N-CSRS

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: (811- 05693)
Exact name of registrant as specified in charter:	Putnam Europe Equity Fund
Address of principal executive offices: One Post Office Square, Boston, Massachusetts 02109
Name and address of agent for service:	Beth S. Mazor, Vice President
	One Post Office Square
	Boston, Massachusetts 02109
Copy to:	John W. Gerstmayr, Esq.
	Ropes & Gray LLP
	One International Place
	Boston, Massachusetts 02110
Registrant’s telephone number, including area code:		(617) 292-1000
Date of fiscal year end: June 30, 2009
Date of reporting period: July 1, 2008 — December 31, 2008

Item 1. Report to Stockholders:
The following is a copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Investment Company Act of 1940:

Since 1937, when George Putnam created a prudent mix of stocks and bonds in a single, professionally managed portfolio, we have championed the wisdom of the balanced approach. Today, we offer investors a world of equity, fixed-income, multi-asset, and absolute-return portfolios so investors can pursue a range of financial goals. Our seasoned portfolio managers seek superior results over time, backed by original, fundamental research on a global scale. We believe in service excellence, in the value of experienced financial advice, and in putting clients first in everything we do.

In 1830, Massachusetts Supreme Judicial Court Justice Samuel Putnam established The Prudent Man Rule, a legal foundation for responsible money management.

Not FDIC insured
May lose value
No bank guarantee

THE PRUDENT MAN RULE

All that can be required of a trustee to invest is that he shall conduct himself faithfully and exercise a sound discretion. He is to observe how men of prudence, discretion, and intelligence manage their own affairs, not in regard to speculation, but in regard to the permanent disposition of their funds, considering the probable income, as well as the probable safety of the capital to be invested.

Putnam
Europe Equity
Fund

12 | 31 | 08
Semiannual Report

Message from the Trustees	2
About the fund	4
Performance snapshot	6
Interview with your fund’s Portfolio Manager	7
Performance in depth.	13
Expenses	14
Portfolio turnover	16
Your fund’s management.	17
Terms and definitions	18
Trustee approval of management contract	19
Other information for shareholders.	24
Financial statements	25
Brokerage commissions	44

Cover photograph: © Marco Cristofori

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Message from the Trustees

Dear Fellow Shareholder:

For more than a year now, financial markets have experienced signifi-cant upheaval. Ongoing and coordinated responses by governmental and financial authorities around the world have provided a sense of optimism that stability will be restored, but investors should not expect a reduction in volatility in the near term.

Putnam Investments, meanwhile, is making several important changes to its equity fund lineup and portfolio management under President and Chief Executive Officer Robert L. Reynolds. Key among them is replacing a team management structure within Putnam equity funds with a more nimble decision-making process that vests full authority and responsibility with individual fund managers.

The portfolio manager of Putnam Europe Equity Fund is Simon (Sam) Davis, who joined Putnam in 2000 and has 21 years of investment-industry experience. In other moves aimed at achieving performance excellence, Putnam has bolstered its ranks of seasoned equity analysts with several important hires in recent months.

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We would like to take this opportunity to welcome new shareholders to the fund and to thank all of our investors for your continued confidence in Putnam. Although the financial markets have recently presented investors with extraordinary challenges, it is Putnam’s belief that the seeds of opportunity are often sown during difficult times like these.

About the fund

Pursuing growth in European markets

As a shareholder of Putnam Europe Equity Fund, you are seeking to benefit from opportunities in one of the world’s most advanced economies.

While international investing involves additional risks, Europe has a long history of capitalism and stock investing, and the region continues to evolve. Today, the 27-member states of the European Union, with approximately 500 million people, form a large, integrated economy that exports more goods and services than any nation in the world.

With these advantages, it is not surprising that European companies are leaders in many business sectors, including financials, health care, and telecommunications. If you look at the products or services you use every day — from cars and cell phones to household products — you are likely to find many items made by European companies.

At the macroeconomic level, European stocks can offer diversification to U.S. investors because Europe can follow a different business cycle than the United States. In Europe, interest rates and monetary policy are not set by the U.S. Federal Reserve Board, but by the European Central Bank, the Bank of England, and other central banks. While different economic systems, political developments, and currencies like the euro, the British pound, and the Swiss franc can add risk, they also provide diversification for U.S.-based investors. Though international markets can experience downturns, investing internationally gives you a chance to keep building wealth even if U.S. stocks struggle.

