<PAGE>
PUTNAM OVERSEAS GROWTH FUND
ANNUAL REPORT
June 30, 1995
[LOGO]
BOSTON * LONDON * TOKYO
<PAGE>
PERFORMANCE HIGHLIGHTS
Lipper Analytical Services ranked the fund's class A share total
return in the top 30% of all international funds rated for the 12-
month period ended June 30, 1995. Class B shares placed in the top 33%
of international funds over the same period.*
FISCAL 1995 RESULTS AT A GLANCE
<TABLE><CAPTION>
<S> <C> <C> <C> <C> <C> <C>
CLASS A CLASS B CLASS M
TOTAL RETURN: NAV POP NAV CDSC NAV POP
- ----------------------------------------------------------------------
(change in value
during period plus
reinvested
distributions)
12 months ended
6/30/95 3.76% -2.19% 3.00% -2.00% -- --
Life of class M -- -- -- -- 3.33% -0.28%
- ----------------------------------------------------------------------
CLASS A CLASS B CLASS M
SHARE VALUE: NAV POP NAV NAV POP
- ----------------------------------------------------------------------
6/30/94 $11.83 $12.55 $11.82 -- --
12/1/94 (inception of
class M shares) -- -- -- 11.87 12.30
6/30/95 12.10 12.84 12.00 12.09 12.53
- ----------------------------------------------------------------------
CAPITAL GAINS
SHORT- LONG-
DISTRIBUTIONS: NO. INCOME TERM TERM TOTAL
- ----------------------------------------------------------------------
Class A 1 -- $0.086 $0.082 $0.168
Class B 1 -- 0.086 0.082 0.168
Class M 1 -- 0.086 0.082 0.168
- ----------------------------------------------------------------------
<FN>
Performance data represent past results and will differ for each share
class. For performance over longer periods, see pages 8 and 9. POP
assumes 5.75% maximum sales charge for class A shares and 3.50% for
class M shares, which became effective 12/1/94. CDSC assumes 5%
maximum contingent deferred sales charge.
* Lipper Analytical Services, an independent research organization,
ranks funds according to total- return performance. Their
rankings vary over time, and do not reflect the effects of sales
charges. For periods ended 6/30/95, the fund's class A shares
ranked 58 out of 198 and 14 out of 90 for 1- and 3-year
performance, respectively. Class B shares ranked 64 out of 198
for 1-year performance. Class M shares have been offered for less
than 1 year and therefore were not tracked over these periods.
Past performance is not indicative of future results.
</TABLE>
<PAGE>
FROM THE CHAIRMAN
[PHOTO OF GEORGE PUTNAM]
(C) KARSH, OTTAWA
DEAR SHAREHOLDER:
Putnam Overseas Growth Fund's fiscal year, which ended on June 30,
1995, was marked by challenge as the world's stock markets digested
economic disaster (in Mexico), natural disaster (Japan's earthquake
and Europe's floods), and a final round of interest-rate increases.
However, because securities markets have finally begun to show signs
of renewed strength, the fund has embarked on fiscal 1996 with an air
of optimism.
The most significant development for global stock markets in recent
months was the return of stability to the world's bond markets. This
long-awaited stabilization finally allowed investors to turn their
attention back to economic fundamentals, which include the prospect of
continued strong corporate earnings growth in Europe. Stronger
earnings, in turn, have contributed to improved stock-market
performance.
Fund Manager Justin Scott's biggest challenge remains Japan, where
many attractive valuations are present but economic uncertainty and an
overvalued yen make stock selection difficult.
Nevertheless, Justin believes overseas stock markets will do well as a
whole in the remaining months of 1995. In the pages that follow, he
reviews your fund's performance in fiscal 1995 and what he sees as its
prospects for fiscal 1996.
Respectfully yours,
[SIGNATURE]
George Putnam
Chairman of the Trustees
August 15, 1995
<PAGE>
REPORT FROM THE FUND MANAGER
JUSTIN M. SCOTT
Putnam Overseas Growth Fund's 1995 fiscal year was marked by an
environment of stagnation in key international markets. This was due
in large part to events such as the Kobe earthquake in Japan, the
collapse of Barings Bank in England, and the floods in continental
Europe. At the same time, major international currencies continued to
strengthen against the U.S. dollar.
During this period, your fund delivered a solid performance relative
to most other foreign stock funds. Moreover, not all the market news
was disagreeable. Indeed, a sweeping recovery in bond markets
throughout Europe and Asia was a major source of support for equity
markets during the fiscal year's second half. This welcome
development, along with good stock selection and the continuation of
generally strong corporate earnings -- especially in Europe -- enabled
the fund to post market-beating results for the fiscal year ended June
30, 1995.
The fund's 3.76% and 3.00% total returns at net asset value for class
A and class B shares, respectively, surpassed the 1.65% return
measured by Morgan Stanley Capital International's Europe, Australia,
and Far East (EAFE) Index, the fund's market standard.
PRUDENT INVESTMENT IN STRUGGLING JAPANESE MARKET
Since the fiscal year began last July, Japan's economy has steadily
weakened. Economic contraction (negative growth) impaired the
performance of some Japanese companies, and deflation (negative
inflation) eroded corporate revenues. Furthermore, the Japanese
government's failure to aggressively bolster the economy during this
period fostered a pessimistic outlook among Japanese consumers, local
investors, and overseas money managers.
In response, we reduced the portfolio's allocation to Japan slightly
during the period. However, because some Japanese companies continued
to report healthy profit growth, fund
<PAGE>
holdings in Japan continued to outweigh those in any other country. We
researched and purchased stocks of high-quality Japanese companies
that became less expensive as the country's economy faltered.
At the end of 1994, we were concerned that the U.S. dollar would begin
to strengthen against the yen, and we initiated a series of defensive
currency hedges. A hedge can be considered a sort of currency
insurance policy designed to lock in specific exchange rates. In this
case, the strategy was intended to protect the performance of the
fund's Japanese holdings, should the yen decline in value relative to
the dollar. Although the yen subsequently remained strong relative to
the dollar, to the fund's disadvantage, we remain convinced that
hedges are necessary to protect investors in the long term.
CORPORATE EARNINGS RISE AND BOND MARKETS RALLY ACROSS EUROPE
Emphasizing stock selection over country selection has proved
invaluable in helping us navigate the European markets. At the end of
1994, we anticipated a continuing recovery in corporate earnings
across Europe, and began to increase holdings in European stocks. As
it turned out, your fund benefited from this increased exposure,
particularly in Spain, Switzerland, the Netherlands, and the United
Kingdom.
