-----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, N8LFn19wySZU2eGCuB28BUrhKcXOc3+9rHXdecei3NZ+2SHhA5m62qgb+8qi2kfL 3etsUl7W3IPfOhyIAsGloQ== 0000928816-98-000003.txt : 19980106 0000928816-98-000003.hdr.sgml : 19980106 ACCESSION NUMBER: 0000928816-98-000003 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19971031 FILED AS OF DATE: 19980105 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM GLOBAL GROWTH FUND CENTRAL INDEX KEY: 0000081251 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 046145734 STATE OF INCORPORATION: MA FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-01403 FILM NUMBER: 98500688 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQ CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6172921000 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, 1997 [LOGO: BOSTON * LONDON * TOKYO] Fund highlights * Morningstar, an independent mutual fund rating agency, gave Putnam Global Growth Fund's class A shares 4 out of 5 stars for overall performance as of September 30, 1997 (based on the fund's average annual returns for the 3-, 5-, and 10-year periods). This rating put the fund among 22.5% of the 601 international equity funds rated.* * "Despite the economic problems that have developed in Asia, the International Monetary Fund predicts that the global economy may be entering its best five-year stretch in the past 25 years." -- The Wall Street Journal, September 17, 1997 CONTENTS 4 Report from Putnam Management 9 Fund performance summary 13 Portfolio holdings 22 Financial statements *Morningstar ratings reflect risk-adjusted performance through 9/30/97 and are subject to change every month. Morningstar ratings are calculated from a fund's 3-, 5-, and 10-year returns (with fee adjustments) in excess of 90-day Treasury bill returns and a risk factor that reflects performance below 90-day Treasury bill returns. For the 3-, 5-, and 10-year performance, the fund received 4 stars. There were 601, 258, and 91 international equity funds rated, respectively, 10% of the funds in an investment category receive 5 stars; the next 22.5% receive 4 stars. Performance of other share classes will vary. Past performance is not indicative of future results. From the Chairman [GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM] [copyright] Karsh, Ottawa Dear Shareholder: Putnam Global Growth Fund closed the books on fiscal 1997 solidly in the black, thanks in no small measure to careful security selection within each of the market sectors in which the fund invests. Besides its gratifyingly positive results, the fund afforded investors the opportunity to diversify assets across a broad band of the world's equity markets. As you might expect, the skill and experience of a wide variety of professionals are required to undertake such a challenge. I am pleased to announce the addition of Michael K. Arends to the fund's management team. Michael joined Putnam in 1997 as senior vice president and senior portfolio manager in the Core Growth Equity Group, where he focuses on large-company growth stocks. Before joining Putnam, he was with Phoenix Duff and Phelps, Kemper Financial Services, Institutional Capital Corporation, and Mathers and Company. He has 20 years of investment experience. In the report that follows, your fund's management team reviews the performance and strategies employed during fiscal 1997 and looks at prospects for the fiscal year just begun. Respectfully yours, /S/GEORGE PUTNAM George Putnam Chairman of the Trustees December 17, 1997 Report from the Fund Managers Michael K. Arends, lead manager Robert Swift Anthony W. Regan Ami Kuan Danoff Kelly A. Morgan Thomas R. Haslett Carol McMullen During a fiscal year characterized by bouts of market volatility and sector rotation, Putnam Global Growth Fund generally navigated the world's financial landscape with aplomb. For the year ended October 31, 1997, the fund had a total return of 16.40% at net asset value, just ahead of the 15.13% gain of the Morgan Stanley Capital International World Index. The class A share performance at public offering price was 9.68%. For performance of other share classes and over longer periods, please turn to page 9 of this report. Skillful stock selection played a pivotal role for much of the year in allowing us to sidestep some of the pitfalls and seize some of the opportunities the world markets presented. Additionally, our defensive currency hedging techniques shielded the fund from the continued weakness of the Japanese yen. Unfortunately, some of the fund's technology holdings came under pressure just before the close of the fiscal year. * U.S. MARKET STRONG BUT STUMBLES AT END OF PERIOD The U.S. stock market continued to post solid gains but not without some turbulence. As has been the case for quite a while, economic growth remained steady and inflation was virtually nonexistent. However, in late spring, market leadership began to shift away from large, multinational companies to smaller, more domestically oriented firms, based on their higher profit expectations. Then, in the summer, investors became concerned about the effect of a strong dollar on the earnings of multinational corporations. Finally, at the end of October, the Southeast Asian currency devaluations and resulting global market volatility forced a brief but sharp decline in U.S. stocks. In terms of specific sectors of your fund's portfolio, technology performed well throughout the year but was hurt in October by a worldwide selloff in semiconductor stocks. For much of the fund's reporting period, however, companies involved with all aspects of the personal computer industry -- PCs, data storage, software, computer services, and semiconductors -- contributed significantly to the fund's returns. Some important technology holdings included leading PC maker Compaq Computer Corp., software developer Computer Associates International, Inc., National Semiconductor Corp., and Intel Corp. While these holdings, along with others discussed in this report, were viewed favorably at the end of the fiscal period, all are subject to review and adjustment in accordance with the fund's investment strategy and may vary in the future. Financial companies continued to perform well. The industry has enjoyed a benign interest-rate environment, rapid industry consolidation, and active stock markets. Financial holdings were generally strong, particularly among asset managers, credit-card issuers, and savings and loans. Money-center banks were attractive but were affected by uncertainty in the emerging markets. Some significant examples from this area include banking and credit-card company MBNA Corp. and insurance and brokerage giant The Travelers Group Inc. Based on rising global demand and improved product pipelines, we believe pharmaceutical companies are an attractive growth area. One new fund holding intended to benefit from this trend is Pfizer, Inc., a globally competitive pharmaceutical company with a rich new-product portfolio. Pfizer's stock has performed relatively well since we purchased it. [GRAPHIC OMITTED: horizontal bar chart COUNTRY ALLOCATIONS] COUNTRY ALLOCATIONS* United States 34.0% United Kingdom 15.8% Japan 10.9% Germany 5.0% France 4.3% Footnote reads: *Based on net assets as of 10/31/97. Holdings will vary over time. * EUROPE ANCHORS PORTFOLIO; CANADA PROVES A PLUS European markets had solid returns during the period with the peripheral countries such as Finland and Italy offering the strongest gains. These countries -- as well as the United Kingdom in the last few months of the fund's fiscal year -- benefited from investors' positive view of their participation in Europe's Economic and Monetary Union (EMU). The U.K. government has since made clear that if it was to join, it wouldn't be until after 2002. Our overweighting of U.K. stocks relative to our benchmark was a major contributor to the fund's overall returns. Key holdings included pharmaceutical companies SmithKline Beecham PLC and Glaxo Wellcome PLC. We believe both companies offer even stronger product portfolios than their American counterparts. Additionally, Vodafone Group PLC, the U.K.'s leading cellular phone operator, enjoys a booming domestic business and an international business that is gaining in profitability. The fund also enjoyed solid returns from other top European companies. Total S.A., a French integrated oil company, is one of the world's production leaders. With political and macroeconomic issues clouding the French market at various times in the past