-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HT3PsVScaxabiscRSMnSg0JS/Pz7LFp6h6Ao/yEoL504qXTdQwzpt7XnRYWI4GYl Wn3X8tQjpO3fB7CLBkzMCg== 0000928816-96-000390.txt : 19970102 0000928816-96-000390.hdr.sgml : 19970102 ACCESSION NUMBER: 0000928816-96-000390 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19961031 FILED AS OF DATE: 19961231 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM GLOBAL GROWTH FUND CENTRAL INDEX KEY: 0000081251 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 046145734 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-01403 FILM NUMBER: 96688844 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQ STREET 2: MAILSTOP A14 CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 8002251581 MAIL ADDRESS: ZIP: ----- FORMER COMPANY: FORMER CONFORMED NAME: PUTNAM INTERNATIONAL EQUITIES FUND DATE OF NAME CHANGE: 19900722 FORMER COMPANY: FORMER CONFORMED NAME: PUTNAM INTERNATIONAL EQUITIES FUND INC /PRED/ DATE OF NAME CHANGE: 19821109 FORMER COMPANY: FORMER CONFORMED NAME: PUTNAM EQUITIES FUND INC DATE OF NAME CHANGE: 19790906 N-30D 1 PUTNAM GLOBAL GROWTH FUND Putnam Global Growth Fund ANNUAL REPORT October 31, 1996 [LOGO: BOSTON * LONDON * TOKYO] Fund highlights * "[Putnam Global Growth Fund] might be found attractive by conservative investors looking to diversify globally." -- Value Line Mutual Fund Advisor, August 31, 1996 * According to CitiBank, U.S. investment in international securities has grown from $17 billion in 1981 to over $300 billion as of October 1996. CONTENTS 4 Report from Putnam Management 8 Fund performance summary 14 Portfolio holdings 24 Financial statements From the Chairman [GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM] (copyright) Karsh, Ottawa Dear Shareholder: The task of managing a portfolio of global securities has changed considerably since Putnam Global Growth Fund began operations some two decades ago. Indeed, it is far more complex now than it was as recently as two or three years ago. This growing complexity has led Putnam Management to bring additional expertise to your fund's management team. Ami Kuan and Robert Swift have joined Lead Manager Anthony Regan on the international equities side and Kim Goodwin has joined Carol McMullen in U.S. equities. Ami came to Putnam from Fidelity Investments in 1993 as an international equities analyst. She has 8 years of investment experience. Robert brought his expertise in Pacific Basin investments to Putnam in 1995; prior to that, he was with IAI International/Hill Samuel in London and Pring Dean in Sydney. He has 13 years of investment experience. Kim joined Putnam in 1996 from Prudential Investments. She has 9 years of investment experience. Respectfully yours, /S/George Putnam George Putnam Chairman of the Trustees December 18, 1996 Report from the Fund Managers Anthony W. Regan, lead manager, Ami T. Kuan, Robert Swift, Carol C. McMullen, Kim Goodwin Bolstered by the ongoing rally in U.S. equities and by broadly positive conditions in markets in Europe and Asia, Putnam Global Growth Fund enjoyed a strong fiscal year. For the 12 months ended October 31, 1996, your fund's class A shares gained 16.10% at net asset value and 9.41% at public offering price. These results closely match the Morgan Stanley Capital International (MSCI) World Index, which rose 16.30% over the same period. For long-term performance and information about other share classes, please turn to page 8 of this report. * U.S. STOCK MARKET REACHES RECORD LEVELS AS RALLY PROVES RESILIENT Domestic equities continued to move upward throughout your fund's fiscal year, fueled by a potent blend of low inflation, stable interest rates, and temperate economic growth. Approximately 26% of your fund's portfolio is invested in U.S. stocks as of October 31, 1996, a sizable position that contributed substantially to performance. In the coming months, we are cautiously optimistic that at least moderately favorable investing conditions will prevail in domestic markets. As we anticipate a slower-growth environment, we are favoring stocks of companies that have the potential to do well regardless of the overall economic activity. Over the past six months, we have seen strong performance from holdings in three important economic sectors: finance, health care, and technology. Within finance, bank stocks were particularly noteworthy, as fund holdings including BankAmerica and Citicorp thrived. In the health- care sector, we concentrated on highly profitable industries such as pharmaceuticals, medical technology, and hospital supplies. Within technology, telecommunications and software companies were generally robust. Among your fund's technology holdings were Computer Associates, a software vendor, and Cascade Communications, a networking company. Your fund also benefited from owning shares of large-capitalization growth stocks. Portfolio stocks such as Nike, chemical giant Monsanto, and health-care leader Johnson & Johnson were all strong performers over the past year. In the coming months, we believe that such internationally competitive firms are best positioned to do well as investors seek companies with proven earnings. While these stocks, along with others discussed in this report, were viewed favorably at the end of the fiscal period, all portfolio holdings are subject to review and adjustment in accordance with the fund's investment strategy and may vary in the future. * WESTERN EUROPE REFLECTS MUCH OF U.S. STRENGTH Many Western European markets performed very well over your fund's fiscal year. Exchanges in Germany, France, Denmark, the United Kingdom, and Sweden all experienced strong returns. Generally Continental markets benefited from conditions similar to those that prevailed in the United States: low inflation, stable interest rates, and increasing political consensus on fiscal responsibility. On the corporate level, many European companies are reaping the rewards of restructuring and efforts to boost competitiveness -- changes reminiscent of those that have underpinned the U.S. bull market. [GRAPHIC OMITTED: HORIZONTAL BAR CHART OF COUNTRY ALLOCATION*] COUNTRY ALLOCATION* United States 25.6% Japan 17.9% United Kingdom 7.7% Netherlands 7.6% France 5.5% Hong Kong 5.1% Sweden 4.2% Switzerland 4.1% Australia 3.4% Germany 3.3% *Based on net assets as of 10/31/96. Holdings will vary over time. Germany's market performed well over the fund's fiscal year despite a slowing economy -- a testament to the beneficial reforms that many German companies have made. The United Kingdom is enjoying continuing economic expansion; some economists anticipate U.K. gross domestic product (GDP) will rise a robust 3.4% in 1997. Strong U.K. fund holdings include Vodafone, which sells cellular equipment and services, and Securicor, another excellent company in cellular telecommunications. Elsewhere in Europe, we saw several Swedish companies perform quite well, notably Pharmacia & Upjohn, a leading pharmaceuticals firm. There were also upbeat results from some Netherlands firms in the fund's portfolio, such as Getronics Electric. * ASIA'S DIVERSE MARKETS POST MIXED RESULTS In contrast to European markets, which generally moved in concert, Asian equity returns varied from country to country. Strength in Hong Kong, Australia, and Malaysia contrasted with weakness in Thailand, Japan, and Singapore. In the months ahead, we envision more of this disparate performance among Asian exchanges as investors watch regional economic and export numbers warily -- and react to disappointments. Over the past several months, moderate optimism about Japanese stocks has gradually faded, with financial, political, and economic uncertainty continuing to afflict Japan. A weakening yen, however, offers some encouragement to corporate Japan by making Japanese exports more attractive in world markets. Your fund's weighting in Japan is around 17.9% of net assets, which we have invested in Japanese companies that we believe have the products and strategy to adapt to changes in the Japanese economy. We remain optimistic about the Hong Kong market, which accounts for around 5% of your fund's net assets. As we approach the July 1997 transfer of rule over Hong Kong from Great Britain to China, indications are that the changeover will be fairly smooth. Among your fund's more successful Hong Kong holdings was Varitronix, a maker of computer displays. To the south, Australia was also buoyant. Australian banks, such as fund holding Westpac, have benefited nicely from lower interest rates and corporate restructuring. [GRAPHIC OMITTED: TOP 10 HOLDINGS] TOP 10 HOLDINGS Bayer AG (Germany) Pharmaceuticals Cheung Kong Holdings (Hong Kong) Infrastructure Greencore Group PLC (Ireland) Food services Nestle (Switzerland) Food products Ciba Geigy (Switzerland) Pharmaceuticals Allied Irish Banks (Ireland) Financial services Veba AG (Germany) Conglomerate IHC Caland (Netherlands) Energy products Total SA (France) Conglomerate Telebras Co. (Brazil) Communications Footnote reads: These holdings represent 10.2% of the fund's net assets as of 10/31/96. Portfolio holdings will vary over time. * GLOBAL EQUITY INVESTING CONDITIONS CAUSE FOR CAUTIOUS OPTIMISM We believe that a number of exchanges in Western Europe and Asia, as well as the U.S. market appear poised for continued strength in the coming months. Of course, several scenarios could overturn the stable interest-rate and low inflation environment that has supported many markets. Too dramatic a slowdown in the U.S. economy, a sharp rise in the yen, or political uncertainties from Russia to the Middle East could negatively affect a range of stock markets. Nevertheless, we remain upbeat about the prospects for global equities as your fund begins its new fiscal year. 