Putnam
Japan
Fund
SEMIANNUAL REPORT
February 28, 1998
[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 2/28/98. Additional
details, including fund strategy, performance, and manager's outlook, will
be provided in the annual report, which will cover the 12 months ended
8/31/98.
Portfolio of investments owned
February 28, 1998 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (97.8%) *
NUMBER OF SHARES VALUE
<S> <C> <C> <C>
Automotive (5.1%)
- ------------------------------------------------------------------------------------------------------------
3,000 Fuji Machinery + $ 5,307
8,000 NHK Spring Co., Ltd. 26,148
3,000 Suzuki Motor Co., Ltd. 31,892
2,000 Toyota Motor Corp. 55,375
--------------
118,722
Basic Industrial Products (3.7%)
- ------------------------------------------------------------------------------------------------------------
2,000 Enplas Corp. 26,973
1,000 Hoya Corp. 26,577
2,000 Toya Seikan Kaisha 32,844
--------------
86,394
Building and Construction (0.5%)
- ------------------------------------------------------------------------------------------------------------
3,000 INAX Corp. 12,614
Business Equipment and Services (2.6%)
- ------------------------------------------------------------------------------------------------------------
1,000 Dai Nippon Printing Co., Ltd. 17,057
4,000 Ricoh Co., Ltd. 42,840
--------------
59,897
Computer Services and Software (4.8%)
- ------------------------------------------------------------------------------------------------------------
1,000 Fuji Soft AB, Inc. 33,320
7,000 Fujitsu Ltd. 78,858
--------------
112,178
Conglomerates (2.1%)
- ------------------------------------------------------------------------------------------------------------
16,000 Itochu Corp. 47,600
Cosmetics (2.2%)
- ------------------------------------------------------------------------------------------------------------
4,000 Shiseido Co., Ltd. 50,456
Electronics and Electrical Equipment (15.7%)
- ------------------------------------------------------------------------------------------------------------
1,000 Fanuc 36,493
500 Hirose Electric Co. Ltd. 26,378
3,000 Matsushita Electric Industrial Co. 43,792
3,000 NEC Corp. 33,558
2,000 Nippondenso Co., Ltd. 40,936
1,000 Secom Co. + 62,436
500 Sony Corp. 45,220
1,000 Tokyo Electron Ltd. 36,017
9,000 Toshiba Corp. 40,413
--------------
365,243
Food and Beverages (2.5%)
- ------------------------------------------------------------------------------------------------------------
1,000 Matsumotokiyoshi 37,604
3,000 Yakult Honsha 20,349
--------------
57,953
Insurance and Finance (34.1%)
- ------------------------------------------------------------------------------------------------------------
14,000 Akita Bank Ltd. 60,532
8,000 Fuji Fire & Marine Insurance + 21,769
17,000 Joyo Bank 73,772
15,000 Keiyo Bank 39,865
5,000 Mitsubishi Bank Ltd. 71,004
16,000 Mitsui Marine and Fire Insurance Co., Ltd. + 89,361
3,000 Mitsui Real Estate Sales Co. 22,658
16,000 Nippon Shinpan Co. 31,987
4,000 Nissan Fire & Marine Insurance + 14,470
1,000 Orix Corp. + 72,987
4,000 Sanwa Bank Ltd. 39,984
11,000 Sumitomo Marine & Fire + 69,377
2,000 Takefuji Corp. 109,480
2,000 The Long-Term Credit Bank of Japan, Ltd. 5,426
6,000 Tokio Marine & Fire Insurance Co. Ltd. + 68,068
--------------
790,740
Medical Supplies and Devices (2.4%)
- ------------------------------------------------------------------------------------------------------------
2,000 Takeda Chemical Industries 55,534
Metals and Mining (2.8%)
- ------------------------------------------------------------------------------------------------------------
6,000 Hitachi Metals Ltd. 27,370
22,000 Kawasaki Steel Corp. 37,001
--------------
64,371
Paper and Forest Products (3.1%)
- ------------------------------------------------------------------------------------------------------------
14,000 Nippon Paper Industries Co. Ltd. 71,415
Pharmaceuticals and Biotechnology (3.5%)
- ------------------------------------------------------------------------------------------------------------
1,000 Sankyo Co., Ltd. 26,894
6,000 Shionogi & Co., Ltd. 31,131
1,000 Taisho Pharmaceutical Co. + 23,562
--------------
81,587
Real Estate (1.0%)
- ------------------------------------------------------------------------------------------------------------
2,000 Mitsubishi Estate Co., Ltd. 22,372
Retail (3.6%)
- ------------------------------------------------------------------------------------------------------------
4,000 Seiyu Ltd. 13,994
1,000 Seven-Eleven Japan Co., Ltd. 69,972
--------------
83,966
Telecommunications (2.3%)
- ------------------------------------------------------------------------------------------------------------
1,000 Matsushita Communication Industrial Co., Ltd. 32,844
2,000 Uniden Ord 21,103
--------------
53,947
Transportation (0.5%)
- ------------------------------------------------------------------------------------------------------------
2,000 Seino Transportation + 11,964
Utilities (5.3%)
- ------------------------------------------------------------------------------------------------------------
5,000 Chubu Electric Power, Inc. 80,131
3,000 Kyushu Electric Power, Inc. 43,792
--------------
123,923
--------------
Total Common Stocks (cost $2,861,157) $ 2,270,876
SHORT-TERM INVESTMENTS (2.9%) * (cost $67,021)
PRINCIPAL AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------
$67,000 Interest in $700,000,000 joint repurchase agreement
dated February 28, 1998 with Goldman Sachs
due March 2, 1998 with respect to various
U.S. Treasury obligations -- maturity value
of $67,032 for an effective yield of 5.64% $ 67,021
- ------------------------------------------------------------------------------------------------------------
Total Investments (cost $2,928,178) *** $ 2,337,897
- ------------------------------------------------------------------------------------------------------------
* Percentages indicated are based on net assets of $2,321,959.