year, investors at first failed to take into account Total's exploration and production profile, but subsequently the stock's price soared. Scandinavian telecommunications equipment manufacturers Oy Nokia AB and L.M. Ericsson have benefited from the rapid proliferation of mobile telephony. European technology companies such as German business software developer SAP AG and the Dutch company ASM Lithography Holding N.V., which manufactures specialized equipment for the semiconductor industry, also helped boost the fund's returns for much of the period. Across the Atlantic, we sought opportunities in the improving Canadian market. Over the past year, Canada's economy has rebounded, its interest rates have fallen, and its government budget deficit has been reduced. During the period, we added Northern Telecom Ltd., a mobile phone manufacturer, and Newbridge Ltd. Networks Corp., a Canadian manufacturer of switching equipment, to the portfolio. The favorable environment in Canada also benefited banking stocks such as Toronto-Dominion Bank and the Bank of Nova Scotia. [GRAPHIC OMITTED: TOP 10 HOLDINGS] TOP 10 HOLDINGS General Electric Co. (United States) Electronics and electrical equipment SmithKline Beecham PLC ADR (United Kingdom) Pharmaceuticals Vodafone Group PLC (United Kingdom) Telecommunications Total S.A. Class B (France) Oil and gas Nestle S.A. (Switzerland) Food and beverages Shiseido Co., Ltd. (Japan) Cosmetics SAP AG (Germany) Computer services and software Enterprise Oil PLC (United Kingdom) Oil and gas Bayerische Motoren Werke (BMW) AG (Germany) Automotive Portugal Telecom S.A. (Portugal) Telecommunications Footnote reads: These holdings represent 13.6% of the fund's net assets as of 10/31/97. Portfolio holdings will vary over time. * ECONOMIC, CURRENCY PROBLEMS MARK ASIAN MARKETS; TURMOIL HITS TECHNOLOGY SECTOR LATE IN PERIOD The Japanese market continues to struggle with anemic economic growth. Additionally, stocks there suffered from the negative effects of the slow pace of economic and financial reform and an April sales tax increase on the profits of consumer-oriented companies. Fortunately your fund was underweighted in Japanese securities relative to its benchmark. Those Japanese stocks the fund did hold, however, resulted in some profitable situations. One such company was Sony Corp. Known around the globe as a leader in the consumer electronics industry, Sony has a superior product line and what we believe to be significant growth potential. The company also recently issued a very positive earnings report. Some of the year's weakest returns were recorded by the Southeast Asian markets. Export growth has slowed in that region and much of the Southeast Asian markets have spent the past summer mired in currency devaluations. In October, investors began to question the value of the Hong Kong dollar, which hastened declines in that market and set off a spate of worldwide volatility. Because of your fund's global diversification, overall performance was not substantially affected by these events. Additionally, as downward earnings estimates were issued, we lowered several positions in the region. In the midst of the volatility in world markets, investors began to believe that the economic problems in Asia would result in a fall in demand for semiconductors. This belief was compounded by a disappointing earnings report by a leading semiconductor producer, SGS-Thomson Microelectronics of France, and an expected price cut from industry giant Intel Corp. * POSITIVE BUT CAUTIOUS OUTLOOK We are encouraged by the fact that many of the stocks we have selected have recorded consistent earnings improvement, and for many of them, we see no reason why that trend can't continue. Going forward, we plan to add stocks of companies in rapidly growing industry sectors or those that are leaders in their respective fields. Of course, we are cognizant of certain risks in any market, including higher interest rates, the possibility of slowing earnings growth, and unforeseen events that can impact corporate profits, such as the Asian currency crisis. Despite these important risks, our current investment strategy focuses on high-quality growth companies that we anticipate will outperform during this unpredictable market uptrend. 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 10/31/97, there is no guarantee the fund will continue to hold these securities in the future. International investing involves certain risks, including economic instability, political developments, and currency fluctuations, not present with U.S. investments. Performance summary This section provides information about your fund's performance, which should always be considered in light of its investment strategy. Putnam Global Growth Fund is designed for investors seeking capital appreciation through a globally diversified equity portfolio. TOTAL RETURN FOR PERIODS ENDED 10/31/97 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 16.40% 9.68% 15.54% 10.54% 15.72% 11.68% - ------------------------------------------------------------------------------ 5 years 100.99 89.49 93.46 91.46 95.79 88.95 Annual average 14.98 13.64 14.11 13.87 14.38 13.57 - ------------------------------------------------------------------------------ 10 years 189.4 172.77 166.61 166.61 173.32 163.75 Annual average 11.21 10.56 10.30 10.30 10.58 10.18 - ------------------------------------------------------------------------------ Annual average (life of fund) 10.56 10.35 9.52 9.52 9.80 9.67 - ------------------------------------------------------------------------------ COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 10/31/97 MSCI EAF MSCI S & P 500 Consumer Index* World Index* Index Price Index - ------------------------------------------------------------------------------ 1 year 3.04% 15.13% 32.10% 2.08% - ------------------------------------------------------------------------------ 5 years 61.23 87.42 147.06 13.96 Annual average 10.03 13.39 19.83 2.65 - ------------------------------------------------------------------------------ 10 years 63.45 126.60 387.00 40.16 Annual average 5.04 8.52 17.15 3.43 - ------------------------------------------------------------------------------ Annual average (life of fund) -- -- 11.97 5.35 - ------------------------------------------------------------------------------ Returns for class A and class M shares reflect the current maximum initial sales charges of 5.75% and 3.50%, respectively. Class B share returns for the 1-, 5-, 10-year, and life-of-fund periods reflect the applicable contingent deferred sales charge (CDSC), which is 5% in the first year, declines to 1% in the sixth year, and is eliminated thereafter. Returns shown for class B and class M shares for periods prior to their inception are derived from the historical performance of class A shares, adjusted to reflect both the initial sales charge or CDSC, if any, currently applicable to each class and, in the case of class B and class M shares, the higher operating expenses applicable to such shares. All returns assume reinvestment of distributions at NAV and represent past performance; they do not guarantee future results. Returns do not take into account any adjustment for taxes payable on reinvested distributions or, for class A shares, distribution fees prior to implementation of the class A distribution plan in 1990. Investment return and principal value will fluctuate so that an investor's shares when redeemed may be worth more or less than their original cost. *Indexes did not exist prior to 1969. [GRAPHIC OMITTED: worm chart GROWTH OF A $10,000 INVESTMENT] GROWTH OF A $10,000 INVESTMENT Cumulative total return of a $10,000 investment since 10/31/87 Fund's class A shares at POP $27,277 MSCI World Index $22,660 Consumer Price Index $14,106 Fund's MSCI Consumer class A shares World Price at POP Index Index -------------- ----- -------- 10/87 9425 10000 10000 10/88 10191 11810 10425 10/89 11988 13181 10893 10/90 11826 11476 11578 10/91 13778 13021 11916 10/92 13571 12091 12298 10/93 17590 15083 12636 10/94 19106 15973 12966 10/95 20183 17192 13330 10/96 23433 19682 13729 10/97 27277 22660 14016 Footnote reads: Past performance is no assurance of future results. At the end of the same time period, a $10,000 investment in the fund's class B shares would have been valued at $26,661, and no contingent deferred sales charges would apply; a $10,00 investment in the fund's class M shares would have been valued at $27,332 ($26,375 at public offering price). See