value Face Value Date (Depreciation)
<S> <C> <C> <C> <C>
Swiss Francs (Sells) $ 705,180 $ 694,287 2/22/95 $(10,893)
French Francs (Sells) 1,056,936 1,042,186 2/22/95 (14,750)
Japanese Yen (Sells) 1,008,460 1,025,326 2/22/95 16,866
Japanese Yen (Sells) 1,008,460 1,036,957 2/22/95 28,497
Japanese Yen (Sells) 4,427,563 4,395,695 2/22/95 (31,868)
Dutch Guilders (Sells) 819,908 807,506 2/22/95 (12,402)
Pounds Sterling (Sells) 1,502,976 1,499,640 2/22/95 (3,336)
---------
$(27,886)
</TABLE>
Percentage of net assets invested in foreign countries at December 31, 1994
Japan 29.8%
United Kingdom 9.9
France 7.4
Netherlands 5.1
Germany 3.9
Switzerland 3.3
Singapore 3.1
Malaysia 2.8
Spain 2.6
Ireland 2.4
Denmark 2.0
Austria 1.9
Hong Kong 1.8
Sweden 1.3
Belgium 1.2
Taiwan 1.2
Australia 0.9
Finland 0.6
Italy 0.3
Argentina 0.1
Norway 0.1
Portugal 0.1
Mexico --
The accompanying notes are an integral part of these financial statements.
<PAGE>
Statement of assets and liabilities
December 31, 1994 (Unaudited)
<TABLE>
<S> <C>
Assets
Investments in securities, at value (identified cost $40,512,261) (Note 1) $40,538,537
Cash 149
Dividends, interest and other receivables 51,214
Receivable for foreign tax 14,183
Receivable for shares of the fund sold 303,574
Receivable for open forward currency contracts 45,363
Unamortized organization expenses (Note 1) 3,293
Total assets 40,956,313
Liabilities
Payable for securities purchased 114,394
Payable for shares of the fund repurchased 16,724
Payable for compensation of Manager (Note 2) 63,973
Payable for investor servicing and custodian fees (Note 2) 4,230
Payable for administrative services (Note 2) 20
Payable for distribution fees--Class A (Note 2) 12,762
Payable for distribution fees--Class B (Note 2) 13,112
Payable for distribution fees--Class M (Note 2) 30
Payable for compensation of Trustees (Note 2) 145
Payable for open forward currency contracts 73,249
Other accrued expenses 23,467
Total liabilities 322,106
Net assets $40,634,207
Represented by
Paid-in capital (Notes 1 and 4) $40,709,989
Net investment loss (34,893)
Accumulated net realized loss on investment transactions (37,835)
Net unrealized foreign currency translation loss (1,444)
Net unrealized depreciation of investments and forward currency contracts (1,610)
Total--Representing net assets applicable to capital shares outstanding $40,634,207
Computation of net asset value and offering price
Net asset value and redemption price of class A shares ($23,905,009 divided
by 2,035,302 shares) $ 11.75
Offering price per share (100/94.25 of $11.75)* $ 12.47
Net asset value and offering price of class B shares ($16,640,227 divided by
1,424,048 shares)+ $ 11.69
Net asset value and redemption price of class M shares ($88,971 divided by
7,575 shares) $ 11.75
Offering price per share (100/96.50 of $11.75) $ 12.18
</TABLE>
*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.
