-----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, UR4Gfyiv4S1u66Gqqj6oCY2EKEW2nm7hE5vDBL02dTESv2TKe1iLpqz5hmZASqXX NyrjRcpAsSHLFuzuYwbSBg== 0000928816-98-000318.txt : 19981217 0000928816-98-000318.hdr.sgml : 19981217 ACCESSION NUMBER: 0000928816-98-000318 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981031 FILED AS OF DATE: 19981216 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: 98770620 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 ON PERFORMANCE AND OUTLOOK 10-31-98 [LOGO: BOSTON * LONDON * TOKYO] Fund highlights * Putnam Global Growth Fund's class A shares were ranked in the top 16% by Lipper Analytical Services for the 1-year period ended October 31, 1998. The fund ranked 33 out of 211 global funds ranked.* CONTENTS 4 Report from Putnam Management 9 Fund performance summary 15 Portfolio holdings 21 Financial statements * Past performance is not indicative of future results. Lipper is an industry research firm whose rankings are based on total return performance, vary over time, and do not reflect the effects of sales charges. For the five-year period ended 10/31/98, the fund ranked 23 out of 66 funds. For the 10-year period, the fund ranked 7 out of 21 funds. Performance of other share classes will vary. From the Chairman [GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM] [copyright] Karsh, Ottawa Dear Shareholder: It should come as no surprise that Putnam Global Growth Fund's portfolio has undergone some significant shifting in industry and sector focus during the past year; most equity portfolios have had to make adjustments in the wake of the worldwide disruption in securities markets. In your fund's case, the managers increased the weighting in U.S. stocks, shifting assets out of the emerging markets and much of Asia. While it is the big global issues that have grabbed the headlines, in the final analysis the painstaking company-by-company search for high-quality growth stocks is what drives your fund's investment decisions. To help with that search are two newly appointed members of the management team, Manuel Weiss Herrero and Olivier M. Rudigoz. Manny has been with Putnam since 1987 and has 11 years of investment experience. Olivier, who has been managing investments for 9 years, joined Putnam earlier this year from Paribas Asset Management. Respectfully yours, /S/GEORGE PUTNAM George Putnam Chairman of the Trustees December 16, 1998 Report from the Fund Managers Robert Swift Lisa Svensson Kelly A. Morgan Olivier M. Rudigoz Michael Arends Manuel Weiss Herrero The unusual level of financial market volatility experienced in late summer and early fall of this year created an uncertain and unnerving environment for investors. Although the markets rebounded in late fall, the overriding theme that emerged from the rapid-fire series of negative events was that economic and corporate earnings growth rates would most likely slow in the near future. These destabilizing events led the management team of Putnam Global Growth Fund to reaffirm the growth potential of many of the large, high-quality growth companies the fund has owned for some time as well as to reassess the prospects of several companies in this new environment. For the year ended October 31, 1998, the fund's class A shares returned 13.02% (6.54% at public offering price). For comparison purposes, the fund's benchmark index, the Morgan Stanley Capital International All Country World Free Index, rose 13.03%. For performance of other share classes and over longer periods, please turn to page 9 of this report. * POSITIONING FOR NEW ENVIRONMENT Financial markets fell abruptly in late summer as corporate earnings expectations were sharply reduced in the face of economic weakness in Asia and other parts of the world and the insolvency of several large hedge funds. Shareholders may notice we made several broad changes to the portfolio. We raised the fund's weighting in companies located in the United States, mainly at the expense of holdings in Europe. Although the fund maintains a significant portion of its assets in Europe, we believe growth expectations there in many cases are too high. The United States offers the largest selection of high-quality growth companies as well as a more stable situation in which the government has the fiscal and monetary tools needed to mitigate an extended slowdown. We also substantially eliminated the fund's emerging-markets position and, with the exception of Japan, its holdings in developed Asian economies. This change was made in response to the deteriorating economic and company fundamentals in these markets. Although the markets subsequently rallied following the easing of high interest rates and the sudden strengthening of the Japanese yen -- both positive developments for non-Japanese exporters -- we believe any short-term rewards are far outweighed by the lack of any earnings growth momentum in these markets. * SEARCH FOR GROWTH POTENTIAL LEADS TO FOOD RETAILERS We looked for companies that had the ability to grow in a more difficult environment. Supermarket companies and food retailers in the United States, Europe, and Asia have offered steady growth for some time. Additionally, in the United States, we saw increased takeover activity in this area. Consequently we maintained significant weightings in Safeway and Kroger as well as in Netherlands-based Koninklijke Ahold, which operates supermarkets in both Europe and the United States. Near the end of the period, we also added some Asian food retailing companies. One of these, Seven Eleven Japan, is the largest company in the Japanese convenience store market. It has an aggressive expansion plan and is installing sophisticated information systems in order to improve profit margins and overall earnings growth. Woolworths Australia, a leading food retailer, has posted strong comparable sales results and has also expanded aggressively in a move to attain future growth. While these holdings, along with others discussed in this report, were viewed favorably at the end of the period, all are subject to review and adjustment in accordance with the fund's investment strategy and may vary in the future. [GRAPHIC OMITTED: horizontal bar chart COUNTRY ALLOCATIONS] COUNTRY ALLOCATIONS* United States 46.1% United Kingdom 9.4% France 8.9% Japan 6.9% Netherlands 6.1% Footnote reads: *Based on net assets as of October 31, 1998. Holdings will vary over time. * FINANCIAL FOCUS SHIFTS TO REGIONAL BANKS Following Russia's devaluation of its currency and default on its foreign debt, global financial institutions located in the United States and Europe -- particularly money-center banks, brokerages, and large insurance companies -- came under intense selling pressure. We reduced the fund's positions in global financial companies that are highly dependent on trading gains to deliver their targeted earnings growth. This selloff was based on the companies' exposure to trading losses and our belief that their investment banking operations would suffer in the event of a slowdown in equity issuance and corporate financing activities. In the financial sector, our current focus is on regional banks, insurance companies, and specialty finance companies that we believe have better growth prospects than larger financial companies. Companies in these areas focus on more stable