first page of performance section for performance calculation method. PRICE AND DISTRIBUTION INFORMATION 12 months ended 10/31/97 Class A Class B Class M - ------------------------------------------------------------------------------ Distributions (number) 1 1 1 - ------------------------------------------------------------------------------ Income $0.275 $0.203 $0.249 - ------------------------------------------------------------------------------ Capital gains - ------------------------------------------------------------------------------ Long-term 0.296 0.296 0.296 - ------------------------------------------------------------------------------ Short-term 0.249 0.249 0.249 - ------------------------------------------------------------------------------ Total $0.820 $0.748 $0.794 - ------------------------------------------------------------------------------ Share value: NAV POP NAV NAV POP - ------------------------------------------------------------------------------ 10/31/96 $11.10 $11.78 $10.78 $11.05 $11.45 - ------------------------------------------------------------------------------ 10/31/97 12.00 12.73 11.62 11.90 12.33 - ------------------------------------------------------------------------------ TOTAL RETURN FOR PERIODS ENDED 9/30/97 (most recent calendar quarter) Class A Class B Class M NAV POP NAV CDSC NAV POP (inception date) (9/1/67) (4/27/92) (3/1/95) - ------------------------------------------------------------------------------ 1 year 25.89% 18.63% 24.85% 19.85% 25.12% 20.76% - ------------------------------------------------------------------------------ 5 years 113.45 101.20 105.45 103.45 107.90 100.51 Annual average 16.37 15.01 15.49 15.26 15.76 14.93 - ------------------------------------------------------------------------------ 10 years 148.44 134.15 128.68 128.68 134.67 126.45 Annual average 9.53 8.88 8.62 8.62 8.90 8.52 - ------------------------------------------------------------------------------ Annual average (life of fund) 10.89 10.67 9.84 9.84 10.12 9.99 - ------------------------------------------------------------------------------ Performance data represent past results, do not reflect future performance, and will differ for each share class. Investment returns and principal value will fluctuate so that an investor's shares when sold may be worth more or less than their original cost. See first page of performance section for performance calculation method. TERMS AND DEFINITIONS Total return shows how the value of the fund's shares changed over time, assuming you held the shares through the entire period and reinvested all distributions in the fund. 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 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) EAFE Index* is an unmanaged list of equity securities from Europe, Australia and the Far East, with all values expressed in U.S. dollars. Morgan Stanley Capital International (MSCI) World Index* is an unmanaged list of global equity securities, 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. *Securities indexes assume reinvestment of all distributions and interest payments and do not take in account brokerage fees or taxes. Securities in the fund do not match those in the indexes and performance of the fund will differ. It is not possible to invest directly in an index. Past performance is no assurance of future results. At the end of the same time period, a $10,000 investment in the fund's class B shares would have been valued at $26,661, and no contingent deferred sales charges would apply; a $10,000 investment in the fund's class M shares would have been valued at $27,332 ($26,375 at public offering price). See first page of performance section for performance calculation method. Report of independent accountants For the fiscal year ended October 31, 1997 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, 1997, and the related statement of operations for the year then ended and the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 1997, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Putnam Global Growth Fund as of October 31, 1997, the results of its operations for the year then ended and the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein, in conformity with generally accepted accounting principles. Coopers & Lybrand L.L.P. Boston, Massachusetts December 10, 1997 Portfolio of investments owned October 31, 1997
COMMON STOCKS (97.2%) * NUMBER OF SHARES VALUE Argentina (0.3%) - ------------------------------------------------------------------------------------------------------------ 116,067 Banco De Galicia y Buenos Aires S.A. de C.V. Class B ADR $ 2,812,811 474,623 Banco Frances del Rio de la Plata S.A. ADR 3,917,991 48,000 Inversiones Y Representaciones S.A. GDR 1,620,000 105,000 Telefonica de Argentina S.A. ADR 2,953,125 122,000 YPF S.A. ADR 3,904,000 -------------- 15,207,927 Australia (2.9%) - ------------------------------------------------------------------------------------------------------------ 3,269,755 Australia & New Zealand Banking Group Ltd. 22,737,615 1,328,000 Lend Lease Corp. Limited 27,108,623 2,961,358 QBE Insurance Group Ltd. 13,804,815 3,028,000 Woodside Petroleum Ltd. 25,492,762 11,132,456 Woolworth Co. 35,819,679 -------------- 124,963,494 Brazil (0.9%) - ------------------------------------------------------------------------------------------------------------ 493,000 Banco Bradesco S.A. BRC 3,666,757 123,200 Brazil Realty S.A. 144A GDR 3,141,600 2,609,400 Centrais Electricas de Santa Catarina S.A. 2,816,495 173,500 Companhia Brasileira de Distribuicao Grupo Pao de Acucar ADR + 3,209,750 112,500 Companhia Energetica de Minas Gerais (Cemig) 144A ADS 4,443,750 242,216 Companhia Paranaense de Energia-Copel 2,924,168 221,000 Companhia Vale do Rio Doce ADR 4,254,250 67,600 Compania Siderurgica Nacional 2,452,608 3,100 Companhia de Tecidos Norte de Minas 1,152,806 3,100 Empresa Nacional De Compercio, Redito E Participacoes S.A. (ENCOPAR) 366 7,370 Light Participacoes, S.A. 1,885,116 143,000 Madeco S. A. ADR 3,020,875 109,300 Multicanal Participacoes S.A. ADR + 676,294 47,200 Telebras Co. ADR 4,790,800 -------------- 38,435,635 Canada (3.0%) - ------------------------------------------------------------------------------------------------------------ 279,200 Bank of Nova Scotia 12,313,568 77,100 Bell Canada International Inc. + 1,291,425 1,069,700 Bombardier, Inc. 20,495,246 648,600 Newbridge Networks Corp. + 34,588,625 450,495 Northern Telecom Ltd. 40,343,783 638,000 Toronto-Dominion Bank 23,383,977 -------------- 132,416,624 Chile (0.2%) - ------------------------------------------------------------------------------------------------------------ 230,500 Compania de Tele Chile ADS 6,396,375 55,200 Distribucion y Servicio D&S S.A. ADR + 969,450 -------------- 7,365,825 China (--%) - ------------------------------------------------------------------------------------------------------------ 1,000,000 Guangdong Kelon Elec Holding 1,268,034 Finland (1.7%) - ------------------------------------------------------------------------------------------------------------ 783,000 Enso Oy Class R 7,334,009 505,900 Oy Nokia AB Class A 44,161,221 992,600 UPM-Kymmene Oyj 22,064,168 -------------- 73,559,398 France (4.3%) - ------------------------------------------------------------------------------------------------------------ 4,323,600 Ayala Land, Inc. Class B 1,703,424 94,577 L'OREAL 33,406,844 586,400 SGS-Thomson Microelectronics ADR + 41,781,000 569,400 Total S.A. Class B 62,974,751 717,454 Valeo S.A. 47,696,363 -------------- 187,562,382 Germany (5.0%) - ------------------------------------------------------------------------------------------------------------ 176,130 Adidas AG 25,475,035 108,300 Adidas AG 144A 15,692,513 70,755 Bayerische Motoren Werke (BMW) AG 51,148,687 392,711 Deutsche Bank AG 25,679,884 120,110 Mannesmann AG 50,689,901 184,190 SAP AG 52,801,133 -------------- 221,487,153 Hong Kong (1.4%) - ------------------------------------------------------------------------------------------------------------ 250,000 Asia Satellite Telecommunications Holdings Ltd. 601,669 2,114,000 Beijing Datang Power Generation Co., Ltd. Class H + 1,066,779 1,346,000 Cheung Kong Holdings Ltd. 9,361,131 860,000 Cheung Kong Infrastructure Holdings 2,225,529 276,000 China Resources Enterprise Ltd. 757,094 824,000 Guangnan Holdings 756,990 191,200 Guoco Group Ltd. 417,928 132,000 Hutchison Whampoa, Ltd. 913,761 15,507,000 National Mutual Asia Ltd. 14,045,286 999,400 New World