*** The aggregate identified cost on a tax basis is $2,940,049 resulting in gross unrealized
appreciation and depreciation of $56,474 and $658,626 respectively, or net unrealized depreciation of
$602,152.
+ Non-income-producing security.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
February 28, 1998 (Unaudited)
<S> <C>
Assets
- ---------------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $2,928,178) (Note 1) $ 2,337,897
- ---------------------------------------------------------------------------------------------------
Cash 135
- ---------------------------------------------------------------------------------------------------
Dividends and interest receivable 781
- ---------------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 275
- ---------------------------------------------------------------------------------------------------
Receivable from Manager (Note 2) 2,579
- ---------------------------------------------------------------------------------------------------
Unamortized organization expenses (Note 1) 3,121
- ---------------------------------------------------------------------------------------------------
Total assets 2,344,788
Liabilities
- ---------------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 2,000
- ---------------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 540
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 777
- ---------------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 7
- ---------------------------------------------------------------------------------------------------
Payable for organization expenses (Note 1) 3,662
- ---------------------------------------------------------------------------------------------------
Payable for auditing 11,300
- ---------------------------------------------------------------------------------------------------
Payable for legal 2,171
- ---------------------------------------------------------------------------------------------------
Other accrued expenses 2,372
- ---------------------------------------------------------------------------------------------------
Total liabilities 22,829
- ---------------------------------------------------------------------------------------------------
Net assets $ 2,321,959
Represented by
- ---------------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $ 3,625,029
- ---------------------------------------------------------------------------------------------------
Distributions in excess of net investment income (Note 1) (7,197)
- ---------------------------------------------------------------------------------------------------
Accumulated net realized loss on investment
and foreign currency transactions (Note 1) (705,577)
- ---------------------------------------------------------------------------------------------------
Net unrealized depreciation of investments and assets
and liabilities in foreign currencies (590,296)
- ---------------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $ 2,321,959
Computation of net asset value and offering price
- ---------------------------------------------------------------------------------------------------
Net asset value and redemption price per share
($2,321,959 divided by 431,461 shares) $5.38
- ---------------------------------------------------------------------------------------------------
Offering price per share (100/94.25 of $5.38)* $5.71
- ---------------------------------------------------------------------------------------------------
* On single retail sales of less than $50,000. On sales on $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, 1998 (Unaudited)
<S> <C>
Investment income:
- --------------------------------------------------------------------------------------------------
Dividends (net of foreign tax of $1,607) $ 9,109
- --------------------------------------------------------------------------------------------------
Interest 82
- --------------------------------------------------------------------------------------------------
Total investment income 9,191
Expenses:
- --------------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 9,743
- --------------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 3,282
- --------------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 1,078
- --------------------------------------------------------------------------------------------------
Administrative services (Note 2) 20
- --------------------------------------------------------------------------------------------------
Amortization of organization expenses (Note 1) 127
- --------------------------------------------------------------------------------------------------
Reports to shareholders 2,440
- --------------------------------------------------------------------------------------------------
Auditing 12,685
- --------------------------------------------------------------------------------------------------
Legal 2,107
- --------------------------------------------------------------------------------------------------
Fees waived by Manager (Note 2) (13,696)
- --------------------------------------------------------------------------------------------------
Total expenses 17,786
- --------------------------------------------------------------------------------------------------
Expense reduction (Note 2) (1,532)
- --------------------------------------------------------------------------------------------------
Net expenses 16,254
- --------------------------------------------------------------------------------------------------
Net investment loss (7,063)
- --------------------------------------------------------------------------------------------------
Net realized loss on investments (Notes 1 and 3) (313,093)
- --------------------------------------------------------------------------------------------------
Net realized loss on foreign currency transactions (Note 1) (614)
- --------------------------------------------------------------------------------------------------
Net unrealized depreciation of assets and liabilities
in foreign currencies during the period (6)
- --------------------------------------------------------------------------------------------------
Net unrealized depreciation of investments during the period (160,253)
- --------------------------------------------------------------------------------------------------
Net loss on investments (473,966)
- --------------------------------------------------------------------------------------------------
Net decrease in net assets resulting from operations $ (481,029)
- --------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
Six months ended Year ended
February 28 August 31
--------------------------------------
1998* 1997
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
- ----------------------------------------------------------------------------------------------------------------
Operations:
- ----------------------------------------------------------------------------------------------------------------
Net investment loss $ (7,063) $ (14,502)
- ----------------------------------------------------------------------------------------------------------------
Net realized loss on investments
and foreign currency transactions (313,707) (324,719)
