Putnam
Global Growth
and Income
Fund
ANNUAL REPORT
September 30, 1997
[LOGO: BOSTON * LONDON * TOKYO]
From the Chairman
Dear Shareholder:
Putnam Global Growth and Income Fund's strategy of seeking cheapness and
change throughout the world's markets fared well during the fiscal year that
ended September 30, 1997. Moderate industrial expansion and relatively stable
interest rates in most of the world's developed economies helped equity
markets rise to record levels. Among the winning stocks were many of the large
industrial corporations and financial companies that the fund's value-oriented
approach tends to favor. Meanwhile, more and more companies in Europe and
Japan embraced the need to reform their businesses and products. Your fund's
managers -- Hugh Mullin, Justin Scott, George Stairs, and Deborah Kuenster --
positioned the fund to capitalize on this trend.
Your fund's results for the year were exceptional both on a relative and on an
absolute basis. The fund provided a total return of 33.88% at net asset value
(26.15% at public offering price). With the portfolio divided rather evenly
between domestic and foreign holdings, that return was especially impressive,
outpacing the performance of the MSCI World Index. For complete performance
information, see page seven.
* UNITED STATES CONTINUES TO SHINE
The stocks of large U.S. companies continued to be among the world's
best-performing investment opportunities during the period, building on the
previous two years of bullish returns. As your fund began the fiscal year,
U.S.-based stocks composed more than 50% of the portfolio. That percentage
declined gradually to approximately 46% (based on net assets) in the course of
the year. Although your fund makes most investment decisions based on
fundamental equity analysis, on occasion, the portfolio managers can make
strategic decisions based on market analysis. In the first quarter of calendar
1997, the U.S. market seemed relatively more expensive than foreign markets,
and management made a decision to focus its new purchases in foreign markets.
Despite the shift, your fund still has more assets invested in the United
States than in any other country, and this domestic portion has been a big
reason for the fund's recent gains. One long-time holding, IBM, illustrated
the effectiveness of your managers' approach. The company decided to
restructure its businesses a few years ago after years of mounting losses. In
the past 12 months, the stock was among the fund's top holdings as it
appreciated to a new record value. While this holding, along with others
discussed in this report, was viewed favorably at the end of the fiscal
period, all are subject to review and adjustment in accordance with the fund's
investment strategy and may vary over time.
Many of the fund's U.S.-based holdings have risen substantially in price but
remain in the portfolio because they are still attractive based on Putnam's
valuation measures. Hewlett Packard, for example, has nearly doubled in value
in the past two or three years, but your managers believe its desktop computer
components business offers further potential for growth.
* EUROPEAN MARKETS FORGE AHEAD THROUGH DOMESTIC TURBULENCE
Like their U.S. counterpart, European equity markets posted robust gains
during the period. In addition to moderate economic growth and steady interest
rates, many European multinational corporations also benefited from the strong
value of the U.S. dollar and were able to increase their exports. These
positive conditions were offset, however, by numerous problems throughout the
Continent, from high unemployment to internal opposition to budgetary reform
in France, Germany, and Italy. The financial markets nonetheless showed
confidence that these countries would remain on track with their efforts to
introduce a monetary union in 1999.
As Europe's Economic and Monetary Union (EMU) struggles with the birth of the
euro, member states are also striving to streamline bloated bureaucracies by
privatizing state-run companies. This process can generate promising
investment opportunities. A good example is ENI, Italy's state-run oil
company, that is currently being privatized in stages. ENI dominates the
market for gasoline in Italy, has sold off its less efficient chemical
businesses, and has made a major onshore oil discovery in southern Italy.
Another holding, Elf Aquitaine, formerly owned by the government of France,
has similarly divested itself of less profitable subsidiaries and has found
new oil reserves in the region of West Africa.
In a European country untroubled by the single-currency question, the United
Kingdom, our research analysts have found new values. A recently acquired
holding, Cookson, is a diversified conglomerate that derives substantial
revenues from a liquid used in the production of semiconductors. When the
global market for semiconductors slumped in 1996, the price of Cookson stock
followed suit, but our analysts believe that the company's cost-reduction plan
is working and that it can join in the resurgence of the semiconductor
business. The management team has also added to existing positions in two
other British companies, Rolls-Royce, which is benefiting from growth in its
aerospace division, and BTR.
[GRAPHIC OMITTED: horizontal bar chart GEOGRAPHIC ALLOCATION]
GEOGRAPHIC ALLOCATION*
United States 46.3%
United Kingdom 11.6%
Japan 8.0%
France 6.8%
Germany 5.9%
Netherlands 4.9%
Footnote reads:
*Based on net assets as of 9/30/97. Allocations will vary over time.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
TOP 10 HOLDINGS
Fuji Photo Film Co. (Japan)
Photography
BAT Industries PLC (United Kingdom)
Tobacco
Akzo-Nobel N.V. (Netherlands)
Chemicals
Nestle S.A. (Switzerland)
Food and beverage
Sankyo Co., Ltd. (Japan)
Pharmaceuticals and biotrechnology
Allied Irish Banks PLC (Ireland)
Banks
Ente Nazionale Idrocarburi SPA (ENI) (Italy)
Oil and gas
Rolls-Royce PLC (United Kingdom)
Aerospace and defense
Compagnie Generale des Eaux (France)
Environmental control
Deutsche Telekom AG (Germany)
Telephone services
Footnote reads:
These holdings represent 12.1% of the fund's net assets as of 9/30/97.
