Putnam
Japan
Fund
SEMIANNUAL REPORT
February 28, 1997
[LOGO: BOSTON * LONDON * TOKYO]
The following report contains a list of your fund's portfolio holdings and
complete financial statements for the six months ended 2/28/97. Additional
details, including fund strategy, performance, and managers' outlook, will be
provided in the annual report, which will cover the 12 months ended 8/31/97.
Portfolio of investments owned
February 28, 1997 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (98.8%) *
NUMBER OF SHARES VALUE
Automotive (7.6%)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
15,000 Fuji Heavy Industries + $ 71,857
6,000 Koito Manufacturing Co., Ltd. 40,740
12,000 NHK Spring Co., Ltd. 42,989
4,000 Suzuki Motor Co., Ltd. 37,657
--------------
193,243
Building and Construction (4.7%)
- ---------------------------------------------------------------------------------------------------------
8,000 INAX Corp. 52,987
14,000 Kumagai Gumi Co., Ltd. 22,161
10,000 Taisei Corp. 43,323
--------------
118,471
Chemicals (2.1%)
- ---------------------------------------------------------------------------------------------------------
4,000 Mitsui Petrochemical Industries 18,462
10,000 Toa Gosei Co., Ltd. 35,491
--------------
53,953
Conglomerates (2.0%)
- ---------------------------------------------------------------------------------------------------------
10,000 Itochu Corp. 49,488
Consumer Non-Durables (5.5%)
- ---------------------------------------------------------------------------------------------------------
12 Japan Tobacco, Inc. 80,980
7,000 Kuraray Co., Ltd. 58,319
--------------
139,299
Electronics and Electrical Equipment (14.7%)
- ---------------------------------------------------------------------------------------------------------
9,000 Hitachi, Ltd. 77,981
16,000 Mitsubishi Electric Corp. 90,377
7,000 NEC Corp. 81,646
6,000 Oki Electric Industry Co., Ltd. 31,792
16,000 Toshiba Corp. 90,644
--------------
372,440
Food and Beverages (3.8%)
- ---------------------------------------------------------------------------------------------------------
9,000 Kirin Brewery Co., Ltd. 77,231
2,000 Yakult Honsha 20,328
--------------
97,559
Insurance and Finance (25.6%)
- ---------------------------------------------------------------------------------------------------------
12,000 Akita Bank Ltd. 66,083
7,000 Chuo Trust & Banking Co., Ltd. 43,797
3,000 Fuji Fire & Marine Insurance 10,747
12,000 Joyo Bank 60,085
21,000 Keiyo Bank 85,904
14,000 Mitsui Marine & Fire Insurance Co., Ltd. (The) 74,648
4,000 Nippon Shinpan Co. 16,996
16,000 Nissan Fire & Marine Insurance Co. 64,117
2,000 Orix Corp. 84,979
4,000 Sanwa Bank Ltd. 46,322
10,000 Tokio Marine & Fire Insurance Co., Ltd. (The) 95,809
--------------
649,487
Metals and Mining (6.2%)
- ---------------------------------------------------------------------------------------------------------
4,000 Hitachi Metals Ltd. 27,993
25,000 Kawasaki Steel Corp. 67,275
4,000 Nippon Yakin Kogyo Co. 9,064
22,000 Sumitomo Metal Industries Ltd. 52,787
--------------
157,119
Oil and Gas (2.2%)
- ---------------------------------------------------------------------------------------------------------
14,000 Cosmo Oil Co., Ltd. 54,820
Paper and Forest Products (2.4%)
- ---------------------------------------------------------------------------------------------------------
13,000 Nippon Paper Industries Co., Ltd. 61,301
Pharmaceuticals and Biotechnology (0.7%)
- ---------------------------------------------------------------------------------------------------------
3,000 Shionogi & Co., Ltd. 18,770
Photography (5.0%)
- ---------------------------------------------------------------------------------------------------------
6,000 Canon, Inc. 125,969
Retail (1.4%)
- ---------------------------------------------------------------------------------------------------------
1,000 Aoki International Co., Ltd. 18,329
2,000 Seiyu Ltd. 17,329
--------------
35,658
Specialty Consumer Products (1.3%)
- ---------------------------------------------------------------------------------------------------------
17,000 Renown Inc. + 33,992
Utilities (13.6%)
- ---------------------------------------------------------------------------------------------------------
5,000 Chubu Electric Power, Inc. 88,728
3,000 Hokuriku Electric Power Co. 51,987
3,000 Kansai Electric Power Co., Inc. 54,736
4,000 Kyushu Electric Power Inc. 69,649
11 Nippon Telegraph and Telephone Corp. 78,721
--------------
343,821
- ---------------------------------------------------------------------------------------------------------
Total Investments (cost $3,257,390) *** $2,505,390
- ---------------------------------------------------------------------------------------------------------
* Percentages indicated are based on net assets of $2,535,917.