<PAGE>
Statement of operations
Six months ended December 31, 1994 (Unaudited)
<TABLE>
<S> <C>
Investment income:
Dividends (net of foreign tax of $16,239) $ 111,276
Interest 65,447
Total investment income $ 176,723
Expenses:
Compensation of Manager (Note 2) $ 68,373
Investor servicing and custodian fees (Note 2) 20,505
Reports to shareholders 8,682
Compensation of Trustees (Note 2) 776
Administrative services (Note 2) 20
Distribution fees--class A (Note 2) 20,532
Distribution fees--class B (Note 2) 49,055
Distribution fees--class M (Note 2) 30
Auditing 5,747
Legal 5,228
Postage 2,469
Registration fees 30,343
Amortization of organization expenses (Note 1) 1,437
Other 186
Fees waived by Manager (Note 2) (1,767)
Total expenses 211,616
Net investment loss (34,893)
Net realized gain on investments (Notes 1 and 3) 174,036
Net realized loss on foreign currency (Notes 1 and 3) (90)
Net unrealized foreign currency translation loss during the period (2,837)
Net unrealized depreciation of investments and forward currency
contracts during the period (689,402)
Net loss on investments (518,293)
Net decrease in net assets resulting from operations $(553,186)
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Statement of changes in net assets
<TABLE>
<CAPTION>
Six months
ended Year ended
December 31 June 30
1994* 1994
<S> <C> <C>
Increase in net assets
Operations:
Net investment loss $ (34,893) $ (7,646)
Net realized gain on investments 173,946 584,650
Net unrealized foreign currency translation gains (losses) (2,837) 1,884
Net unrealized appreciation (depreciation) of investments and
forward currency contracts (689,402) 227,688
Net increase (decrease) in net assets resulting from operations (553,186) 806,576
Distributions to shareholders from:
Net realized gain on investments--class A (Note 1) (327,617) (70,167)
Net realized gain on investments--class B (Note 1) (224,423) --
Net realized gain on investments--class M (Note 1) (731) --
Increase from capital share transactions (Note 4) 30,488,888 7,656,085
Total increase in net assets 29,382,931 8,392,494
Net assets
Beginning of period 11,251,276 2,858,782
End of period (including net investment loss of $34,893 and $0,
respectively) $40,634,207 $11,251,276
</TABLE>
*Unaudited
The accompanying notes are an integral part of these financial statements.
<PAGE>
Financial Highlights
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
For the period For the period
December 1, 1994 June 1, 1994
(commencement Six months (commencement
of operations) to ended of operations) to
December 31* December 31* June 30
1994 1994 1994
Class M Class B
<S> <C> <C> <C>
Net asset value,
beginning of period $11.87 $ 11.82 $11.78
Investment operations
Net investment income
(loss) (.01) (.03) (.01)(a)(b)
Net realized and
unrealized gain (loss)
on investments .06 .07 .05
Total from investment
operations .05 .04 .04
Distributions to
shareholders from:
Net investment income -- -- --
Net realized gain on
investments (.17) (.17) --
Total distributions (.17) (.17) --
Net asset value, end of
period $11.75 $ 11.69 $11.82
Total investment return
at net asset value (%)
(c) 0.42(d) 0.34(d) 0.34(d)
Net assets, end of period
(in thousands) $ 89 $16,640 $2,470
Ratio of expenses to
average net assets (%) .12(d) 1.18(d) .15(a)(b)(d)
Ratio of net investment
income (loss) to
average net assets (%) (.10)(d) (.43)(d) (.06)(a)(b)(d)
Portfolio turnover (%) 10.74(d) 10.74(d) 96.13(d)
</TABLE>
*Unaudited
(a)Reflects an expense limitation applicable during the period. As a result
of such limitation expenses for class A shares of the fund for the periods
ended June 30, 1994, June 30, 1993, and June 30, 1991 reflect per share
reductions of approximately $0.03, $0.05 and $0.10 respectively. Expenses for
class B shares of the fund for the period ended June 30, 1994 reflect a
reduction of less than $0.01 per share.
(b)Per share net investment income for the period ended June 30, 1994 has
been determined on the basis of the weighted average number of shares
outstanding for the period.
(c)Total investment return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(d)Not annualized.