Portfolio holdings will vary over time.
* JAPAN STRIVES TO REFORM
Japan continues to provide a mixture of good and bad news. The economy, after
surging in the first quarter of calendar 1997, has stagnated again since
March. The big bang economic reforms introduced by Prime Minister Ryutaro
Hashimoto showed promise, but a new tax on consumption slowed retail sales.
Finally the summer brought currency and financial turbulence to Southeast
Asia, where many Japanese export companies operate production facilities. The
Tokyo market suffered from the fallout.
Your fund's strategy can, however, take advantage of such difficulties because
they prompt corporations to reform their businesses. In the past 12 months,
the fund managers added to several existing positions in Japanese companies,
attracted by their restructuring initiatives and their depressed stock prices.
For example, our analysts perceive growing strength in Fuji Photo Film's
global film sales and estimate that the personal-care product revenues of KAO
Corporation are undervalued. Positions in both stocks have been acquired
during the past year.
* FOCUS REMAINS ON COMPANIES, NOT COUNTRIES
The recently ended fiscal year has been rewarding for this portfolio as it has
been for many of the major national markets. It's important to remember,
though, that your fund invests in companies rather than in countries. Stock
markets around the world cannot continue to set records indefinitely, but
broad-based gains are not necessary to the success of your fund's strategy.
Its returns depend more on each company's potential for positive change than
on the performance of major equity indexes.
In some ways, economic difficulty can help the fund's cause by prompting
established companies to take strategic steps to revitalize their earnings. As
companies compete for capital in the global arena, we are confident that more
and more of them will learn to unlock their hidden business value. With your
fund's value-oriented, stock-by-stock approach to investing, we believe we can
identify these companies and take advantage of the opportunities.
Respectfully yours,
/S/GEORGE PUTNAM
George Putnam
Chairman of the Trustees
November 19, 1997
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 9/30/97, there is no guarantee the fund will continue to hold
these securities in the future. International investing involves risks
including political developments, economic instability, and currency
fluctuations, not present with domestic investments.
Performance summary
This section provides information about your fund's performance, which
should always be considered in light of its investment strategy. Putnam
Global Growth and Income Fund is designed for investors seeking capital
growth through investing in the stocks of companies in the United States
and worldwide.
TOTAL RETURN FOR PERIODS ENDED 9/30/97
NAV POP
- ------------------------------------------------------------------------------
1 year 33.88% 26.15%
- ------------------------------------------------------------------------------
Life of fund (1/3/95) 76.34 66.18
Annual average 23.00 20.37
- ------------------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 9/30/97
S&P MSCI MSCI Consumer
500 EAFE World Price
Index Index Index Index
- ------------------------------------------------------------------------------
1 year 40.43 12.18 24.12 2.15%
- ------------------------------------------------------------------------------
Life of fund 119.19 30.23 62.59 7.68
Annual average 33.04 10.08 19.34 2.73
- ------------------------------------------------------------------------------
Performance data represent past results and do not reflect future
performance. They do not take into account any adjustment for taxes
payable on reinvested distributions. Performance data reflect an expense
limitation currently in effect. Without the expense limitation, the fund's
total return would have been lower. Investment returns and principal value
will fluctuate so that an investor's shares when sold may be worth more or
less than their original cost. During the past year the fund's benchmark
index changed. The previous comparative benchmark was a combination of the
S&P 500 index and the MSCI EAFE index. The benchmark changed to the MSCI
World index, because this index better represents global equity markets.
POP assumes 5.75% maximum sales charge. The short-term results of a
relatively new fund are not necessarily indicative of its long-term
prospects.
[GRAPHIC OMITTED: worm chart GROWTH OF A $10,000 INVESTMENT]
Cumulative total return of a $10,000 investment since 1/3/95
Fund's MSCI
class A shares World Standard & Poor's MSCI
at POP Index 500 Stock Index EAFE Index
1/3/95 9425 10000 10000 10000
3/31/95 9368 10422 10974 10186
6/30/95 10333 10820 12019 10260
9/30/95 10687 11377 12971 10688
12/31/95 11180 11870 13749 11121
3/31/96 11756 12305 14486 11442
6/30/96 12136 12613 15135 11623
9/30/96 12413 12730 15600 11609
12/31/96 13401 13262 16898 11793
3/31/97 13932 13251 17354 11609
6/30/97 15607 15192 20377 13115
9/30/97 16618 16259 21919 13023
Footnote reads:
Past performance is no assurance of future results.