*** The aggregate identified cost on a tax basis is $3,257,569, resulting in gross unrealized
appreciation and depreciation of $15,849 and $768,028, respectively, or net unrealized
depreciation of $752,179.
+ Non-income-producing security.
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Forward Currency Contracts to Sell at February 28, 1997 (Unaudited)
Market Aggregate Face Delivery Unrealized
Value Value Date Appreciation
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Japanese Yen $ 268,654 $ 280,764 Apr 97 $ 12,110
- ----------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
February 28, 1997 (Unaudited)
<S> <C>
Assets
- ---------------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $3,257,390) (Note 1) $2,505,390
- ---------------------------------------------------------------------------------------------------
Cash 33,884
- ---------------------------------------------------------------------------------------------------
Dividends receivable 1,111
- ---------------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 538
- ---------------------------------------------------------------------------------------------------
Receivable for open forward currency contracts 12,110
- ---------------------------------------------------------------------------------------------------
Unamortized organization expenses (Note 1) 3,333
- ---------------------------------------------------------------------------------------------------
Total assets 2,556,366
Liabilities
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 1,233
- ---------------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 1,049
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 157
- ---------------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 7
- ---------------------------------------------------------------------------------------------------
Payable for organization expenses (Note 1) 3,662
- ---------------------------------------------------------------------------------------------------
Payable for auditing fees 10,500
- ---------------------------------------------------------------------------------------------------
Payable for report to shareholders 2,343
- ---------------------------------------------------------------------------------------------------
Other accrued expenses 1,498
- ---------------------------------------------------------------------------------------------------
Total liabilities 20,449
- ---------------------------------------------------------------------------------------------------
Net assets $2,535,917
Represented by
- ---------------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $3,308,065
- ---------------------------------------------------------------------------------------------------
Distributions in excess of net investment income (Note 1) (3,383)
- ---------------------------------------------------------------------------------------------------
Distributions in excess of gains on investments and
foreign currency transactions (Note 1) (28,829)
- ---------------------------------------------------------------------------------------------------
Net unrealized depreciation of investments and assets and
liabilities in foreign currencies (739,936)
- ---------------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $2,535,917
Computation of net asset value and offering price
- ---------------------------------------------------------------------------------------------------
Net asset value per share ($2,535,917 divided by 392,019 shares) $6.47
- ---------------------------------------------------------------------------------------------------
Offering price per share (100/94.25 of $6.47)* $6.86
- ---------------------------------------------------------------------------------------------------
* 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.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
Six months ended February 28, 1997 (Unaudited)
<S> <C>
Investment income:
- --------------------------------------------------------------------------------------------------
Dividends (net of foreign tax of $1,901) $ 10,770
- --------------------------------------------------------------------------------------------------
Interest 293
- --------------------------------------------------------------------------------------------------
Total investment income 11,063
Expenses:
- --------------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 11,577
- --------------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 2,944
- --------------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 923
- --------------------------------------------------------------------------------------------------
Administrative services (Note 2) 20
- --------------------------------------------------------------------------------------------------
Amortization of organization expenses (Note 1) 161
- --------------------------------------------------------------------------------------------------
Reports to shareholders 3,259
- --------------------------------------------------------------------------------------------------
Registration fees 29
- --------------------------------------------------------------------------------------------------
Auditing 15,211
- --------------------------------------------------------------------------------------------------
Legal 2,178
- --------------------------------------------------------------------------------------------------
Postage 324
- --------------------------------------------------------------------------------------------------
Other 4
- --------------------------------------------------------------------------------------------------
Fees waived and reimbursed by Manager (Note 2) (15,775)
- --------------------------------------------------------------------------------------------------
Total expenses 20,855