Since 1990, Putnam Europe Equity Fund has served investors by seeking to invest in attractively valued companies across European markets. Pursuing Putnam’s “blend” strategy, the fund’s manager targets stocks believed to be worth more than their current stock prices indicate, and seeks to perform well when either growth- or value-style stocks lead international markets. The manager selects stocks and determines market and sector weightings by relying in part on the proprietary research of Putnam analysts based in both Boston and London.

International investing involves certain risks, such as currency fluctuations, economic instability, and political developments. Additional risks may be associated with emerging-market securities, including illiquidity and volatility. The fund invests some or all of its assets in small and/or midsize companies. Such investments increase the risk of fluctuations in the value of your investment. The fund concentrates its investments by region and involves more risk than a fund that invests more broadly. While diversification can help protect your returns from excessive volatility, it cannot protect against market losses.

In-depth analysis is key to
successful stock selection.

Drawing on the expertise of a dedicated team of stock analysts, the fund’s manager seeks stocks that are believed to be underpriced by the market. Once a stock is selected for the portfolio, it is regularly assessed to ensure that it continues to meet certain criteria, including:

Quality High-quality companies, with characteristics such as solid management teams and sound business models, are preferred.

Valuation The manager carefully considers how each stock is valued, seeking stocks whose valuations are attractive relative to the company’s growth potential and capital requirements.

Cash flow Examining each company’s financials, particularly the amount of cash a company generates relative to the earnings that it reports, and projecting its ability to generate cash returns going forward.

Changes in the world and Europe’s regional economy have added to the
investment potential of European companies since Putnam Europe Equity Fund
launched in 1990.

Performance snapshot

Average annual total return (%) comparison as of 12/31/08

Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. Share price, principal value, and return will fluctuate, and you may have a gain or a loss when you sell your shares. Performance of class A shares assumes reinvestment of distributions and does not account for taxes. Fund returns in the bar chart do not reflect a sales charge of 5.75%; had they, returns would have been lower. See pages 7 and 13–14 for additional performance information. For a portion of the periods, this fund may have limited expenses, without which returns would have been lower. A 1% short-term trading fee may apply. To obtain the most recent month-end performance, visit www.putnam.com.

* Returns for the six-month period are not annualized, but cumulative.

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Interview with your
fund’s Portfolio Manager

Simon (Sam) Davis

Sam, how did the fund perform during the six-month period?

Like European markets in general, the fund saw a significant decline in absolute terms over the period. Relative results were more favorable, as the fund outperformed the benchmark MSCI Europe Index and the average of its peer group, Lipper European Region Funds. While markets fell in absolute returns until December, our relative results were much different in the first half of the period than in the second. From July until September, the fund underperformed the index substantially amid the worsening global credit crisis, as hedge funds generally were forced to sell their most liquid securities, many of which were also holdings in this fund. Fortunately, when this selling pressure abated from October through December, we saw much-improved relative results from our stock selections.

How did currency positioning influence performance?

The fund’s overall foreign currency exposure, achieved through country exposures and selective currency hedging, had a negative impact on results. Positioning in

Broad market index and fund performance

This comparison shows your fund’s performance in the context of broad market indexes for the six months ended 12/31/08. See page 6 and pages 13–14 for additional fund performance information. Index descriptions can be found on page 18.

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the Swiss franc and the Norwegian krone offset relatively favorable results from positioning in the euro.

How did the international economic situation affect profits of European companies?

The deteriorating value of assets and decreased credit availability is causing a decline in profitability and earnings growth across Europe. In terms of the broader economy, unemployment has increased while consumption has slowed significantly as the savings rates in many countries have risen. In Ireland and Spain, once-booming real-estate sectors have retrenched. In the United Kingdom, consumers are heavily indebted and vulnerable to a sustained economic contraction. Germany, the region’s largest economy and biggest exporter, is decelerating significantly. Eastern Europe is also a source of concern, particularly the Baltic states and Bulgaria, Romania, and Hungary.

How have European policymakers responded to the situation?

The United Kingdom has been the most aggressive, employing measures similar to those implemented in the United States by the Federal Reserve (the Fed). For example, in November the Bank of England slashed interest rates by 150 basis points; it has also provided capital to support the financials sector and supplied liquidity to the credit markets.