PRICE AND DISTRIBUTION INFORMATION
12 months ended 9/30/97
- ------------------------------------------------------------------------------
Distributions (number) 1
- ------------------------------------------------------------------------------
Income $ .231
- ------------------------------------------------------------------------------
Capital gains
- ------------------------------------------------------------------------------
Long term .008
- ------------------------------------------------------------------------------
Short term 1.302
- ------------------------------------------------------------------------------
Total $1.541
- ------------------------------------------------------------------------------
Share value: NAV POP
- ------------------------------------------------------------------------------
9/30/96 $10.77 $11.43
- ------------------------------------------------------------------------------
9/30/97 12.50 13.26
- ------------------------------------------------------------------------------
TERMS AND DEFINITIONS
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 in the fund.
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.
COMPARATIVE BENCHMARKS
Consumer Price Index (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
MSCI World Index is an index of approximately 1,482 equity securities
listed on the stock exchanges of the United States, Europe, Canada,
Australia, New Zealand and the Far East, with all values expressed in U.S.
dollars.
MSCI EAFE Index is an index of approximately 1,045 equity securities
issued by companies located in 18 countries and listed on the stock
exchanges of Europe, Australia, and the Far East. All values are expressed
in U.S. dollars.
Standard & Poor's 500 Index is an index of common stocks frequently used
as a general measure of stock market performance.
*Securities indexes assume reinvestment of all distributions and interest
payments and do not take in account brokerage fees or taxes. Securities in
the fund do not match those in the indexes and performance of the fund
will differ. It is not possible to invest directly in an index.
Report of independent accountants
For the fiscal year ended September 30, 1997
To the Trustees and Shareholders of
Putnam Global Growth and Income Fund
We have audited the accompanying statement of assets and liabilities of Putnam
Global Growth and Income Fund, including the portfolio of investments owned,
as of September 30, 1997, and the related statement of operations for the year
then ended and the statements 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 September 30, 1997, by correspondence with the custodian and
brokers. 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 Global Growth and Income Fund as of September 30, 1997, the results of
its operations for the year then ended and 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
November 11, 1997
Portfolio of investments owned
September 30, 1997
<TABLE>
<CAPTION>
COMMON STOCKS (98.7%) *
NUMBER OF SHARES VALUE
Aerospace and Defense (2.4%)
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
260 Boeing Co. $ 14,154
160 General Motors Corp. Class H 10,580
95 Lockheed Martin Corp. 10,129
25 Northrop Grumman Corp. 3,034
7,711 Rolls-Royce PLC (United Kingdom) 31,906
--------------
69,803
Airlines (0.8%)
- ------------------------------------------------------------------------------------------------------------
120 Delta Air Lines, Inc. 11,303
352 K.L.M.-Royal Dutch Airlines (Netherlands) 12,333
--------------
23,636
Appliances (0.5%)
- ------------------------------------------------------------------------------------------------------------
205 Electrolux AB (Sweden) 16,050
Automotive (2.2%)
- ------------------------------------------------------------------------------------------------------------
31 Bayerische Motoren Werke (BMW) AG (Germany) 26,485
245 Chrysler Corp. 9,019
290 Ford Motor Co. 13,123
305 TRW, Inc. 16,737
--------------
65,364
Automotive Parts (0.4%)
- ------------------------------------------------------------------------------------------------------------
175 Goodyear Tire & Rubber Co. (The) 12,031
Banks (15.9%)
- ------------------------------------------------------------------------------------------------------------
3,817 Allied Irish Banks PLC (Ireland) 33,778
9 Baer Holdings AG (Switzerland) 13,871
205 Banc One Corp. 11,442
552 Bank of Nova Scotia (Canada) 26,481
115 Bankers Trust New York Corp. 14,088
95 Chase Manhattan Corp. 11,210
140 Comerica, Inc. 11,051
50 Crestar Financial Corp. 2,344
3,500 Dao Heng Bank Group Ltd. (Hong Kong) 15,787
5,742 Den Norske Bank ASA (Norway) 24,143
240 Deutsche Bank AG (Germany) 16,954
1,000 Development Bank of Singapore Ltd. (Singapore) 10,206
110 First Chicago NBD Corp. 8,278
112 First of America Bank Corp. 6,013
50 First Tennessee National Corp. 2,850
280 First Union Corp. 14,018
295 Fleet Financial Group, Inc. 19,341
4,000 Guoco Group Ltd. (Hong Kong) 15,974
105 Huntington Bancshares, Inc. 3,787