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 10/31/96, there is no guarantee the fund will continue to hold these securities in the future. International investing involves certain risks, including currency fluctuations, political developments, and economic instability, not present with domestic investments. Performance summary Performance should always be considered in light of a fund's investment strategy. Putnam Global Growth Fund is designed for investors seeking capital appreciation through a globally diversified equity portfolio. This section provides, at a glance, information about your fund's performance. Total return shows how the value of the fund's shares changed over time, assuming you held the shares through the entire period and reinvested all distributions in the fund. TOTAL RETURN FOR PERIODS ENDED 10/31/96 Class A Class B Class M (inception date) (9/1/67) (4/27/92) (3/1/95) NAV POP NAV CDSC NAV POP - ------------------------------------------------------------------------ 1 year 16.10% 9.41% 15.25% 10.25% 15.54% 11.46% - ----------------------------------------------------------------------- 5 years 70.07 60.22 -- -- -- -- Annual average 11.20 9.89 -- -- -- -- - ------------------------------------------------------------------------ 10 years 169.20 153.68 -- -- -- -- Annual average 10.41 9.76 -- -- -- -- - ------------------------------------------------------------------------ Life of class -- -- 61.19 59.19 31.59 27.00 Annual average -- -- 11.17 10.86 17.86 15.39 - ------------------------------------------------------------------------ Performance data represent past results, do not reflect future performance, and will differ for each share class. They do not take into account any adjustment for taxes payable on reinvested distributions or for payments under the fund's class A distribution plan prior to its implementation in fiscal 1990. Investment returns and net asset value will fluctuate so that an investor's shares, when sold, may be worth more or less than their original cost. POP assumes 5.75% maximum sales charge for class A shares and 3.50% for class M shares. CDSC for class B shares declines from a 5% maximum during the first year to 1% during the sixth year. COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 10/31/96 MSCI MSCI S&P 500 Consumer World EAFE Index Price Index - ----------------------------------------------------------------------- 1 year 16.30% 10.47% 24.08% 2.99% - ------------------------------------------------------------------------ 5 years 64.98 44.54 105.60 15.21 Annual average 10.53 7.64 15.50 2.87 - ------------------------------------------------------------------------ 10 years 180.22 143.54 292.00 43.52 Annual average 10.85 9.31 14.64 3.68 - ------------------------------------------------------------------------ Life of class B 72.86 62.82 91.57 13.48 Annual average 12.92 11.43 15.53 2.84 - ------------------------------------------------------------------------ Life of class M 32.03 19.83 50.48 4.90 Annual average 18.07 11.42 27.67 2.91 - ------------------------------------------------------------------------ [GRAPHIC OF WORM CHART OMITTED:] GROWTH OF A $10,000 INVESTMENT Cumulative total return of a $10,000 investment since 10/31/86 Starting value (Insert ending Total) $9,425 Fund's class A shares at POP $25,368 $10,000 MSCI World Index $28,022 $10,000 Consumer Price Index $14,352 (plot points for 10-year total return mountain chart) MSCI World Date/year Fund at POP Index CPI - --------- ----------- ----------- ------- 10/31/86 9,425 10,000 10,000 10/31/87 10,204 12,132 10,453 10/31/88 11,032 14,581 10,898 10/31/89 12,978 16,540 11,387 10/31/90 12,803 14,674 12,103 10/31/91 14,916 16,985 12,457 10/31/92 14,692 16,097 12,856 10/31/93 19,043 20,444 13,209 10/31/94 20,684 22,008 13,554 10/31/95 21,850 24,095 13,935 10/31/96 25,368 28,022 14,352 Footnote reads: Past performance is no assurance of future results. A $10,000 investment in the fund's class B shares at inception on 4/27/92 would have been valued at $16,119 on 10/31/96 ($15,919 with a redemption at the end of the period). A $10,000 investment in the fund's class M shares at inception on 3/1/95 would have been valued at $13,159 at net asset value on 10/31/96 ($12,700 at public offering price). PRICE AND DISTRIBUTION INFORMATION 12 months ended 10/31/96 Class A Class B Class M - ------------------------------------------------------------------------ Distributions (number) 1 1 1 - ------------------------------------------------------------------------ Income $0.1758 $0.1108 $0.1318 - ------------------------------------------------------------------------ Capital gains - ------------------------------------------------------------------------ Long-term 0.4062 0.4062 0.4062 - ------------------------------------------------------------------------ Short-term -- -- -- - ------------------------------------------------------------------------ Total $0.5820 $0.5170 $0.5380 - ------------------------------------------------------------------------ Share value: NAV POP NAV NAV POP - ------------------------------------------------------------------------ 10/31/95 $10.13 $10.75 $9.86 $10.09 $10.46 - ------------------------------------------------------------------------ 10/31/96 11.10 11.78 10.78 11.05 11.45 - ------------------------------------------------------------------------ TOTAL RETURN FOR PERIODS ENDED 9/30/96 (most recent calendar quarter) Class A Class B Class M (inception date) (9/1/67) (4/27/92) (3/1/95) NAV POP NAV CDSC NAV POP - ------------------------------------------------------------------------ 1 year 14.74% 8.10% 13.96% 8.96% 14.28% 10.29% - ------------------------------------------------------------------------ 5 years 70.45 60.56 -- -- -- -- Annual average 11.25 9.93 -- -- -- -- - ------------------------------------------------------------------------ 10 years 176.19 160.33 -- -- -- -- Annual average 10.69 10.04 -- -- -- -- - ------------------------------------------------------------------------ Life of class -- -- 61.49 59.49 31.82 27.23 Annual average -- -- 11.43 11.11 18.98 16.35 - ------------------------------------------------------------------------ Performance data represent past results, do not reflect future performance, and will differ for each share class. Investment returns and net asset value will fluctuate so that an investor's shares, when sold, may be worth more or less than their original cost. TERMS AND DEFINITIONS Class A shares are generally subject to an initial sales charge. Class B shares may be subject to a sales charge upon redemption. Class M shares have a lower initial sales charge and a higher 12b-1 fee than class A shares and no sales charge on redemption. Net asset value (NAV) is the value of all your fund's assets, minus any liabilities, divided by the number of outstanding shares, not including any initial or contingent deferred sales charge. Public offering price (POP) is the price of a mutual fund share plus the maximum sales charge levied at the time of purchase. POP performance figures shown here assume the maximum 5.75% sales charge for class A shares and 3.50% for class M shares. Contingent deferred sales charge (CDSC) is a charge applied at the time of the redemption of class B shares and assumes redemption at the end of the period. Your fund's CDSC declines from a 5% maximum during the first year to 1% during the sixth year. After the sixth year, the CDSC no longer applies. COMPARATIVE BENCHMARKS Standard & Poor's (S&P) 500 Index* is an unmanaged list of common stocks that is frequently used as a general measure of stock market performance. Morgan Stanley Capital International (MSCI) World Index* is an unmanaged list of global equity securities, with all values expressed in U.S. dollars. Morgan Stanley Capital International (MSCI) EAFE Index* is an unmanaged list of equity securities from Europe, Australia and the Far East, with all values expressed in U.S. dollars. Consumer Price Index (CPI) is a commonly used measure of inflation; it does not represent an investment return. Footnote reads: *These indexes assume reinvestment of all distributions and interest payments and do not take in account commissions or other costs. 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. PUTNAM GROWTH FUNDS Asia Pacific Growth Fund Capital Appreciation Fund Diversified Equity Trust Europe Growth Fund Global Growth Fund Global Natural Resources Fund * Health Sciences Trust International Growth Fund + International New Opportunities Fund Investors Fund New Opportunities Fund OTC & Emerging Growth Fund [DBL. DAGGER] Vista Fund Voyager Fund Voyager Fund II PUTNAM GROWTH AND INCOME FUNDS Balanced Retirement Fund Convertible Income-Growth Trust Equity Income Fund The George Putnam Fund of Boston The Putnam Fund for Growth and Income Growth and Income Fund II International Growth and Income Fund New Value Fund Utilities Growth and Income Fund PUTNAM INCOME FUNDS American Government Income Fund Diversified Income Trust Diversified Income Trust II Federal Income Trust Global Governmental Income Trust High Yield Advantage Fund High Yield Trust Income Fund Intermediate U.S. Government Income Fund Preferred Income Fund U.S. Government Income Trust PUTNAM TAX-FREE INCOME FUNDS Municipal Income Fund Tax Exempt Income Fund Tax-Free High Yield Fund Tax-Free Insured Fund State tax-free income funds [SECTION MARK] Arizona, California, Florida, Massachusetts, Michigan, Minnesota, New Jersey, New York, Ohio and Pennsylvania LIFESTAGESM FUNDS Putnam Asset Allocation Funds--three investment portfolios that spread your money across a variety of stocks, bonds, and money market investments. The three portfolios: Asset Allocation: Balanced Portfolio Asset Allocation: Conservative Portfolio Asset Allocation: Growth Portfolio MOST CONSERVATIVE INVESTMENTS ** Putnam money market funds: ++ California Tax Exempt Money Market Fund Money Market Fund New York Tax Exempt Money Market Fund Tax Exempt Money Market Fund CDs and savings accounts [2 DBL. DAGGERS] * Formerly Natural Resources Fund + Formerly Overseas Growth Fund [DBL. DAGGER] Formerly OTC Emerging Growth Fund [SECTION MARK] Not available in all states. ** Relative to above. ++ An investment in a money market fund is neither insured nor guaranteed by the U.S. government. These funds are managed to maintain a price of $1.00 per share, although there is no assurance that this price will be maintained in the future. [2 DBL. DAGGERS] Not offered by Putnam Investments. Certificates of deposit offer a fixed rate of return and may be insured up to certain limits by federal/state agencies. Savings accounts may also be insured up to certain limits. Please call your financial advisor or Putnam at 1-800-225-1581 to obtain a prospectus for any Putnam fund. It contains more complete information, including charges and expenses. Please read it carefully before you invest or send money. Report of independent accountants For the fiscal year ended October 31, 1996 To the Trustees and Shareholders of Putnam Global Growth Fund We have audited the accompanying statement of assets and liabilities of Putnam Global Growth Fund, including the portfolio of investments owned, as of October 31, 1996, and the related statement of operations for the year then ended, 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 October 31, 1996, 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 Fund as of October 31, 1996, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with generally accepted accounting principles. Coopers & Lybrand L.L.P. Boston, Massachusetts December 11, 1996