Unfortunately, the European Central Bank has cut interest rates at a slower

Top 10 holdings

This table shows the fund’s top 10 holdings and the percentage of the fund’s net assets that each represented as of 12/31/08. Holdings will vary over time.

HOLDING (percentage of fund’s net assets)	COUNTRY	SECTOR/INDUSTRY
Nestle SA (4.8%)	Switzerland	Consumer staples/Food
BP PLC (4.8%)	United Kingdom	Energy/Oil and gas
Novartis AG (4.6%)	Switzerland	Health care/Pharmaceuticals
Total SA (4.5%)	France	Energy/Oil and gas
Roche Holding AG (4.5%)	Switzerland	Health care/Pharmaceuticals
GlaxoSmithKline PLC (4.0%)	United Kingdom	Health care/Pharmaceuticals
E.On AG (3.6%)	Germany	Utilities and power/Electric utilities
Banco Santander Central Hispano SA (3.0%)	Spain	Financials/Banking
BHP Billiton PLC (3.0%)	United Kingdom	Basic materials/Metals
Vodafone Group PLC (2.8%)	United Kingdom	Communication services/
		Telecommunications

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pace, even as the continent has fallen into recession. The countries of the European Union have not yet agreed on a coordinated plan to stimulate growth through increased government spending because large countries such as Germany initially expressed reluctance. Some countries may feel less urgency because they did not experience the same increase in property prices seen in places such as the United Kingdom, Ireland, and Spain. Nevertheless, all of these economies have fallen into recession and could benefit from a coordinated policy response.

How have you positioned the fund during this market turmoil?

Our stock selection process did not require major adjustments, but rather a shift in emphasis. We anticipated the effects of the slowdown by favoring companies with strong balance sheets that achieve earnings growth through market-share gains, rising profit margins, or more competitive business models. Companies with these advantages should be well positioned for performance in lean economic times. We also reduced exposure to banking stocks affected by the credit crisis and to consumer discretionary companies hurt by the drop in consumer spending. By contrast, the weighting in the consumer staples sector increased, because consumers typically continue to spend on staple goods and services even when they reduce discretionary purchases. Within financials, we continued to favor insurers and were underweight banks during the period. Investment banks, in particular, are

Comparison of top sector weightings

This chart shows how the fund’s top weightings have changed over the past six months. Weightings are shown as a percentage of net assets. Holdings will vary over time.

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among those at greatest risk within the sector. Our market positioning was generally neutral except for a below-benchmark allocation to the United Kingdom, a market we considered overvalued, and an overweight to Switzerland where we identified various high-quality but undervalued stocks. With regard to sectors, we maintained underweights to financials and consumer cyclicals.

What stocks contributed positively to the fund’s results during the semiannual period?

Our stock selection was particularly effective in the industrial and health-care sectors. Among industrials, one of the top positive contributors to relative performance was BAE Systems, a British defense company. This company benefited from continuing strength in orders for military equipment, and the fund held an overweight relative to the benchmark. Prysmian is a cable manufacturer based in Italy. It makes a wide range of cables used in industrial and consumer products — from high-voltage power transmission lines to fiber optic and copper cables used for telephones and televisions. Orders for its products have remained reasonably strong, and the company’s announcement of a share repurchase program demonstrates management’s focus on shareholder value.

In the health-care sector, GlaxoSmith-Kline, a global health-care company based in the United Kingdom, outperformed the benchmark during the period. The stock benefited as the company won a U.S. panel’s backing to keep its top-selling asthma drug Advair on the market. The company also announced that it would undertake the final phase of testing on a new drug that may shake up the estimated $34 billion market for cholesterol medicines.

The fund also held two pharmaceutical stocks in Switzerland that outperformed the benchmark. Roche, the world’s biggest maker of cancer medicines, reported favorable test results for its Xeloda drug aimed at extending the life of patients with incurable stomach and esophageal tumors, and released clinical trial data indicating that its Avastin medication helped women with breast cancer to live longer without their disease progressing. Novartis had good results from its bird-flu vaccine and received the European Commission’s approval for the use of its osteoporosis drug Aclasta. To prepare for the patent expiration of its top-selling drug, Diovan, Novartis announced job cuts and a strategic focus on selling its products to managed-care organizations rather than to doctors, as well as a new effort on the development and sale of cancer medicines.