200 Keycorp 12,725
45 Mercantile Bancorpation, Inc. 3,426
115 Morgan (J.P.) & Co., Inc. 13,067
1,200 National Bank (Canada) 16,814
210 National City Corp. 12,928
1,679 National Westminster Bancorp Inc. (United Kingdom) 25,414
160 NationsBank Corp. 9,900
175 Norwest Corp. 10,719
310 PNC Bank Corp. 15,132
58 Schweizerischer Bankverein (Switzerland) 15,718
119 Societe Generale (France) 17,282
172 Summit Bancorp 7,643
14 United Bank of Switzerland (Switzerland) 16,402
45 Washington Mutual, Inc. 3,139
2,605 Westpac Banking Corp. (Australia) 16,430
--------------
458,355
Basic Industrial Products (0.8%)
- ------------------------------------------------------------------------------------------------------------
220 Cooper Industries, Inc. 11,894
270 General Signal Corp. 11,678
--------------
23,572
Broadcasting (0.3%)
- ------------------------------------------------------------------------------------------------------------
101 Societe Television Francaise (France) 8,760
Building Products (2.8%)
- ------------------------------------------------------------------------------------------------------------
2,800 Cemex, S.A. de C.V. (Mexico) 14,514
2,250 CRH PLC (Ireland) 25,678
204 Lafarge Coppee (France) 14,996
80 Sandvik AB Class A (Sweden) 2,746
650 Sandvik AB Class B (Sweden) 22,614
--------------
80,548
Business Equipment (0.5%)
- ------------------------------------------------------------------------------------------------------------
1,000 Ricoh Co., Ltd. (Japan) + 15,033
Cable Television (--%)
- ------------------------------------------------------------------------------------------------------------
100 Comcast Corp. Class A 2,575
Chemicals (4.3%)
- ------------------------------------------------------------------------------------------------------------
209 Akzo-Nobel N.V. (Netherlands) 35,834
747 Bayer AG ADR (Germany) 29,842
252 Ciba Specialty Chemicals AG (Switzerland) + 24,415
120 Dow Chemical Co. 10,883
210 du Pont (E.I.) de Nemours & Co., Ltd. 12,928
150 Eastman Chemical Co. 9,300
--------------
123,202
Combined Utilities (0.7%)
- ------------------------------------------------------------------------------------------------------------
347 Veba (Vereinigte Elektrizitaets Bergwerks) AG (Germany) 20,345
Computer Software and Services (1.7%)
- ------------------------------------------------------------------------------------------------------------
205 Computer Associates Intl., Inc. 14,722
245 IBM Corp. 25,955
285 NCR Corp. + 9,957
--------------
50,634
Conglomerates (2.0%)
- ------------------------------------------------------------------------------------------------------------
6,665 BTR PLC (United Kingdom) 27,147
135 Minnesota Mining & Manufacturing Co. 12,488
3,456 Tomkins PLC (United Kingdom) 19,271
--------------
58,906
Consumer Products (2.0%)
- ------------------------------------------------------------------------------------------------------------
170 Fortune Brands, Inc. 5,727
285 Kimberly-Clark Corp. 13,947
375 Lowe's Cos., Inc. 14,578
807 Unilever Group (United Kingdom) 23,622
--------------
57,874
Containers (0.4%)
- ------------------------------------------------------------------------------------------------------------
170 Temple Inland, Inc. 10,880
Electric Utilities (1.7%)
- ------------------------------------------------------------------------------------------------------------
175 Carolina Power & Light Co. 6,289
100 Dominion Resources, Inc. 3,788
140 Duke Power Co. 6,921
135 New Century Energies, Inc. 5,611
160 Potomac Electric Power Co. 3,640
2,300 Scottish Power PLC (United Kingdom) 17,807
145 Union Electric Co. 5,573
--------------
49,629
Electronics and Electrical Equipment (6.9%)
- ------------------------------------------------------------------------------------------------------------
3,000 Cookson Group PLC (United Kingdom) 12,211
240 Emerson Electric Co. 13,830
280 General Electric Co. 19,058
4,746 General Electric Co. PLC (United Kingdom) 29,917
215 Hewlett-Packard Co. 14,956
2,000 Matsushita Electric (Japan) 20,930
190 Motorola, Inc. 13,656
2,000 NEC Corp. (Japan) 24,419
308 Philips Electronics N.V. (Netherlands) 26,148
100 Seagate Technology, Inc. + 3,613
290 Siemens AG (Germany) 19,654
--------------
198,392
Energy-Related (0.6%)
- ------------------------------------------------------------------------------------------------------------
1,300 Iberdrola II (Spain) 16,040
Environmental Control (1.1%)
- ------------------------------------------------------------------------------------------------------------
267 Compagnie Generale des Eaux (France) 31,507
Farm Equipment (0.4%)
- ------------------------------------------------------------------------------------------------------------
225 Deere (John) & Co. 12,094
Food and Beverages (4.5%)
- ------------------------------------------------------------------------------------------------------------
295 Anheuser-Busch Cos., Inc. 13,312
800 Bass PLC (United Kingdom) 10,810
1,000 Fomento Economico Mexicano, S.A. de C.V.