businesses such as retail banking, mortgage lending, and asset management. Some recent additions to the fund in the banking area include the Spanish banking company Bankinter, the Italian bank Banca Intesa, the Dutch banking and insurance company Fortis Amev, and the U.S. super regional bank Wells Fargo. * SEMICONDUCTORS SHOW SIGNS OF LIFE Because of your fund's focus on growth, it has been -- and remains -- heavily invested in technology. Within technology, however, we have made several important changes. As the fund's fiscal period progressed, it became clear that corporate technology spending would slow to the detriment of software and information technology (IT) service companies. Thus we began buying more of the inexpensively priced stocks in the hardware and components areas, favoring them over stocks of software and IT service companies. As a result, we added hardware companies such as Sun Microsystems and eliminated the fund's positions in companies such as Veritas and PeopleSoft. [GRAPHIC OMITTED: TOP 10 HOLDINGS] TOP 10 HOLDINGS Microsoft Corp. (United States) Computer services and software Warner-Lambert Co. (United States) Pharmaceuticals Intel Corp. (United States) Electronics and electrical equipment Wolters Kluwer N.V. (Netherlands) Business equipment and services Glaxo Wellcome PLC (United Kingdom) Pharmaceuticals General Electric Co. (United States) Electronics and electrical equipment Pfizer, Inc. (United States) Pharmaceuticals Vodafone Group PLC (United Kingdom) Telecommunications KAO Corp. (Japan) Consumer nondurables Wal-Mart Stores, Inc. (United States) Retail Footnote reads: These holdings represent 15.2% of the fund's net assets as of 10/31/98. Portfolio holdings will vary over time. One significant development was the improvement in the outlook for the long-suffering semiconductor sector. Semiconductor prices have been held back for some time by a worldwide supply glut. Lately we have observed a large amount of production capacity removed from the industry, particularly that of Southeast Asian producers of basic memory chips, a development that has resulted in a stabilization of chip prices. Additionally the move to a new generation of chips as well as to new technology in the industry could also support higher prices. Positive earnings announcements and the indication of higher future sales from well-known companies such as Intel have only served to confirm this positive trend for investors. * POSITIVE BUT CAUTIOUS OUTLOOK Although market volatility in the second half of the fund's fiscal year resulted in some rather indiscriminate selling of growth stocks, we remain convinced that a company-by-company, research-driven strategy of evaluating individual stocks is still the best method for selecting long-term investments. In this current period of relative calm, we plan to take the opportunity to continue to reassess each of the fund's holdings to determine if each company can meet our price targets and maintain its growth prospects. In general, we expect economic and corporate earnings growth to slow but not contract. Lower interest rates around the world and any improvement in the Japanese economy should help stocks. However, should growth deteriorate more than we expect, we stand at the ready to reallocate our resources to more attractive relative growth opportunities. 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 October 31, 1998, there is no guarantee the fund will continue to hold these securities in the future. International investing involves certain risks, such as currency fluctuations, economic instability, and political developments, not present with domestic investments. Performance summary This section provides information about your fund's performance, which should always be considered in light of its investment strategy. Putnam Global Growth Fund is designed for investors seeking capital appreciation through a globally diversified equity portfolio. TOTAL RETURN FOR PERIODS ENDED 10/31/98 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 13.02% 6.54% 12.13% 7.57% 12.48% 8.56% - ------------------------------------------------------------------------------ 5 years 75.26 65.13 68.90 66.90 70.73 64.84 Annual average 11.88 10.55 11.05 10.79 11.29 10.51 - ------------------------------------------------------------------------------ 10 years 202.51 185.12 179.32 179.32 186.49 176.46 Annual average 11.71 11.05 10.82 10.82 11.10 10.70 - ------------------------------------------------------------------------------ Annual average (Life of fund) 10.64 10.43 9.60 9.60 9.89 9.76 - ------------------------------------------------------------------------------ COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 10/31/98 MSCI MSCI MSCI S&P Consumer EAFE World World 500 Price Index* Index Free Index* Index Index - ------------------------------------------------------------------------------ 1 year 9.65% 15.26% 13.03% 21.99% 1.36% - ------------------------------------------------------------------------------ 5 years 39.01 84.48 79.34 162.66 12.42 Annual average 6.81 13.03 12.39 21.31 2.37 - ------------------------------------------------------------------------------ 10 years 67.20 158.65 163.83 418.25 36.27 Annual average 5.28 9.97 10.19 17.89 3.14 - ------------------------------------------------------------------------------ Annual average (Life of fund) -- -- -- 12.28 5.22 - ------------------------------------------------------------------------------ Past performance is no assurance of future results. 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-, and 10-year (where available) 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. 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. Putnam Management has recently undertaken a review of benchmarks for various funds. The MSCI All-Country World Free Index replaces the MSCI All-Country World Index as a performance benchmark for this fund because, in Putnam Management's opinion, the securities tracked by this index more accurately reflect the types of securities generally held by the fund. This performance information does not reflect any market volatility that may have occurred since the date of the information. As a result, more recent returns may be more or less than those shown.
[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 10/31/88 Fund's class A MSCI EAFE Consumer Price MSCI World S&P 500 MSCI World Date shares at POP Index Index Index Index Free Index 10/31/88 9,427 10,000 10,000 10,000 10,000 10,000 10/31/89 11,089 10,814 10,449 11,433 12,640 11,344 10/31/90 10,940 9,428 11,106 10,205 11,695 10,064 10/31/91 12,745 10,083 11,431 11,957 15,612 11,649 10/31/92 12,553 8,751 11,797 11,471 17,166 11,040 10/31/93 16,272 12,028 12,121 14,711 19,731 14,021 10/31/94 17,674 13,242 12,438 16,085 20,494 15,094 10/31/95 18,670 13,193 12,787 17,359 25,913 16,525 10/31/96 21,676 14,575 13,170 20,111 32,157 19,218 10/31/97 25,231 15,249 13,444 23,342 42,483 22,442 10/31/98 $28,512 $16,720 $13,627 $26,383 $51,825 $25,865 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 $27,932 and no contingent deferred sales charges would apply; a $10,000 investment in the fund's class M shares would have been valued at $28,649 ($27,646 at public offering price). See first page of performance section for performance calculation method.