What holdings had a detrimental impact on performance?

The slowdown in the global economy has reduced demand for raw materials significantly. Shares of ArcelorMittal, a global steel maker headquartered in Luxembourg, fell after the company announced production cuts.

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Our stock selection in the energy sector had disappointing results. The price of oil fell steadily and sharply since July, and this had an effect on both oil producers and energy exploration companies. Two energy holdings in the fund — StatoilHydro, an oil and natural gas company, and Petroleum Geo-Services — underperformed the benchmark. Both companies are based in Norway, a market that is often influ-enced by the fortunes of the global oil industry. The fund had overweight positions in both stocks. While the setbacks for these companies had an adverse impact on fund performance, we continue to hold StatoilHydro because we believe the shares are priced below their worth, and because we expect that energy prices will increase from current levels. The fund sold Petroleum Geo-Services given a severe deterioration in the operati ng fundamentals of its business.

I N  T H E  N E W S

The U.S. Treasury and the Federal Reserve have taken well-publicized steps in response to the credit crisis. What may be less known are actions by European and Asian authorities.The Bank of England has made dramatic reductions in interest rates. In October, short-term rates stood at 5%, but after a series of cuts, they had fallen to 1.5% by January 8.This marked the first time rates had dropped below 2% in the Bank of England’s history, which dates to 1694. Similarly, China has instituted several interest-rate reductions since September. In November, China unveiled a $586 billion economic stimulus program. In a more unconventional move, the government of Ireland during January nationalized Anglo-Irish Banks, a weakened financial institution.

What is your outlook and strategy for the second half of the fund’s fiscal year?

Economic fundamentals are poor, the corporate earnings outlook is deteriorating, and company failures are increasing. The process of financial deleveraging is continuing, which puts pressure on asset prices, and consumers are deleveraging as well, especially the heavily indebted consumers of the United Kingdom. In this environment, the fund is positioned defensively, but we are monitoring the positive developments that are occurring today. For example, stock valuations in general have become attractive, markets are receiving monetary policy stimulus, and energy prices have fallen, providing consumers with some respite. We are looking for opportunities among select

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cyclical stocks, although we remain quite skeptical of the retail industry. Generally speaking, we are looking for attractively valued companies that have strong balance sheets and can generate market-share gains in a challenging business environment.

Thank you, Sam, for talking with us today.

The views expressed in this report are exclusively those of Putnam Management. They are not meant as investment advice.

Please note that the holdings discussed in this report may not have been held by the fund for the entire period. Portfolio composition is subject to review in accordance with the fund’s investment strategy and may vary in the future.

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Your fund’s performance

This section shows your fund’s performance, price, and distribution information for periods ended December 31, 2008, the end of the first half of its current fiscal year. In accordance with regulatory requirements for mutual funds, we also include expense information taken from the fund’s current prospectus. Performance should always be considered in light of a fund’s investment strategy. Data represents past performance. Past performance does not guarantee future results. More recent returns may be less or more than those shown. Investment return and principal value will fluctuate, and you may have a gain or a loss when you sell your shares. Performance information does not reflect any deduction for taxes a shareholder may owe on fund distributions or on the redemption of fund shares. For the most recent month-end performance, please visit the Individual Investors section of www.putnam.com or call Putnam at 1-800-225-1581. Class Y shares are generally onl y available to corporate and institutional clients and clients in other approved programs. See the Terms and Definitions section in this report for definitions of the share classes offered by your fund.