Portfolio of investments owned October 31, 1996 COMMON STOCKS (96.4%) * NUMBER OF SHARES VALUE Argentina (0.3%) - ------------------------------------------------------------------------------------------------------------ 615,230 Astra Cia Argentina de Petro 1,107,636 74,667 Banco De Galicia y Buenos Aires Class B ADR 1,353,339 57,500 Banco Frances del Rio de la Plata S.A. ADR 1,509,375 397,325 Banco Frances del Rio de la Plata S.A. 3,477,289 70,000 Capex S.A. 144A GDR 980,000 226,411 Cia Naviera Perez Co. 1,437,997 34,979 Inversiones Y Represent ADR + 1,066,860 15,300 Siderar S.A. 144A ADR + 325,125 75,000 Telecom Argentina S.A. Class B + 283,182 19,000 Telecom Argentina S.A. ADR + 717,250 -------------- 12,258,053 Australia (3.4%) - ------------------------------------------------------------------------------------------------------------ 3,000,000 Biota Holdings Ltd. + 8,190,990 827,400 Commonwealth Bank of Australia (Installment shares) 4,983,061 1,443,000 Commonwealth Bank of Australia 13,532,584 12,146,500 Goodman Fielder Ltd. ADR 14,226,855 17,515,000 MIM Holdings Ltd. 22,732,648 2,352,625 QBE Insurance Group Ltd. 12,437,274 9,600 S.A. Brewing Holdings Ltd. 144A ADR + 247,200 11,389,000 Sydney Harbor Casino + 16,223,858 5,310,000 Westpac Banking Corp. + 30,256,805 -------------- 122,831,275 Austria (0.5%) - ------------------------------------------------------------------------------------------------------------ 410,000 Mayr-Melnhof Karton AG 144A ADS + 4,920,000 91,000 VA Technologies AG 12,704,020 -------------- 17,624,020 Belgium (0.6%) - ------------------------------------------------------------------------------------------------------------ 12,540 N.V. Bekaert S.A. 10,126,165 21,100 Solvay S.A. 12,601,700 -------------- 22,727,865 Brazil (1.2%) - ------------------------------------------------------------------------------------------------------------ 62,400 Brazil Realty S.A. + 1,248,000 1,637,357 Centrais Electricas de Santa Catarina S.A. + 1,386,645 36,200 Comp Energetica De Minas Gerais (Cemig) 144A ADS 1,144,825 24,700 Compania Siderurgica Nacional 613,112 10,770 Light Participacoes S.A. + 1,695,229 55,927 Multinacanal Participacoes S.A. 782,978 445,500 Telebras Co. ADR 33,189,750 1,246 Telecomunicacoes do Rio de Janeiro + 120,110 11,562 Telemig (Telec De Minas Gerais) 1,290,918 53,500 Usiminas Siderurg Minas 144A ADR 557,186 -------------- 42,028,753 Canada (0.3%) - ------------------------------------------------------------------------------------------------------------ 93,100 Indochina Goldfelds Ltd. 664,205 225,000 Magna International, Inc. Class A 11,278,125 -------------- 11,942,330 Chile (0.1%) - ------------------------------------------------------------------------------------------------------------ 80,000 Banco Santander Chile ADR 1,130,000 45,000 Santa Isabel S.A. ADR + 1,265,625 -------------- 2,395,625 China (--%) - ------------------------------------------------------------------------------------------------------------ 46,500 Ek Chor China Motorcycle Co., Ltd. 273,188 Denmark (0.6%) - ------------------------------------------------------------------------------------------------------------ 351,300 Danisco A/S 20,063,613 France (5.5%) - ------------------------------------------------------------------------------------------------------------ 62,304 Cetelem Group + 13,264,966 313,100 Credit Locale de France S.A. 26,872,233 362,100 Lafarge Coppee 21,679,504 507,000 Michelin Corp. Class B 24,388,795 171,000 Peugeot Citroen S.A. + 17,786,430 511,000 SGS-Thomson Microelectronics ADR + 26,763,625 319,324 Societe Nationale Elf Aquitaine 25,474,631 362,000 Sommer Allibert 10,031,419 425,500 Total S.A. Class B 33,205,990 -------------- 199,467,593 Germany (3.3%) - ------------------------------------------------------------------------------------------------------------ 1,240,500 Bayer AG ADR 46,759,822 53,300 Bayerische Motoren Werke (BMW) AG 31,109,223 28,500 Preussag AG 6,845,257 650,000 Veba (Vereinigte Elektrizitaets Bergwerks) AG + 34,585,310 -------------- 119,299,612 Hong Kong (5.1%) - ------------------------------------------------------------------------------------------------------------ 21,678,000 Amoy Properties Ltd. 26,775,770 20,000 Asia Satellite Telecommunications Holdings Ltd. ADR + 535,000 1,200,000 Chen Hsong Holdings 690,654 5,370,000 Cheung Kong Holdings Ltd. 43,061,125 490,000 Cheung Kong Infrastructure Holdings + 912,595 2,928,000 Citic Pacific Ltd. 14,238,961 362,000 Consolidated Electric Power Asia Ltd. 842,753 301,293 First Pacific Co., Ltd. 415,009 3,100,000 Golden Resources Development Intl. Ltd. 364,857 1,501,200 Guoco Group Ltd. 7,941,111 4,060,000 Hong Kong Electric Holdings Ltd. 12,996,327 5,106,000 Hong Kong Land Holdings Ltd. 11,386,380 310,000 Hong Kong Telecommunications Ltd. 547,285 9,000 Hong Kong Telecommunications Ltd. ADR 158,625 2,425,000 Hutchison Whampoa, Ltd. + 16,936,548 405,400 New World Infrastructure Ltd. + 1,009,332 2,398,000 Sun Hung Kai Properties Ltd. 27,292,998 1,977,700 Swire Pacific Ltd. Class A 17,457,516 337,000 Varitronix International Ltd. 614,566 -------------- 184,177,412 Hungary (--%) - ------------------------------------------------------------------------------------------------------------ 31,200 Gedeon Richter Ltd. GDR + 1,638,000 India (0.2%) - ------------------------------------------------------------------------------------------------------------ 58,000 Ashok Leyland Ltd. 144A GDR + 623,500 107,000 Crompton Greaves Ltd. 144A 428,000 36,000 East India Hotel Ltd. 144A GDR + 630,000 101,800 India Cements Ltd. 144A GDR + 241,775 31,400 Indian Hotels Ltd. 144A GDR + 730,050 55,600 Indian Petrochemicals Corp. Ltd. 144A ADR + 486,500 105,000 Industrial Credit & Investment Corp. of India Ltd. + 866,250 157,500 Kec International Ltd. + 301,690 64,000 State Bank of India Ltd. 144A GDR + 960,000 102,000 State Bank of India Ltd. 662,282 55,680 Telco 144A GDR (Tata Engineering & Locomotive Co., Ltd.) 668,160 -------------- 6,598,207 Indonesia (0.1%) - ------------------------------------------------------------------------------------------------------------ 513,500 Daya Guna Samudera + 501,747 50,000 PT Pasifik Satelit Nusantara ADR + 675,000 26,000 PT Telekomunikasi Indonesia ADR + 780,000 103,000 Quilmes Industrial S.A. ADR + 1,081,500 100,000 Sampoerna Industries 929,868 -------------- 3,968,115 Ireland (2.9%) - ------------------------------------------------------------------------------------------------------------ 5,551,306 Allied Irish Banks PLC 35,155,977 3,076,566 CRH PLC 31,554,492 6,581,192 Greencore Group PLC + 37,606,774 -------------- 104,317,243 Italy (0.1%) - ------------------------------------------------------------------------------------------------------------ 63,700 Gucci Group + 4,395,300 Japan (17.9%) - ------------------------------------------------------------------------------------------------------------ 1,450,000 Bridgestone Corp. 24,425,340 1,638,000 Canon Inc. 31,328,658 424,000 Chiba Kogyo Bank Ltd. 2,135,252 74,200 Chubu Electric Power, Inc. 1,529,830 1,897,000 Cosmo Oil Co. Ltd. 10,252,256 1,314,000 Dai Nippon Printing Co., Ltd. 22,134,412 751,000 Daikin Industries Ltd. 7,115,986 4,600 East Japan Railway Co. 21,107,214 269,000 Hirose Electric Co. Ltd. 15,954,029 480,000 Ito-Yokado Co., Ltd. 23,919,989 1,855,000 KAO Corp. 21,808,214 416,000 Komori Printing Machinery Co. 9,343,395 715,000 Kurita Water Industries Ltd. 14,365,241 155,800 Kyushu Electric Power Inc. 3,184,892 1,168,000 Marui Co., Ltd. 21,622,041 1,100,000 Mitsubishi Bank Ltd. 22,389,895 2,123,000 Mitsubishi Motors Corp. 17,545,764 2,525,000 Mitsui and Co. 20,380,771 556,000 Murata Manufacturing Co. 17,853,661 1,060,000 Nippon Express Co., Ltd. 8,602,387 3,168 Nippon Telegraph and Telephone Corp. 22,096,511 1,163,000 Nippondenso Co., Ltd. 24,080,368 1,380,000 Obayashi Corp. 10,630,287 850,000 Omron Corp. 15,138,622 402,000 Onward Kashiyama Co. Ltd. 5,607,827 473,000 Santen Pharmaceutical 10,001,142 225,000 Secom Co. 13,383,928 1,569,000 Sekisui Chemical Co. Ltd. 17,482,280 1,778,000 Sharp Corp. 26,986,667 1,080,000 Shimizu Corp. + 9,759,608 871,000 Sumitomo Trust & Banking 9,628,532 417,000 TDK Corp. 24,439,027 1,769,000 Tokio Marine & Fire Insurance Co. Ltd. (The) 19,400,336 1,218,000 Tokyo Electric Power Co., Inc. 27,890,686 3,534,000 Toray Industries Inc. 21,300,739 650,000 Tostem Corp. 18,648,010 1,038,000 Yamanouchi Pharmaceutical Co. Ltd. 21,036,851 1,000,000 Yamatake-Honeywell 16,757,328 1,023,000 Yamato Transport Co. Ltd. 10,590,807 410,000 Yasuda Fire & Marine Insurance Co. 2,600,720 -------------- 644,459,503 Malaysia (0.2%) - ------------------------------------------------------------------------------------------------------------ 150,000 KFC Holdings Berhad 593,707 300,000 Malayan Banking Berhad 2,968,534 261,000 Malaysian Assurance Alliance 1,280,982 285,000 Maruichi Malaysia Steel Tube 998,318 169,000 Sungei Way Holdings Berhad 963,230 177,750 YTL Corp. Berhad + 956,818 -------------- 7,761,589 Mexico (0.5%) - ------------------------------------------------------------------------------------------------------------ 216,000 Apasco S.A. 1,329,648 300,000 Cemex S.A. de C.V. 998,744 990,000 Cifra S.A. Class C + 1,281,030 15,700 Controladora Comercial Mexicana S.A. GDR + 276,713 345,000 Fomento Economico Mexicano, S.A. de C.V. Class B 1,057,538 268,300 Panamerican Beverages, Inc. Class A 11,704,588 143,000 Sears Roebuck de Mexico S.A. + 256,897 22,500 Telefonos de Mexico S.A. ADR Class L 686,250 -------------- 17,591,408 Morocco (--%) - ------------------------------------------------------------------------------------------------------------ 59,300 Banque Marocaine Du Commerce Exterieur 144A GDR 926,563 Netherlands (7.6%) - ------------------------------------------------------------------------------------------------------------ 560,662 ABN AMRO Holding N.V. 31,607,481 457,247 Aegon N.V. 23,197,000 187,110 Akzo-Nobel N.V. 23,516,618 187,600 Dutch States Mines N.V. 17,920,757 1,022,424 Getronics Electric N.V. 25,063,242 600,000 IHC Caland N.V. 33,401,917 804,696 Internationale Nederlanden Groep 25,024,054 487,600 K.L.M.