PRICE AND DISTRIBUTION INFORMATION 12 months ended 10/31/98 Class A Class B Class M - ------------------------------------------------------------------------------ Distributions (number) 1 1 1 - ------------------------------------------------------------------------------ Income $0.255 $0.169 $0.204 - ------------------------------------------------------------------------------ Capital gains - ------------------------------------------------------------------------------ Long-term 1.417 1.417 1.417 - ------------------------------------------------------------------------------ Short-term 0.547 0.547 0.547 - ------------------------------------------------------------------------------ Total $2.219 $2.133 $2.168 - ------------------------------------------------------------------------------ Share value: NAV POP NAV NAV POP - ------------------------------------------------------------------------------ 10/31/97 $12.00 $12.73 $11.62 $11.90 $12.33 - ------------------------------------------------------------------------------ 10/31/98 11.01 11.68 10.59 10.90 11.30 - ------------------------------------------------------------------------------ TOTAL RETURN FOR PERIODS ENDED 9/30/98 (most recent calendar quarter) Class A Class B Class M (inception date) (9/1/67) (4/27/92) (3/1/95) NAV POP NAV CDSC NAV POP - ------------------------------------------------------------------------------ 1 year -0.24% -5.95% -1.03% -5.05% -0.73% -4.23% - ------------------------------------------------------------------------------ 5 years 73.62 63.59 67.04 65.04 69.08 63.22 Annual average 11.67 10.34 10.81 10.54 11.08 10.29 - ------------------------------------------------------------------------------ 10 years 201.76 184.40 178.37 178.37 185.74 175.73 Annual average 11.68 11.02 10.78 10.78 11.07 10.67 - ------------------------------------------------------------------------------ Annual average (Life of fund) 10.51 10.30 9.47 9.47 9.75 9.63 - ------------------------------------------------------------------------------ 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 5.75% maximum 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, Australasia and the Far East, with all values expressed in U.S. dollars. Morgan Stanley Capital International (MSCI) All-Country World Index* is an unmanaged list of global equity securities, with all values expressed in U.S. dollars. Morgan Stanley Capital International (MSCI) All-Country World Free Index* is an unmanaged list of global equity securities available to non-domestic investors, 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. PUTNAM GROWTH FUNDS Asia Pacific Growth Fund Capital Appreciation Fund [DBL. DAGGER] Capital Opportunities Fund Diversified Equity Trust Europe Growth Fund Global Growth Fund Global Natural Resources Fund Growth Opportunities Fund Health Sciences Trust International Growth Fund International New Opportunities Fund Investors Fund New Opportunities Fund [DBL. DAGGER] OTC & Emerging Growth Fund Research Fund Vista Fund Voyager Fund Voyager Fund II PUTNAM GROWTH AND INCOME FUNDS Balanced Retirement Fund Convertible Income-Growth Trust Equity Income Fund The George Putnam Fund of Boston Global Growth and Income Fund The Putnam Fund for Growth and Income Growth and Income Fund II International Growth and Income Fund New Value Fund Utilities Growth and Income Fund PUTNAM INCOME FUNDS American Government Income Fund Diversified Income Trust Global Governmental Income Trust High Quality Bond Fund + High Yield Advantage Fund [DBL. DAGGER] High Yield Total Return Fund High Yield Trust [DBL. DAGGER] High Yield Trust II Income Fund Intermediate U.S. Government Income Fund Money Market Fund ** Preferred Income Fund Strategic Income Fund * U.S. Government Income Trust PUTNAM TAX-FREE INCOME FUNDS Municipal Income Fund Tax Exempt Income Fund Tax Exempt Money Market Fund** Tax-Free High Yield Fund Tax-Free Insured Fund State tax-free income funds [SECTION MARK] Arizona, California, Florida, Massachusetts, Michigan, Minnesota, New Jersey, New York, Ohio and Pennsylvania State tax-free money market funds [SECTION MARK] California, New York LIFESTAGE SM FUNDS Putnam Asset Allocation Funds-three investment portfolios that spread your money across a variety of stocks, bonds, and money market investments. The three portfolios: Asset Allocation: Balanced Portfolio Asset Allocation: Conservative Portfolio Asset Allocation: Growth Portfolio *Formerly Putnam Diversified Income Trust II +Formerly Putnam Federal Income Trust [DBL. DAGGER] Closed to new investors. Some exceptions may apply. Contact Putnam for details. [SECTION MARK] Not available in all states. **An investment in a money market fund is neither insured nor guaranteed by the U.S. government. These funds are managed to maintain a price of $1.00 per share, although there is no assurance that this price will be maintained in the future. Please call your financial advisor or Putnam at 1-800-225-1581 to obtain a prospectus for any Putnam fund. It contains more complete information, including charges and expenses. Please read it carefully before you invest or send money. Report of independent accountants For the fiscal year ended October 31, 1998 To the Trustees and Shareholders of Putnam Global Growth Fund In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments owned, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Putnam Global Growth Fund (the "fund") at October 31, 1998, and the results of its operations, the changes in its net assets and the financial highlights for the periods indicated, in conformity with generally accepted accounting principles. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of investments owned at October 31, 1998 by correspondence with the custodian, provide a reasonable basis for the opinion expressed above. PricewaterhouseCoopers LLP Boston, Massachusetts December 10, 1998
Portfolio of investments owned October 31, 1998 COMMON STOCKS (95.9%) (a) NUMBER OF SHARES VALUE Australia (0.9%) - -------------------------------------------------------------------------------------------------------------------------- 2,151,200 AMP Ltd. (NON) $ 25,548,925 1,127,200 AMP Ltd.144A (NON) 13,387,295 30,839 Australia & New Zealand Banking Group Ltd. 176,078 1,009,800 Woolworth Ltd. 3,547,549 -------------- 42,659,847 Brazil (--%) - -------------------------------------------------------------------------------------------------------------------------- 50,348 Companhia Energetica de Minas Gerais (Cemig) 144A ADS 969,199 Canada (1.6%) - -------------------------------------------------------------------------------------------------------------------------- 1,003,100 BCE Mobile Communications, Inc. (NON) 24,459,507 2,238,300 Bombardier, Inc. (NON) 26,490,905 1,812,000 CGI Group, Inc. (NON) 24,912,062 -------------- 75,862,474 Denmark (0.8%) - -------------------------------------------------------------------------------------------------------------------------- 355,900 Tele Danmark AS 38,811,465 Finland (0.8%) - -------------------------------------------------------------------------------------------------------------------------- 382,100 Oy Nokia AB Class A 34,819,901 France (8.9%) - -------------------------------------------------------------------------------------------------------------------------- 90,693 Accor S.A. 19,080,356 343,834 Axa S.A. (NON) 38,926,943 357,305 Cap Gemini S.A. 53,785,772 43,856 L'OREAL 25,102,362 73,120 Promodes 46,123,469 154,021 Sanofi S.A. 24,156,890 460,290 Sidel S.A. 34,021,796 233,557 Societe Television Francaise 1 38,652,484 207,129 Sodexho Alliance S.A. 40,290,643 220,190 STMicroelectronics 13,496,413 269,352 Total S.A. Class B 31,125,768 233,182 Vivendi 53,345,585 -------------- 418,108,481 Germany (3.1%) - -------------------------------------------------------------------------------------------------------------------------- 94,700 Allianz Versicherungs AG (NON) 32,513,056 652,616 Bayerische Vereinsbank AG 51,873,189 372,000 Mannesmann AG 36,651,354 60,544 SAP AG 25,434,042 -------------- 146,471,641 Greece (0.3%) - -------------------------------------------------------------------------------------------------------------------------- 340 Bank of Greece S.A. 48,374 576,977 Hellenic Telecommunication Organization S.A. 13,134,581 20,922 Hellenic Telecommunication Organization S.A. GDR 237,465 -------------- 13,420,420 India (--%) - -------------------------------------------------------------------------------------------------------------------------- 50 Hindalco Industries Ltd. 605 500 Hindustan Petroleum Corp. Ltd. 3,147 10 Housing Development Finance Corporation Ltd. 528 1,337 Larsen & Toubro Ltd. GDR 4,570 10 Ranbaxy Laboratories Ltd. 118 50 State Bank of India Ltd. 193 -------------- 9,161 Ireland (2.0%) - -------------------------------------------------------------------------------------------------------------------------- 2,014,200 Allied Irish Banks PLC 29,110,011 1,537,000 CRH PLC 22,531,075 608,700 Elan Corp. PLC ADR (NON) 42,647,044 -------------- 94,288,130 Italy (5.3%) - -------------------------------------------------------------------------------------------------------------------------- 3,667,680 Alleanza Assicurazioni SPA 45,268,722 1,182,400 Assicurazioni Generali SPA 42,408,992 3,917,700 Banca Intesa SPA (NON) 19,820,606 8,240,400 Credito Italiano SPA 44,308,433 3,965,700 La Rinascente SPA 38,285,328 455,500 Mediolanum SPA 11,355,440 8,647,500 Telecom Italia Mobile SPA 50,275,314 -------------- 251,722,835 Japan (6.9%) - -------------------------------------------------------------------------------------------------------------------------- 103,100 Advantest Corp. 6,529,818 419,200 Aiful Corp. 19,614,452 300 Fujitsu Ltd. 3,206 3,188,520 KAO Corp. 64,841,975 1,050,000 Matsushita Communication Industrial Co., Ltd. 48,767,798 472,300 Promise Co., Ltd. 21,447,844 404,000 Secom Co. 30,112,898 145,000 Seven-Eleven Japan Co., Ltd. (NON) 11,070,234 80,100 Shohkoh Fund & Co., Ltd. 24,468,302 1,459,000 Takeda Chemical Industries 47,648,539 416,000 Takefuji Corp. 22,260,761 134,400 Takefuji Corp. 144A 7,191,938 600 Tokyo Electron Ltd. 19,595 837,000 Yamanouchi Pharmaceutical Co., Ltd. 24,089,457 -------------- 328,066,817 Netherlands (6.1%) - -------------------------------------------------------------------------------------------------------------------------- 645,510 Aegon N.V. 56,087,677 194,540 Benckiser N.V. Class B (NON) 11,042,981 594,800 Fortis Amev N.V. 38,673,477 754,900 Heineken N.V. 40,261,873 1,614,176 Koninklijke Ahold N.V. 53,730,880 524,600 VNU N.V. 18,165,287 358,200 Wolters Kluwer N.V. 69,504,931 -------------- 287,467,106 Pakistan (--%) - -------------------------------------------------------------------------------------------------------------------------- 6 Pakistan State Oil 6 Philippines (--%) - -------------------------------------------------------------------------------------------------------------------------- 2,361,650 International Container Terminal Services, Inc. (NON) 158,618 Portugal (1.8%) - -------------------------------------------------------------------------------------------------------------------------- 769,277 Banco Comercial Portugues, S.A. 24,126,102 643,850 Banco Portugues Do Atlantico (NON) 12,926,360 237,700 Banco Portugues Do Atlantico 144A (NON) 4,772,223 233,740 Telecel-Comunicacaoes Pessoais, S.A. 43,137,184 -------------- 84,961,869 Spain (1.4%) - -------------------------------------------------------------------------------------------------------------------------- 182,400 Banco Popular Espanol S.A. 11,282,479 395,900 Bankinter, S.A. (NON) 12,131,743 1,382,190 Centros Comerciales Continente, S.A. 41,274,087 -------------- 64,688,309 Switzerland (0.5%) - -------------------------------------------------------------------------------------------------------------------------- 40,552 Zurich Allied AG (NON) 24,712,548 Taiwan (--%) - -------------------------------------------------------------------------------------------------------------------------- 85,301 Bank Sinopac (NON) 36,492 Turkey (--%) - -------------------------------------------------------------------------------------------------------------------------- 80,659 Yapi ve Kredi Bankasi A.S. GDR 935,644 United Kingdom (9.4%) - -------------------------------------------------------------------------------------------------------------------------- 5,648,500 Cable & Wireless Communications (NON) 42,550,151 1,052,700 CMG PLC 24,671,077 13,751,900 Coca-Cola Beverages PLC 29,006,058 583,500 Coca-Cola Beverages PLC 144A 1,230,742 4,291,300 Compass Group PLC 43,460,999 2,226,704 Glaxo Wellcome PLC 69,182,446 1,034,000 HSBC Holdings PLC 23,700,284 5,633,435 Misys PLC (NON) 39,513,251 3,663,700 Orange PLC ADR (NON) 34,069,003 3,061,000 SEMA Group PLC 24,800,712 3,779,873 Smithkline Beecham PLC ADR 47,266,486 4,918,697 Vodafone Group PLC 65,871,190 -------------- 445,322,399 United States (46.1%) - -------------------------------------------------------------------------------------------------------------------------- 693,500 Abbott Laboratories 32,551,156 105,900 America Online, Inc. (NON) 13,455,919 569,325 American International Group, Inc. 48,534,956 534,200 Ascend Communications, Inc. (NON) 25,775,150 195,700 Associates First Capital Corp. 13,796,850 287,800 Biogen, Inc. (NON) 20,002,100 524,000 BMC Software, Inc. (NON) 25,184,750 507,200 Bristol-Myers Squibb Co. 56,077,300 525,400 Cablevision Systems Corp. Class A (NON) 25,350,550 243,250 Cardinal Health, Inc. 23,002,328 692,700 Centocor, Inc. (NON) 30,825,150 741,975 Cisco Systems, Inc. (NON) 46,744,425 230,500 Clorox Co. 25,182,125 260,600 Colgate-Palmolive Co. 23,030,525 855,800 Compaq Computer Corp. 27,064,675 329,300 Computer Sciences Corp. (NON) 17,370,575 421,000 Compuware Corp. (NON) 22,812,938 484,900 ConAgra, Inc. 14,759,144 560,800 Costco Companies, Inc. (NON) 31,825,400 1,032,558 CVS Corp. 47,174,994 470,500 Dell Computer Corp. (NON) 30,817,750 522,500 EMC Corp. (NON) 33,635,938 144,700 Exxon Corp. 10,309,875 489,300 Fannie Mae 34,648,556 607,300 Federal Home Loan Mortgage Corp. 34,919,750 269,000 Firstar Corp. 15,265,750 787,800 General Electric Co. 68,932,500 917,300 HBO & Co. 24,079,125 847,300 Home Depot, Inc. (The) 36,857,550 287,900 IBM Corp. 42,735,156 245,900 IMS Health Inc. (NON) 16,352,350 867,600 Intel Corp. 77,379,075 355,900 Interpublic Group Cos. Inc. 20,820,150 79,300 Kroger Co. (NON) 4,397,352 639,700 Lilly (Eli) & Co. 51,775,719 444,900 Lowe's Cos., Inc. 14,987,569 317,200 Lucent Technologies, Inc. 25,435,475 551,100 MCI WorldCom, Inc. (NON) 30,448,275 819,800 MediaOne Group Inc. (NON) 34,687,788 576,300 Medtronic, Inc. 37,459,500 406,700 Merck & Co., Inc. 55,006,175 885,500 Microsoft Corp. (NON) 93,752,313 862,200 Office Depot, Inc. (NON) 21,555,000 586,800 Omnicare, Inc. 20,281,275 708,000 Peco Energy Co. 27,390,750 628,200 Pfizer, Inc. 67,413,713 1,156,000 Philip Morris Cos., Inc. 59,100,500 783,800 PLATINUM Technology, Inc. (NON) 12,883,713 572,000 Quintiles Transnational Corp. (NON) 25,883,000 323,400 Rite Aid Corp. 12,834,938 548,700 Safeway, Inc. (NON) 26,234,719 256,100 SBC Communications, Inc. 11,860,631 1,035,400 ServiceMaster Co. (The) 21,872,825 531,100 Schering-Plough Corp. 54,636,913 563,500 Southtrust Corp. 20,567,750 231,600 Sprint Corp. 17,775,300 141,900 Star Banc Corp. 10,731,188 192,000 Sun Microsystems, Inc. (NON) 11,195,290 754,100 Tele-Communications, Inc. Class A (NON) 31,766,463 296,100 Time Warner, Inc. 27,481,781 1,919,900 TJX Cos., Inc. (The) 36,358,106 427,900 Tommy Hilfiger Corp. (NON) 19,870,606 576,200 Tyco International Ltd. 35,688,388 453,300 Viacom, Inc. Class B (NON) 27,141,338 883,400 Wal-Mart Stores, Inc. 60,954,600 639,700 Walgreen Co. 31,145,394 1,057,100 Warner-Lambert Co. 82,850,206 627,400 Waste Management, Inc. (NON) 28,311,425 29,500 Wells Fargo & Co. 10,915,000 -------------- 2,179,925,513 -------------- Total Common Stocks (cost $3,860,566,143) $4,533,418,875 INVESTMENT COMPANIES (--%) (a) (cost $1,177,200) NUMBER OF SHARES VALUE - -------------------------------------------------------------------------------------------------------------------------- 21,800 India Magnum Fund Class A (acquired 3/23/95, cost $1,177,200) (NON) (RES) (India) $ 588,600 SHORT-TERM INVESTMENTS (3.7%) (a) PRINCIPAL AMOUNT VALUE - -------------------------------------------------------------------------------------------------------------------------- $ 324,000 Ciesco L.P., effective yield of 5.08%, December 8, 1998 $ 322,312 25,000,000 Commonwealth Bank of Australia, effective yield of 5.14%, November 30, 1998 24,896,486 25,000,000 Corporate Asset Funding Corp., effective yield of 5 1/8%, January 11, 1999 24,747,309 24,000,000 Diageo Capital PLC, effective yield of 5.17%, December 4, 1998 (United Kingdom) 23,887,100 30,000,000 USAA Capital