Infrastructure Ltd. + 1,978,498 930,000 Ng Fung Hong Ltd. 872,420 3,373,000 Sun Hung Kai Properties Ltd. 24,876,883 906,000 Television Broadcasts Ltd. 2,520,411 -------------- 60,394,379 Hungary (0.1%) - ------------------------------------------------------------------------------------------------------------ 186,500 MOL Magyar Olaj-es 144A GDR 3,986,438 India (0.4%) - ------------------------------------------------------------------------------------------------------------ 98,000 BSES Ltd. GDR + 1,582,700 260,000 Gujarat Ambuja Cements Ltd. GDR + 2,080,000 120,000 Hindalco Industries Ltd. 3,137,190 73,000 Hindustan Petroleum Corp. Ltd. GDR 960,262 321,000 Mahanagar Telephone Nigam Ltd. 2,239,484 75,000 Ranbaxy Laboratories Ltd. 1,462,810 64,000 State Bank of India 144A GDR 1,144,000 102,000 State Bank of India Ltd. 739,008 156,000 Tata Engineering and Locomotive Co., Ltd. 1,368,760 95,680 Tata Engineering and Locomotive Co., Ltd. GDR 144A 956,800 76,300 Videsh Sanchar Nigam Ltd. GDR + 1,030,050 -------------- 16,701,064 Indonesia (0.2%) - ------------------------------------------------------------------------------------------------------------ 700,000 PT Astra International Inc. 523,045 645,000 PT Daya Guna Samudera 837,781 400,000 PT Gudang Garam 1,139,666 2,100,000 PT Indah Kiat Pulp & Paper Corp. 806,565 3,074,500 PT Indah Kiat Pulp & Paper Corp. Class F 1,180,850 412,000 PT Indosat ADR 935,057 217,500 PT London Sumatra Indonesia 235,423 830,000 PT Ramayana Lestari Sentosa 1,414,248 146,900 PT Telekomunikasi Indonesia ADR 2,855,369 -------------- 9,928,004 Israel (0.2%) - ------------------------------------------------------------------------------------------------------------ 1,057,000 Bank Hapoalim Ltd. + 2,498,945 733,000 Supersol Ltd. 2,101,926 86,000 Supersol Ltd. ADR + 1,268,500 83,500 Tadiran Ltd. 3,020,650 36,500 Tefron Ltd. + 700,344 -------------- 9,590,365 Italy (2.7%) - ------------------------------------------------------------------------------------------------------------ 6,177,000 Credito Italiano SPA 16,456,275 7,888,100 Ente Nazionale Idrocarburi SPA ADR + 44,310,386 888,000 La Rinascente SPA 6,575,865 6,821,000 Telecom Italia Mobile SPA 25,275,739 4,038,300 Telecom Italia SPA 25,281,924 -------------- 117,900,189 Japan (10.9%) - ------------------------------------------------------------------------------------------------------------ 93,700 Acom Co. Ltd. 144A 5,147,066 416,000 Acom Co. Ltd. 22,851,436 384,902 AFLAC Inc. 19,581,889 1,724,000 Canon, Inc. 41,898,295 426,500 Hirose Electric Co. Ltd. 27,865,378 405,000 Hoya Corp. 14,089,888 175,400 Keyence Corp 26,277,155 4,129,000 NEC Corp. 45,362,299 227,000 Promise Co. Ltd. 13,300,708 2,744,000 Ricoh Co., Ltd. 35,399,086 236,000 Rohm Co. Ltd. 23,374,117 707,000 Sankyo Co., Ltd. 23,360,717 762,000 Shin-Etsu Chemical Co. 18,645,694 4,020,000 Shiseido Co., Ltd. 54,871,412 94,000 Shohkoh Fund & Co., Ltd. 30,511,861 347,900 Sony Corp. 28,926,518 647,000 Tokyo Broadcasting System 11,092,968 757,900 Tokyo Electron Ltd. 37,847,692 -------------- 480,404,179 Lebanon (0.1%) - ------------------------------------------------------------------------------------------------------------ 107,200 Commerce Bank of Lebanon 144A GDR 2,342,320 Malaysia (0.1%) - ------------------------------------------------------------------------------------------------------------ 605,000 Berjaya Sports Toto Berhad 1,643,433 263,000 Malakoff Berhard 628,060 235,100 Malaysian Assurance Alliance + 421,075 937,000 Perusahaan Otomobil Nasional Berhad 2,237,612 23,000 Tan Chong Motor Holdings Berhad 13,113 -------------- 4,943,293 Mexico (0.9%) - ------------------------------------------------------------------------------------------------------------ 300,000 Cemex S.A. de C.V. 1,164,875 895,000 Cemex S.A. de C.V. Class B + 3,935,006 1,300,000 Cifra S.A. de CV Class B 2,587,575 1,388,200 Corporacion Moctezuma, S.A. de C.V. 1,575,615 837,000 Fomento Economico Mexicano, S.A. de C.V. Class B 5,900,000 142,200 Grupo Accion, S.A. de C.V. 144A ADR + 1,422,000 188,600 Grupo Imsa S.A. de C.V. ADR + 4,491,038 145,000 Grupo Televisa S.A.GDR 4,495,000 1,067,400 Kimberly-Clark de Mexico, S.A. de C.V. Class A 4,641,978 222,600 Panamerican Beverages, Inc. Class A 6,900,600 97,700 Telefonos de Mexico S.A. ADR Class L 4,225,525 -------------- 41,339,212 Netherlands (3.4%) - ------------------------------------------------------------------------------------------------------------ 418,000 Aegon N.V. 32,830,595 413,300 ASM Lithography Holding N.V. + 29,915,452 551,104 Getronics Electric N.V. 18,134,377 759,919 Internationale Nederlanden Groep 31,793,326 539,700 Ispat International NV + 13,714,143 188,400 Wolters Kluwer N.V. 23,056,756 -------------- 149,444,649 New Zealand (0.9%) - ------------------------------------------------------------------------------------------------------------ 8,065,400 Telecom Corp. of New Zealand Ltd. 38,985,837 Pakistan (--%) - ------------------------------------------------------------------------------------------------------------ 30 Pakistan State Oil 318 Philippines (0.2%) - ------------------------------------------------------------------------------------------------------------ 13,943,300 Belle Corp. + 1,278,469 150,000 Benpres Holdings Corp. GDR + 525,000 3,202,400 Fil-Estate Land, Inc. 189,024 8,509,900 International Container Terminal Services, Inc. 1,706,857 505,000 Manila Electric Co. Class B 1,562,751 13,000 Philippine Long Distance Telephone Co. 325,931 74,400 Philippine Long Distance Telephone Co. ADR 1,804,200 11,220,000 SM Prime Holdings Inc. 1,993,238 -------------- 9,385,470 Poland (0.1%) - ------------------------------------------------------------------------------------------------------------ 41,100 Bank Handlowy 144A + 552,724 291,000 KGHM Polska Miedz S.A. GDR + 2,851,800 -------------- 3,404,524 Portugal (1.4%) - ------------------------------------------------------------------------------------------------------------ 125,000 Colep-Companhia Portuguesa de Embalagens + 1,804,532 54,600 Electricidade de Portugal S.A. 955,886 111,200 Investec Consultadoria International S.A. + 3,465,154 1,241,900 Portugal Telecom S.A. 50,766,599 35,500 Telecel-Comunicacaoes Pessoais, S.A. + 3,195,000 -------------- 60,187,171 Russia (0.4%) - ------------------------------------------------------------------------------------------------------------ 2,000 AO Tatneft ADR 287,000 44,500 AO Tatneft 144A ADR 6,385,750 47,000 Lukoil Holding ADR 3,901,000 78,000 Mosenergo 144A ADR 3,276,000 11,400,000 Unified Energy Systems 3,534,000 -------------- 17,383,750 Singapore (0.3%) - ------------------------------------------------------------------------------------------------------------ 3,635,600 Overseas Union Bank Ltd. 12,134,077 South Africa (0.5%) - ------------------------------------------------------------------------------------------------------------ 1,171,000 Billiton PLC + 3,431,948 76,100 Energy Africa Ltd. 144A + 1,978,600 596,000 First National Bank Holdings Ltd. 4,503,139 193,280 Gencor Ltd. 433,886 128,000 Liberty Life Association of Africa Ltd. 3,192,683 1,488,000 Lonrho PLC 2,397,007 438,400 Sasol Ltd. 5,285,221 -------------- 21,222,484 South Korea (--%) - ------------------------------------------------------------------------------------------------------------ 83,800 Housing & Commercial Bank (GDR) + 733,250 75,002 Kookmin Bank 144A GDR + 468,763 2,648 SK Telecom Co., Ltd. 887,745 -------------- 2,089,758 Spain (0.6%) - ------------------------------------------------------------------------------------------------------------ 68,960 Banco de Bilbao Vizcaya 1,838,618 543,700 Gas Natural SDG, S.A. Class E 25,116,780 -------------- 26,955,398 Sweden (0.9%) - ------------------------------------------------------------------------------------------------------------ 929,105 Telefonaktiebolaget LM Ericsson Class B 40,861,551 Switzerland (2.7%) - ------------------------------------------------------------------------------------------------------------ 41,321 Nestle S.A. 58,104,435 8,417 Novartis AG ADR 13,155,499 181,510 Schweizerischer Bankverein 48,705,378 -------------- 119,965,312 Taiwan (0.4%) - ------------------------------------------------------------------------------------------------------------ 115,800 @Entertainment, Inc. + 1,331,700 1,173,750 Acer Inc. + 1,626,373 54,000 Ase Test Limited + 2,956,500 80,000 Asustek Computer, Inc. + 1,014,379 335,000 Aurora Corp. + 574,755 2,287,800 Bank Sinopac + 1,682,206 177,000 