While many European investors concentrated on one market sector at a
time, switching sectors only after securities became overvalued,
[BAR CHART]
TOP COUNTRY ALLOCATIONS (6/30/95)*
- ----------------------------------------------------------------------
JAPAN 26.5%
UNITED KINGDOM 10.9%
FRANCE 8.1%
SWITZERLAND 5.8%
NETHERLANDS 5.6%
SINGAPORE 5.6%
* Based on percentage of net assets. Country allocations will vary
over time.
<PAGE>
we diversified your fund's holdings across different countries and
market sectors, endeavoring to pay as little as possible for stocks
with attractive growth potential. The fund particularly benefited from
investment in smaller capitalization stocks.
STRICT ADHERENCE TO A PROVEN VALUATION STYLE
In selecting stocks for your fund's portfolio, we continue to apply
our established valuation techniques across all sectors, comparing the
cost of corporate assets with the return we expect to receive. We
extensively research corporate assets and profitability to find
securities that we believe are not priced appropriately, selling
significantly below what we consider to be their true long-term worth.
While we are not deliberately contrarian, we often invest in companies
that have been ignored or overlooked by the bulk of international
investors. For fiscal 1995, this approach enabled the fund to
comfortably outperform its market index.
OUTLOOK: SHORT-TERM STRENGTH IN JAPAN; ONGOING STABILITY IN EUROPE
We believe that the depressed Japanese economy may yield relatively
cheap stock prices over the next 12 to 18 months, presenting
opportunities to purchase high-quality stocks at inexpensive prices.
Barring a substantial exacerbation of the current banking crisis, we
may modestly increase allocations to Japan during this period. Over
the longer term, however, Japan's low rate of return on corporate
capital could stifle the growth potential of attractively valued
companies. We will proceed, therefore, with caution.
Southeast Asia. Historically, Southeast Asian markets have proved
sensitive to U.S. interest rate fluctuations. These markets performed
poorly in 1994 until U.S. interest rates began to decline. We remain
attracted to long-term opportunities in this dynamic growth region.
Europe. Through the remainder of 1995, we anticipate that European
bond markets will remain stable and corporate earnings will continue
to be strong. Accordingly, we expect equity markets to perform well.
We will continue to employ our research techniques to identify
attractive stocks.
<PAGE>
<TABLE><CAPTION>
<S> <C>
TOP 10 HOLDINGS (6/30/95)
- ----------------------------------------------------------------------
Tarkett AG GERMANY
Hardwood floors and floor covering manufacturer
- ----------------------------------------------------------------------
Tokyo Electric Power Company Inc. JAPAN
Information systems and home electrical appliance producer
- ----------------------------------------------------------------------
Austria Mikro Systeme International AUSTRIA
Specialized semiconductor manufacturer
- ----------------------------------------------------------------------
United Overseas Bank Ltd. SINGAPORE
Commercial banking, stockbroking, and insurance provider
- ----------------------------------------------------------------------
Development Bank of Singapore SINGAPORE
International banking and financial service provider
- ----------------------------------------------------------------------
CRH PLC IRELAND
Construction products manufacturer
- ----------------------------------------------------------------------
Credit Locale de France S.A. FRANCE
Property finance and mortgage service provider
- ----------------------------------------------------------------------
Glory Ltd. (Glory Kogyo) JAPAN
Machine manufacturer specializing in vending machines
- ----------------------------------------------------------------------
Omron Tateisi Electronics Corp. JAPAN
Electric fund transfer systems and personal computer manufacturer
- ----------------------------------------------------------------------
Greencore Group PLC IRELAND
Food products manufacturer and distributor
- ----------------------------------------------------------------------
<FN>
These holdings represent 11.4% of the fund's net assets. Portfolio
holdings will vary over time.
</TABLE>
Latin America. Stocks of Mexican companies were significantly damaged
by the devaluation of the Mexican peso and remain largely
unattractive. Elsewhere in this region, we will continue to search for
individual stocks that offer attractive potential. Overall, we expect
to maintain a relatively low allocation to this region.
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 6/30/95, 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
associated with 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.
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.
TOTAL RETURN FOR PERIODS ENDED 6/30/95
<TABLE><CAPTION>
<S> <C> <C> <C> <C> <C> <C>
CLASS A CLASS B CLASS M
NAV POP NAV CDSC NAV POP
- ----------------------------------------------------------------------
1 year 3.76% -2.19% 3.00% -2.00% -- --
- ----------------------------------------------------------------------
3 years 41.79 33.61 -- -- -- --
Annual average 12.34 10.14 -- -- -- --
- ----------------------------------------------------------------------
Life of class A47.19 38.67 -- -- -- --
Annual average 9.31 7.82 -- -- -- --
- ----------------------------------------------------------------------
Life of class B -- -- 3.35 -0.65 -- --
Annual average -- -- 3.10 -0.60 -- --
- ----------------------------------------------------------------------
Life of class M -- -- -- -- 3.33% -0.28%
- ----------------------------------------------------------------------
</TABLE>
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 6/30/95
<TABLE><CAPTION>
<S> <C> <C> <C>
STANDARD & POOR'S MSCI EAFE CONSUMER
500 INDEX INDEX PRICE INDEX
- ----------------------------------------------------------------------
1 year 25.99% 1.65% 3.04%
- ----------------------------------------------------------------------
3 years 45.14 43.06 8.77
Annual average 13.22 12.69 2.84
- ----------------------------------------------------------------------
Life of class A 69.06 26.30 13.13
Annual average 12.86 5.54 2.88
- ----------------------------------------------------------------------
Life of class B 23.56 3.09 3.39
Annual average 21.64 2.85 3.13
- ----------------------------------------------------------------------
Life of class M 22.51 3.24 1.87
- ----------------------------------------------------------------------
<FN>
The fund began investment operations on 2/28/91, offering shares now
known as class A shares. Effective 6/1/94, the fund began offering
class B shares and on 12/1/94, class M shares. Fund performance data
do not take into account any adjustment for taxes payable on
reinvested distributions. Performance data represent past results and
differ for each share class. Investment returns and net asset value
will fluctuate so an investor's shares, when sold, may be worth more
or less than their original cost.