Class B, (Mexico) 8,641
220 General Mills, Inc. 15,166
225 Heinz (H.J.) Co. 10,392
25 Nestle S.A. (Switzerland) 34,926
325 PepsiCo, Inc. 13,183
245 Sara Lee Corp. 12,618
335 Whitman Corp. 9,129
--------------
128,177
Health Care Services (0.4%)
- ------------------------------------------------------------------------------------------------------------
205 United Healthcare Corp. 10,250
Hospital Management (0.4%)
- ------------------------------------------------------------------------------------------------------------
380 Tenet Healthcare Corp. + 11,068
Household Products (1.8%)
- ------------------------------------------------------------------------------------------------------------
170 Colgate-Palmolive Co. 11,847
2,000 KAO Corp. (Japan) 29,070
350 Tupperware Corp. 9,844
--------------
50,761
Insurance and Finance (7.0%)
- ------------------------------------------------------------------------------------------------------------
533 ABN AMRO Holding N.V. (Netherlands) 10,829
80 Aetna Inc. 6,515
280 American General Corp. 14,525
262 AON Corp. 13,853
11 Baloise Holding Ltd. (Switzerland) 17,067
1,500 Banco Bradesco BRC . (Brazil) 15,739
140 Beneficial Corp. 10,666
75 CIGNA Corp. 13,969
162 Credit Locale de France S.A. (France) 15,392
210 Federal National Mortgage Association 9,870
511 Internationale Nederlanden Groep (Netherlands) 23,546
1,200 Norwich Union PLC 144A (United Kingdom) + 6,536
440 Promise Co. Ltd. (Japan) 23,023
276 Scor (France) 11,959
390 USF&G Corp. 8,946
--------------
202,435
Medical Supplies and Devices (0.7%)
- ------------------------------------------------------------------------------------------------------------
405 Baxter International, Inc. 21,161
Metals and Mining (1.3%)
- ------------------------------------------------------------------------------------------------------------
515 Freeport-McMoRan Copper & Gold Co., Inc. Class A 14,195
140 Freeport-McMoRan Copper & Gold Co., Inc. Class B 4,034
1,190 Rio Tinto PLC (United Kingdom) 18,926
--------------
37,155
Networking (0.2%)
- ------------------------------------------------------------------------------------------------------------
105 3Com Corp. + 5,381
Office Equipment (0.5%)
- ------------------------------------------------------------------------------------------------------------
170 Xerox Corp. 14,312
Oil and Gas (8.3%)
- ------------------------------------------------------------------------------------------------------------
135 Amoco Corp. 13,010
95 Atlantic Richfield Co. 8,117
1,426 British Petroleum Co. PLC (United Kingdom) 21,562
222 Elf Aquitaine SA (France) 29,725
5,310 Ente Nazionale Idrocarburi SPA (ENI) (Italy) + 33,543
415 Exxon Corp. 26,586
170 Mobil Corp. 12,580
600 Petroleo Brasileiro S/A-Petrobras ADR (Brazil) 16,875
280 Royal Dutch Petroleum Co. ADR (Netherlands) 15,540
2,080 Shell Transportation & Trading (United Kingdom) 15,246
200 Tosco Corp. 6,963
219 Total Corp. ADR Class B (France) 25,140
370 YPF S.A. ADR (Argentina) 13,644
--------------
238,531
Paper (1.1%)
- ------------------------------------------------------------------------------------------------------------
530 Svenska Cellulosa AB Class B, (Sweden) 13,400
310 Weyerhaeuser Co. 18,406
--------------
31,806
Pharmaceuticals and Biotechnology (4.9%)
- ------------------------------------------------------------------------------------------------------------
140 Altana AG (Germany) 10,335
190 American Home Products Corp. 13,870
220 Bristol-Myers Squibb Co. 18,205
1,130 Glaxo Wellcome PLC (United Kingdom) 25,469
100 Merck & Co., Inc. 9,994
760 Pharmacia & Upjohn, Inc. 27,740
1,000 Sankyo Co., Ltd. (Japan) 34,718
100 Santen Pharmaceutical (Japan) 1,885
--------------
142,216
Photography (3.2%)
- ------------------------------------------------------------------------------------------------------------
1,000 Canon, Inc. (Japan) 29,319
185 Eastman Kodak Co. 12,013
1,000 Fuji Photo Film Co. (Japan) 41,362
205 Polaroid Corp. 10,493
--------------
93,187
Publishing (0.9%)
- ------------------------------------------------------------------------------------------------------------
210 McGraw-Hill, Inc. 14,214
195 Times Mirror Co. Class A 10,713
--------------
24,927
REIT's (Real Estate Investment Trust) (0.4%)
- ------------------------------------------------------------------------------------------------------------
100 Avalon Properties, Inc. (R) 2,975
70 Beacon Properties Corp. (R) 3,207
85 Equity Residential Properties Trust (R) 4,638
50 LTC Properties, Inc. (R) 950
--------------
11,770
Railroads (1.2%)
- ------------------------------------------------------------------------------------------------------------
100 Burlington Northern Santa Fe Corp. 9,663
100 CSX Corp. 5,850
125 Norfolk Southern Corp. 12,906
125 Union Pacific Corp. 7,828
--------------
36,247
Retail (1.1%)
- ------------------------------------------------------------------------------------------------------------
170 Dayton Hudson Corp. 10,189
750 K mart Corp. + 10,500
200 Sears, Roebuck & Co. 11,388
--------------
32,077
Savings and Loans (0.5%)
- ------------------------------------------------------------------------------------------------------------
240 Ahmanson (H.F.) & Co. 13,635
Semiconductors (1.5%)
- ------------------------------------------------------------------------------------------------------------
260 Intel Corp. 24,001
201 SGS-Thomson Microelectronics ADR (France) + 18,869
--------------
42,870
Steel (0.9%)
- ------------------------------------------------------------------------------------------------------------
6,000 Kawasaki Steel Corp. (Japan) 11,512
65 Thyssen AG (Germany) 15,207
--------------
26,719
Telecommunications (0.6%)
- ------------------------------------------------------------------------------------------------------------
408 Royal PTT Nederland N.V. ADR (Netherlands) 15,938
Telephone Services (3.1%)
- ------------------------------------------------------------------------------------------------------------
340 American Telephone & Telegraph Co. 15,066
1,608 Deutsche Telekom AG (Germany) 31,229
171 MCI Communications Corp. 5,023
394 Portugal Telecom S.A. (Portugal) 17,141
400 Sprint Corp. 20,000
--------------
88,459
Telephone Utilities (1.8%)
- ------------------------------------------------------------------------------------------------------------
175 Ameritech Corp. 11,638
175 Bell Atlantic Corp. 14,077
285 SBC Communications, Inc. 17,492
250 US West Communicatioins, Inc. 9,625
--------------
52,832
Tire and Rubber (0.8%)
- ------------------------------------------------------------------------------------------------------------
381 Michelin Corp. Class B, (France) 21,707
Tobacco (2.4%)
- ------------------------------------------------------------------------------------------------------------