China Steel Corp. GDR 2,522,250 108,150 Chung Hwa Pulp Corp. + 60,083 469,000 Delta Electronics, Inc. 1,509,690 120,000 Siliconware Precision Industries Co. GDR + 1,155,000 2,400,000 U-Ming Marine Transport Corp. 1,427,451 55,750 Yieh Phui Enterprise 31,519 -------------- 15,891,906 Thailand (0.1%) - ------------------------------------------------------------------------------------------------------------ 162,000 Advanced Info Service Public Co., Ltd. 853,463 522,300 Electricity Generating Public Co. Ltd. 853,514 892,400 Industrial Finance Corp. of Thailand (The) 740,039 132,000 PTT Exploration & Production PLC 1,320,000 -------------- 3,767,016 Turkey (0.2%) - ------------------------------------------------------------------------------------------------------------ 252,700 Haci Omer Sabanci Holdings ADR + 3,285,100 125,300 Yapi ve Kredi Bankasi A.S. + 3,759,000 -------------- 7,044,100 United Kingdom (15.8%) - ------------------------------------------------------------------------------------------------------------ 2,448,300 Argos PLC 25,895,653 4,764,000 British Airways PLC 46,439,081 2,747,500 Compass Group PLC 29,244,363 1,673,981 Dixons Group PLC 19,542,143 2,840,000 Electrocomponents PLC 21,999,812 4,656,600 Enterprise Oil PLC 51,943,618 2,090,054 Glaxo Wellcome PLC 44,738,070 2,296,197 Granada Group PLC 31,613,301 1,802,400 HSBC Holdings PLC 44,829,770 166,000 Ramco Energy PLC ADR 2,261,750 3,810,000 Reuters Holdings PLC ADR 41,287,457 3,310,657 Rio Tinto PLC 42,585,749 1,339,000 Royal & Sun Alliance Insurance Group PLC 12,816,980 1,572,400 SEMA Group PLC 35,264,075 2,077,200 Siebe PLC 39,835,721 7,783,096 SmithKline Beecham PLC ADR 73,652,877 2,690,000 Smiths Industries PLC 38,972,411 3,072,000 Unilever PLC 22,845,100 11,975,213 Vodafone Group PLC 65,186,171 -------------- 690,954,102 United States (34.0%) - ------------------------------------------------------------------------------------------------------------ 325,000 Adaptec, Inc. + 15,742,188 429,100 AES Corp. + 17,003,088 373,900 American Express Co. 29,164,200 215,250 American International Group, Inc. 21,968,953 304,400 Apollo Group, Inc. Class A + 12,860,900 272,500 BMC Software, Inc. + 16,452,188 517,400 Bristol-Myers Squibb Co. 45,401,850 398,900 Campbell Soup Co. 20,568,281 273,150 Cardinal Health, Inc. 20,281,388 242,300 Cisco Systems, Inc. + 19,876,172 116,400 Citicorp 14,557,275 220,200 Clorox Co. 15,414,000 817,600 Coca-Cola Enterprises, Inc. 22,995,000 250,200 Colgate-Palmolive Co. 16,200,450 339,950 Compaq Computer Corp. 21,671,813 300,800 Computer Associates Intl., Inc. 22,428,400 271,500 Compuware Corp. + 17,952,938 713,600 ConAgra, Inc. 21,497,200 383,475 Consolidated Stores Corp. + 15,291,066 502,900 Costco Companies, Inc. + 19,361,650 450,779 CVS Corp. 27,638,387 136,800 Data General Corp. 2,633,400 304,100 Dayton Hudson Corp. 19,101,281 223,800 Diebold, Inc. 9,861,188 181,700 Electronics for Imaging, Inc. + 8,494,475 352,900 EMC Corp. + 19,762,400 159,950 Franklin Resources, Inc. 14,375,506 226,500 Gannett Co., Inc. 11,905,406 1,161,200 General Electric Co. 74,969,975 513,500 Halliburton Co. 30,617,438 413,400 HBO & Co. 17,982,900 778,100 HEALTHSOUTH Corp. + 19,890,181 226,500 Herman Miller, Inc. 11,070,188 617,700 Intel Corp. 47,562,900 268,600 Interpublic Group Cos. Inc. 12,758,500 254,100 Jones Apparel Group, Inc. + 12,927,338 332,500 KLA Instruments Corp. + 14,609,219 467,400 Lilly (Eli) & Co. 31,257,375 293,600 Lucent Technologies, Inc. 24,203,650 222,500 Marriott International, Inc. 15,519,375 175,100 Masco Corp. 7,682,513 690,225 MBNA Corp. 18,161,545 256,200 Merck & Co., Inc. 22,865,850 343,600 Microsoft Corp. + 44,668,000 334,400 Motorola, Inc. 20,649,200 434,800 National Semiconductor Corp. + 15,652,800 649,900 Omnicare, Inc. 18,075,344 362,100 Parametric Technology Corp. + 15,977,663 371,300 Paychex, Inc. 14,155,813 160,600 Payless Shoesource, Inc. + 8,953,450 319,900 PeopleSoft, Inc. + 20,113,713 641,200 PepsiCo, Inc. 23,604,175 387,100 Pfizer, Inc. 27,387,325 629,300 Procter & Gamble Co. 42,792,400 250,200 Quintiles Transnational Corp. + 18,139,500 564,800 Quorum Health Group, Inc. + 13,696,400 293,600 Rite Aid Corp. 17,432,500 411,500 Schering-Plough Corp. 23,069,719 387,000 SCI Systems, Inc. + 17,028,000 339,700 Solectron Corp. + 13,333,225 432,500 SunAmerica, Inc. 15,542,969 316,000 Tellabs, Inc. + 17,064,000 445,200 Teradyne, Inc. + 16,667,175 339,700 Tiffany & Co. 13,418,150 641,200 TJX Cos., Inc. (The) 18,995,550 342,300 Tosco Corp. 11,295,900 264,633 Travelers Group Inc. 18,524,310 309,400 USA Waste Services, Inc. + 11,447,800 621,400 Wal-Mart Stores, Inc. 21,826,675 526,600 Walgreen Co. 14,810,625 235,700 Warner-Lambert Co. 33,749,294 238,300 Washington Mutual, Inc. 16,308,656 235,700 Western Atlas, Inc. + 20,314,394 919,000 Westinghouse Electric Corp. 24,296,063 -------------- 1,491,530,778 -------------- Total Common Stocks (cost $3,986,877,115) $4,261,004,116 CONVERTIBLE BONDS AND NOTES (0.2%) * PRINCIPAL AMOUNT VALUE - ------------------------------------------------------------------------------------------------------------ $4,200,000 Alfa S.A. 144A cv. sub. notes 8s, 2000 (Mexico) $ 6,489,000 1,901,000 Qingling Motors Co., Ltd. 144A cv. bonds 3 1/2s, 2002 (China) 2,110,110 -------------- Total Convertible Bonds and Notes (cost $7,276,446) $ 8,599,110 PREFERRED STOCKS (0.2%) * NUMBER OF SHARES VALUE - ------------------------------------------------------------------------------------------------------------ 5,900 Banco Itau S.A. BRC 16.02 No par value (NPV) pfd. (Brazil) $ 2,381,406 23,200 Petroleo Brasileiro S.A. BRC 6.258 NPV pfd. (Brazil) 4,313,832 -------------- Total Preferred Stocks (cost $6,702,103) $ 6,695,238 INVESTMENT FUNDS (0.1%) * NUMBER OF SHARES VALUE - ------------------------------------------------------------------------------------------------------------ 148,000 Fleming Russia Securities Fund Ltd. (Russia) + $ 3,256,000 21,800 India Magnum Fund Class A (India) + 1,013,700 -------------- Total Investment Funds (cost $3,338,440) $ 4,269,700 WARRANTS (--%)*+ (cost $--) EXPIRATION NUMBER OF WARRANTS DATE VALUE - ------------------------------------------------------------------------------------------------------------ 2,788,660 Belle Corp. (Phillipines) 9/11/00 $ 519 SHORT-TERM INVESTMENTS (1.4%) *(cost $62,418,795) PRINCIPAL AMOUNT VALUE - ------------------------------------------------------------------------------------------------------------ $62,409,000 Interest in $269,350,000 joint repurchase agreement dated October 31, 1997 with SBC Warburg due November 3,1997 with respect to various U.S. Treasury obligations -- maturity value of $62,438,384 for an effective yield of 5.65% $ 62,418,795 - ------------------------------------------------------------------------------------------------------------ Total Investments (cost $4,066,612,899) *** $4,342,987,478 - ------------------------------------------------------------------------------------------------------------ * Percentages indicated are based on net assets of $4,383,810,494. *** The aggregate identified cost on a tax basis is $4,086,738,259, resulting in gross unrealized appreciation and depreciation of $493,814,734 and $237,565,515, respectively, or net unrealized appreciation of $256,249,219. + Non-income-producing security. 144A after the name of a security represents those exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. ADR, ADS or GDR after the name of a foreign holding stands for American Depository Receipts, American Depository Shares or Global Depository Receipts, respectively, representing ownership of foreign securities on deposit with a domestic custodian bank. The fund had the following industry group concentrations greater than 10% at October 31, 1997 (as a percentage of net assets): Insurance and Finance 14.1% Electronics and Electrical Equipment 12.5
- ---------------------------------------------------------------------------------------- Forward Currency Contracts to Sell at October 31,1997 (aggregate face value $372,440,595) Market Aggregate Face Delivery Appreciation/ Value Value Date (Depreciation) - ---------------------------------------------------------------------------------------- British Pounds $212,445,095 $200,673,845 11/14/97 $(11,771,250) Japanese Yen 164,497,192 171,766,750 11/14/97 7,269,558 - ---------------------------------------------------------------------------------------- $ (4,501,692) - ---------------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements.