</TABLE>
<PAGE>
[MOUNTAIN CHART]
GROWTH OF A $10,000 INVESTMENT
- ----------------------------------------------------------------------
Date POP MSCI EAFE Index CPI
2/28/91 $9,425 $10,000 $10,000
6/30/91 8,930 $8,887 $10,089
6/30/92 9,780 $8,829 $10,401
6/30/93 10,623 $10,619 $10,712
6/30/94 13,364 $12,425 $10,979
6/30/95 13,867 $12,630 $11,313
Past performance is not indicative of future results. A $10,000
investment in the fundOs class B shares at inception on 6/1/94 would
have been valued at $10,335 on 6/30/95 ($9,935 with a redemption at
the end of the period). A $10,000 investment in the fundOs class M
shares at inception on 12/1/94 would have been valued at $10,333 at
net asset value, and $9,972 at public offering price, on 6/30/95.
TERMS AND DEFINITIONS
CLASS A SHARES are generally subject to an initial sales charge.
CLASS B SHARES may be subject to a sales charge upon redemption.
CLASS M SHARES have a lower initial sales charge and a higher 12b-1
fee than class A shares and no sales charge on redemption.
NET ASSET VALUE (NAV) is the value of all your fund's assets, minus
any liabilities, divided by the number of outstanding shares, not
including any initial or contingent deferred sales charge.
PUBLIC OFFERING PRICE (POP) is the price of a mutual fund share plus
the maximum sales charge levied at the time of purchase. POP
performance figures shown here assume the maximum 5.75% sales charge
for class A shares and 3.50% for class M shares.
CONTINGENT DEFERRED SALES CHARGE (CDSC) is a charge applied at the
time of the redemption of class B shares and assumes redemption at the
end of the period. Your fund's CDSC declines from a 5% maximum during
the first year to 1% during the sixth year. After the sixth year, the
CDSC no longer applies.
COMPARATIVE BENCHMARKS
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 the U.S., with all values
expressed in U.S. dollars. Performance figures reflect changes in
market prices and reinvestment of distributions net of withholding
taxes.
STANDARD & POOR'S 500 INDEX is an unmanaged list of 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.
CONSUMER PRICE INDEX (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
The fund's portfolio contains securities that differ from those in the
indexes.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
for the year ended June 30, 1995
To the Trustees and Shareholders of
Putnam Overseas Growth Fund
We have audited the accompanying statement of assets and liabilities
of Putnam Overseas Growth Fund, including the portfolio of investments
owned, as of June 30, 1995 and the related statement of operations for
the year then ended, the statement of changes in net assets for each
of the two years in the period then ended, and the "Financial
Highlights" for each of the periods indicated therein. These financial
statements and "Financial Highlights" are the responsibility of the
fund's management. Our responsibility is to express an opinion on
these financial statements and "Financial Highlights" based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
and "Financial Highlights" are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of June 30, 1995, by
correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and "Financial Highlights"
referred to above present fairly, in all material respects, the
financial position of Putnam Overseas Growth Fund as of June 30, 1995,
the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and
the "Financial Highlights" for each of the periods indicated therein,
in conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
August 15, 1995
<PAGE>
PORTFOLIO OF INVESTMENTS OWNED
June 30, 1995
<TABLE><CAPTION>
<S> <C>
COMMON STOCKS (89.9%)*
NUMBER OF SHARES VALUE
AUSTRALIA (0.3%)
- ----------------------------------------------------------------------
27,400 Amcor, Ltd. $ 201,733
Austria (2.3%)
- ----------------------------------------------------------------------
5,300 Austria Mikro Systeme International 696,688
17,500 Mayr-Melnhof Karton AG 144A ADS 251,563
3,500 VA Technologie AG 438,151
----------
1,386,402
BELGIUM (0.9%)
- ----------------------------------------------------------------------
270 Bekaert S.A. 213,856
600 Solvay S.A. 332,664
----------
546,520
CANADA (0.9%)
- ----------------------------------------------------------------------
12,400 Magna International, Inc., Class A 547,150
DENMARK (1.0%)
- ----------------------------------------------------------------------
8,000 Danisco A/S 342,571
9,000 Tele Danmark A/S ADS 252,000
----------
594,571
FINLAND (0.3%)
- ----------------------------------------------------------------------
8,000 Effjohn Oy Ser. A+ 56,239
6,500 Repola 137,083
----------
193,322
FRANCE (7.6%)
- ----------------------------------------------------------------------
7,100 Credit Local de France S.A. 659,783
489 Docks de France S.A. 74,625
7,000 Lafarge Coppee (Bearer) 545,256
13,000 Michelin Corp. Class B (Registered)+ 576,913
585 Pechiney International 14,799
2,300 Peugeot S.A. 319,649
15,000 Sgs-Thomson Microelectronic ADR+ 609,375
1,400 Societe Generale Paris 163,924
6,000 Societe Nationale Elf Aquitaine (Bearer) 444,192
1,350 Sommer-Allibert 497,625
3,610 Sovac 320,551
4,500 Ugine S.A. (Bearer) 316,882
620 Zodiac S.A. 77,460
----------
4,621,034
GERMANY (4.0%)
- ----------------------------------------------------------------------
900 Jungheinrich Prior 182,305
1,500 Mayr-Melnhof Karton AG+ 86,727
7,500 SGL Carbon AG+ 335,311
<PAGE>
COMMON STOCKS
NUMBER OF SHARES VALUE
GERMANY (continued)
- ----------------------------------------------------------------------
6,900 Schering AG $ 482,696
33,000 Tarkett AG+ 857,050
1,300 VEBA AG 510,671
----------
2,454,760
HONG KONG (4.1%)
- ----------------------------------------------------------------------
70,000 Cheung Kong Holdings Ltd. 346,508
36,600 Guoco Group Ltd. 170,767
44,000 HSBC Holdings PLC 564,416
87,000 Hong Kong Electric Holdings, Ltd.+ 295,727
110,000 Hong Kong Land Holdings Ltd. 200,200
80,000 Hutchison Whampoa, Ltd. 386,703
30,000 Swire Pacific Ltd. Class A 228,765
180,000 Varitronix International Ltd. 315,230
----------
2,508,316
IRELAND (3.0%)
- ----------------------------------------------------------------------
63,426 Allied Irish Banks 299,574
35,000 Bank of Ireland 199,178
100,000 CRH PLC 669,120
82,755 Greencore Group PLC 624,304
----------
1,792,176
ITALY (0.5%)
- ----------------------------------------------------------------------
12,150 Danieli & Co. 78,159
65,600 Danieli & Co. (Savings Shares) 199,944
----------
278,103
JAPAN (26.5%)
- ----------------------------------------------------------------------
48,000 Asahi Bank Ltd. 513,172
31,000 Bridgestone Corp. 457,767
10,000 CSK Corp. 231,542
35,000 Dai Nippon Printing Co., Ltd. 558,181
40,000 Daiwa Securities Ltd. 422,445