4,459 B A T Industries PLC (United Kingdom) 39,134
540 Philip Morris Cos., Inc. 22,444
215 RJR Nabisco Holdings Corp. 7,391
--------------
68,969
Transportation (0.4%)
- ------------------------------------------------------------------------------------------------------------
1,000 Peninsular and Oriental Steam Navigation Co.
(United Kingdom) 10,708
Trucking (0.4%)
- ------------------------------------------------------------------------------------------------------------
285 Ryder System, Inc. 10,242
--------------
Total Common Stocks (cost $2,364,454) 2,848,770
CONVERTIBLE PREFERRED STOCKS (0.3%) *
NUMBER OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------
60 K mart Financing $3.875 cv. pfd. $ 3,510
70 Tosco Financing Trust 144A $2.875 cv. pfd. 4,279
--------------
Total Convertible Preferred Stocks (cost $7,509) $ 7,789
WARRANTS (--)*+(cost $--) EXPIRATION
NUMBER OF SHARES DATE VALUE
- ------------------------------------------------------------------------------------------------------------
172 Generale Des Eaux (France) 5/2/01 $ 93
SHORT-TERM INVESTMENTS (1.8%) *(cost $51,009)
PRINCIPAL AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------
$51,000 Interest in $565,867,000 joint repurchase agreement
dated September 30, 1997 with UBS Securities
due October 1, 1997with respect to various
U.S. Treasury obligations -- maturity value of
$51,009 for an effective yield of 6.05% $ 51,009
- ------------------------------------------------------------------------------------------------------------
Total Investments (cost $2,422,972) *** $ 2,907,661
- ------------------------------------------------------------------------------------------------------------
* Percentages indicated are based on net assets of $2,885,405.
*** The aggregate identified cost on a tax basis is $2,425,977,
resulting in gross unrealized appreciation and depreciation of $518,184
and $36,500, respectively, or net unrealized appreciation of $481,684.
+ Non-income producing security.
(R) Real Estate Investment Trust.
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.
ADR after the name of a foreign holding stands for American
Depository Receipts, representing ownership of foreign securities on
deposit with a domestic custodian bank.
Diversification by Country
Distribution of investments by country of issue at September 30,
1997: (as percentage of Market Value)
Brazil 1.1%
Canada 1.5
France 6.7
Germany 5.8
Hong Kong 1.1
Ireland 2.0
Italy 1.2
Japan 8.0
Netherlands 4.8
Sweden 1.9
Switzerland 4.2
United Kingdom 11.5
United States 46.0
Other 4.2
-----
Total 100.0%
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Forward Currency Contracts to Sell at September 30, 1997
Market Aggregate Face Delivery Unrealized
Value Value Date Depreciation
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------
French Francs 152,530 144,587 2/11/98 (7,943)
- ----------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
September 30, 1997
<S> <C>
Assets
- ---------------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $2,422,972) (Note 1) $2,907,661
- ---------------------------------------------------------------------------------------------------
Dividends and interest receivable 8,116
- ---------------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 2,388
- ---------------------------------------------------------------------------------------------------
Receivable for securities sold 26,391
- ---------------------------------------------------------------------------------------------------
Unamortized organization expenses (Note 1) 4,793
- ---------------------------------------------------------------------------------------------------
Total assets 2,949,349
Liabilities
- ---------------------------------------------------------------------------------------------------
Payable to subcustiodian (Note 2) 3,770
- ---------------------------------------------------------------------------------------------------
Payable for securities purchased 35,350
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 4,272
- ---------------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 102
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 1,232
- ---------------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 7
- ---------------------------------------------------------------------------------------------------
Payable for organization expenses (Note 1) 6,425
- ---------------------------------------------------------------------------------------------------
Payable for open forward currency contracts 7,943
- ---------------------------------------------------------------------------------------------------
Payable for closed forward currency contracts 452
- ---------------------------------------------------------------------------------------------------
Other accrued expenses 4,391
- ---------------------------------------------------------------------------------------------------
Total liabilities 63,944
- ---------------------------------------------------------------------------------------------------
Net assets $2,885,405
Represented by
- ---------------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $2,036,363
- ---------------------------------------------------------------------------------------------------
Undistributed net investment income (Note 1) 59,193
- ---------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments
and foreign currency transactions (Note 1) 313,158
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and assets
and liabilities in foreign currencies 476,691
- ---------------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $2,885,405
Computation of net asset value and offering price
- ---------------------------------------------------------------------------------------------------
Net asset value and redemption price per share ($2,885,405 divided by
230,852 shares) $12.50
- ---------------------------------------------------------------------------------------------------
Offering price per share (100/94.25 of 12.50)* $13.26
- ---------------------------------------------------------------------------------------------------
* 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
Year ended September 30, 1997
<S> <C>
Investment income:
- --------------------------------------------------------------------------------------------------
Dividends (net of foreign tax of $2,041) $ 61,202
- --------------------------------------------------------------------------------------------------
Interest 154
- --------------------------------------------------------------------------------------------------
Total investment income 61,356
Expenses:
- --------------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 19,817