- --------------------------------------------------------------------------------------------------
Expense reduction (Note 2) (1,301)
- --------------------------------------------------------------------------------------------------
Net expenses 19,554
- --------------------------------------------------------------------------------------------------
Net investment loss (8,491)
- --------------------------------------------------------------------------------------------------
Net realized loss on investments (Notes 1 and 3) (67,007)
- --------------------------------------------------------------------------------------------------
Net realized gain on foreign currency transactions (Note 1) 38,946
- --------------------------------------------------------------------------------------------------
Net unrealized appreciation of assets and liabilities in
foreign currencies during the period 18,500
- --------------------------------------------------------------------------------------------------
Net unrealized depreciation of investments during the period (454,419)
- --------------------------------------------------------------------------------------------------
Net loss on investments (463,980)
- --------------------------------------------------------------------------------------------------
Net decrease in net assets resulting from operations $(472,471)
- --------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
For the period
December 28
(commencement
Six months ended of operations) to
February 28 August 31
1997* 1996
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets
- ----------------------------------------------------------------------------------------------------------------------
Operations:
- ----------------------------------------------------------------------------------------------------------------------
Net investment loss $ (8,491) $ (9,426)
- ----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments and foreign
currency transactions (28,061) 114,878
- ----------------------------------------------------------------------------------------------------------------------
Net unrealized depreciation of investments and assets
and liabilities in foreign currencies (435,919) (304,017)
- ----------------------------------------------------------------------------------------------------------------------
Net decrease in net assets resulting from operations (472,471) (198,565)
- ----------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ----------------------------------------------------------------------------------------------------------------------
From net investment income (29,097) --
- ----------------------------------------------------------------------------------------------------------------------
From net realized gain on investments (72,177) --
- ----------------------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 89,919 218,308
- ----------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (483,826) 19,743
Net assets
- ----------------------------------------------------------------------------------------------------------------------
Beginning of period 3,019,743 3,000,000
- ----------------------------------------------------------------------------------------------------------------------
End of period (including distributions in excess of
net investment income and undistributed net
investment income of $3,383 and $34,205, respectively) $2,535,917 $3,019,743
- ----------------------------------------------------------------------------------------------------------------------
* Unaudited.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
- --------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share February 28 Dec. 28, 1995+
operating performance (unaudited) to August 31
- --------------------------------------------------------------------------------------------------------
1997 1996
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value,
beginning of period $7.97 $8.50
- --------------------------------------------------------------------------------------------------------
Investment operations
- --------------------------------------------------------------------------------------------------------
Net investment loss (c) (.02) (.02)
- --------------------------------------------------------------------------------------------------------
Net realized and unrealized
loss on investments (1.21) (.51)
- --------------------------------------------------------------------------------------------------------
Total from
investment operations (1.23) (.53)
- --------------------------------------------------------------------------------------------------------
Less distributions:
- --------------------------------------------------------------------------------------------------------
From net
investment income (.08) --
- --------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.19) --
- --------------------------------------------------------------------------------------------------------
Total distributions (.27) --
- --------------------------------------------------------------------------------------------------------
Net asset value,
end of period $6.47 $7.97
- --------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- --------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) (15.77)* (6.24)*
- --------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $2,536 $3,020
- --------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b)(c) .72* .98*
- --------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%)(c) (.29)* (.29)*
- --------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 41.29* 46.39*
- --------------------------------------------------------------------------------------------------------
Average commission
rate paid $.0450 $.0508
- --------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) Includes amounts paid through expense offset arrangements (Note 2).