58,000 Fujitsu, Ltd. 578,972
7,000 Futaba Industrial Co., Ltd. 317,543
21,000 Glory Ltd. (Glory Kogyo) 647,490
6,000 Hirose Electric Co. Ltd. 372,121
10,000 Ito Yokado Co., Ltd. 528,057
800 JGC Corp. 7,797
45,000 KAO Corp.+ 542,233
11,000 Komori Corp. 224,808
16,000 Kurita Water Ltd. 412,050
4,000 Kyocera Corp. 329,829
6,000 Mabuchi Motor Co. Ltd. 413,940
49,000 Maeda Corp. 544,123
26,000 Marui Co., Ltd. 414,649
34,000 Matsushita Electric Industrial Co., Ltd. 530,183
24,000 Mitsubishi Bank 518,842
40,000 Mitsubishi Motors Corp. 330,301
40,000 Mitsui Fudoscan Co. Ltd. 312,818
14,500 Murata Manufacturing Co. Ltd. 549,852
31,000 Nichicon 373,538
20,000 Nippondenso Co., Ltd. 363,851
<PAGE>
COMMON STOCKS
NUMBER OF SHARES VALUE
JAPAN (continued)
- ----------------------------------------------------------------------
78,000 Nisshin Steel Co., Ltd. $ 286,568
33,000 Omron Tateisi Electronics Corp. 631,542
12,000 Rohm Co. Ltd. 620,910
18,700 Santen Pharmaceutical Co., Ltd. 499,256
48,000 Sekisui Chemical Co., Ltd. 567,041
13,000 Takuma Co. Ltd. 121,016
34,000 Tokio Marine & Fire Insurance Co. Ltd. 390,408
24,400 Tokyo Electric Power Co., Inc. 749,439
65,000 Toray Industries, Inc. 404,666
16,000 Tostem Corp. 493,326
25,000 Yamanouchi Pharmaceutical Co. Ltd. 564,087
17,600 Yamato Transport Co. Ltd. 187,539
----------
16,011,902
MALAYSIA (3.2%)
- ----------------------------------------------------------------------
45,000 Genting Berhad 444,923
31,000 Hong Leong Industries Berhad 193,313
70,000 Leader Universal 249,846
50,000 Malayan Banking Berhad 395,897
60,000 Sungei Way Holdings 244,923
34,000 Telekom Malaysia 258,051
20,000 United Engineers 127,179
----------
1,914,132
NETHERLANDS (5.6%)
- ----------------------------------------------------------------------
10,040 ABN AMRO Holding N.V. 387,900
8,835 Aegon N.V. 305,954
3,000 Akzo-Nobel N.V. 358,961
800 Dutch State Mines N.V. 69,001
10,149 Getronics Electric N.V. 497,680
13,400 IHC Caland N.V. 380,928
7,580 K.L.M.-Royal Dutch Airlines+ 246,333
7,000 Koninklijke PPT Nederland N.V. 251,906
6,200 Randstad Holdings 439,023
5,327 Wolters Kluwer N.V. 470,475
----------
3,408,161
NORWAY (0.1%)
- ----------------------------------------------------------------------
1,500 Christiana Bank Kreditkass 144A ADR 34,500
5,000 Christiana Bank OG Kreditkass 11,612
----------
46,112
PORTUGAL (0.1%)
- ----------------------------------------------------------------------
400 Banco Commercial Portugues, S.A. (Registered) 5,300
2,295 Banco Totta and Accores (BTA) Nationalisert 48,696
----------
53,996
SINGAPORE (5.6%)
- ----------------------------------------------------------------------
90,000 City Developments Ltd. 551,020
32,000 Cycle & Carriage Ltd. 286,430
58,000 Development Bank of Singapore (Registered) 660,365
7,500 Genting Berhad 74,154
30,000 Informatics Holdings Ltd. 15,467
42,800 Jardine Matheson Holdings Ltd. 314,580
<PAGE>
COMMON STOCKS
NUMBER OF SHARES VALUE
SINGAPORE (continued)
- ----------------------------------------------------------------------
46,000 Singapore Airlines Ltd. (Registered) $ 424,919
15,600 Singapore Press Holdings (Registered) 233,469
72,100 United Overseas Bank Ltd. (Registered) 681,504
62,000 Venture Manufacturing Ltd. 163,380
----------
3,405,288
SPAIN (3.5%)
- ----------------------------------------------------------------------
6,880 Argentaria Corp. (Registered) 254,762
5,000 Hidrolectrica del Cantabrico 153,082
70,000 Iberdrola S.A. 528,258
1,700 Immobiliaria Metropolitana Vasco Central 50,641
11,500 Mapfre Vida Seguros 566,198
17,000 Repsol S.A. 535,954
----------
2,088,895
SWEDEN (3.2%)
- ----------------------------------------------------------------------
18,500 Astra AB Free 571,208
4,600 Autoliv AB 246,101
30,000 Foreningsbanken AB+ 51,162
50,000 IRO AB+ 505,433
30,000 Svenska Cellulosa, Ser. B 557,007
----------
1,930,911
SWITZERLAND (5.8%)
- ----------------------------------------------------------------------
400 BBC Brown Boveri & Cie, AG, Ltd. 414,970
35 Baer Holding AG 41,123
800 Ciba-Geigy AG (Registered) 587,641
280 Georg Fischer (Bearer) 377,720
500 Nestle S.A. (Registered) 521,758
1,175 Rieter Holding AG (Registered) 352,807
250 SGS Societe Generale De Surveillance Holdings S.A. 435,161
300 Swiss Reinsurance (Registered) 231,593
500 Union Bank of Switzerland (Bearer) 519,147
----------
3,481,920
TAIWAN (0.5%)
- ----------------------------------------------------------------------
23,250 Yageo Corp. GDR 144A+ 331,313
UNITED KINGDOM (10.9%)
- ----------------------------------------------------------------------
110,479 Argyll Group PLC 591,337
58,078 BAT Industries PLC 445,013
20,000 Barclays Bank PLC 215,214
41,137 Burmah Oil PLC 596,990
55,000 General Electric Co. (The) PLC 268,978
50,200 Guinness PLC 378,251
600 Ktk Telecommunications PLC 6,167
66,000 Molins PLC 702,322
60,000 North West Water Group PLC 530,469
25,000 Pearson PLC 236,959
36,132 Royal Insurance Holdings PLC 177,855
300,000 Sears PLC 475,511
13,600 Securicor Group PLC, Class A 210,149
17,500 Security Services PLC 249,504
4,600 Shell Transportation & Trading Co. PLC 55,032
<PAGE>
COMMON STOCKS
NUMBER OF SHARES VALUE
UNITED KINGDOM (continued)
- ----------------------------------------------------------------------
30,000 Siebe PLC $ 299,165
5,000 South Western Electric PLC 53,366
84,281 Tate & Lyle PLC 570,603
70,200 Vodafone Group PLC 261,120
75,000 Weir Group PLC (The) 303,467
----------
6,627,472
- ----------------------------------------------------------------------
TOTAL COMMON STOCKS (cost $50,816,997) $54,424,189
- ----------------------------------------------------------------------
PREFERRED STOCKS (0.5%)* (COST $210,471)
NUMBER OF SHARES VALUE
FRANCE (0.5%)
- ----------------------------------------------------------------------
2,200 Essilor International ADP $ 295,302
CONVERTIBLE BONDS AND NOTES (0.4%)*
PRINCIPAL AMOUNT VALUE
DENMARK (0.3%)
- ----------------------------------------------------------------------
$1,200,000 Danisco Cv. Bond 5s, 2004 $ 215,219
FINLAND (0.1%)
- ----------------------------------------------------------------------
350,000 Effjohn Oy--AB Cv. Bond 7s, 2004 41,008
- ----------------------------------------------------------------------
TOTAL CONVERTIBLE BONDS AND NOTES
(cost $244,414) $ 256,227
- ----------------------------------------------------------------------
</TABLE>
<TABLE><CAPTION>
<S> <C> <C>
WARRANTS (--%)*+ EXPIRATION
NUMBER OF WARRANTS DATE VALUE
SWITZERLAND (--%)
- ----------------------------------------------------------------------
1,175 Rieter Holding 3/13/96 $3,886
ITALY (--%)
- ----------------------------------------------------------------------
6,237 Danieli & Co 11/30/99 4,394
- ----------------------------------------------------------------------