-Royal Dutch Airlines 11,580,178 756,000 Philips Electronics N.V. 26,576,216 520,600 Royal PTT 18,790,688 133,600 Unilever N.V. 20,262,654 403,910 Vendex International N.V. 16,264,673 -------------- 273,205,478 Pakistan (0.1%) - ------------------------------------------------------------------------------------------------------------ 82,695 Hubco Power 144A GDR + 1,674,574 62,530 Pakistan State Oil 539,806 8,000 Pakistan Telecomm Ltd. 144A GDR + 628,000 -------------- 2,842,380 Peru (--%) - ------------------------------------------------------------------------------------------------------------ 36,000 Telefonica del Peru S.A. ADR 742,500 Philippines (0.3%) - ------------------------------------------------------------------------------------------------------------ 10,600,000 Alsons Consolidated Resources, Inc. + 945,275 7,600,000 Belle Corp. + 2,027,439 23,210 Benpres Holdings Corp. 144A GDR + 162,470 1,249,700 Fil-Estate Land, Inc. 1,166,831 3,330,000 Filinvest Land, Inc. + 1,129,459 1,000,000 HI Cement Corp. + 308,689 1,900,000 International Container Terminal Services, Inc. + 1,249,047 94,300 Philippine Commercial International + 1,221,875 18,500 Philippine Long Distance Telephone Co. ADR 1,107,688 -------------- 9,318,773 Portugal (--%) - ------------------------------------------------------------------------------------------------------------ 107,300 Portucel Industrial Empresa S.A. 144A + 630,388 Russia (0.1%) - ------------------------------------------------------------------------------------------------------------ 41,500 AO Mosenergo 144A ADS + 1,182,750 36,600 Gazprom 144A ADR + 672,525 30,300 Lukoil Oil Co. ADR 1,189,275 -------------- 3,044,550 Singapore (2.2%) - ------------------------------------------------------------------------------------------------------------ 995,000 Cycle & Carriage Ltd. 10,458,807 764,000 Development Bank of Singapore Ltd. 9,170,170 2,189,000 Far East Levingston Shipbuilding Ltd. 10,494,141 2,943,200 Jardine Matheson Holdings Ltd. 16,629,080 1,106,000 Malayan Banking Berhad 10,943,994 96,000 Overseas Union Bank Ltd. 654,545 1,104,000 Singapore Airlines Ltd. 9,722,727 1,120,000 United Overseas Bank Ltd. 10,897,727 -------------- 78,971,191 South Africa (0.2%) - ------------------------------------------------------------------------------------------------------------ 108,200 Barlow Ltd. 942,774 69,000 Energy Africa Ltd. 144A GDR + 1,017,750 74,284 Nedcor Ltd. 144A GDR 1,058,547 1,050,300 SA Iron & Steel Industrial Corp. 747,337 97,100 Sasol Ltd. 1,185,419 28,597 South African Breweries Ltd. 743,254 -------------- 5,695,081 South Korea (0.2%) - ------------------------------------------------------------------------------------------------------------ 715,600 Cho Hung Bank Co. Ltd. 7,034,405 51,700 Korea Mobile Telecommunications ADR + 646,250 -------------- 7,680,655 Spain (1.2%) - ------------------------------------------------------------------------------------------------------------ 285,231 Banco de Bilbao Vizcaya 13,859,185 250,800 Repsol S.A. ADS 8,182,350 544,560 Tabacalera S.A. 19,930,212 -------------- 41,971,747 Sweden (4.2%) - ------------------------------------------------------------------------------------------------------------ 657,000 Astra AB 30,148,146 384,610 Electrolux AB 21,388,974 280,860 Pharmacia & Upjohn, Inc. 10,110,960 617,000 Pharmacia & Upjohn, Inc. + 21,515,733 797,530 Sandvik AB Class B 18,783,089 979,000 Skandia Forsakrings AB 27,445,261 1,111,840 Svenska Cellulosa AB Class B 23,313,618 -------------- 152,705,781 Switzerland (4.1%) - ------------------------------------------------------------------------------------------------------------ 18,060 ABB AG Baden 22,238,644 28,970 Ciba-Geigy AG 35,558,762 33,280 Nestle S.A. 36,021,632 32,500 Rieter Holding AG 9,172,251 7,950 Societe Generale de Surveillance Holdings S.A. 17,986,993 25,206 Swiss Reinsurance Co. 26,944,688 -------------- 147,922,970 Taiwan (--%) - ------------------------------------------------------------------------------------------------------------ 536 Tung Ho Steel 144A GDR + 4,824 58,538 Yageo Corp 144A GDR + 541,477 -------------- 546,301 Thailand (0.1%) - ------------------------------------------------------------------------------------------------------------ 220,000 Industrial Finance Corp. 633,944 302,000 Siam Makro Public Co. + 1,290,548 130,000 Thai Farmers Bank Public Co. 993,845 -------------- 2,918,337 United Kingdom (7.7%) - ------------------------------------------------------------------------------------------------------------ 1,200,000 Anglian Water PLC 10,666,587 3,069,628 B A T Industries PLC 21,368,970 1,418,538 Barclays Bank PLC 22,253,446 72,900 British Petroleum Co. PLC ADR 9,376,763 1,194,500 British Petroleum Co. PLC 12,842,267 1,060,603 Burmah Castrol PLC 18,518,633 836,000 East Midlands Electricity + 7,376,665 4,203,000 General Electric Co. 25,943,301 2,000,000 Guinness PLC 14,313,200 1,463,554 HSBC Holdings PLC 29,813,207 995,000 Molins PLC 16,021,838 618,182 North West Water Group PLC 5,731,196 836,900 RTZ Corp. PLC 13,373,965 3,752,310 Scottish Power PLC 19,194,351 3,751,838 Securior Group PLC 16,995,085 800,000 Shell Transportation & Trading 13,109,589 14 Tate & Lyle PLC 109 5,012,186 Vodafone Group PLC 19,361,761 -------------- 276,260,933 United States (25.6%) - ------------------------------------------------------------------------------------------------------------ 284,200 360 Communications Co. + 6,430,025 166,300 3Com Corp. + 11,246,038 298,900 Abbott Laboratories 15,131,813 224,400 Avon Products, Inc. 12,173,700 137,200 BankAmerica Corp. 12,553,800 39,600 Basic Petroleum International, Ltd. + 1,207,800 247,300 Becton Dickinson & Co. 10,757,550 243,300 Belo (A.H.) Corp. 9,488,700 178,200 Boeing Co. 16,995,825 28,100 Cabletron Systems, Inc. + 1,752,738 118,300 Cardinal Health, Inc. 9,286,550 128,800 Cascade Communications Corp. + 9,354,100 142,900 Case Corp. 6,644,850 96,300 Cincinnati Bell Inc. 4,754,813 260,900 Cisco Systems, Inc. + 16,143,188 201,500 Citicorp 19,948,500 131,900 Clorox Co. 14,393,588 318,200 Coca-Cola Enterprises, Inc. 13,563,275 142,700 Compaq Computer Corp. + 9,935,488 144,800 CompUSA, Inc. + 6,697,000 303,200 Computer Associates Intl., Inc. 17,926,700 117,100 Computer Sciences Corp. + 8,694,675 188,400 Conagra, Inc. 9,396,450 203,700 du Pont (E.I.) de Nemours & Co., Ltd. 18,893,175 205,900 Eastman Kodak Co. 16,420,525 269,500 EMC Corp. + 7,074,375 231,100 Enron Corp. 10,746,150 226,300 Estee Lauder Cos. Class A 9,730,900 248,600 Federated Department Stores Inc. + 8,203,800 177,202 First Data Corp. 14,131,860 94,800 Franklin Resources, Inc. 6,683,400 113,900 Gannett Co., Inc. 8,642,163 196,600 General Electric Co. 19,021,050 284,900 Gillette Co. 21,296,275 353,500 Halliburton Co. 20,016,938 171,100 HBO & Co. 10,287,388 239,900 Healthsouth Rehabilitation Corp. + 8,996,250 125,800 HFS, Inc. + 9,214,850 323,400 Home Depot, Inc. (The) 17,706,150 193,000 Honeywell, Inc. 11,990,125 247,200 Intel Corp. 27,161,100 136,000 Jacor Communications, Inc. + 3,808,000 510,400 Johnson & Johnson 25,137,200 141,600 Jones Apparel Group, Inc. + 4,425,000 133,600 Lilly (Eli) & Co. 9,418,800 121,100 Liz Claiborne, Inc. 5,116,475 190,600 Marriott International, Inc. 10,840,375 196,000 MBNA Corp. 7,399,000 217,800 Medtronic, Inc. 14,020,875 348,300 Merck & Co., Inc. 25,817,738 135,700 Microsoft Corp. + 18,624,825 41,300 Millicom International Cellular S.A. + 1,641,675 85,600 Mirage Resorts, Inc. + 1,883,200 452,200 Monsanto Co. 17,918,425 204,600 Nautica Enterprises, Inc. + 6,291,450 283,600 Nike, Inc. 16,696,950 174,000 Nine West Group, Inc. + 8,678,250 173,000 Omnicom Group, Inc. 8,606,750 54,800 Oxford Health Plans Inc. + 2,493,400 173,100 Parametric Technology Corp. + 8,460,263 131,600 PeopleSoft, Inc. + 11,811,100 81,300 Perkin-Elmer Corp. 4,359,713 239,900 Pfizer, Inc. 19,851,725 252,400 Praxair, Inc. 11,168,700 150,800 Safeway, Inc. + 6,465,550 367,200 Sears, Roebuck & Co. 17,763,300 286,400 Service Corp. International 8,162,400 167,300 Sherwin Williams Co. 8,385,913 187,100 Starbucks Corp. + 6,080,750 44,625 Sun Bancorp, Inc. 892,500 196,000 SunAmerica, Inc. 7,350,000 211,000 Sun Micro Systems 12,871,000 192,300 Symbol Technologies, Inc. + 8,629,463 86,100 Tellabs, Inc. + 7,329,263 105,800 Textron, Inc. 9,389,750 287,500 Thermo Electron Corp. + 10,493,750 238,100 TJX Cos., Inc. (The) 9,524,000 214,000 Travelers Group Inc. 11,609,500 90,300 Tribune Co. 7,382,025 229,100 USA Waste Services Inc. 7,331,200 218,500 U.S. Surgical Corp. 9,149,688 86,600 United Technologies Corp. 11,149,750 232,500 Walgreen Co. 8,776,875 277,300 Warner-Lambert Co. 17,643,213 -------------- 921,543,419 Venezuela (--%) - ------------------------------------------------------------------------------------------------------------ 225,040 Venepal 144A GDR 618,860 184,000 Venezolana de Prerreducidos Caroni C.A. + 897,000 -------------- 1,515,860 -------------- Total Common Stocks (cost $2,990,402,804) 3,474,261,611 - ------------------------------------------------------------------------------------------------------------ PREFERRED STOCKS (0.6%) * NUMBER OF SHARES VALUE - ------------------------------------------------------------------------------------------------------------ 924,350 Banco Bradesco BRC .01 pfd. (Brazil) 7,882,124 2,600 CIA Cervejaria Brahma BRC 4.55 pfd. (Brazil) 1,607,125 4,500 CIA Tecidos Norte de Minas BRC 9.642 No Par Value (NPV) pfd. (Brazil) 1,511,243 38,400 CIA Vale Do Rio Doce BRC .1735 NPV pfd. (Brazil) 796,184 76,900 Petroleo Brasileiro S.A. BRC 5.352 S.A. pfd. (Brazil) 9,955,904 -------------- Total Preferred Stocks (cost $18,205,404) 21,752,580 INVESTMENT FUNDS (0.2%) * NUMBER OF SHARES VALUE - ------------------------------------------------------------------------------------------------------------ 104,200 Fleming Russia Securities Fund Ltd. + (Russia) 1,055,025 21,800 India Magnum Fund Class A +(double dagger) (India) (acquired 3/23/95, cost $1,177,200) 915,600 3,250 Nordic Recovery Fund N.V. + (Switzerland) 4,137,250 57,700 Taiwan Fund, Inc. (Taiwan) 1,233,338 -------------- Total Investment Funds (cost $6,720,760) 7,341,213 UNITS (0.3%) *(cost $11,138,400) NUMBER OF UNITS VALUE - ------------------------------------------------------------------------------------------------------------ 7,000,000 Grand Hotel Group + 9,971,640 WARRANTS (--%) +*(cost $--) EXPIRATION NUMBER OF WARRANTS DATE VALUE - ------------------------------------------------------------------------------------------------------------ 32,500 Rieter Holding AG (Switzerland)+ 2/28/97 39,712 SHORT-TERM INVESTMENTS (1.5%) * PRINCIPAL AMOUNT VALUE - ------------------------------------------------------------------------------------------------------------ $25,000,000 Household Finance Corp. effective yield of 5.39%, November 19, 1996 24,932,624 20,000,000 Sheffield Receivables Corp. effective yield of 5.32%, December 4, 1996 19,902,466 10,000,000 Interest in $500,000,000 joint repurchase agreement dated October 31, 1996, with Lehman Brothers Inc., due November 1, 1996, with respect to various U.S. Treasury obligations -- maturity value of $10,001,536 for an effective yield of 5.53% 10,001,536 -------------- Total Short-Term Investments (cost $54,836,626) 54,836,626 - ------------------------------------------------------------------------------------------------------------ Total Investments (cost $3,081,303,994)*** 3,568,203,382 - ------------------------------------------------------------------------------------------------------------ * Percentages indicated are based on net assets of $3,604,559,477. *** The aggregate identified cost on a tax basis is $3,092,382,800, resulting in gross unrealized appreciation and depreciation of $601,601,012 and $125,780,430, respectively, or net unrealized appreciation of $475,820,582. + Non-income-producing security. (double dagger) Restricted, excluding 144A securities, as to public resale. The total market value of restricted securities held at October 31, 1996, was $915,600 or less than 0.1% of net assets. ADR, ADS or GDR after the name of a foreign holding stands for American Depository Receipts, American Depository Shares or Global Depository Receipts, respectively, representing securities on deposit with a domestic custodian bank. 144A after the name of a security represents those exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. - ------------------------------------------------------------------------------------------------------------ Forward Currency Contracts to Sell at October 31, 1996 (agregate face value $770,635,803) Unrealized Market Aggregate Face Delivery Appreciation/ Value Value Date (Depreciation) - ------------------------------------------------------------------------------------------------------------ British Pounds $52,552,764 $49,029,835 11/12/96 $(3,522,929) Deutschemarks 92,827,732 94,872,451 11/12/96 2,044,719 Dutch Guilders 87,277,352 88,406,315 11/12/96 1,128,963 French Francs 149,170,272 147,188,954 11/12/96 (1,981,318) Japanese Yen 374,310,653 391,138,248 1/6/97 16,827,595 - ------------------------------------------------------------------------------------------------------------ $14,497,030 The accompanying notes are an integral part of these financial statements.
Statements of assets and liabilities October 31, 1996 Assets - ---------------------------------------------------------------------------------------------------------- Investments in securities, at value (identified cost $3,081,303,994) (Note 1) $3,568,203,382 - ---------------------------------------------------------------------------------------------------------- Cash 2,131,728 - ---------------------------------------------------------------------------------------------------------- Foreign currency 249,607 - ---------------------------------------------------------------------------------------------------------- Dividends and other receivables 8,669,630 - ---------------------------------------------------------------------------------------------------------- Receivable for shares of the fund sold 14,248,107 - ---------------------------------------------------------------------------------------------------------- Receivable for securities sold 28,392,637 - ---------------------------------------------------------------------------------------------------------- Receivable for open forward currency contracts 20,001,277 - ---------------------------------------------------------------------------------------------------------- Receivable for closed forward currency contracts 2,824,009 - ---------------------------------------------------------------------------------------------------------- Total assets 3,644,720,377 Liabilities - ---------------------------------------------------------------------------------------------------------- Payable for securities purchased 22,070,280 - ---------------------------------------------------------------------------------------------------------- Payable for shares of the fund repurchased 2,110,024 - ---------------------------------------------------------------------------------------------------------- Payable for compensation of Manager (Note 2) 5,716,055 - ---------------------------------------------------------------------------------------------------------- Payable for investor servicing and custodian fees (Note 2) 1,531,937 - ---------------------------------------------------------------------------------------------------------- Payable for compensation of Trustees (Note 2) 15,729 - ---------------------------------------------------------------------------------------------------------- Payable for administrative services (Note 2) 14,251 - ---------------------------------------------------------------------------------------------------------- Payable for distribution fees (Note 2) 1,608,587 - ---------------------------------------------------------------------------------------------------------- Payable for open forward currency contracts 5,504,247 - ---------------------------------------------------------------------------------------------------------- Payable for closed forward currency contracts 1,086,801 - ---------------------------------------------------------------------------------------------------------- Other accrued expenses 502,989 - ---------------------------------------------------------------------------------------------------------- Total liabilities 40,160,900 - ---------------------------------------------------------------------------------------------------------- Net Assets $3,604,559,477 Represented by - ---------------------------------------------------------------------------------------------------------- Paid-in capital (Notes 1 and 4) $2,868,192,704 - ---------------------------------------------------------------------------------------------------------- Undistributed net investment income (Note 1) 66,835,636 - ---------------------------------------------------------------------------------------------------------- Accumulated net realized gain on investment and foreign currency transactions (Note 1) 168,133,827 - ---------------------------------------------------------------------------------------------------------- Net unrealized appreciation of investments and assets and liabilities in foreign currencies 501,397,310 - ---------------------------------------------------------------------------------------------------------- Total - Representing net assets applicable to capital shares outstanding $3,604,559,477 Computation of net asset value and offering price - ---------------------------------------------------------------------------------------------------------- Net asset value and redemption price per class A share ($2,186,425,771 divided by 196,914,289 shares) $11.10 - ---------------------------------------------------------------------------------------------------------- Offering price per class A share (100/94.25 of $11.10)* $11.78 - ---------------------------------------------------------------------------------------------------------- Net asset value and offering price per class B share ($1,327,246,365 divided by 123,127,673 shares)** $10.78 - ---------------------------------------------------------------------------------------------------------- Net asset value and redemption price per class M share ($24,179,439 divided by 2,188,420 shares) $11.05 - ---------------------------------------------------------------------------------------------------------- Offering price per class M share (100/96.50 of $11.05)* $11.45 - ---------------------------------------------------------------------------------------------------------- Net asset value, offering price and redemption price per class Y share ($66,707,902 divided by 5,932,774 shares) $11.24 - ---------------------------------------------------------------------------------------------------------- * On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales the offering price is reduced. ** Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. The accompanying notes are an integral part of these financial statements.