Statement of assets and liabilities October 31, 1997 Assets - --------------------------------------------------------------------------------------------------- Investments in securities, at value (identified cost $4,066,612,899) (Note 1) $4,342,987,478 - --------------------------------------------------------------------------------------------------- Cash 383,592 - --------------------------------------------------------------------------------------------------- Foreign currency (cost $4,099,041) 3,983,522 - --------------------------------------------------------------------------------------------------- Dividends and interest receivable 8,957,422 - --------------------------------------------------------------------------------------------------- Receivable for shares of the fund sold 10,969,038 - --------------------------------------------------------------------------------------------------- Receivable for securities sold 128,519,133 - --------------------------------------------------------------------------------------------------- Receivable for open forward currency contracts 7,269,558 - --------------------------------------------------------------------------------------------------- Receivable for closed forward currency contracts 3,486,275 - --------------------------------------------------------------------------------------------------- Total assets 4,506,556,018 Liabilities - --------------------------------------------------------------------------------------------------- Payable for securities purchased 94,293,548 - --------------------------------------------------------------------------------------------------- Payable for shares of the fund repurchased 4,651,686 - --------------------------------------------------------------------------------------------------- Payable for compensation of Manager (Note 2) 7,484,693 - --------------------------------------------------------------------------------------------------- Payable for investor servicing and custodian fees (Note 2) 1,111,313 - --------------------------------------------------------------------------------------------------- Payable for compensation of Trustees (Note 2) 73,248 - --------------------------------------------------------------------------------------------------- Payable for administrative services (Note 2) 3,155 - --------------------------------------------------------------------------------------------------- Payable for distribution fees (Note 2) 2,140,082 - --------------------------------------------------------------------------------------------------- Payable for open forward currency contracts 11,771,250 - --------------------------------------------------------------------------------------------------- Payable for closed forward currency contracts 1,033,150 - --------------------------------------------------------------------------------------------------- Other accrued expenses 183,399 - --------------------------------------------------------------------------------------------------- Total liabilities 122,745,524 - --------------------------------------------------------------------------------------------------- Net assets $4,383,810,494 Represented by - --------------------------------------------------------------------------------------------------- Paid-in capital (Notes 1 and 4) $3,322,667,726 - --------------------------------------------------------------------------------------------------- Undistributed net investment income (Note 1) 84,713,761 - --------------------------------------------------------------------------------------------------- Accumulated net realized gain on investments and foreign currency transactions (Note 1) 704,748,625 - --------------------------------------------------------------------------------------------------- Net unrealized appreciation of investments and assets and liabilities in foreign currencies 271,680,382 - --------------------------------------------------------------------------------------------------- Total -- Representing net assets applicable to capital shares outstanding $4,383,810,494 Computation of net asset value and offering price - --------------------------------------------------------------------------------------------------- Net asset value and redemption price per class A share ($2,628,933,168 divided by 219,025,915 shares) $12.00 - --------------------------------------------------------------------------------------------------- Offering price per class A share (100/94.25 of $12.00)* $12.73 - --------------------------------------------------------------------------------------------------- Net asset value and offering price per class B share ($1,664,215,132 divided by 143,241,908 shares)** $11.62 - --------------------------------------------------------------------------------------------------- Net asset value and redemption price per class M share ($43,662,133 divided by 3,668,503) $11.90 - --------------------------------------------------------------------------------------------------- Offering price per class M share (100/96.50 of $11.90)* $12.33 - --------------------------------------------------------------------------------------------------- Net asset value, offering price and redemption price per class Y share ($47,000,061 divided by 3,861,684) $12.17 - --------------------------------------------------------------------------------------------------- * 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, 1997 Investment income: - -------------------------------------------------------------------------------------------------- Dividends (net of foreign tax of $4,317,707) $ 56,706,645 - -------------------------------------------------------------------------------------------------- Interest 6,806,968 - -------------------------------------------------------------------------------------------------- Total investment income 63,513,613 Expenses: - -------------------------------------------------------------------------------------------------- Compensation of Manager (Note 2) 27,176,359 - -------------------------------------------------------------------------------------------------- Investor servicing and custodian fees (Note 2) 12,854,671 - -------------------------------------------------------------------------------------------------- Compensation of Trustees (Note 2) 128,958 - -------------------------------------------------------------------------------------------------- Administrative services (Note 2) 38,368 - -------------------------------------------------------------------------------------------------- Distribution fees -- Class A (Note 2) 6,351,743 - -------------------------------------------------------------------------------------------------- Distribution fees -- Class B (Note 2) 15,821,816 - -------------------------------------------------------------------------------------------------- Distribution fees -- Class M (Note 2) 271,415 - -------------------------------------------------------------------------------------------------- Reports to shareholders 422,747 - -------------------------------------------------------------------------------------------------- Registration fees 137,321 - -------------------------------------------------------------------------------------------------- Auditing 107,808 - -------------------------------------------------------------------------------------------------- Legal 41,206 - -------------------------------------------------------------------------------------------------- Postage 655,760 - -------------------------------------------------------------------------------------------------- Other 293,015 - -------------------------------------------------------------------------------------------------- Total expenses 64,301,187 - -------------------------------------------------------------------------------------------------- Expense reduction (Note 2) (2,005,174) - -------------------------------------------------------------------------------------------------- Net expenses 62,296,013 - -------------------------------------------------------------------------------------------------- Net investment income 1,217,600 - -------------------------------------------------------------------------------------------------- Net realized gain on investments (Notes 1 and 3) 727,145,124 - -------------------------------------------------------------------------------------------------- Net realized gain on foreign currency transactions (Note 1) 98,481,300 - -------------------------------------------------------------------------------------------------- Net unrealized depreciation of assets and liabilities in foreign currencies during the year (19,192,119) - -------------------------------------------------------------------------------------------------- Net unrealized depreciation of investments during the year (210,524,809) - -------------------------------------------------------------------------------------------------- Net gain on investments 595,909,496 - -------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations $597,127,096 - -------------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements.
Statement of changes in net assets Year ended October 31 --------------------------------- 1997 1996 - ---------------------------------------------------------------------------------------------------------------------- Increase in net assets - ---------------------------------------------------------------------------------------------------------------------- Operations: - ---------------------------------------------------------------------------------------------------------------------- Net investment income $ 1,217,600 $ 18,142,868 - ---------------------------------------------------------------------------------------------------------------------- Net realized gain on investments and foreign currency transactions 825,626,424 253,869,045 - ---------------------------------------------------------------------------------------------------------------------- Net unrealized appreciation (depreciation) of investments and assets and liabilities in foreign currencies (229,716,928) 180,077,125 - ---------------------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 597,127,096 452,089,038 - ---------------------------------------------------------------------------------------------------------------------- Distributions to shareholders: - ---------------------------------------------------------------------------------------------------------------------- From net investment income Class A (54,577,493) (29,547,833) - ---------------------------------------------------------------------------------------------------------------------- Class B (25,358,432) (11,187,413) - ---------------------------------------------------------------------------------------------------------------------- Class M (590,659) (95,055) - ---------------------------------------------------------------------------------------------------------------------- Class Y (1,800,840) (836,209) - ---------------------------------------------------------------------------------------------------------------------- From net realized gain on investments Class A (108,162,646) (68,153,175) - ---------------------------------------------------------------------------------------------------------------------- Class B (68,080,503) (40,919,727) - ---------------------------------------------------------------------------------------------------------------------- Class M (1,292,807) (292,366) - ---------------------------------------------------------------------------------------------------------------------- Class Y (3,260,656) (1,697,504) - ---------------------------------------------------------------------------------------------------------------------- Increase from capital share transactions (Note 4) 445,247,957 591,315,666 - ---------------------------------------------------------------------------------------------------------------------- Total increase in net assets 779,251,017 890,675,422 Net assets - ---------------------------------------------------------------------------------------------------------------------- Beginning of year 3,604,559,477 2,713,884,055 - ---------------------------------------------------------------------------------------------------------------------- End of year (including undistributed net investment income of $84,713,761 and $66,835,636, respectively) $4,383,810,494 $3,604,559,477 - ---------------------------------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements.
Financial highlights (For a share outstanding throughout the period) CLASS A - ------------------------------------------------------------------------------------------------------------------------------------ Per-share operating performance Year ended October 31 - ------------------------------------------------------------------------------------------------------------------------------------ 1997 1996 1995 1994 1993 - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $11.10 $10.13 $9.92 $9.30 $7.25 - ------------------------------------------------------------------------------------------------------------------------------------ Investment operations - ------------------------------------------------------------------------------------------------------------------------------------ Net investment (loss) income .04 (b) .09 (b) .09 .02 .07 - ------------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain on investments 1.68 1.47 .43 .77 2.06 - ------------------------------------------------------------------------------------------------------------------------------------ Total from investment operations 1.72 1.56 .52 .79 2.13 - ------------------------------------------------------------------------------------------------------------------------------------ Less distributions: - ------------------------------------------------------------------------------------------------------------------------------------ From net investment income (.27) (.18) (.01) -- (.07) - ------------------------------------------------------------------------------------------------------------------------------------ From net realized gain on investments (.55) (.41) (.30) (.17) (.01) - ------------------------------------------------------------------------------------------------------------------------------------ Total distributions (.82) (.59) (.31) (.17) (.08) - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $12.00 $11.10 $10.13 $9.92 $9.30 - ------------------------------------------------------------------------------------------------------------------------------------ Ratios and supplemental data - ------------------------------------------------------------------------------------------------------------------------------------ Total investment return at net asset value (%)(a) 16.40 16.10 5.64 8.62 29.62 - ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $2,628,933 $2,186,426 $1,689,656 $1,507,550 $940,985 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets (%)(c) 1.24 1.27 1.28 1.33 1.39 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net investment income to average net assets (%) .31 .84 1.05 .83 .85 - ------------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover (%) 154.98 72.88 63.31 17.45 49.53 - ------------------------------------------------------------------------------------------------------------------------------------ Average commission rate paid (d) $.0241 $.0298 - ------------------------------------------------------------------------------------------------------------------------------------ + Commencement of operations. * Not annualized. (a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges. (b) Per share net investment income (loss) 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.