TOTAL WARRANTS (cost $--) $ 8,280
- ----------------------------------------------------------------------
</TABLE>
<TABLE><CAPTION>
<S> <C>
SHORT-TERM INVESTMENTS (11.2%)*
PRINCIPAL AMOUNT VALUE
$5,000,000 Federal National Mortgage Assn. 5.91s,
July 20, 1995 $4,984,404
1,776,000 Interest in $453,426,000 joint repurchase
agreement dated June 30, 1995 with Lehman
Brothers, Inc. due July 3, 1995 with respect
to various U.S. Treasury obligations --
maturity value of $1,776,921 for an effective
yield of 6.22 % $1,776,307
- ----------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS (cost $6,760,711) $6,760,711
- ----------------------------------------------------------------------
TOTAL INVESTMENTS (cost $58,032,593)*** $61,744,709
- ----------------------------------------------------------------------
<FN>
NOTES
- ----------------------------------------------------------------------
* Percentages indicated are based on net assets of $60,525,428,
which correspond to a net asset value per class A, class B, and
class M shares of $12.10, $12.00, and $12.09, respectively.
+ Non-income-producing security.
*** The aggregate identified cost for federal income tax purposes is
$58,044,045, resulting in gross unrealized appreciation and
depreciation of $5,708,699, and $2,008,035, respectively, or net
unrealized appreciation of $3,700,664.
ADR, ADS or GDR after the name of a foreign holding stands for
American Depository Receipt, American Depository Shares or Global
Depository Receipts, respectively, representing ownership of
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.
</TABLE>
<TABLE><CAPTION>
<S> <C> <C> <C> <C>
FORWARD CURRENCY CONTRACTS TO SELL
AT JUNE 30, 1995
-----------------------------------------------------------------
-
UNREALIZED
AGGREGATE DELIVERY APPRECIATION/
MARKET VALUE FACE VALUE DATE (DEPRECIATION)
-----------------------------------------------------------------
-
British Pounds $1,798,214 $1,779,496 8/22/95 (18,718)
British Pounds 604,709 607,878 8/22/95 3,169
British Pounds 779,757 767,683 8/22/95 (12,074)
French Francs 827,009 779,064 8/22/95 (47,945)
French Francs 1,134,301 1,124,055 8/22/95 (10,246)
French Francs 932,189 878,779 8/22/95 (53,410)
Japanese Yen 8,774,558 7,749,238 8/22/95 (1,025,320)
Japanese Yen 1,105,070 1,132,028 8/22/95 26,958
Netherland
Guilders 712,504 665,960 8/22/95 (46,544)
Netherland
Guilders 226,706 227,848 8/22/95 1,142
Netherland
Guilders 498,752 477,759 8/22/95 (20,993)
Swiss Francs 935,112 863,042 8/22/95 (72,070)
Swiss Francs 279,662 282,722 8/22/95 3,060
Swiss Francs 174,789 166,875 8/22/95 (7,914)
-----------------------------------------------------------------
-
Total Forward
Currency
Contracts
to Sell $18,783,332 $17,502,427 $(1,280,905)
-----------------------------------------------------------------
-
</TABLE>
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1995
<TABLE>
<S> <C>
ASSETS
- ----------------------------------------------------------------------
Investments in securities, at value
(identified cost $58,032,593) (Note 1) $61,744,709
- ----------------------------------------------------------------------
Cash 837
- ----------------------------------------------------------------------
Dividends, interest and other receivables 236,116
- ----------------------------------------------------------------------
Receivable for securities sold 69,592
- ----------------------------------------------------------------------
Receivable for shares of the fund sold 266,454
- ----------------------------------------------------------------------
Receivable for open forward currency contracts 34,329
- ----------------------------------------------------------------------
Unamortized organization expenses (Note 1) 1,872
- ----------------------------------------------------------------------
TOTAL ASSETS 62,353,909
- ----------------------------------------------------------------------
LIABILITIES
- ----------------------------------------------------------------------
Payable for shares of the fund repurchased 292,323
- ----------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 109,168
- ----------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 42,333
- ----------------------------------------------------------------------
Payable for administrative services (Note 2) 1,223
- ----------------------------------------------------------------------
Payable for distribution fees (Note 2) 40,419
- ----------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 45
- ----------------------------------------------------------------------
Payable for open forward currency contracts 1,315,234
- ----------------------------------------------------------------------
Other accrued expenses 27,736
- ----------------------------------------------------------------------
TOTAL LIABILITIES 1,828,481
- ----------------------------------------------------------------------
NET ASSETS $60,525,428
- ----------------------------------------------------------------------
REPRESENTED BY
Paid-in capital (Notes 1 and 4) 58,777,836
- ----------------------------------------------------------------------
Accumulated net investment loss (Note 1) (108,932)
- ----------------------------------------------------------------------
Accumulated net realized loss on
investment transactions (Note 1) (577,743)
- ----------------------------------------------------------------------
Net unrealized appreciation of investments,
forward currency contracts and foreign currency 2,434,267
- ----------------------------------------------------------------------
TOTAL -- REPRESENTING NET ASSETS APPLICABLE
TO CAPITAL SHARES OUTSTANDING $60,525,428
- ----------------------------------------------------------------------
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE
- ----------------------------------------------------------------------
Net asset value and redemption price of class A
shares ($32,856,412 divided by 2,714,515 shares) $12.10
- ----------------------------------------------------------------------
Offering price per class A share (100/94.25 of $12.10)* $12.84
- ----------------------------------------------------------------------
Net asset value and offering price of class B shares
($25,891,874 divided by 2,157,480 shares)+ $12.00
- ----------------------------------------------------------------------
Net asset value and redemption price of class M shares
($1,777,142 divided by 147,023 shares) $12.09
- ----------------------------------------------------------------------
Offering price per class M share (100/96.50 of $12.09)* $12.53
- ----------------------------------------------------------------------
<FN>
* On single retail sales of less than $50,000. On sales of $50,000
or more and on group sales, the offering price is reduced.
+ Redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge.
</TABLE>
<PAGE>
STATEMENT OF OPERATIONS
Year ended June 30, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME
- ----------------------------------------------------------------------
Dividends (net of foreign tax of $89,489) $740,166
- ----------------------------------------------------------------------
Interest 240,597
- ----------------------------------------------------------------------
TOTAL INVESTMENT INCOME 980,763
EXPENSES:
- ----------------------------------------------------------------------
Compensation of Manager (Note 2) 297,692
- ----------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 122,230
- ----------------------------------------------------------------------
Reports to shareholders 28,633
- ----------------------------------------------------------------------
Compensation of Trustees (Note 2) 1,602
- ----------------------------------------------------------------------
Administrative services (Note 2) 4,707
- ----------------------------------------------------------------------
Distribution fees -- class A (Note 2) 55,299
- ----------------------------------------------------------------------
Distribution fees -- class B (Note 2) 145,547
- ----------------------------------------------------------------------
Distribution fees -- class M (Note 2) 3,718
- ----------------------------------------------------------------------
Auditing 11,857
- ----------------------------------------------------------------------
Legal 12,936
- ----------------------------------------------------------------------
Postage 7,485
- ----------------------------------------------------------------------
Registration fees 35,054
- ----------------------------------------------------------------------
Amortization of organization expenses (Note 1) 2,857
- ----------------------------------------------------------------------
Fees waived by Manager (Note 2) (1,767)
- ----------------------------------------------------------------------
TOTAL EXPENSES 727,850
- ----------------------------------------------------------------------
NET INVESTMENT INCOME 252,913
- ----------------------------------------------------------------------
Net realized loss on investments (Notes 1 and 3) (418,475)
- ----------------------------------------------------------------------
Net realized loss on forward currency contracts
and foreign currency (320,521)
- ----------------------------------------------------------------------
Net unrealized loss on forward currency contracts and foreign currency
translation during the year (1,279,242)
- ----------------------------------------------------------------------
Net unrealized appreciation of investments during the year 3,024,324
- ----------------------------------------------------------------------
NET GAIN ON INVESTMENTS 1,006,086
- ----------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $1,258,999
- ----------------------------------------------------------------------
</TABLE>
<PAGE>
Statement of changes in net assets
<TABLE><CAPTION>
<S> <C> <C>
Year ended June 30
----------------------------
1995 1994
- ----------------------------------------------------------------------
Increase in net assets
- ----------------------------------------------------------------------
Operations:
- ----------------------------------------------------------------------
Net investment income (loss) $252,913 $(7,646)
- ----------------------------------------------------------------------
Net realized gain (loss) on investments,
forward currency contracts and foreign
currency translation (738,996) 584,650
- ----------------------------------------------------------------------
Net unrealized appreciation of investments,
forward currency contracts and foreign
currency translation 1,745,082 229,572
- ----------------------------------------------------------------------
Net increase in net assets resulting
from operations 1,258,999 806,576
- ----------------------------------------------------------------------
Distributions to shareholders from:
- ----------------------------------------------------------------------
Net realized gain on investments -- class A
(Note 1) (199,229) (70,167)
- ----------------------------------------------------------------------
Net realized gain on investments -- class B
(Note 1) (141,301) --
- ----------------------------------------------------------------------
Net realized gain on investments -- class M
(Note 1) (460) --
- ----------------------------------------------------------------------
In excess of net realized gain
on investments -- class A (Note 1) (117,199) --
- ----------------------------------------------------------------------
In excess of net realized gain
on investments -- class B (Note 1) (83,122) --
- ----------------------------------------------------------------------
In excess of net realized gain
on investments -- class M (Note 1) (271) --
- ----------------------------------------------------------------------
Increase from capital share
transactions (Note 4) 48,556,735 7,656,085
- ----------------------------------------------------------------------
Total increase in net assets 49,274,152 8,392,494
- ----------------------------------------------------------------------
Net assets
- ----------------------------------------------------------------------
Beginning of year 11,251,276 2,858,782
- ----------------------------------------------------------------------
End of year (including accumulated net
investment loss of ($108,932) and $0,
respectively) $60,525,428 $11,251,276
- ----------------------------------------------------------------------
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
<TABLE><CAPTION>
<S> <C> <C> <C>
FOR THE PERIOD FOR THE PERIOD
DECEMBER 1,1994 DECEMBER 1, 1994
(COMMENCEMENT (COMMENCEMENT
OF OPERATIONS) TO YEAR ENDED OF OPERATIONS) TO
JUNE 30 JUNE 30 JUNE 30
- ----------------------------------------------------------------------
1995 1995 1994
- ----------------------------------------------------------------------
CLASS M CLASS B
- ----------------------------------------------------------------------
NET ASSET VALUE,
BEGINNING OF PERIOD $11.87 $11.82 $11.78
- ----------------------------------------------------------------------
INVESTMENT OPERATIONS
- ----------------------------------------------------------------------
Net investment income (loss) .03 .01 (.01)(a)(b)
- ----------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .36 .34 .05
- ----------------------------------------------------------------------
TOTAL FROM INVESTMENT
OPERATIONS .39 .35 .04
- ----------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
- ----------------------------------------------------------------------
Net investment income -- -- --
- ----------------------------------------------------------------------
Net realized gain on
investments (.11) (.11) --
- ----------------------------------------------------------------------
In excess of net realized
gain on investments (.06) (.06) --
- ----------------------------------------------------------------------
TOTAL DISTRIBUTIONS (.17) (.17) --
- ----------------------------------------------------------------------
NET ASSET VALUE,
END OF PERIOD $12.09 $12.00 $11.82
- ----------------------------------------------------------------------
Total investment return at