Statement of operations Year ended October 31, 1996 Investment income: - -------------------------------------------------------------------------------------------------------- Dividends (net of foreign tax of $4,199,014) $ 56,824,669 - -------------------------------------------------------------------------------------------------------- Interest 9,616,200 - -------------------------------------------------------------------------------------------------------- Total investment income 66,440,869 - -------------------------------------------------------------------------------------------------------- Expenses - -------------------------------------------------------------------------------------------------------- Compensation of Manager (Note 2) 20,951,734 - -------------------------------------------------------------------------------------------------------- Investor servicing and custodian fees (Note 2) 10,176,556 - -------------------------------------------------------------------------------------------------------- Compensation of Trustees (Note 2) 84,520 - -------------------------------------------------------------------------------------------------------- Administrative services (Note 2) 43,424 - -------------------------------------------------------------------------------------------------------- Distribution fees -- Class A (Note 2) 4,902,301 - -------------------------------------------------------------------------------------------------------- Distribution fees -- Class B (Note 2) 11,722,821 - -------------------------------------------------------------------------------------------------------- Distribution fees -- Class M (Note 2) 104,009 - -------------------------------------------------------------------------------------------------------- Reports to shareholders 169,367 - -------------------------------------------------------------------------------------------------------- Auditing 100,586 - -------------------------------------------------------------------------------------------------------- Legal 61,231 - -------------------------------------------------------------------------------------------------------- Postage 1,134,567 - -------------------------------------------------------------------------------------------------------- Other 91,193 - -------------------------------------------------------------------------------------------------------- Total expenses 49,542,309 - -------------------------------------------------------------------------------------------------------- Expense reduction (Note 2) (1,244,308) - -------------------------------------------------------------------------------------------------------- Net expenses 48,298,001 - -------------------------------------------------------------------------------------------------------- Net investment income 18,142,868 - -------------------------------------------------------------------------------------------------------- Net realized gain on investments (Notes 1 and 3) 179,608,669 - -------------------------------------------------------------------------------------------------------- Net realized gain on foreign currency transactions (Note 1) 74,260,376 - -------------------------------------------------------------------------------------------------------- Net unrealized depreciation of assets and liabilities in foreign currencies during the year (2,485,792) - -------------------------------------------------------------------------------------------------------- Net unrealized appreciation of investment during the year 182,562,917 - -------------------------------------------------------------------------------------------------------- Net gain on investments 433,946,170 - -------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations $452,089,038 - -------------------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements
Statement of changes in net assets Year ended October 31 ---------------------------------- 1996 1995 - ---------------------------------------------------------------------------------------------------------------- Increase in net assets - ---------------------------------------------------------------------------------------------------------------- Operations: -- - ---------------------------------------------------------------------------------------------------------------- Net investment income $18,142,868 $19,339,153 - ---------------------------------------------------------------------------------------------------------------- Net realized gain on investments and foreign currency transactions 253,869,045 $100,455,864 - ---------------------------------------------------------------------------------------------------------------- Net unrealized appreciation of investments and assets and liabilities in foreign currency 180,077,125 $26,307,148 - ---------------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 452,089,038 146,102,165 - ---------------------------------------------------------------------------------------------------------------- Distributions to shareholders: - ---------------------------------------------------------------------------------------------------------------- From net investment income Class A (29,547,833) (1,159,070) - ---------------------------------------------------------------------------------------------------------------- Class B (11,187,413) (644,782) - ---------------------------------------------------------------------------------------------------------------- Class M (95,055) -- - ---------------------------------------------------------------------------------------------------------------- Class Y (836,209) (22,144) - ---------------------------------------------------------------------------------------------------------------- From net realized gain on investments: Class A (68,153,175) (46,984,247) - ---------------------------------------------------------------------------------------------------------------- Class B (40,919,727) (26,094,046) - ---------------------------------------------------------------------------------------------------------------- Class M (292,366) -- - ---------------------------------------------------------------------------------------------------------------- Class Y (1,697,504) (896,166) - ---------------------------------------------------------------------------------------------------------------- Increase from capital share transactions (Note 4) 591,315,666 305,193,194 - ---------------------------------------------------------------------------------------------------------------- Total increase in net assets 890,675,422 375,494,904 - ---------------------------------------------------------------------------------------------------------------- Net Assets - ---------------------------------------------------------------------------------------------------------------- Beginning of year 2,713,884,055 2,338,389,151 - ---------------------------------------------------------------------------------------------------------------- End of year (including undistributed net investment income of $66,835,636 and $18,553,417, respectively) $3,604,559,477 $2,713,884,055 - ---------------------------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements
Financial highlights (For a share outstanding throughout the period) March 1, 1995 (commencement Year ended of operations) to October 31 October 31 Year ended October 31 ------------------------------------------------------------------- 1996 1995 1996 ------------------------------------------------------------------- Class M Class Y ------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $10.09 $8.86 $10.25 - ---------------------------------------------------------------------------------------------------------------------------- Investment operations - ---------------------------------------------------------------------------------------------------------------------------- Net investment income .03 (b) .01 .12 (b) - ---------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 1.47 1.22 1.48 - ---------------------------------------------------------------------------------------------------------------------------- Total from investment operations 1.50 1.23 1.60 - ---------------------------------------------------------------------------------------------------------------------------- Less distributions: - ---------------------------------------------------------------------------------------------------------------------------- From net investment income (.13) -- (.20) - ---------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments (.41) -- (.41) - ---------------------------------------------------------------------------------------------------------------------------- Total distributions (.54) -- (.61) - ---------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.05 $10.09 $11.24 - ---------------------------------------------------------------------------------------------------------------------------- Total investment return at net asset value (%) (a) 15.54 13.88* 16.39 - ---------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $24,179 $5,853 $66,708 - ---------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(c) 1.80 1.23* 1.02 - ---------------------------------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets (%) .32 .17* 1.09 - ---------------------------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 72.88 63.31 72.88 - ---------------------------------------------------------------------------------------------------------------------------- Average commission rate paid (d) $.0298 $.0298 - ---------------------------------------------------------------------------------------------------------------------------- See page 29 for notes to Financial Highlights.