- --------------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 4,773
- --------------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 2,861
- --------------------------------------------------------------------------------------------------
Administrative services (Note 2) 27
- --------------------------------------------------------------------------------------------------
Amortization of organization expenses (Note 1) 648
- --------------------------------------------------------------------------------------------------
Reports to shareholders 6,556
- --------------------------------------------------------------------------------------------------
Registration fees 66
- --------------------------------------------------------------------------------------------------
Auditing 10,349
- --------------------------------------------------------------------------------------------------
Legal 5,375
- --------------------------------------------------------------------------------------------------
Postage 48
- --------------------------------------------------------------------------------------------------
Other 379
- --------------------------------------------------------------------------------------------------
Fees waived by Manager (Note 2) (14,332)
- --------------------------------------------------------------------------------------------------
Total expenses 36,567
- --------------------------------------------------------------------------------------------------
Expense reduction (Note 2) (4,578)
- --------------------------------------------------------------------------------------------------
Net expenses 31,989
- --------------------------------------------------------------------------------------------------
Net investment income 29,367
- --------------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 318,099
- --------------------------------------------------------------------------------------------------
Net realized gain on foreign currency transactions (Note 1) 40,738
- --------------------------------------------------------------------------------------------------
Net unrealized depreciation of assets and liabilities in
foreign currencies during the year (10,373)
- --------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments during the year 337,837
- --------------------------------------------------------------------------------------------------
Net gain on investments 686,301
- --------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $715,668
- --------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
Year ended September 30,
--------------------------------
1997 1996
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets
- ----------------------------------------------------------------------------------------------------------------------
Operations:
- ----------------------------------------------------------------------------------------------------------------------
Net investment income $ 29,367 $ 38,969
- ----------------------------------------------------------------------------------------------------------------------
Net realized gain on investments
and foreign currency transactions 358,837 267,099
- ----------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments
and assets and liabilities in foreign currencies 327,464 (19,696)
- ----------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 715,668 286,372
- ----------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ----------------------------------------------------------------------------------------------------------------------
From net investment income (44,540) (66,094)
- ----------------------------------------------------------------------------------------------------------------------
From net realized gain on investments (252,586) (3,672)
- ----------------------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 389,976 89,170
- ----------------------------------------------------------------------------------------------------------------------
Total increase in net assets 808,518 305,776
Net assets
- ----------------------------------------------------------------------------------------------------------------------
Beginning of year 2,076,887 1,771,111
- ----------------------------------------------------------------------------------------------------------------------
End of year (including undistributed net investment
income of $59,193 and $33,002, respectively) $2,885,405 $2,076,887
- ----------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
- ------------------------------------------------------------------------------------------------------------------
For the period
Per-share Jan. 3, 1995+
operating performance Year ended September 30 to Sept. 30
- ------------------------------------------------------------------------------------------------------------------
1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value,
beginning of period $10.77 $9.64 $8.50
- ------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------
Net investment income (a) .14 .21 .27
- ------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 3.13 1.30 .87
- ------------------------------------------------------------------------------------------------------------------
Total from
investment operations 3.27 1.51 1.14
- ------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ------------------------------------------------------------------------------------------------------------------
From net
investment income (.23) (.36) --
- ------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (1.31) (.02) --
- ------------------------------------------------------------------------------------------------------------------
Total distributions (1.54) (.38) --
- ------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $12.50 $10.77 $9.64
- ------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(b) 33.88 16.14 13.41*
- ------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $2,885 $2,077 $1,771
- ------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(a)(c) 1.48 1.27 .49*
- ------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)(a) 1.19 2.03 3.04*
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 103.92 222.89 21.68*
- ------------------------------------------------------------------------------------------------------------------
Average commission
rate paid (d) $.0305 $.0374
- ------------------------------------------------------------------------------------------------------------------
Effective December 28, 1995, the fund expanded its investment flexibility to include securities outside
of the utilities sector. Information in the table prior to December 28, 1995 may not reflect those
that could have been achieved under the fund's current investment policies.