net asset value (%)(c) 3.33(d) 3.00 .34(d)
- ----------------------------------------------------------------------
NET ASSETS, END OF PERIOD
(in thousands) $1,777 $25,892 $2470
- ----------------------------------------------------------------------
Ratio of expenses to
average net assets (%) 1.61(a)(d) 2.41(a) .15(a)(b)(d)
- ----------------------------------------------------------------------
Ratio of net investment
income (loss) to average
net assets (%) .58(a)(d) .23(a) (.06)(a)(b)(d)
- ----------------------------------------------------------------------
Portfolio turnover (%) 25.83 25.83 96.13
- ----------------------------------------------------------------------
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE><CAPTION>
<C> <C> <C> <C> <C>
FOR THE PERIOD
FEBRUARY 28, 1991
(COMMENCEMENT
OF OPERATIONS) TO
YEAR ENDED JUNE 30 JUNE 30
- ----------------------------------------------------------------------
1995 1994 1993 1992 1991
- ----------------------------------------------------------------------
CLASS A
- ----------------------------------------------------------------------
$11.83 $9.58 $8.82 $8.18 $8.63
- ----------------------------------------------------------------------
.08 (.06)(a) .07(a) .06 .07(a)
.36 2.53 .69 .71 (.52)
- ----------------------------------------------------------------------
.44 2.47 .76 .77 (.45)
- ----------------------------------------------------------------------
-- -- -- (.13) --
(.11) (.22) -- -- --
(.06) -- -- -- --
- ----------------------------------------------------------------------
(.17) (.22) -- (.13) --
- ----------------------------------------------------------------------
$12.10 $11.83 $9.58 $8.82 $8.18
- ----------------------------------------------------------------------
3.76 25.81 8.62 9.52 (5.21)(d)
- ----------------------------------------------------------------------
$32,856 $8,781 $2,859 $2,502 $2,054
- ----------------------------------------------------------------------
1.61(a) 2.17(a) 1.80(a) 1.98 .78(a)(d)
- ----------------------------------------------------------------------
.97(a) (.17)(a) .81(a) .76 .86(a)(d)
- ----------------------------------------------------------------------
25.83 96.13 80.92 82.45 14.54(d)
- ----------------------------------------------------------------------
<FN>
(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. Expenses for classes A, B, and M
shares of the fund for the period ended June 30, 1995 reflect a
reduction of less than $0.01 per share.
(b) Per share net investment income for class B shares 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.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1995
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. 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 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. The fund commenced its public offering of class
M shares on December 1, 1994 which are sold with a maximum front-end
sales charge of 3.50%. Expenses of the fund are borne pro-rata by the
holders of each class of shares, except that each class bears expenses
unique to that class (including the distribution fees applicable to
such class) 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 separate
dividends on each class of shares.
The following is a summary of significant accounting policies
consistently followed by the fund in the preparation of its financial
statements. The policies are in conformity with generally accepted
accounting principles.
A SECURITY VALUATION Investments for which market quotations are
readily available are stated at market value, which is determined
using the last reported sale price on the principal market in which
the securities are traded, or, if no sales are reported -- as in the
case of some securities traded over-the-counter -- the last reported
bid price, 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
<PAGE>
is responsible for determining that the value of these underlying
securities is at all times at least equal to the resale price,
including accrued interest.
D SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the
order to buy or sell is executed). Interest income is recorded on the
accrual basis and dividend income is recorded on the ex-dividend date,
except that certain dividends from foreign securities are recorded as
soon as the fund is informed of the ex-dividend date.
E FOREIGN CURRENCY TRANSLATION Securities quoted in foreign
currencies are translated into U.S. dollars at the current exchange
rate. The fund does not isolate that portion of the results of
operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market
prices of securities held. Such fluctuations are included with the net
realized and unrealized gain or loss from investment.
Foreign currency-denominated receivables and payables are "marked- to-
market" using the current exchange rate. The fluctuation between the
original exchange rate and the current exchange rate is recorded as
unrealized translation gain or loss. Upon receipt of payment, the fund
realizes a gain or loss on foreign currency amounting to the
difference between the original value and the ending value of the
receivable or payable.
F FORWARD CURRENCY CONTRACTS The fund may engage in forward currency
contracts, which are agreements between two parties to buy and sell
currencies at a set price on a future date, to protect against a
decline in value relative to the U.S. dollar of the currencies in
which its portfolio securities are denominated or quoted (or an
increase in the value of a currency in which securities a fund intends
to buy are denominated, when a fund holds cash reserves and short-
term investments). The market value of the contract will fluctuate
with changes in currency exchange rates. The contract is "marked to
market" daily and the change in market value is recorded as an
unrealized gain or loss. When the contract is closed, the fund records
a realized gain or loss equal to the difference between the value of
the contract at the time it was opened and the value at the time it
was closed. The fund could be exposed to risk if the value of the
currency changes unfavorably. In addition, the fund could be exposed
to risks if the counterparties to the contracts are unable to meet the
terms of their contracts or if the fund is unable to enter into a
closing position. 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.
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 exdividend 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. The
<PAGE>
differences include realized and unrealized gains and losses on
forward foreign currency contracts and post-October losses.
Reclassifications are made to the fund's capital accounts to reflect
income and gains available for distribution (or available capital loss
carryovers) under income tax regulations. For the year ended June 30,
1995, the fund reclassified $361,845 to increase accumulated net
investment loss and $361,845 to decrease accumulated net realized loss
on investments.
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 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 December 31, 1994, the Manager had 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.
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 $350 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 year ended June 30, 1995 have been reduced by
credits allowed by PFTC, and such credits amounted to $105,424.