(c) Reflects an expense limitation during the period (Note 2). As a result of such limitation, expenses for
the fund for the period ended February 28, 1997, and August 31, 1996, reflect a reduction of $0.04
and $0.04 per share, respectively.
</TABLE>
Notes to financial statements
February 28, 1997 (Unaudited)
Note 1
Significant accounting policies
Putnam Japan Fund (the "fund") is one of a series of Putnam Investments Funds
(the "trust") which is registered under the Investment Company Act of 1940, as
amended, as a diversified open-end management investment company. The
objective of the fund is to seek capital appreciation by investing primarily
in common stocks and equity securities, including securities convertible into
common stocks or other equity securities, of Japanese companies.
The following is a summary of significant accounting policies consistently
followed by the fund in the preparation of its financial statements. The
preparation of financial statements is in conformity with generally accepted
accounting principles and requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities. Actual
results could differ from those estimates.
A) Security valuation Investments for which market quotations are readily
available are stated at market value which is determined using the last
reported sale price on its principle exchange, or if no sales are reported --
as in the case of some securities traded over-the-counter -- the last bid
price. Short-term investments having remaining maturities of 60 days or less
are stated at amortized cost, which approximates market value and other
investments are stated at fair market value following procedures approved by
the Trustees. Foreign securities quoted in foreign currencies are translated
into U.S. dollars at the current exchange rate.
B) Joint trading account Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the fund may transfer uninvested cash
balances into a joint trading account along with the cash of other registered
investment companies and certain other accounts managed by Putnam Investment
Management, Inc. ("Putnam Management"), the fund's Manager, a wholly-owned
subsidiary of Putnam Investments, Inc.. These balances may be invested in one
or more repurchase agreements and/or short-term money market instruments.
C) Repurchase agreements The fund, or any joint trading account, through its
custodian, receives delivery of the underlying securities, the market value of
which at the time of purchase is required to be in an amount at least equal to
the resale price, including accrued interest. Putnam Management is responsible
for determining that the value of these underlying securities is at all times
at least equal to the resale price, including accrued interest.
D) Security transactions and related investment income Security transactions
are accounted for on the trade date (date the order to buy or sell is
executed). Interest income is recorded on the accrual basis. Dividend income
is recorded on the ex-dividend date except that certain dividends from foreign
securities are recorded as soon as the fund is informed of the ex-dividend
date.
E) Foreign currency translation The accounting records of the fund are
maintained in U.S. dollars. The market value of foreign securities, currency
holdings, other assets and liabilities are recorded in the books and records
of the fund after translation to U.S. dollars based on the exchange rates on
that day. The cost of each security is determined using historical exchange
rates. Income and withholding taxes are translated at prevailing exchange
rates when accrued or incurred. The fund does not isolate that portion of
realized or unrealized gains or losses resulting from changes in the foreign
exchange rate on investments from fluctuations arising from changes in the
market prices of the securities. Such fluctuations are included with the net
realized and unrealized gain or loss on investments. Net realized gains and
losses on foreign currency transactions represent net exchange gains or losses
on closed forward currency contracts, disposition of foreign currencies and
the difference between the amount of investment income and foreign withholding
taxes recorded on the fund's books and the U.S. dollar equivalent amounts
actually received or paid. Net unrealized appreciation and depreciation of
assets and liabilities in foreign currencies arise from changes in the value
of open forward currency contracts and assets and liabilities other than
investments at the period end, resulting from changes in the exchange rate.