Corp., effective yield of 5.06%, December 2, 1998 29,869,284 877,000 Windmill Funding Corp., effective yield of 5.13%, November 16, 1998 874,874 27,401,000 Windmill Funding Corp., effective yield of 5.17%, December 11, 1998 27,243,596 44,744,000 Interest in $750,000,000 joint tri-party repurchase agreement dated October 30, 1998 with Goldman Sachs due November 2, 1998 with respect to various U.S. Treasury obligations -- maturity value of $44,764,060 for an effective yield of 5.38% 44,757,373 -------------- Total Short-Term Investments (cost $176,598,334) $ 176,598,334 - -------------------------------------------------------------------------------------------------------------------------- Total Investments (cost $4,038,341,677) (b) $4,710,605,809 - -------------------------------------------------------------------------------------------------------------------------- (a) Percentages indicated are based on net assets of $4,728,205,095. (b) The aggregate identified cost on a tax basis is $4,065,513,098, resulting in gross unrealized appreciation and depreciation of $791,984,332 and $146,891,621, respectively, or net unrealized appreciation of $645,092,711. (NON) Non-income-producing security. (RES) Restricted, excluding 144A securities, as to public resale. The total market value of restricted securities held at October 31, 1998 was $588,600 or less than 0.01% of net assets. ADR, ADS, or GDR after the name of a foreign holding stands for American Depository Receipts, American Depository Shares, or Global Depository Receipts, respectively, representing 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, 1998 (as a percentage of net assets): Insurance and finance 17.4% Pharmaceuticals 11.4 The accompanying notes are an integral part of these financial statements.
Statement of assets and liabilities October 31, 1998 Assets - ----------------------------------------------------------------------------------------------- Investments in securities, at value (identified cost $4,038,341,677) (Note 1) $4,710,605,809 - ----------------------------------------------------------------------------------------------- Cash 111,199 - ----------------------------------------------------------------------------------------------- Foreign currency (cost $3,884,675) 3,593,377 - ----------------------------------------------------------------------------------------------- Dividends and interest receivable 3,422,255 - ----------------------------------------------------------------------------------------------- Receivable for shares of the fund sold 6,078,842 - ----------------------------------------------------------------------------------------------- Receivable for securities sold 73,723,395 - ----------------------------------------------------------------------------------------------- Receivable for closed forward currency contracts 43,203 - ----------------------------------------------------------------------------------------------- Total assets 4,797,578,080 Liabilities - ----------------------------------------------------------------------------------------------- Distributions payable to shareholders 34,197 - ----------------------------------------------------------------------------------------------- Payable for securities purchased 51,907,377 - ----------------------------------------------------------------------------------------------- Payable for shares of the fund repurchased 5,402,249 - ----------------------------------------------------------------------------------------------- Payable for compensation of Manager (Note 2) 7,505,885 - ----------------------------------------------------------------------------------------------- Payable for investor servicing and custodian fees (Note 2) 1,075,878 - ----------------------------------------------------------------------------------------------- Payable for compensation of Trustees (Note 2) 77,052 - ----------------------------------------------------------------------------------------------- Payable for administrative services (Note 2) 5,915 - ----------------------------------------------------------------------------------------------- Payable for distribution fees (Note 2) 1,970,731 - ----------------------------------------------------------------------------------------------- Payable for closed forward currency contracts 139,729 - ----------------------------------------------------------------------------------------------- Other accrued expenses 1,253,972 - ----------------------------------------------------------------------------------------------- Total liabilities 69,372,985 - ----------------------------------------------------------------------------------------------- Net assets $4,728,205,095 Represented by - ----------------------------------------------------------------------------------------------- Paid-in capital (Notes 1 and 4) $3,930,615,362 - ----------------------------------------------------------------------------------------------- Undistributed net investment income (Note 1) 12,854,506 - ----------------------------------------------------------------------------------------------- Accumulated net realized gain on investments and foreign currency transactions (Note 1) 112,566,884 - ----------------------------------------------------------------------------------------------- Net unrealized appreciation of investments and assets and liabilities in foreign currencies 672,168,343 - ----------------------------------------------------------------------------------------------- Total -- Representing net assets applicable to capital shares outstanding $4,728,205,095 Computation of net asset value and offering price - ----------------------------------------------------------------------------------------------- Net asset value and redemption price per class A share ($2,882,999,583 divided by 261,754,179 shares) $11.01 - ----------------------------------------------------------------------------------------------- Offering price per class A share (100/94.25 of $11.01)* $11.68 - ----------------------------------------------------------------------------------------------- Net asset value and offering price per class B share ($1,732,139,238 divided by 163,550,587 shares)** $10.59 - ----------------------------------------------------------------------------------------------- Net asset value and redemption price per class M share ($50,699,608 divided by 4,649,688 shares) $10.90 - ----------------------------------------------------------------------------------------------- Offering price per class M share (100/96.50 of $10.90)* $11.30 - ----------------------------------------------------------------------------------------------- Net asset value, offering price and redemption price per class Y share ($62,366,666 divided by 5,570,176 shares) $11.20 - ----------------------------------------------------------------------------------------------- * 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, 1998 Investment income: - ----------------------------------------------------------------------------------------------- Dividends (net of foreign tax of $3,399,665) $ 48,530,309 - ----------------------------------------------------------------------------------------------- Interest 6,262,586 - ----------------------------------------------------------------------------------------------- Total investment income 54,792,895 Expenses: - ----------------------------------------------------------------------------------------------- Compensation of Manager (Note 2) 30,359,299 - ----------------------------------------------------------------------------------------------- Investor servicing and custodian fees (Note 2) 12,180,823 - ----------------------------------------------------------------------------------------------- Compensation of Trustees (Note 2) 89,988 - ----------------------------------------------------------------------------------------------- Administrative services (Note 2) 38,614 - ----------------------------------------------------------------------------------------------- Distribution fees -- Class A (Note 2) 7,172,973 - ----------------------------------------------------------------------------------------------- Distribution fees -- Class B (Note 2) 17,991,491 - ----------------------------------------------------------------------------------------------- Distribution fees -- Class M (Note 2) 369,162 - ----------------------------------------------------------------------------------------------- Reports to shareholders 251,708 - ----------------------------------------------------------------------------------------------- Registration fees 177,078 - ----------------------------------------------------------------------------------------------- Auditing 98,897 - ----------------------------------------------------------------------------------------------- Legal 38,575 - ----------------------------------------------------------------------------------------------- Postage 848,839 - ----------------------------------------------------------------------------------------------- Other 543,288 - ----------------------------------------------------------------------------------------------- Total expenses 70,160,735 - ----------------------------------------------------------------------------------------------- Expense reduction (Note 2) (1,464,258) - ----------------------------------------------------------------------------------------------- Net expenses 68,696,477 - ----------------------------------------------------------------------------------------------- Net investment loss (13,903,582) - ----------------------------------------------------------------------------------------------- Net realized gain on investments (Notes 1 and 3) 133,668,133 - ----------------------------------------------------------------------------------------------- Net realized gain on foreign currency transactions (Note 1) 22,171,474 - ----------------------------------------------------------------------------------------------- Net realized loss on swap contracts (Note 1) (890,965) - ----------------------------------------------------------------------------------------------- Net unrealized appreciation of assets and liabilities in foreign currencies during the year 4,598,408 - ----------------------------------------------------------------------------------------------- Net unrealized appreciation of investments during the year 395,889,553 - ----------------------------------------------------------------------------------------------- Net gain on investments 555,436,603 - ----------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations $541,533,021 - ----------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements.
Statement of changes in net assets Year ended October 31 ------------------------------- 1998 1997 - --------------------------------------------------------------------------------------------------------------- Increase in net assets - --------------------------------------------------------------------------------------------------------------- Operations: - --------------------------------------------------------------------------------------------------------------- Net investment income (loss) $ (13,903,582) $ 1,217,600 - --------------------------------------------------------------------------------------------------------------- Net realized gain on investments and foreign currency transactions 154,948,642 825,626,424 - --------------------------------------------------------------------------------------------------------------- Net unrealized appreciation (depreciation) of investments and assets and liabilities in foreign currencies 400,487,961 (229,716,928) - --------------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 541,533,021 597,127,096 - --------------------------------------------------------------------------------------------------------------- Distributions to shareholders: - --------------------------------------------------------------------------------------------------------------- From net investment income Class A (55,521,899) (54,577,493) - --------------------------------------------------------------------------------------------------------------- Class B (24,067,329) (25,358,432) - --------------------------------------------------------------------------------------------------------------- Class M (740,570) (590,659) - --------------------------------------------------------------------------------------------------------------- Class Y (1,101,259) (1,800,840) - --------------------------------------------------------------------------------------------------------------- From net realized gain on investments Class A (427,627,489) (108,162,646) - --------------------------------------------------------------------------------------------------------------- Class B (279,693,689) (68,080,503) - --------------------------------------------------------------------------------------------------------------- Class M (7,129,800) (1,292,807) - --------------------------------------------------------------------------------------------------------------- Class Y (7,589,027) (3,260,656) - --------------------------------------------------------------------------------------------------------------- Increase from capital share transactions (Note 4) 606,332,642 445,247,957 - --------------------------------------------------------------------------------------------------------------- Total increase in net assets 344,394,601 779,251,017 Net assets - --------------------------------------------------------------------------------------------------------------- Beginning of year 4,383,810,494 3,604,559,477 - --------------------------------------------------------------------------------------------------------------- End of year (including undistributed net investment income of $12,854,506 and $84,713,761, respectively) $4,728,205,095 $4,383,810,494 - --------------------------------------------------------------------------------------------------------------- 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 - ------------------------------------------------------------------------------------------------------------------------------------ 1998 1997 1996 1995 1994 - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $12.00 $11.10 $10.13 $9.92 $9.30 - ------------------------------------------------------------------------------------------------------------------------------------ Investment operations - ------------------------------------------------------------------------------------------------------------------------------------ Net investment (loss) income --(b) .04(b) .09(b) .09 .02 - ------------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain on investments 1.23 1.68 1.47 .43 .77 - ------------------------------------------------------------------------------------------------------------------------------------ Total from investment operations 1.23 1.72 1.56 .52 .79 - ------------------------------------------------------------------------------------------------------------------------------------ Less distributions: - ------------------------------------------------------------------------------------------------------------------------------------ From net investment income (.26) (.27) (.18) (.01) -- - ------------------------------------------------------------------------------------------------------------------------------------ From net realized gain on investments (1.96) (.55) (.41) (.30) (.17) - ------------------------------------------------------------------------------------------------------------------------------------ Total distributions (2.22) (.82) (.59) (.31) (.17) - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $11.01 $12.00 $11.10 $10.13 $9.92 - ------------------------------------------------------------------------------------------------------------------------------------ Ratios and supplemental data - ------------------------------------------------------------------------------------------------------------------------------------ Total investment return at net asset value (%)(a) 13.02 16.40 16.10 5.64 8.62 - ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $2,882,999 $2,628,933 $2,186,426 $1,689,656 $1,507,550 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets (%)(c) 1.18 1.24 1.27 1.28 1.33 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net investment income (loss) to average net assets (%) (.01) .31 .84 1.05 .83 - ------------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover (%) 162.35 154.98 72.88 63.31 17.45 - ------------------------------------------------------------------------------------------------------------------------------------ + 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).