The fund has adopted distribution plans (the "Plans") with respect to
its class A, class B and class M shares pursuant to Rule 12b-1 under
the Investment Company Act of 1940. The purpose of the Plans is to
compensate Putnam
<PAGE>
Mutual Funds Corp., a wholly owned subsidiary of Putnam Investments
Inc., for services provided and expenses incurred by it in
distributing shares of the fund. The Plans provide for payments by the
fund to Putnam Mutual Funds Corp. at an annual rate up to .25%, 1.00%
and .75% of the average net assets attributable to class A, class B
and class M shares, respectively. The Trustees have approved payment
by the fund at an annual rate of .25%, 1.00% and .75% of the average
net assets attributable to class A, class B and class M shares
respectively.
For the year ended June 30, 1995, Putnam Mutual Funds Corp., acting as
underwriter received net commissions of $48,353 from the sale of class
A shares and $3,908 for the sale of class M shares. There was $13,612
in contingent deferred sales charges from redemptions of class B
shares. A deferred sales charge of up to 1% is assessed on certain
redemptions of class A shares purchased as part of an investment of $1
million or more. For the year ended June 30, 1995, Putnam Mutual Funds
Corp., acting as underwriter received $16,856 on class A redemptions
and no monies on class M redemptions.
NOTE 3
PURCHASES AND SALES OF SECURITIES
During the year ended June 30, 1995, purchases and sales of investment
securities other than short-term investments aggregated $51,485,463
and $8,368,425, 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.
NOTE 4
CAPITAL SHARES
At June 30, 1995, there was an unlimited number of shares of
beneficial interest authorized divided into three classes of shares,
class A, class B and class M. Transactions in capital shares were as
follows:
<TABLE><CAPTION>
<S> <C> <C>
YEAR ENDED JUNE 30
- ----------------------------------------------------------------------
1995
- ----------------------------------------------------------------------
CLASS A SHARES AMOUNT
- ----------------------------------------------------------------------
Shares sold 3,343,986 $39,677,281
Shares issued in connection with
reinvestment of distributions 27,348 317,828
- ----------------------------------------------------------------------
3,371,334 39,995,109
- ----------------------------------------------------------------------
Shares repurchased (1,399,240) (16,448,723)
- ----------------------------------------------------------------------
NET INCREASE 1,972,094 $23,546,386
- ----------------------------------------------------------------------
YEAR ENDED JUNE 30
- ----------------------------------------------------------------------
1994
- ----------------------------------------------------------------------
CLASS A SHARES AMOUNT
- ----------------------------------------------------------------------
Shares sold 507,115 $5,922,768
Shares issued in connection with
reinvestment of distributions 6,134 70,166
- ----------------------------------------------------------------------
513,249 5,992,934
- ----------------------------------------------------------------------
Shares repurchased (69,326) (789,703)
- ----------------------------------------------------------------------
NET INCREASE 443,923 $5,203,231
- ----------------------------------------------------------------------
YEAR ENDED JUNE 30
- ----------------------------------------------------------------------
1995
- ----------------------------------------------------------------------
CLASS B SHARES AMOUNT
- ----------------------------------------------------------------------
Shares sold 2,667,962 $31,655,329
Shares issued in connection with
reinvestment of distributions 18,223 210,475
- ----------------------------------------------------------------------
2,686,185 31,865,804
- ----------------------------------------------------------------------
Shares repurchased (737,746) (8,555,102)
- ----------------------------------------------------------------------
Net increase 1,948,439 $23,310,702
- ----------------------------------------------------------------------
<PAGE>
FOR THE PERIOD
JUNE 1, 1994
(COMMENCEMENT
OF OPERATIONS)
TO JUNE 30
- ----------------------------------------------------------------------
1994
- ----------------------------------------------------------------------
CLASS B SHARES AMOUNT
- ----------------------------------------------------------------------
Shares sold 209,041 $2,452,854
Shares issued in connection with
reinvestment of distributions -- --
- ----------------------------------------------------------------------
209,041 2,452,854
- ----------------------------------------------------------------------
Shares repurchased -- --
- ----------------------------------------------------------------------
NET INCREASE 209,041 $2,452,854
- ----------------------------------------------------------------------
FOR THE PERIOD
DECEMBER 1, 1994
(COMMENCEMENT
OF OPERATIONS)
TO JUNE 30
- ----------------------------------------------------------------------
1995
- ----------------------------------------------------------------------
CLASS M SHARES AMOUNT
- ----------------------------------------------------------------------
Shares sold 153,859 $1,779,068
Shares issued in connection with
reinvestment of distributions 63 731
- ----------------------------------------------------------------------
153,922 1,779,799
- ----------------------------------------------------------------------
Shares repurchased (6,899) (80,152)
- ----------------------------------------------------------------------
Net increase 147,023 $1,699,647
- ----------------------------------------------------------------------
</TABLE>
FEDERAL TAX INFORMATION
Pursuant to section 852 of the Internal Revenue Code, the fund hereby
designates $.082 per share (or if different, the amount necessary to
offset capital gain income earned by the fund) as capital gain
dividends for its taxable year ended June 30, 1995.
For the period, interest and dividends from the foreign countries were
$829,892 or $.165 per share. Taxes paid to the foreign countries were
$89,489 or $.018 per share.
The Form 1099 you receive in January 1996 will show you the status of
all distributions, if any, paid to your account in calendar year 1995.
<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
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
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
Eli Shapiro
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 M. Scott
Vice President and Fund Manager
William N. Shiebler
Vice President
John R. Verani
Vice President
Paul M. O'Neil
Vice President
John D. Hughes
Vice President and Treasurer
Beverly Marcus
Clerk and Assistant Treasurer
This report is for the information of shareholders of Putnam 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
19393-841/524/891
<PAGE>
APPENDIX TO FORM N-30D FILINGS TO DESCRIBE DIFFERENCES BETWEEN PRINTED
AND EDGAR-FILED TEXTS.
(1) Rule lines for tables are omitted.
(2) Italic typefaces is displayed in normal type.
(3) Boldface type is displayed in capital letters.
(4) Headers (e.g. the names of the fund) and footers (e.g. page
numbers and OThe accompanying notes are an integral part of these
financial statementsO) are omitted.
(5) Because the printed page breaks are not reflected, certain
tabular and columnar headings and symbols are displayed
differently in this filing.
(6) Bullet points and similar graphic symbols are omitted.
(7) Page numbering is different.