<PAGE>
Financial Highlights (cont'd)
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
For the period
Feb. 28, 1991
Six months (commencement
ended of operations) to
December 31* Year ended June 30 June 30
1994 1994 1993 1992 1991
Class A
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 11.83 $ 9.58 $ 8.82 $ 8.18 $ 8.63
Investment operations
Net investment income
(loss) -- (.06)(a) .07(a) .06 .07(a)
Net realized and
unrealized gain (loss)
on investments .09 2.53 .69 .71 (.52)
Total from investment
operations .09 2.47 .76 .77 (.45)
Distributions to
shareholders from:
Net investment income -- -- -- (.13) --
Net realized gain on
investments (.17) (.22) -- -- --
Total distributions (.17) (.22) -- (.13) --
Net asset value, end of
period $ 11.75 $11.83 $ 9.58 $ 8.82 $ 8.18
Total investment return
at net asset value (%)
(c) 0.76(d) 25.81 8.62 9.52 (5.21)(d)
Net assets, end of period
(in thousands) $23,905 $8,781 $2,859 $2,502 $2,054
Ratio of expenses to
average net assets (%) .71(d) 2.17(a) 1.80(a) 1.98 .78(a)(d)
Ratio of net investment
income to average net
assets (%) .04(d) (.17)(a) .81(a) .76 .86(a)(d)
Portfolio turnover (%) 10.74(d) 96.13 80.92 82.45 14.54(d)
</TABLE>
*Unaudited
(a)Reflects an expense limitation applicable during the period. As a result
of such limitation expenses for class A shares of the fund for the periods
ended June 30, 1994, June 30, 1993, and June 30, 1991 reflect per share
reductions of approximately $0.03, $0.05 and $0.10 respectively. Expenses for
class B shares of the fund for the period ended June 30, 1994 reflect a
reduction of less than $0.01 per share.
(b)Per share net investment income for the period ended June 30, 1994 has
been determined on the basis of the weighted average number of shares
outstanding for the period.
(c)Total investment return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(d)Not annualized.
<PAGE>
Notes to financial statements
December 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 equity securities of companies
located outside North America.
The fund offers class A, class B and class M shares. The fund commenced its
public offering of 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 both classes of shares, except
that each class bears expenses unique to that class (including the
distribution fees applicable to such class) and votes as a class only with
respect to its own distribution plan or other matters on which a class vote
is required by law or determined by the Trustees. Shares of each class should
receive their pro-rata share of the net assets of the fund, if the fund were
liquidated. In addition, the Trustees declare separated dividends on each
class of share.
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.
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., and certain other accounts. 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 the resale price, including accrued interest.
<PAGE>
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 form 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
forward currency contracts is 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.
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 fund's securities or other
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 are recorded by
the fund on the ex-dividend date. The amount and character of income and
gains to be distributed are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
<PAGE>
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 $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 Management, the fund's Manager, for management and
investment advisory services is paid quarterly based on the average net
assets of the fund for the quarter. Such fee is based on the following annual
rates: 0.80% of the first $500 million of average net assets, 0.70% of the
next $500 million, 0.65% of the next $500 million, 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 December 31, 1994, the Manager voluntarily agreed to reduce its
compensation to the extent that expenses of the fund exceed 1.90% of average
net assets. The fund's expenses subject to this limitation are exclusive of
brokerage, interest, taxes, amortization of 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 to the Manager and, if necessary, payment of additional fund expenses
by the Manager. For the purposes of determining any such reduction in Putnam
Management's compensation, expenses of the fund do not reflect the
applications of commissions or cash management credits that may reduce
designated fund expenses. For the six months ended December 31, 1994 expenses
were reduced by $1,767. For the purpose of determining any such reduction in
Putnam Management compensation, expenses of the fund do not reflect the
applications 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.
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 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
<PAGE>
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 $36,680 from the sale
of class A shares of the fund.
A deferred sales charge of up to 1% is assessed on certain redemptions of
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 no such charge.