Financial highlights (continued) (For a share outstanding throughout the period) June 15, 1994 (commencement Year ended of operations) to Year ended October 31 October 31 October 31 ---------------------------------------------------------- 1995 1994 1996 ---------------------------------------------------------- Class Y ---------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $10.00 $9.46 $9.86 - ----------------------------------------------------------------------------------------------------------------- Investment operations - ----------------------------------------------------------------------------------------------------------------- Net investment income .09 .01 .01 (b) - ----------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments .47 .53 1.43 - ----------------------------------------------------------------------------------------------------------------- Total from investment operations .56 .54 1.44 - ----------------------------------------------------------------------------------------------------------------- Less distributions: - ----------------------------------------------------------------------------------------------------------------- From net investment income (.01) -- (.11) - ----------------------------------------------------------------------------------------------------------------- From net realized gain on investments (.30) -- (.41) - ----------------------------------------------------------------------------------------------------------------- Total distributions (.31) -- (.52) - ----------------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.25 $10.00 $10.78 - ----------------------------------------------------------------------------------------------------------------- Total investment return at net asset value (%) (a) 6.00 5.71* 15.25 - ----------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $42,582 $29,396 $1,327,246 - ----------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(c) 1.06 .37* 2.02 - ----------------------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets (%) 1.20 .42* .09 - ----------------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 63.31 17.45 72.88 - ----------------------------------------------------------------------------------------------------------------- Average commission rate paid (d) $.0298 - ----------------------------------------------------------------------------------------------------------------- Financial highlights (continued) (For a share outstanding throughout the period) Year ended October 31 ----------------------------------------------------------- 1995 1994 1993 ----------------------------------------------------------- Class B ----------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $9.74 $9.19 $7.22 - ------------------------------------------------------------------------------------------------------------------ Investment operations - ------------------------------------------------------------------------------------------------------------------ Net investment income .03 .01 .05 - ------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments .40 .71 1.99 - ------------------------------------------------------------------------------------------------------------------ Total from investment operations .43 .72 2.04 - ------------------------------------------------------------------------------------------------------------------ Less distributions: - ------------------------------------------------------------------------------------------------------------------ From net investment income (.01) -- (.06) - ------------------------------------------------------------------------------------------------------------------ From net realized gain on investments (.30) (.17) (.01) - ------------------------------------------------------------------------------------------------------------------ Total distributions (.31) (.17) (.07) - ------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $9.86 $9.74 $9.19 - ------------------------------------------------------------------------------------------------------------------ Total investment return at net asset value (%) (a) 4.80 7.95 28.44 - ------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $975,794 $801,443 $233,195 - ------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets (%)(c) 2.04 2.11 2.09 - ------------------------------------------------------------------------------------------------------------------ Ratio of net investment income to average net assets (%) .29 .12 .23 - ------------------------------------------------------------------------------------------------------------------ Portfolio turnover (%) 63.31 17.45 49.53 - ------------------------------------------------------------------------------------------------------------------ Average commission rate paid (d) - ------------------------------------------------------------------------------------------------------------------ Financial highlights (continued) (For a share outstanding throughout the period) April 27, 1992 (commencement of operations) to October 31 Year ended October 31 -------------------------------------------------------- 1992 1996 1995 -------------------------------------------------------- Class A -------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $7.50 $10.13 $9.92 - -------------------------------------------------------------------------------------------------------------------- Investment operations - -------------------------------------------------------------------------------------------------------------------- Net investment income .01 .09 (b) .09 - -------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (.29) 1.47 .43 - -------------------------------------------------------------------------------------------------------------------- Total from investment operations (.28) 1.56 .52 - -------------------------------------------------------------------------------------------------------------------- Less distributions: - -------------------------------------------------------------------------------------------------------------------- From net investment income -- (.18) (.01) - -------------------------------------------------------------------------------------------------------------------- From net realized gain on investments -- (.41) (.30) - -------------------------------------------------------------------------------------------------------------------- Total distributions -- (.59) (.31) - -------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $7.22 $11.10 $10.13 - -------------------------------------------------------------------------------------------------------------------- Total investment return at net asset value (%) (a) (3.73)* 16.10 5.64 - -------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $18,154 $2,186,426 $1,689,656 - -------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(c) 1.16* 1.27 1.28 - -------------------------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets (%) .21* .84 1.05 - -------------------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 61.84 72.88 63.31 - -------------------------------------------------------------------------------------------------------------------- Average commission rate paid (d) $.0298 - -------------------------------------------------------------------------------------------------------------------- Financial highlights (continued) (For a share outstanding throughout the period) Year ended October 31 ---------------------------------------------------------- 1994 1993 1992 ---------------------------------------------------------- Class A ---------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $9.30 $7.25 $7.64 - ------------------------------------------------------------------------------------------------------------------- Investment operations - ------------------------------------------------------------------------------------------------------------------- Net investment income .02 .07 .10 - ------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments .77 2.06 (.22) - ------------------------------------------------------------------------------------------------------------------- Total from investment operations .79 2.13 (.12) - ------------------------------------------------------------------------------------------------------------------- Less distributions: - ------------------------------------------------------------------------------------------------------------------- From net investment income -- (.07) (.12) - ------------------------------------------------------------------------------------------------------------------- From net realized gain on investments (.17) (.01) (.15) - ------------------------------------------------------------------------------------------------------------------- Total distributions (.17) (.08) (.27) - ------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $9.92 $9.30 $7.25 - ------------------------------------------------------------------------------------------------------------------- Total investment return at net asset value (%) (a) 8.62 29.62 (1.51) - ------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $1,507,550 $940,985 $630,764 - ------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(c) 1.33 1.39 1.56 - ------------------------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets (%) .83 .85 1.28 - ------------------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 17.45 49.53 61.84 - ------------------------------------------------------------------------------------------------------------------- Average commission rate paid (d) - ------------------------------------------------------------------------------------------------------------------- * Not annualized. (a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges. (b) Per share net investment income has been determined on the basis of the weighted average number of shares outstanding during the period. (c) The ratio of expenses to average net assets for the period ended October 31, 1995, and thereafter, includes amounts paid through brokerage service and expense offset arrangements. Prior period ratios exclude these amounts (Note 2). (d) Average commission rate paid on security trades is presented for fiscal periods beginning on or after September 1, 1995.
Notes to financial statements October 31, 1996 Note 1 Significant accounting policies The fund is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. The fund seeks capital appreciation by investing primarily in common stocks traded in securities markets located in a number of foreign countries and in the United States. The fund offers class A, class B, class M and class Y shares. Class A shares are sold with a maximum front-end sales charge of 5.75%. 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 may be subject to a contingent deferred sales charge, if those shares are redeemed within six years of purchase. Class M shares are sold with a maximum front end sales charge of 3.50% and pay an ongoing distribution fee that is higher than class A shares but lower than class B shares. Class Y shares, which are sold at net asset value, are generally subject to the same expenses as class A, class B and class M shares, but do not bear a distribution fee. Class Y shares are sold to defined contribution plans that initially invest at least $250 million in a combination of Putnam Funds. Expenses of the fund are borne pro-rata by the holders of each class of shares, except that each class bears expenses unique to that class (including the distribution fees applicable to such class). Each class votes as a class only with respect to its own distribution plan or other matters on which a class vote is required by law or determined by the Trustees. Shares of each class would receive their pro-rata share of the net assets of the fund, if that fund were liquidated. In addition, the Trustees declare separate dividends on each class of shares. The following is a summary of significant accounting policies 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, or, if no sales are reported -- as in the case of some securities traded over-the-counter -- the last reported bid 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, 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 fluctuations are included with the net realized and unrealized gain or loss on investments. Net realized gains and losses on foreign currency transactions represent net exchange gains or losses on closed forward currency contracts, disposition of foreign currencies and the difference between the amount of investment income and foreign withholding taxes recorded on the fund's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized gains and losses on foreign currency transactions arise from changes in the value of open forward currency contracts and assets and liabilities other than investments at the period end, resulting from changes in the exchange rate. F) Forward currency contracts The fund may engage in forward currency contracts, which are agreements between two parties to buy and sell currencies at a set price on a future date, to protect against a decline in value relative to the U.S. dollar of the currencies in which its portfolio securities are denominated or quoted (or an increase in the value of a currency in which securities a fund intends to buy are denominated, when a fund holds cash reserves and short-term investments). The U.S. dollar value of forward currency contracts is determined using forward currency exchange rates supplied by a quotation service. The market value of the contract will fluctuate with changes in currency exchange rates. The contract is "marked to market" daily and the change in market value is recorded as an unrealized gain or loss. When the contract is closed, the fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. The fund could be exposed to risk if the value of the currency changes unfavorably, if the counterparties to the contracts are unable to meet the terms of their contracts or if the fund is unable to enter into a closing position. G) Federal taxes It is the policy of the fund to distribute all of its taxable income within the prescribed time and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. It is also the intention of the fund to distribute an amount sufficient to avoid imposition of any excise tax under Section 4982 of the Internal Revenue Code of 1986. Therefore, no provision has been made for federal taxes on income, capital gains or unrealized appreciation on securities held nor for excise tax on income and capital gains. H) Distributions to shareholders Distributions to shareholders from net investment income are recorded by the fund on the ex-dividend date. Capital gain distributions, if any, are recorded on the ex-dividend date and paid 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 losses on wash sale transactions, realized and unrealized gains and losses on forward foreign currency contracts and realized and unrealized gains on passive foreign investment companies. 