Financial highlights (For a share outstanding throughout the period) CLASS B - ------------------------------------------------------------------------------------------------------------------------------------ Per-share operating performance Year ended October 31 - ------------------------------------------------------------------------------------------------------------------------------------ 1997 1996 1995 1994 1993 - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $10.78 $9.86 $9.74 $9.19 $7.22 - ------------------------------------------------------------------------------------------------------------------------------------ Investment operations - ------------------------------------------------------------------------------------------------------------------------------------ Net investment (loss) income (.05)(b) .01 (b) .03 .01 .05 - ------------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain on investments 1.64 1.43 .40 .71 1.99 - ------------------------------------------------------------------------------------------------------------------------------------ Total from investment operations 1.59 1.44 .43 .72 2.04 - ------------------------------------------------------------------------------------------------------------------------------------ Less distributions: - ------------------------------------------------------------------------------------------------------------------------------------ From net investment income (.20) (.11) (.01) -- (.06) - ------------------------------------------------------------------------------------------------------------------------------------ From net realized gain on investments (.55) (.41) (.30) (.17) (.01) - ------------------------------------------------------------------------------------------------------------------------------------ Total distributions (.75) (.52) (.31) (.17) (.07) - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $11.62 $10.78 $9.86 $9.74 $9.19 - ------------------------------------------------------------------------------------------------------------------------------------ Ratios and supplemental data - ------------------------------------------------------------------------------------------------------------------------------------ Total investment return at net asset value (%)(a) 15.54 15.25 4.80 7.95 28.44 - ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $1,664,215 $1,327,246 $975,794 $801,443 $233,195 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets (%)(c) 1.99 2.02 2.04 2.11 2.09 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net investment income to average net assets (%) (.45) .09 .29 .12 .23 - ------------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover (%) 154.98 72.88 63.31 17.45 49.53 - ------------------------------------------------------------------------------------------------------------------------------------ Average commission rate paid (d) $.0241 $.0298 - ------------------------------------------------------------------------------------------------------------------------------------ + Commencement of operations. * Not annualized. (a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges. (b) Per share net investment income (loss) 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.
Financial highlights (For a share outstanding throughout the period) CLASS M - ------------------------------------------------------------------------------------------------------------------------------------ For the period Per-share March 1, 1995+ operating performance Year ended October 31 to October 31 - ------------------------------------------------------------------------------------------------------------------------------------ 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $11.05 $10.09 $8.86 - ------------------------------------------------------------------------------------------------------------------------------------ Investment operations - ------------------------------------------------------------------------------------------------------------------------------------ Net investment (loss) income (.02)(b) .03 (b) .01 - ------------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain on investments 1.66 1.47 1.22 - ------------------------------------------------------------------------------------------------------------------------------------ Total from investment operations 1.64 1.50 1.23 - ------------------------------------------------------------------------------------------------------------------------------------ Less distributions: - ------------------------------------------------------------------------------------------------------------------------------------ From net investment income (.24) (.13) -- - ------------------------------------------------------------------------------------------------------------------------------------ From net realized gain on investments (.55) (.41) -- - ------------------------------------------------------------------------------------------------------------------------------------ Total distributions (.79) (.54) -- - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $11.90 $11.05 $10.09 - ------------------------------------------------------------------------------------------------------------------------------------ Ratios and supplemental data - ------------------------------------------------------------------------------------------------------------------------------------ Total investment return at net asset value (%)(a) 15.72 15.54 13.88* - ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $43,662 $24,179 $5,853 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets (%)(c) 1.74 1.80 1.23* - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net investment income to average net assets (%) (.21) .32 .17* - ------------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover (%) 154.98 72.88 63.31 - ------------------------------------------------------------------------------------------------------------------------------------ Average commission rate paid (d) $.0241 $.0298 - ------------------------------------------------------------------------------------------------------------------------------------ + Commencement of operations. * Not annualized. (a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges. (b) Per share net investment income (loss) 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.
Financial highlights (For a share outstanding throughout the period) CLASS Y - ------------------------------------------------------------------------------------------------------------------------------------ For the period Per-share June 15, 1994+ operating performance Year ended October 31 to October 31 - ------------------------------------------------------------------------------------------------------------------------------------ 1997 1996 1995 1994 - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $11.24 $10.25 $10.00 $9.46 - ------------------------------------------------------------------------------------------------------------------------------------ Investment operations - ------------------------------------------------------------------------------------------------------------------------------------ Net investment (loss) income .08 (b) .12 (b) .09 .01 - ------------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain on investments 1.70 1.48 .47 .53 - ------------------------------------------------------------------------------------------------------------------------------------ Total from investment operations 1.78 1.60 .56 .54 - ------------------------------------------------------------------------------------------------------------------------------------ Less distributions: - ------------------------------------------------------------------------------------------------------------------------------------ From net investment income (.30) (.20) (.01) -- - ------------------------------------------------------------------------------------------------------------------------------------ From net realized gain on investments (.55) (.41) (.30) -- - ------------------------------------------------------------------------------------------------------------------------------------ Total distributions (.85) (.61) (.31) -- - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $12.17 $11.24 $10.25 $10.00 - ------------------------------------------------------------------------------------------------------------------------------------ Ratios and supplemental data - ------------------------------------------------------------------------------------------------------------------------------------ Total investment return at net asset value (%)(a) 16.75 16.39 6.00 5.71* - ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $47,000 $66,708 $42,582 $29,396 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets (%)(c) .99 1.02 1.06 .37* - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net investment income to average net assets (%) .69 1.09 1.20 .42* - ------------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover (%) 154.98 72.88 63.31 17.45 - ------------------------------------------------------------------------------------------------------------------------------------ Average commission rate paid (d) $.0241 $.0298 - ------------------------------------------------------------------------------------------------------------------------------------ + Commencement of operations. * Not annualized. (a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges. (b) Per share net investment income (loss) 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, 1997 Note 1 Significant accounting policies Putnam Global Growth Fund (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 shares, class B shares and class M shares, but do not bear a distribution fee. Class Y shares are sold to defined contribution plans that invest at least $250 million in a combination of Putnam Funds and other accounts managed by affiliates of Putnam Management. 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 the fund were liquidated. In addition, the Trustees declare separate dividends on each class of shares. The following is a summary of significant accounting policies consistently followed by the fund in the preparation of its financial statements. The 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 gains and losses are included with the net realized and unrealized gain or loss on investments. Net realized gains and losses on foreign currency transactions represent net exchange gains or losses on closed forward currency contracts, disposition of foreign currencies and the difference between the amount of investment income and foreign withholding taxes recorded on the fund's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized appreciation and depreciation of assets and liabilities in foreign currencies arise from changes in the value of open forward currency contracts and assets and liabilities other than investments at the period end, resulting from changes in the exchange rate. F) Forward currency contracts The fund may engage in forward currency contracts, which are agreements between two parties to buy and sell currencies at a set price on a future date, to protect against a decline in value relative to the U.S. dollar of the currencies in which its portfolio securities are denominated or quoted (or an increase in the value of a currency in which securities a fund intends to buy are denominated, when a fund holds cash reserves and short-term investments). The U.S. dollar value of forward currency contracts is determined using current forward currency exchange rates supplied by a quotation service. The market value of the contract will fluctuate with changes in currency exchange rates. The contract is "marked to market" daily and the change in market value is recorded as an unrealized gain or loss. When the contract is closed, the fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. The