The fund has 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 Mutual Funds Corp. at an annual rate of 1 .00% of the funds
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
$3,666 in contingent deferred sales charges from such redemptions for the six
months ended December 31, 1994.
The fund has 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 .75% of the funds
average net assets attributable to class M shares.
During the period December 1, 1994 (commencement of operations) to December
31, 1994 Putnam Mutual Funds Corp., acting as an underwriter received net
commissions of $374 from the sale 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
$26,776,672 and $2,297,716, respectively. There were no purchases or sales of
U.S. government obligations during the year. In determining the net gain or
loss on securities sold, the cost of securities has been determined on the
identified cost basis.
<PAGE>
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>
Six months ended
December 31 Year ended June 30
1994 1994
Class A Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Shares sold 1,663,388 $20,152,174 507,115 $5,922,768
Shares issued in connection with
reinvestment of distributions 27,393 317,759 6,134 70,166
1,690,781 20,469,933 513,249 5,992,934
Shares repurchased (397,900) (4,799,367) (69,326) (789,703)
Net increase 1,292,881 $15,670,566 443,923 $5,203,231
</TABLE>
<TABLE>
<CAPTION>
For the period
June 1, 1994
(commencement
Six months ended of operations to
December 31 June 30
1994 1994
Class B Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Shares sold 1,380,498 $16,718,180 209,041 $2,452,854
Shares issued in connection with
reinvestment of distributions 18,261 210,919 -- --
1,398,759 16,929,099 -- --
Shares repurchased (183,752) (2,199,352) -- --
Net increase 1,215,007 $14,729,747 209,041 $2,452,854
</TABLE>
<TABLE>
<CAPTION>
For the period
December 1, 1994
(commencement
of operations) to
December 31
1994
Class M Shares Amount
<S> <C> <C>
Shares sold 7,512 $87,844
Shares issued in connection with reinvestment of distributions 63 731
7,575 88,575
Shares repurchased -- --
Net increase 7,575 $88,575
</TABLE>
<PAGE>
CHOOSE AWARD-WINNING SERVICE.
Our commitment to quality service
> Putnam Investor Services has won the DALBAR Quality Tested Service Seal for
the past five years, through 1994. DALBAR, an independent research firm, ran
more than 10,000 tests of 38 shareholder service components. In every
category, Putnam outperformed the industry standard.
> HELP YOUR INVESTMENT GROW.
Set up a systematic program for investing with as little as $25 a month from
a Putnam fund or from your own checking or savings account.*
> SWITCH FUNDS EASILY.
You can move money from one account to another with the same class of shares
without a service charge. (This privilege is subject to change or
termination.)
> ACCESS YOUR MONEY QUICKLY.
You can get checks sent regularly or redeem shares any business day at the
then-current net asset value, which may be more or less than their original
cost.
For details about any of these or other services, contact your financial
advisor or call the toll-free number shown below and speak with a helpful
Putnam representative.
> To make an additional investment in this or any other Putnam fund, contact
your financial advisor or call our toll-free number: 1-800-225-1581.
*Regular investing, of course, does not guarantee a profit or protect against
a loss in a declining market. Investors should consider their ability to
continue purchasing shares during periods of low price levels.
<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
Brett C. Browchuk
Vice President
Anthony W. Regan
Vice President
Justin 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 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, 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
841/524 16296
<PAGE>
APPENDIX TO FORM N-30D FILINGS TO DESCRIBE DIFFERENCES BETWEEN PRINTED
AND EDGAR-FILED TEXTS:
(1) Bold and italic typefaces are displayed in normal type.
(2) Headers (e.g., the name of the fund) are omitted.
(3) Certain tabular and columnar headings and symbols are displayed
differently in this filing.
(4) Bullet points and similar graphic signals are omitted.
(5) Page numbering is omitted.
(6) Trademark symbol replaced with (TM)
(7) Section symbol replaced with (S)
(8) Dagger symbol replaced with + and double-dagger replaced with ++