Fund performance Total return for periods ended 12/31/08

	Class A		Class B		Class C		Class M		Class R	Class Y
(inception dates)	(9/7/90)		(2/1/94)		(7/26/99)		(12/1/94)		(12/1/03) (10/4/05)
	NAV	POP	NAV	CDSC	NAV	CDSC	NAV	POP	NAV	NAV
Annual average
(life of fund)	7.02%	6.67%	6.22%	6.22%	6.22%	6.22%	6.51%	6.30%	6.77%	7.07%
10 years	–3.16	–8.74	–10.12	–10.12	–10.07	–10.07	–7.83	–11.05	–5.23	–2.31
Annual average	–0.32	–0.91	–1.06	–1.06	–1.06	–1.06	–0.81	–1.16	–0.54	–0.23
5 years	1.97	–3.88	–1.72	–3.31	–1.72	–1.72	–0.58	–4.04	1.04	2.87
Annual average	0.39	–0.79	–0.35	–0.67	–0.35	–0.35	–0.12	–0.82	0.21	0.57
3 years	–21.63	–26.15	–23.35	–25.22	–23.34	–23.34	–22.79	–25.49	–22.08	–20.98
Annual average	–7.80	–9.61	–8.48	–9.23	–8.48	–8.48	–8.26	–9.34	–7.98	–7.55
1 year	–45.35	–48.51	–45.76	–48.47	–45.74	–46.28	–45.63	–47.54	–45.46	–45.18
6 months	–38.41	–41.96	–38.63	–41.70	–38.62	–39.24	–38.58	–40.74	–38.45	–38.30

Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. After-sales-charge returns (public offering price, or POP) for class A and M shares reflect a maximum 5.75% and 3.50% load, respectively. Class B share returns reflect the applicable contingent deferred sales charge (CDSC), which is 5% in the first year, declining to 1% in the sixth year, and is eliminated thereafter. Class C shares reflect a 1% CDSC for the first year that is eliminated thereafter. Class R and Y shares have no initial sales charge or CDSC. Performance for class B, C, M, R, and Y shares before their inception is derived from the historical performance of class A shares, adjusted for the applicable sales charge (or CDSC) and, except for class Y shares, the higher operating expenses for such shares.

For a portion of the periods, this fund may have limited expenses, without which returns would have been lower.

A 1% short-term trading fee may be applied to shares exchanged or sold within 90 days of purchase.

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Comparative index returns For periods ended 12/31/08

	MSCI Europe	Lipper European Region
	Index	Funds category *
Annual average (life of fund)	6.73%	6.76%
10 years	3.76	33.38
Annual average	0.37	2.42
5 years	7.90	9.52
Annual average	1.53	1.67
3 years	–18.43	–20.37
Annual average	–6.56	–7.47
1 year	–46.42	–46.97
6 months	–38.83	–39.22

Index and Lipper results should be compared to fund performance at net asset value.

* Over the 6-month, 1-year, 3-year, 5-year, 10-year, and life-of-fund periods ended 12/31/08, there were 120, 107, 96, 88, 44, and 8 funds, respectively, in this Lipper category.

Fund price and distribution information For the six-month period ended 12/31/08

	Class A		Class B	Class C	Class M		Class R	Class Y
Share value	NAV	POP	NAV	NAV	NAV	POP	NAV	NAV
6/30/08	$23.20	$24.62	$22.39	$22.94	$23.07	$23.91	$23.02	$23.24
12/31/08	14.29	15.16	13.74	14.08	14.17	14.68	14.17	14.34

The classification of distributions, if any, is an estimate. Final distribution information will appear on your year-end tax forms.

The fund made no distributions during the period.

Fund’s annual operating expenses For the fiscal year ended 6/30/08

	Class A	Class B	Class C	Class M	Class R	Class Y
Total annual fund operating expenses	1.41%	2.16%	2.16%	1.91%	1.66%	1.16%

Expense information in this table is taken from the most recent prospectus, is subject to change, and may differ from that shown in the next section and in the financial highlights of this report. Expenses are shown as a percentage of average net assets.

Your fund’s expenses

As a mutual fund investor, you pay ongoing expenses, such as management fees, distribution fees (12b-1 fees), and other expenses. In the most recent six-month period, your fund limited these expenses; had it not done so, expenses would have been higher. Using the following information, you can estimate how these expenses affect your investment and compare them with the expenses of other funds. You may also pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund’s prospectus or talk to your financial representative.

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Review your fund’s expenses

The following table shows the expenses you would have paid on a $1,000 investment in Putnam Europe Equity Fund from July 1, 2008, to December 31, 2008. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.

	Class A	Class B	Class C	Class M	Class R	Class Y
Expenses paid per $1,000*	$5.99	$9.03	$9.03	$8.02	$7.00	$4.97
Ending value (after expenses)	$615.90	$613.70	$613.80	$614.20	$615.50	$617.00

* Expenses for each share class are calculated using the fund’s annualized expense ratio for each class, which represents the ongoing expenses as a percentage of average net assets for the six months ended 12/31/08. The expense ratio may differ for each share class (see the last table in this section). Expenses are calculated by multiplying the expense ratio by the average account value for the period; then multiplying the result by the number of days in the period; and then dividing that result by the number of days in the year.