fund could be exposed to risk if the value of the currency changes unfavorably, if the counterparties to the contracts are unable to meet the terms of their contracts or if the fund is unable to enter into a closing position. G) Line of credit The fund has entered into a committed line of credit with certain banks. This line of credit agreement includes restrictions that the fund maintain an asset coverage ratio of at least 300% and borrowings must not exceed prospectus limitations. For the year ended October 31, 1997, the fund had no borrowings against the line of credit. H) Federal taxes It is the policy of the fund to distribute all of its taxable income within the prescribed time and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. It is also the intention of the fund to distribute an amount sufficient to avoid imposition of any excise tax under Section 4982 of the Internal Revenue Code of 1986, as amended. Therefore, no provision has been made for federal taxes on income, capital gains or unrealized appreciation on securities held nor for excise tax on income and capital gains. I) Distributions to shareholders Distributions to shareholders from net investment income are recorded by the fund on the ex-dividend date. Capital gain distributions, if any, are recorded on the ex-dividend date and paid at least annually. The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. These differences include temporary and permanent differences 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 under income tax regulations. For the year ended October 31, 1997, the fund reclassified $98,987,949 to increase undistributed net investment income and $9,227,065 to increase paid-in-capital, with a decrease to accumulated net realized gain on investments and foreign currency transactions of 108,215,014. 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 the next $5 billion, 0.575% of the next $5 billion, 0.555% of the next $5 billion, 0.54% of the next $5 billion and 0.53% thereafter. Prior to February 20, 1997, any amount over $1.5 billion was based on a rate of 0.60%. The fund reimburses Putnam Management an allocated amount for the compensation and related expenses of certain officers of the fund and their staff who provide administrative services to the fund. The aggregate amount of all such reimbursements is determined annually by the Trustees. Custodial functions for the fund's assets are provided by Putnam Fiduciary Trust Company (PFTC), a subsidiary of Putnam Investments, Inc. Investor servicing agent functions are provided by Putnam Investor Services, a division of PFTC. For the year ended October 31, 1997, fund expenses were reduced by $2,005,174 under expense offset arrangements with PFTC and brokerage service arrangements. Investor servicing and custodian fees reported in the Statement of operations exclude these credits. The fund could have invested a portion of the assets utilized in connection with the expense offset arrangements in an income producing asset if it had not entered into such arrangements. Trustees of the funds receive an annual Trustees fee of which $3,914 has been allocated to the fund and an additional fee for each Trustee's meeting attended. Trustees who are not interested persons of Putnam Management and who serve on committees of the Trustees receive additional fees for attendance at certain committee meetings. The fund has adopted a Trustee Fee Deferral Plan (the "Deferral Plan") which allows the Trustees to defer the receipt of all or a portion of Trustees Fees payable on or after July 1, 1995. The deferred fees remain in the fund and are invested in certain Putnam funds until distribution in accordance with the Deferral Plan. The fund has adopted an unfunded noncontributory defined benefit pension plan (the "Pension Plan") covering all Trustees of the fund who have served as Trustee for at least five years. Benefits under the Pension Plan are equal to 50% of the Trustee's average total retainer and meeting fees for the three years preceding retirement. Pension expense for the fund is included in Compensation of trustees in the Statement of operations. Accrued pension liability is included in Payable for compensation of Trustees in the Statement of assets and liabilities. The fund has adopted 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 currently limit payment by the fund to 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, 1997, Putnam Mutual Funds Corp., acting as underwriter received net commissions of $991,161 and $28,403 from the sale of class A and class M shares, respectively and $1,818,267 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, 1997, Putnam Mutual Funds Corp., acting as underwriter received $38,023 on class A redemptions. Note 3 Purchases and sales of securities During the year ended October 31, 1997, purchases and sales of investment securities other than short-term investments aggregated $6,551,229,406 and $6,300,255,512, 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, 1997, there was an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows: Year ended October 31, 1997 - ------------------------------------------------------------ Class A Shares Amount - ------------------------------------------------------------ Shares sold 101,249,030 $1,191,480,880 - ------------------------------------------------------------ Shares issued in connection with reinvestment of distributions 14,409,751 154,040,248 - ------------------------------------------------------------ 115,658,781 1,345,521,128 Shares repurchased (93,547,155) (1,107,228,654) - ------------------------------------------------------------ Net increase 22,111,626 $ 238,292,474 - ------------------------------------------------------------ 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, 1997 - ------------------------------------------------------------ Class B Shares Amount - ------------------------------------------------------------ Shares sold 38,781,150 $444,244,122 - ------------------------------------------------------------ Shares issued in connection with reinvestment of distributions 8,389,558 87,335,290 - ------------------------------------------------------------ 47,170,708 531,579,412 Shares repurchased (27,056,473) (312,278,426) - ------------------------------------------------------------ Net increase 20,114,235 $219,300,986 - ------------------------------------------------------------ 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, 1997 - ------------------------------------------------------------ Class M Shares Amount - ------------------------------------------------------------ Shares sold 3,715,074 $44,560,643 - ------------------------------------------------------------ Shares issued in connection with reinvestment of distributions 168,896 1,798,748 - ------------------------------------------------------------ 3,883,970 46,359,391 Shares repurchased (2,403,887) (29,285,638) - ------------------------------------------------------------ Net increase 1,480,083 $17,073,753 - ------------------------------------------------------------ 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 - ------------------------------------------------------------ Year ended October 31, 1997 - ------------------------------------------------------------ Class Y Shares Amount - ------------------------------------------------------------ Shares sold 4,445,438 $51,918,759 - ------------------------------------------------------------ Shares issued in connection with reinvestment of distributions 470,446 5,061,496 - ------------------------------------------------------------ 4,915,884 56,980,255 Shares repurchased (6,986,974) (86,399,511) - ------------------------------------------------------------ Net decrease (2,071,090) $(29,419,256) - ------------------------------------------------------------ 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 - ------------------------------------------------------------ Federal tax information (Unaudited) Pursuant to Section 852 of the Internal Revenue Code, as amended, the Fund hereby designates $620,151,357 (or if different, the amount necessary to offset net capital gain earned by the Fund) (for all classes of shares) as capital gain dividends for its taxable year ended October 31, 1997. For the period, interest and dividends from foreign countries were $49,319,695 of $0.133 (for all share classes). Taxes paid to foreign countries were $4,317,707 or $0.012 (for all classes of shares). The fund has designated 3.97% of the distributions from net investment income as qualifying for the dividends received deduction for corporations. The Form 1099 you receive in January 1998 will show the tax status of all distributions paid to your account in calendar 1997. Fund information INVESTMENT MANAGER Putnam Investment Management, Inc. One Post Office Square Boston, MA 02109 MARKETING SERVICES Putnam Mutual Funds Corp. One Post Office Square Boston, MA 02109 CUSTODIAN Putnam Fiduciary Trust Company LEGAL COUNSEL Ropes & Gray INDEPENDENT ACCOUNTANTS Coopers & Lybrand L.L.P. TRUSTEES George Putnam, Chairman William F. Pounds, Vice Chairman Jameson Adkins Baxter Hans H. Estin John A. Hill Ronald J. Jackson Elizabeth T. Kennan Lawrence J. Lasser Robert E. Patterson Donald S. Perkins George Putnam, III A.J.C. Smith W. Thomas Stephens W. Nicholas Thorndike OFFICERS George Putnam President Charles E. Porter Executive Vice President Patricia C. Flaherty Senior Vice President John D. Hughes Senior Vice President and Treasurer Lawrence J. Lasser Vice President Gordon H. Silver Vice President Ian C. Ferguson Vice President Brett C. Browchuk Vice President Robert Swift Vice President and Fund Manager Anthony W. Regan Vice President and Fund Manager Ami Kuan Danoff Vice President and Fund Manager Kelly A. Morgan Vice President and Fund Manager Thomas R. Haslett Vice President and Fund Manager Carol McMullen Vice President and Fund Manager Michael K. Arends 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 the principal amount invested. PUTNAM INVESTMENTS The Putnam Funds One Post Office Square Boston, Massachusetts 02109 - -------------------- Bulk Rate U.S. Postage PAID Putnam Investments - -------------------- 36859-005/882/907/513 12/97 PUTNAM INVESTMENTS [SCALE LOGO OMITTED] - ------------------------------------------------------------------------------ Putnam Global Growth Fund Supplement to Annual Report dated 10/31/97 The following information has been prepared to provide class Y shareholders with a performance overview specific to their holdings. Class Y shares are offered exclusively to defined contribution plans investing $250 million or more in one or more of Putnam's funds or private accounts. Performance of class Y shares, which incur neither a front-end load, distribution fee, nor contingent deferred sales charge, will differ from performance of class A, B, and M shares, which are discussed more extensively in the annual report. ANNUAL RESULTS AT A GLANCE - ------------------------------------------------------------------------------ Total return: NAV One year ended 10/31/97 16.75% Five years 104.41 Annual average 15.37 Ten years 194.32 Annual average 11.40 Life of class (since 9/1/67) Annual average 10.62 - ------------------------------------------------------------------------------ Share value: NAV 10/31/96 $11.24 10/31/97 12.17 - ------------------------------------------------------------------------------ Distributions: No. Income Capital gains Total Short Long 1 $0.301 $0.249 $0.296 $0.846 - ------------------------------------------------------------------------------ Please note that past performance does not indicate future results. Investment return and principal value will fluctuate so your shares, when redeemed, may be worth more or less than their original cost. See full report for information on comparative benchmarks. If you have questions, please consult your fund prospectus or call Putnam toll free at 1-800-752-9894. -----END PRIVACY-ENHANCED MESSAGE-----