+ Commencement of operations.
* Not annualized.
(a) Reflects an expense limitation during the period (Note 2). As a result of such limitation, expenses
of the fund for the periods ended September 30, 1997, September 30, 1996 and September 30, 1995,
reflect a reduction of approximately $.07, $.09 and $.20 per share, respectively.
(b) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(c) Includes amounts paid through expense offset and brokerage service arrangements. (Note 2).
(d) Average commission rate paid on security trades is required for fiscal periods beginning on
or after September 1, 1995.
</TABLE>
Notes to financial statements
September 30, 1997
Note 1
Significant accounting policies
Putnam Global Growth and Income Fund (the "fund") is a series of Putnam
Investment 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
and current income as a secondary objective by investing primarily in common
stocks with a significant portion of its assets in countries outside the
United States.
The fund offers class A shares. Class A shares are sold with a maximum
front-end sales charge of 5.75%. Effective November 3, 1997, the fund will
begin offering class B and class M shares. Class B shares, which convert to
class A shares after approximately eight years, do not pay a front-end sales
charge, but pay a higher ongoing distribution fee than class A shares, and are
subject to a contingent deferred sales charge, if those shares are redeemed
within six years of purchase. Class M shares are sold with a maximum front-end
sales charge of 3.50% and pay a ongoing distribution fee that is lower than
class B shares and higher than class A shares.
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 fair market value, which is determined using the last
reported sale price, or, if no sales are reported -- as is the case of some
securities traded over-the-counter -- the last reported sale price. Securities
quoted in foreign currencies are translated into U.S. dollars at the current
exchange rate. 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 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 gains and losses 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 current 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) Line of credit The fund has entered into a committed line of credit with
certain banks. This line of credit agreement includes restrictions that the
fund maintain an asset coverage ratio of at least 300% and borrowings must not
exceed prospectus limitations. For the period ended September 30, 1997, the
fund had no borrowings against the line of credit.
H) 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, as amended. 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.
I) 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. These differences include treatment
of realized and unrealized gains and losses on forward foreign currency
contracts and organizational expenses. 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 September 30, 1997, the fund reclassified $41,364 to increase
undistributed net investment income and $626 to decrease paid-in-capital, with
a decrease to accumulated net realized gain on investments of $40,738.
J) 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.
K) 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 $6,425. 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 December 31, 1997, to the extent that
expenses of the fund (exclusive of brokerage commissions, 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.
As part of the custodian contract between the subcustodian bank and PFTC, the
subcustodian bank has a lien on the securities of the fund to the extent
permitted by the funds investment restrictions to cover any advances made by
the subcustodian bank for the settlement of securities purchased by the fund.
At September 30, 1997, the payable to the subcustodian bank represents the
amount due for cash advanced for the settlement of a security purchased.
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 year ended September 30, 1997, fund expenses were reduced by $4,578
under expense offset arrangements with PFTC and brokerage service
arrangements. 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 "Deferral 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
Deferral 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 pursuant to
the plan.
For the year ended September 30, 1997, Putnam Mutual Funds Corp., acting as
underwriter received no commissions from the sale of shares of the fund.
Note 3
Purchase and sales of securities
During the year ended September 30, 1997, purchases and sales of investment
securities other than short-term investments aggregated $2,598,776 and
$2,416,817, 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 September 30, 1997, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Year ended
September 30, 1997
- ------------------------------------------------------------
Shares Amount
- ------------------------------------------------------------
Shares sold 16,348 $177,118
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 29,497 296,547
- ------------------------------------------------------------
45,845 473,665
Shares
repurchased (7,804) (83,689)
- ------------------------------------------------------------
Net increase 38,041 $389,976
- ------------------------------------------------------------
Year ended
September 30, 1996
- ------------------------------------------------------------
Shares Amount
- ------------------------------------------------------------
Shares sold 1,972 $20,241
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 7,267 69,765
- ------------------------------------------------------------
9,239 90,006
Shares
repurchased (85) (836)
- ------------------------------------------------------------
Net increase 9,154 $89,170
- ------------------------------------------------------------
At September 30, 1997, Putnam Management owned 220,017 shares of the fund
(95.3% of shares outstanding) valued at $2,750,213.
Federal tax information
September 30, 1997
Pursuant to section 852 of the Internal Revenue Code, the Fund hereby
designates $132,527 as capital gain for its taxable year ended September
30, 1997.
The fund has designated 15.38% of the distributions from net investment income
as qualifying for the dividends received deduction for corporations.
The Form 1099 you receive in January 1998 will show the tax status of all
distributions paid to your account in calendar 1997.
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
Ronald J. Jackson
Elizabeth T. Kennan
Lawrence J. Lasser
Robert E. Patterson
Donald S. Perkins
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
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
Hugh H. Mullin
Vice President and Fund Manager
Justin M. Scott
Vice President and Fund Manager
George W. Stairs
Vice President and Fund Manager
Deborah Kuenstner
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 Global Growth and
Income 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 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 the principal amount
invested.
36839-197 11/97