F) Forward currency contracts The fund may engage in forward currency
contracts, which are agreements between two parties to buy and sell currencies
at a set price on a future date, to protect against a decline in value
relative to the U.S. dollar of the currencies in which its portfolio
securities are denominated or quoted (or an increase in the value of a
currency in which securities a fund intends to buy are denominated, when a
fund holds cash reserves and short-term investments). The U.S. dollar value of
forward currency contracts is determined using forward currency exchange rates
supplied by a quotation service. The market value of the contract will
fluctuate with changes in currency exchange rates. The contract is "marked to
market" daily and the change in market value is recorded as an unrealized gain
or loss. When the contract is closed, the fund records a realized gain or loss
equal to the difference between the value of the contract at the time it was
opened and the value at the time it was closed. The fund could be exposed to
risk if the value of the currency changes unfavorably, if the counterparties
to the contracts are unable to meet the terms of their contracts or if the
fund is unable to enter into a closing position.
G) Federal taxes It is the policy of the fund to distribute all of its taxable
income within the prescribed time and otherwise comply with the provisions of
the Internal Revenue Code applicable to regulated investment companies. It is
also the intention of the fund to distribute an amount sufficient to avoid
imposition of any excise tax under Section 4982 of the Internal Revenue Code
of 1986. Therefore, no provision has been made for federal taxes on income,
capital gains or unrealized appreciation on securities held nor for excise tax
on income and capital gains.
H) Distributions to shareholders Distributions to shareholders from net
investment income are recorded by the fund on the ex-dividend date. Capital
gain distributions, if any, are recorded on the ex-dividend date and paid at
least annually. The amount and character of income and gains to be distributed
are determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. Reclassifications are made to the
fund's capital accounts to reflect income and gains available for distribution
(or available capital loss carryovers) under income tax regulations.
I) Expenses of the trust Expenses directly charged or attributable to any fund
will be paid from the assets of that fund. Generally, expenses of the trust
will be allocated among and charged to the assets of each fund on a basis that
the Trustees deem fair and equitable, which may be based on the relative
assets of each fund or the nature of the services performed and relative
applicability to each fund.
J) 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 $3,662. These expenses are being amortized on projected net
asset levels over a five-year period.
The fund will reimburse Putnam Management for the payment of these expenses.
Note 2
Management fee, administrative services and other transactions
Compensation of Putnam Management, for management and investment advisory
services is paid quarterly based on the average net assets of the fund. Such
fee is based on the following annual rates: 0.80% of the first $500 million of
average net assets, 0.70% of the next $500 million, 0.65% of the next $500
million, 0.60% of the next $5 billion, 0.575% of the next $5 billion, 0.555%
of the next $5 billion, 0.54% of the next $5 billion, and 0.53% thereafter.
Putnam Management has agreed to limit its compensation (and, to the extent
necessary, bear other expenses) through June 30, 1997, to the extent that
expenses of the fund (exclusive of brokerage, interest, taxes, deferred
organizational and extraordinary expense, credits from Putnam Fiduciary Trust
Company (PFTC), a wholly-owned subsidiary of Putnam Investments, Inc. and
payments under the Trust's distribution plan) would exceed an annual rate of
1.45% of the fund's average net assets.
The fund reimburses Putnam Management for the compensation and related
expenses of certain officers of the fund and their staff who provide
administrative services to the fund. The aggregate amount of all such
reimbursements is determined annually by the Trustees.
Custodial functions for the fund's assets are provided by PFTC. Investor
servicing agent functions are provided by Putnam Investor Services, a division
of PFTC.
For the six months ended February 28, 1997, fund expenses were reduced by
$1,301 under expense offset arrangements with PFTC. Investor servicing and
custodian fees reported in the Statement of operations exclude these credits.
The fund could have invested a portion of the assets utilized in connection
with the expense offset arrangements in an income producing asset if it had
not entered into such arrangements.
Trustees of the fund receive an annual Trustees fee of $100 and an additional
fee for each Trustee's meeting attended. Trustees who are not interested
persons of Putnam Management and who serve on committees of the Trustees
receive additional fees for attendance at certain committee meetings.