- ----------------------------------------------------------------------------------------------------------------
Net unrealized depreciation of investments
and assets and liabilities in foreign currencies (160,259) (126,020)
- ----------------------------------------------------------------------------------------------------------------
Net decrease in net assets resulting from operations (481,029) (465,241)
- ----------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ----------------------------------------------------------------------------------------------------------------
From net investment income (57,361) (29,097)
- ----------------------------------------------------------------------------------------------------------------
From net realized gain on investments -- (72,178)
- ----------------------------------------------------------------------------------------------------------------
Increase (decrease) from capital share transactions (Note 4) (184,222) 591,344
- ----------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (722,612) 24,828
Net assets
- ----------------------------------------------------------------------------------------------------------------
Beginning of period 3,044,571 3,019,743
- ----------------------------------------------------------------------------------------------------------------
End of period (including distributions in excess
of net investment income and undistributed
net investment income of $7,197 and $57,227, respectively) $ 2,321,959 $3,044,571
- ----------------------------------------------------------------------------------------------------------------
* 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 Year ended Dec. 28, 1995+
operating performance (Unaudited) August 31 to August 31
- ------------------------------------------------------------------------------------------------------------------------------------
1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value,
beginning of period $6.65 $7.97 $8.50
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment loss (c) (.01) (.03) (.02)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
loss on investments (1.12) (1.02) (.51)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations (1.13) (1.05) (.53)
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.14) (.08) --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- (.19) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.14) (.27) --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $5.38 $6.65 $7.97
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) (16.91)* (13.43) (6.24)*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $2,322 $3,045 $3,020
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b)(c) .72* 1.46 .98*
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%)(c) (.29)* (.50) (.29)*
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 32.65* 100.61 46.39*
- ------------------------------------------------------------------------------------------------------------------------------------
Average commission
rate paid $.0462 $.0507 $.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 brokerage service and 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, 1998, the year ended August 31, 1997, and the period ended
August 31, 1996, reflect a reduction of $0.02, $0.05 and $0.04 per share, respectively.
</TABLE>
Notes to financial statements
February 28, 1998 (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 an open-end diversified management investment company. The
objective of the fund is to seek long-term 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 is the case of some securities traded over the counter -- the last reported
bid price. Short-term investments having remaining maturities of 60 days or
less are stated at amortized cost, which approximates market value. All 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 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) 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 six month period ended February
28, 1998, the fund had no borrowings against the line of credit.
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, 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. At August 31, 1997, the fund had a
capital loss carryover of approximately $46,000 available to offset future net
capital gain, if any, which will expire on August 31, 2005.
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 December 31, 1998 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 subsidiary of Putnam Investments, Inc. would
exceed an annual rate of 1.45% of the fund's average net assets.
The fund reimburses Putnam Management an allocated amount 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, 1998, fund expenses were reduced by
$1,532 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.
Each Trustee of the fund receives an annual Trustee fee, of which $100 has
been allocated to the fund, 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 six months ended February 28, 1998, Putnam Mutual Funds Corp., acting
as underwriter received no net commissions from the sale of shares of the
fund.
Note 3
Purchases and sales
During the six months ended February 28, 1998 purchases and sales of
investment securities other than short-term investments aggregated $785,202
and $974,556, 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, 1998 there was an unlimited number of shares
of beneficial interest authorized. Transactions in capital
shares were as follows:
Six months ended
February 28, 1998
- ------------------------------------------------------------
Shares Amount
- ------------------------------------------------------------
Shares sold 46,385 $ 253,619
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 11,518 57,361
- ------------------------------------------------------------
57,903 310,980
Shares
repurchased (83,943) (495,202)
- ------------------------------------------------------------
Net decrease (26,040) $ (184,222)
- ------------------------------------------------------------
Year ended
August 31, 1997
- ------------------------------------------------------------
Shares Amount
- ------------------------------------------------------------
Shares sold 342,830 $2,631,727
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 14,169 101,162
- ------------------------------------------------------------
356,999 2,732,889
Shares
repurchased (278,306) (2,141,545)
- ------------------------------------------------------------
Net increase 78,693 $ 591,344
- ------------------------------------------------------------
At February 28, 1998, Putnam Investments, Inc. owned 400,150
shares of the fund (92.7% of shares outstanding), valued at
$2,152,807.
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
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John H. Mullin III
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
John J. Morgan
Vice President
Carol McMullen
Vice President
Brett C. Browchuk
Vice President
Robert Swift
Vice President and Fund Manager
William N. Shiebler
Vice President
John R. Verani
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 Putnam
Investments' web site: 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.
41229 4/98