Financial highlights (For a share outstanding throughout the period) CLASS B - ------------------------------------------------------------------------------------------------------------------------------------ Per-share operating performance Year ended October 31 - ------------------------------------------------------------------------------------------------------------------------------------ 1998 1997 1996 1995 1994 - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $11.62 $10.78 $9.86 $9.74 $9.19 - ------------------------------------------------------------------------------------------------------------------------------------ Investment operations - ------------------------------------------------------------------------------------------------------------------------------------ Net investment (loss) income (.08)(b) (.05)(b) .01(b) .03 .01 - ------------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain on investments 1.18 1.64 1.43 .40 .71 - ------------------------------------------------------------------------------------------------------------------------------------ Total from investment operations 1.10 1.59 1.44 .43 .72 - ------------------------------------------------------------------------------------------------------------------------------------ Less distributions: - ------------------------------------------------------------------------------------------------------------------------------------ From net investment income (.17) (.20) (.11) (.01) -- - ------------------------------------------------------------------------------------------------------------------------------------ From net realized gain on investments (1.96) (.55) (.41) (.30) (.17) - ------------------------------------------------------------------------------------------------------------------------------------ Total distributions (2.13) (.75) (.52) (.31) (.17) - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $10.59 $11.62 $10.78 $9.86 $9.74 - ------------------------------------------------------------------------------------------------------------------------------------ Ratios and supplemental data - ------------------------------------------------------------------------------------------------------------------------------------ Total investment return at net asset value (%)(a) 12.13 15.54 15.25 4.80 7.95 - ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $1,732,139 $1,664,215 $1,327,246 $975,794 $801,443 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets (%)(c) 1.93 1.99 2.02 2.04 2.11 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net investment income (loss) to average net assets (%) (.75) (.45) .09 .29 .12 - ------------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover (%) 162.35 154.98 72.88 63.31 17.45 - ------------------------------------------------------------------------------------------------------------------------------------ + 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).
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 - ------------------------------------------------------------------------------------------------------------------------------------ 1998 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $11.90 $11.05 $10.09 $8.86 - ------------------------------------------------------------------------------------------------------------------------------------ Investment operations - ------------------------------------------------------------------------------------------------------------------------------------ Net investment (loss) income (.06)(b) (.02)(b) .03(b) .01 - ------------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain on investments 1.22 1.66 1.47 1.22 - ------------------------------------------------------------------------------------------------------------------------------------ Total from investment operations 1.16 1.64 1.50 1.23 - ------------------------------------------------------------------------------------------------------------------------------------ Less distributions: - ------------------------------------------------------------------------------------------------------------------------------------ From net investment income (.20) (.24) (.13) -- - ------------------------------------------------------------------------------------------------------------------------------------ From net realized gain on investments (1.96) (.55) (.41) -- - ------------------------------------------------------------------------------------------------------------------------------------ Total distributions (2.16) (.79) (.54) -- - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $10.90 $11.90 $11.05 $10.09 - ------------------------------------------------------------------------------------------------------------------------------------ Ratios and supplemental data - ------------------------------------------------------------------------------------------------------------------------------------ Total investment return at net asset value (%)(a) 12.48 15.72 15.54 13.88* - ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $50,700 $43,662 $24,179 $5,853 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets (%)(c) 1.68 1.74 1.80 1.23* - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net investment income (loss) to average net assets (%) (.50) (.21) .32 .17* - ------------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover (%) 162.35 154.98 72.88 63.31 - ------------------------------------------------------------------------------------------------------------------------------------ + 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).
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 - ------------------------------------------------------------------------------------------------------------------------------------ 1998 1997 1996 1995 1994 - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $12.17 $11.24 $10.25 $10.00 $9.46 - ------------------------------------------------------------------------------------------------------------------------------------ Investment operations - ------------------------------------------------------------------------------------------------------------------------------------ Net investment (loss) income .03(b) .08(b) .12(b) .09 .01 - ------------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain on investments 1.25 1.70 1.48 .47 .53 - ------------------------------------------------------------------------------------------------------------------------------------ Total from investment operations 1.28 1.78 1.60 .56 .54 - ------------------------------------------------------------------------------------------------------------------------------------ Less distributions: - ------------------------------------------------------------------------------------------------------------------------------------ From net investment income (.29) (.30) (.20) (.01) -- - ------------------------------------------------------------------------------------------------------------------------------------ From net realized gain on investments (1.96) (.55) (.41) (.30) -- - ------------------------------------------------------------------------------------------------------------------------------------ Total distributions (2.25) (.85) (.61) (.31) -- - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $11.20 $12.17 $11.24 $10.25 $10.00 - ------------------------------------------------------------------------------------------------------------------------------------ Ratios and supplemental data - ------------------------------------------------------------------------------------------------------------------------------------ Total investment return at net asset value (%)(a) 13.35 16.75 16.39 6.00 5.71* - ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $62,367 $47,000 $66,708 $42,582 $29,396 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets (%)(c) .93 .99 1.02 1.06 .37* - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net investment income (loss) to average net assets (%) .24 .69 1.09 1.20 .42* - ------------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover (%) 162.35 154.98 72.88 63.31 17.45 - ------------------------------------------------------------------------------------------------------------------------------------ + 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).