The fund has adopted a Trustee Fee Deferral Plan (the "Plan") which allows the
Trustees to defer the receipt of all or a portion of Trustees Fees payable on
or after July 1, 1995. The deferred fees remain in the fund and are invested
in certain Putnam funds until distribution in accordance with the Plan.
The fund has adopted an unfunded noncontributory defined benefit pension plan
(the "Pension Plan") covering all Trustees of the fund who have served as
Trustee for at least five years. Benefits under the Pension Plan are equal to
50% of the Trustee's average total retainer and meeting fees for the three
years preceding retirement. Pension expense for the fund is included in
Compensation of Trustees in the Statement of operations. Accrued pension
liability is included in Payable for compensation of Trustees in the Statement
of assets and liabilities.
The fund has adopted a distribution plan (the "Plan") pursuant to Rule 12b-1
under the Investment Company Act of 1940. The purpose of the Plan is to
compensate Putnam Mutual Funds Corp., a wholly-owned subsidiary of Putnam
Investments, Inc., for services provided and expenses incurred by it in
distributing shares of the fund. The Plan provides for payment by the fund to
Putnam Mutual Funds Corp. at an annual rate of up to 0.35% of the fund's
average net assets. The fund is not currently making any payments pursued to
the plan.
For the six months ended February 28, 1997, Putnam Mutual Funds Corp., acting
as underwriter received no commissions from the sale of shares of the fund.
Note 3
Purchases and sales of securities
During the six months ended February 28, 1997, purchases and sales of
investment securities other than short-term investments aggregated $1,210,306
and $1,146,438, respectively. There were no purchases and sales of U.S.
government obligations. In determining the net gain or loss on securities
sold, the cost of securities has been determined on the identified cost basis.
Note 4
Capital shares
At February 28, 1997, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Six months ended
February 28, 1997
- ------------------------------------------------------------
Shares Amount
- ------------------------------------------------------------
Shares sold 226,926 $ 1,777,028
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 14,169 101,162
- ------------------------------------------------------------
241,095 1,878,190
Shares
repurchased (227,884) (1,788,271)
- ------------------------------------------------------------
Net increase 13,211 $ 89,919
- ------------------------------------------------------------
For the period
December 28, 1995
(commencement of
operations) to
August 31, 1996
- ------------------------------------------------------------
Shares Amount
- ------------------------------------------------------------
Shares sold 232,144 $ 1,985,263
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- ------------------------------------------------------------
232,144 1,985,263
Shares
repurchased (206,277) (1,766,955)
- ------------------------------------------------------------
Net increase 25,867 $ 218,308
- ------------------------------------------------------------
At February 28, 1997, Putnam Management owned 366,189 shares
of the fund (93.41% of shares outstanding), valued at $2,369,243.
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
John D. Hughes
Senior Vice President and Treasurer
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Ian C. Ferguson
Vice President
Brett C. Browchuk
Vice President
Anthony W. Regan
Vice President
Robert Swift
Vice President and Fund Manager
David K. Thomas
Vice President and Fund Manager
William n. Shiebler
Vice President
John R. Verani
Vice President
Paul M. O'Neil
Vice President
Beverly Marcus
Clerk and Assistant Treasurer
This report is for the information of shareholders of Putnam Japan Fund. It
may also be used as sales literature when preceded or accompanied by the
current prospectus, which gives details of sales charges, investment
objectives, and operating policies of the fund, and the most recent copy of
Putnam's Quarterly Performance Summary. For more information, or to request a
prospectus, call toll free: 1-800-225-1581. You can also learn more at the
Putnam Investments website: http://www.putnaminv.com.
Shares of mutual funds are not deposits or obligations of, or guaranteed or
endorsed by, any financial institution, are not insured by the Federal Deposit
Insurance Corporation (FDIC), the Federal Reserve Board or any other agency,
and involve risk, including the possible loss of principal amount invested.
32132-2AWA 2/97