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 October 31, 1996, the fund reclassified $71,805,861 to increase undistributed net investment income and $3,035,101 to increase paid-in-capital, with a decrease to accumulated net realized gain on investments of $74,840,962. The calculation of net investment income per share in the financial highlights table excludes these adjustments. 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 any amount over $1.5 billion subject, under current law, to reduction in any year by the amount of certain brokerage commissions and fees (less expenses) received by affiliates of Putnam Management on the fund's portfolio transactions. 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. Trustees of the fund receive an annual Trustees fee of $4,770 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 adopted a Trustee Fee Deferral Plan (the "Plan") which allows the Trustees to defer the receipt of all or a portion of Trustees Fees payable on or after July 1, 1995. The deferred fees remain in the fund and are invested in the fund or in other Putnam funds until distribution in accordance with the Plan. The Fund has adopted an unfunded noncontributory defined benefit pension plan (the "Pension Plan") covering all Trustees of the Fund who have served as Trustee for at least five years. Benefits under the Pension Plan are equal to 50% of the Trustee's average total retainer and meeting fees for the three years preceding retirement. Pension expense for the fund is included in Compensation of trustees in the Statement of operations for the year ended October 31, 1996. Accrued pension liability is included in Payable for compensation of Trustees in the Statement of assets and liabilities. Custodial functions for the fund's assets are provided by Putnam Fiduciary Trust Company (PFTC), a wholly-owned subsidiary of Putnam Investments, Inc. Investor servicing agent functions are provided by Putnam Investor Services, a division of PFTC. For the year ended October 31, 1996, fund expenses were reduced by $1,244,308 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 these assets utilized in connection with the expense offset arrangements in an income producing asset if it had not entered into such arrangements. The fund has adopted distribution plans (the "Plans") with respect to its class A, class B and class M shares pursuant to Rule 12b-1 under the Investment Company Act of 1940. The purpose of the Plans is to compensate Putnam Mutual Funds Corp., a wholly-owned subsidiary of Putnam Investments Inc., for services provided and expenses incurred by it in distributing shares of the fund. The Plans provide for payments by the fund to Putnam Mutual Funds Corp. at an annual rate up to 0.35%, 1.00% and 1.00% of the average net assets attributable to class A, class B and class M shares, respectively. The Trustees have approved payment by the fund at an annual rate of 0.25%, 1.00% and 0.75% of the average net assets attributable to class A, class B and class M shares respectively. For the year ended October 31, 1996, Putnam Mutual Funds Corp., acting as underwriter received net commissions of $1,199,012 and $34,883 from the sale of class A and class M shares, respectively and received $1,502,966 in contingent deferred sales charges from redemptions of class B shares. A deferred sales charge of up to 1% is assessed on certain redemptions of class A shares. For the year ended October 31, 1996, Putnam Mutual Funds Corp., acting as underwriter received $20,996 on class A redemptions. Note 3 Purchases and sales of securities During the year ended October 31, 1996, purchases and sales of investment securities other than short-term investments aggregated $2,798,873,068 and $2,195,518,161, 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 October 31, 1996, there was an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows: Year ended October 31, 1996 - ---------------------------------------------------- Class A Shares Amount - ---------------------------------------------------- Shares sold 74,479,884 $786,801,972 - ---------------------------------------------------- Shares issued in connection with reinvestment of distributions 9,384,293 91,684,535 - ---------------------------------------------------- 83,864,177 878,486,507 Shares repurchased (53,754,835) (567,550,801) - ---------------------------------------------------- Net increase 30,109,342 $310,935,706 - ---------------------------------------------------- Year ended October 31, 1995 - ---------------------------------------------------- Class A Shares Amount - ---------------------------------------------------- Shares sold 68,492,496 $649,257,185 - ---------------------------------------------------- Shares issued in connection with reinvestment of distributions 4,941,635 44,870,047 - ---------------------------------------------------- 73,434,131 694,127,232 Shares repurchased (58,666,136) (560,108,246) - ---------------------------------------------------- Net increase 14,767,995 $134,018,986 - ---------------------------------------------------- Year ended October 31, 1996 - ---------------------------------------------------- Class B Shares Amount - ---------------------------------------------------- Shares sold 38,966,921 $400,645,801 - ---------------------------------------------------- Shares issued in connection with reinvestment of distributions 5,083,057 48,543,206 - ---------------------------------------------------- 44,049,978 449,189,007 Shares repurchased (19,905,910) (204,642,212) - ---------------------------------------------------- Net increase 24,144,068 $244,546,795 - ---------------------------------------------------- Year ended October 31, 1995 - ---------------------------------------------------- Class B Shares Amount - ---------------------------------------------------- Shares sold 36,604,976 $339,453,881 - ---------------------------------------------------- Shares issued in connection with reinvestment of distributions 2,773,499 24,656,265 - ---------------------------------------------------- 39,378,475 364,110,146 Shares repurchased (22,718,652) (210,414,554) - ---------------------------------------------------- Net increase 16,659,823 $153,695,592 - ---------------------------------------------------- Year ended October 31, 1996 - ---------------------------------------------------- Class M Shares Amount - ---------------------------------------------------- Shares sold 1,976,000 $20,965,783 - ---------------------------------------------------- Shares issued in connection with reinvestment of distributions 37,518 366,551 - ---------------------------------------------------- 2,013,518 21,332,334 Shares repurchased (404,965) (4,274,542) - ---------------------------------------------------- Net increase 1,608,553 $17,057,792 - ---------------------------------------------------- For the period March 1, 1995 (commencement of operations) to October 31, 1995 - ---------------------------------------------------- Class M Shares Amount - ---------------------------------------------------- Shares sold 618,124 $6,076,061 - ---------------------------------------------------- Shares issued in connection with reinvestment of distributions -- -- - ---------------------------------------------------- 618,124 6,076,061 Shares repurchased (38,257) (382,704) - ---------------------------------------------------- Net increase 579,867 $5,693,357 - ---------------------------------------------------- Year ended October 31, 1996 - ---------------------------------------------------- Class Y Shares Amount - ---------------------------------------------------- Shares sold 3,135,536 $33,518,710 - ---------------------------------------------------- Shares issued in connection with reinvestment of distributions 256,720 2,533,713 - ---------------------------------------------------- 3,392,256 36,052,423 Shares repurchased (1,614,376) (17,277,050) - ---------------------------------------------------- Net increase 1,777,880 $18,775,373 - ---------------------------------------------------- Year ended October 31, 1995 - ---------------------------------------------------- Class Y Shares Amount - ---------------------------------------------------- Shares sold 2,547,793 $24,844,353 - ---------------------------------------------------- Shares issued in connection with reinvestment of distributions 100,142 918,308 - ---------------------------------------------------- 2,647,935 25,762,661 - ---------------------------------------------------- Shares repurchased (1,433,258) (13,977,402) - ---------------------------------------------------- Net increase 1,214,677 $11,785,259 - ---------------------------------------------------- Federal tax information (Unaudited) The fund has designated 5.49% of the distributions from net investment income as qualifying for the dividends received deduction for corporations. Pursuant to section 852 of the Internal Revenue Code, the Fund hereby designates $.4062 per share (or if different, the amount necessary to offset net capital gain earned by the Fund) for all share classes as capital gain dividends for its taxable year ended October 31, 1996. For the period, dividends from foreign countries were $50,770,206 or $.155 per share for all share classes. Taxes paid to foreign countries were $4,199,014 or $.013 for all share classes. The form 1099 that you will have received in January 1997 shows the tax status of all distributions paid to your account in calendar year 1996. Results of July 31, 1996 shareholder meeting A meeting of shareholders of the fund was held on July 31, 1996. At the meeting, each of the nominees for Trustees was elected, as follows: Votes Votes for withheld --------- -------- Jameson Adkins Baxter 162,068,300 2,966,597 Hans H. Estin 162,030,693 3,004,204 John A. Hill 162,149,162 2,885,735 R.J. Jackson 162,097,048 2,937,849 Elizabeth T. Kennan 161,974,520 3,060,377 Lawrence J. Lasser 162,059,993 2,974,804 Robert E. Patterson 162,140,522 2,894,385 Donald S. Perkins 162,039,392 2,995,505 William F. Pounds 162,101,167 2,933,730 George Putnam 162,109,920 2,924,977 George Putnam, III 162,025,742 3,009,155 Eli Shapiro 161,763,281 3,271,616 A.J.C. Smith 162,111,632 2,923,265 W. Nicholas Thorndike 162,022,726 3,012,171 A proposal to ratify the selection of Coopers & Lybrand L.L.P. as auditors for the fund was approved as follows: 157,609,651 votes for, and 1,764,647 votes against, with 5,660,599 abstentions and broker non- votes. A proposal to amend the fund's fundamental investment restriction with respect to diversification of investments was approved as follows: 137,771,916 votes for, and 9,998,599 votes against, with 17,264,382 abstentions and broker non-votes. A proposal to amend the fund's fundamental investment restriction with respect to investments in the securities of a single issuer was approved as follows: 135,709,627 votes for, and 11,140,432 votes against, with 18,184,838 abstentions and broker non-votes. A proposal to amend the fund's fundamental investment restriction with respect to making loans through purchases of debt obligations, repurchase agreements and securities loans was approved as follows: 129,802,658 votes for, and 16,744,494 votes against, with 18,487,745 abstentions and broker non-votes. A proposal to amend the fund's fundamental investment restriction with respect to investments in real estate was approved as follows: 132,476,198 votes for, and 14,537,644 votes against, with 18,021,055 abstentions and broker non-votes. A proposal to amend the fund's fundamental investment restriction with respect to concentration of its assets was approved as follows: 137,749,323 votes for, and 9,285,242 votes against, with 18,000,332 abstentions and broker non-votes. A proposal to amend the fund's fundamental investment restriction with respect to investments in commodities or commodity contracts was approved as follows: 132,845,691 votes for, and 14,209,233 votes against, with 17,979,973 abstentions and broker non-votes. A proposal to amend the fund's fundamental investment restriction with respect to underwriting was approved as follows: 136,709,115 votes for, and 9,499,765 votes against, with 18,826,017 abstentions and broker non- votes. A proposal to eliminate the fund's fundamental investment restriction with respect to investments in certain oil, gas and mineral interests was approved as follows: 135,397,712 votes for, and 12,001,629 votes against, with 17,635,556 abstentions and broker non-votes. A proposal to eliminate the fund's fundamental investment restriction with respect to investments in securities of issuers in which management of the fund or Putnam Investment Management, Inc. owns securities was approved as follows: 134,209,440 votes for, and 12,633,648 votes against, with 18,191,809 abstentions and broker non-votes. A proposal to eliminate the fund's fundamental investment restriction with respect to margin transactions was approved as follows: 130,721,075 votes for, and 15,884,647 votes against, with 18,429,175 abstentions and broker non-votes. A proposal to eliminate the fund's fundamental investment restriction with respect to short sales was approved as follows: 132,339,879 votes for, and 13,846,508 votes against, with 18,848,510 abstentions and broker non-votes. A proposal to eliminate the fund's fundamental investment restriction which limits the fund's ability to pledge assets was approved as follows: 130,534,763 votes for, and 15,417,013 votes against, with 19,083,121 abstentions and broker non-votes. A proposal to eliminate the fund's fundamental investment restriction with respect to invest to gain control of a company's management was approved as follows: 134,401,057 votes for, and 12,067,948 votes against, with 18,565,892 abstentions and broker non-votes. A proposal to eliminate the fund's fundamental investment restriction with respect to investments in issuers that have been in operation for less than three years was approved as follows: 134,231,817 votes for, and 12,145,434 votes against, with 18,657,646 abstentions and broker non-votes. A proposal to amend the fund's Agreement and Declaration of Trust with respect to purchase of certain illiquid securities was approved as follows: 130,513,018 votes for, and 15,493,920 votes against, with 19,027,959 abstentions and broker non-votes. All tabulations are rounded to nearest whole number. 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 Eli Shapiro A.J.C. Smith W. Nicholas Thorndike OFFICERS George Putnam President Charles E. Porter Executive Vice President Patricia C. Flaherty Senior Vice President John D. Hughes Senior Vice President and Treasurer Lawrence J. Lasser Vice President Gordon H. Silver Vice President Ian C. Ferguson Vice President Anthony V. Regan Vice President and Lead Fund Manager Robert Swift Vice President and Fund Manager Ami T. Kuan Vice President and Fund Manager Carol McMullen Vice President and Fund Manager Jeffrey R. Lindsey 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 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 principal amount invested. PUTNAM INVESTMENTS The Putnam Funds One Post Office Square Boston, Massachusetts 02109 - --------------------- Bulk Rate U.S. Postage PAID Putnam Investments - --------------------- 29198-005/882/907 12/31/96 -----END PRIVACY-ENHANCED MESSAGE-----