Notes to financial statements October 31, 1998 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 are subject to a contingent deferred sales charge, if those shares are redeemed within six years of purchase. Class M shares are sold with a maximum front end sales charge of 3.50% and pay an ongoing distribution fee that is higher than class A shares but lower than class B shares. Class Y shares, which are sold at net asset value, are generally subject to the same expenses as class A, class B, and class M shares, but do not bear a distribution fee. Class Y shares are sold to defined contribution plans that invest at least $250 million in a combination of Putnam Funds and other accounts managed by affiliates of Putnam Investment Management, Inc., ("Putnam Management"), the fund's manager, a wholly-owned subsidiary of Putnam Investments, Inc. Expenses of the fund are borne pro-rata by the holders of each class of shares, except that each class bears expenses unique to that class (including the distribution fees applicable to such class). Each class votes as a class only with respect to its own distribution plan or other matters on which a class vote is required by law or determined by the Trustees. Shares of each class would receive their pro-rata share of the net assets of the fund, if that fund were liquidated. In addition, the Trustees declare separate dividends on each class of shares. The following is a summary of significant accounting policies 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 Management. 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. Collateral for certain tri-party repurchase agreements is held at the counterparty's custodian in a segregated account for the benefit of the fund and the counterparty. 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, and 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 realized 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) Swap contracts The fund may engage in swap agreements, which are an agreement to exchange the return generated by one instrument for the return generated by another instrument. The fund may enter into equity swap agreements, to manage its exposure to equity markets, which involve a commitment by one party to pay interest in exchange for a market linked return based on a notional amount. To the extent that the total return of the security or index underlying the transaction exceeds or falls short of the offsetting interest rate obligation, the fund will receive a payment from or make a payment to the counterparty, respectively. Equity swaps are marked to market daily based upon quotations from market makers and the change, if any, is recorded as unrealized gain or loss. Payments received or made at the end of the measurement period are recorded as realized gains or losses. The fund could be exposed to credit or market risk due to unfavorable changes in the fluctuation of interest rates or in the price of the underlying security or index, the possibility that there is no liquid market for these agreements or that the counterparty may default on its obligation to perform. H) 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, 1998, the fund had no borrowings against the line of credit. I) 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. J) 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, foreign taxes, realized and unrealized gains and losses on passive foreign investment companies. Reclassifications are made to the fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryovers) under income tax regulations. For the year ended October 31, 1998, the fund reclassified $23,475,384 to increase undistributed net investment income and $1,614,994 to increase paid-in-capital, with a decrease to accumulated net realized gains of $25,090,378. 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. As part of the subcustodian contract between the subcustodian bank and Putnam Fiduciary Trust Company (PFTC), a subsidiary of Putnam Investments, Inc., the subcustodian bank has a lien on the securities of the fund to the extent permitted by the fund's investment restrictions to cover any advances made by the subcustodian bank for the settlement of securities purchased by the fund. At October 31, 1998, the payable to the subcustodian bank represents the amount due for cash advance for the settlement of a security purchased. The fund reimburses Putnam Management an allocated amount for the compensation and related expenses of certain officers of the fund and their staff who provide administrative services to the fund. The aggregate amount of all such reimbursements is determined annually by the Trustees. Custodial functions for the fund's assets are provided by PFTC. Investor servicing agent functions are provided by Putnam Investor Services, a division of PFTC. For the year ended October 31, 1998, fund expenses were reduced by $1,464,258 under expense offset arrangements with PFTC and brokerage service arrangements. Investor servicing and custodian fees reported in the Statement of operations exclude these credits. The fund could have invested a portion of the assets utilized in connection with the expense offset arrangements in an income producing asset if it had not entered into such arrangements. Each Trustee of the fund receives an annual Trustee fee, of which $4,000 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, class M shares, respectively. The Trustees have approved payment by the fund at an annual rate of 0.25%, 1.00%, and 0.75% of the average net assets attributable to class A, class B, and class M shares respectively. For the year ended October 31, 1998 Putnam Mutual Funds Corp., acting as underwriter received net commissions of $577,977 and $17,991 from the sale of class A and class M shares, respectively and received $2,076,679 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, 1998, Putnam Mutual Funds Corp., acting as underwriter received $27,335 on class A redemptions. Note 3 Purchases and sales of securities During the year ended October 31, 1998, purchases and sales of investment securities other than short-term investments aggregated $7,530,171,122 and $7,805,725,388, 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, 1998, there was an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows: Year ended October 31, 1998 - ----------------------------------------------------------------------------- Class A Shares Amount - ----------------------------------------------------------------------------- Shares sold 67,632,824 $ 765,441,417 - ----------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 48,094,524 460,264,719 - ----------------------------------------------------------------------------- 115,727,348 1,225,706,136 Shares repurchased (72,999,084) (818,734,753) - ----------------------------------------------------------------------------- Net increase 42,728,264 $ 406,971,383 - ----------------------------------------------------------------------------- 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, 1998 - ----------------------------------------------------------------------------- Class B Shares Amount - ----------------------------------------------------------------------------- Shares sold 32,103,540 $ 347,176,136 - ----------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 30,698,837 284,271,233 - ----------------------------------------------------------------------------- 62,802,377 631,447,369 Shares repurchased (42,493,698) (459,737,498) - ----------------------------------------------------------------------------- Net increase 20,308,679 $ 171,709,871 - ----------------------------------------------------------------------------- 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, 1998 - ----------------------------------------------------------------------------- Class M Shares Amount - ----------------------------------------------------------------------------- Shares sold 2,198,969 $ 24,442,916 - ----------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 789,181 7,505,074 - ----------------------------------------------------------------------------- 2,988,150 31,947,990 Shares repurchased (2,006,965) (22,548,855) - ----------------------------------------------------------------------------- Net increase 981,185 $ 9,399,135 - ----------------------------------------------------------------------------- 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, 1998 - ----------------------------------------------------------------------------- Class Y Shares Amount - ----------------------------------------------------------------------------- Shares sold 2,546,489 $ 29,156,167 - ----------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 895,004 8,690,286 - ----------------------------------------------------------------------------- 3,441,493 37,846,453 Shares repurchased (1,733,001) (19,594,200) - ----------------------------------------------------------------------------- Net increase 1,708,492 $ 18,252,253 - ----------------------------------------------------------------------------- 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) - ----------------------------------------------------------------------------- Federal tax information (Unaudited) Pursuant to Section 852 of the Internal Revenue Code, as amended, the Fund hereby designates $139,685,652 as a 20% capital gain. For the period, interest and dividends from foreign countries were $35,182,799. Taxes paid to foreign countries were $3,399,665 or $.008 (for all classes of shares). The fund has designated 69.03% of the distributions from net investment income as qualifying for the dividends received deduction for corporations. The Form 1099 you receive in January 1999 will show the tax status of all distributions paid to your account in calendar 1998. 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 PricewaterhouseCoopers LLP TRUSTEES George Putnam, Chairman William F. Pounds, Vice Chairman John A. Hill, Vice Chairman Jameson Adkins Baxter Hans H. Estin Ronald J. Jackson Paul L. Joskow Elizabeth T. Kennan Lawrence J. Lasser John H. Mullin III Robert E. Patterson Donald S. Perkins George Putnam, III A.J.C. Smith W. Thomas Stephens W. Nicholas Thorndike OFFICERS George Putnam President Charles E. Porter Executive Vice President Patricia C. Flaherty Senior Vice President John D. Hughes Senior Vice President and Treasurer Lawrence J. Lasser Vice President Gordon H. Silver Vice President Ian C. Ferguson Vice President Brett C. Browchuk Vice President Robert Swift Vice President and Fund Manager Lisa Svensson Vice President and Fund Manager Kelly A. Morgan Vice President and Fund Manager Olivier M. Rudigoz Vice President and Fund Manager Michael Arends Vice President and Fund Manager Manuel Weiss Herrero Vice President and Fund Manager John R. Verani 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. [LOGO OMITTED] PUTNAM INVESTMENTS The Putnam Funds One Post Office Square Boston, Massachusetts 02109 www.putnaminv.com - --------------------- BULK RATE U.S. POSTAGE PAID PUTNAM INVESTMENTS - --------------------- AN006 47848 005/882/907/513 12/98 PUTNAM INVESTMENTS [SCALE LOGO OMITTED] - ---------------------------------------------------------------------------- Putnam Global Growth Fund Supplement to Annual Report dated 10/31/98 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 Six months ended 10/31/98 -5.64% One year ended 10/31/98 13.35 Life of class (since 6/15/94) 72.58 Annual average 13.27 - ---------------------------------------------------------------------------- Share value: NAV 10/31/97 $12.17 10/31/98 11.20 - ---------------------------------------------------------------------------- Distributions: No. Income Capital gains Total 1 $0.285 $1.964 $2.249 - ---------------------------------------------------------------------------- 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-----