Estimate the expenses you paid

To estimate the ongoing expenses you paid for the six months ended December 31, 2008, use the following calculation method. To find the value of your investment on July 1, 2008, call Putnam at 1-800-225-1581.

Compare expenses using the SEC’s method

The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the following table shows your fund’s expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total costs) of investing in the fund with those of other funds. All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.

	Class A	Class B	Class C	Class M	Class R	Class Y
Expenses paid per $1,000*	$7.48	$11.27	$11.27	$10.01	$8.74	$6.21
Ending value (after expenses)	$1,017.80	$1,014.01	$1,014.01	$1,015.27	$1,016.53	$1,019.06

* Expenses for each share class are calculated using the fund’s annualized expense ratio for each class, which represents the ongoing expenses as a percentage of average net assets for the six months ended 12/31/08. The expense ratio may differ for each share class (see the last table in this section). Expenses are calculated by multiplying the expense ratio by the average account value for the period; then multiplying the result by the number of days in the period; and then dividing that result by the number of days in the year.

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Compare expenses using industry averages

You can also compare your fund’s expenses with the average of its peer group, as defined by Lipper, an independent fund-rating agency that ranks funds relative to others that Lipper considers to have similar investment styles or objectives. The expense ratio for each share class shown indicates how much of your fund’s average net assets have been used to pay ongoing expenses during the period.

	Class A	Class B	Class C	Class M	Class R	Class Y
Your fund’s annualized
expense ratio	1.47%	2.22%	2.22%	1.97%	1.72%	1.22%
Average annualized expense
ratio for Lipper peer group*	1.47%	2.22%	2.22%	1.97%	1.72%	1.22%

* Putnam keeps fund expenses below the Lipper peer group average expense ratio by limiting our fund expenses if they exceed the Lipper average. The Lipper average is a simple average of front-end load funds in the peer group that excludes 12b-1 fees as well as any expense offset and brokerage/service arrangements that may reduce fund expenses. To facilitate the comparison in this presentation, Putnam has adjusted the Lipper average to reflect 12b-1 fees. Investors should note that the other funds in the peer group may be significantly smaller or larger than the fund, and that an asset-weighted average would likely be lower than the simple average. Also, the fund and Lipper report expense data at different times; the fund’s expense ratio shown here is annualized data for the most recent six-month period, while the quarterly updated Lipper average is based on the most recent fiscal year-end data available for the peer group funds as of 12/31/08.

Your fund’s portfolio turnover

Putnam funds are actively managed by experts who buy and sell securities based on intensive analysis of companies, industries, economies, and markets. Portfolio turnover is a measure of how often a fund’s managers buy and sell securities for your fund. A portfolio turnover of 100%, for example, means that the managers sold and replaced securities valued at 100% of a fund’s assets within a one-year period. Funds with high turnover may be more likely to generate capital gains that must be distributed to shareholders as taxable income. High turnover may also cause a fund to pay more brokerage commissions and other transaction costs, which may detract from performance.

Turnover comparisons Percentage of holdings that change every year

	2008	2007	2006	2005	2004
Putnam Europe Equity Fund	77%	106%	81%	56%	82%
Lipper European Region	107%	103%	111%	113%	139%
Funds category average

Turnover data for the fund is calculated based on the fund’s fiscal-year period, which ends on June 30. Turnover data for the fund’s Lipper category is calculated based on the average of the turnover of each fund in the category for its fiscal year ended during the indicated year. Fiscal years vary across funds in the Lipper category, which may limit the comparability of the fund’s portfolio turnover rate to the Lipper average. Comparative data for 2008 is based on information available as of 12/31/08.

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Your fund’s management

Your fund’s Portfolio Manager is Simon Davis.

Portfolio management fund ownership

The following table shows how much the fund’s current Portfolio Manager has invested in the fund and in all Putnam mutual funds (in dollar ranges). Information shown is as of December 31, 2008, and December 31, 2007.

Trustee and Putnam employee fund ownership

As of December 31, 2008, all of the Trustees of the Putnam funds owned fund shares. The following table shows the approximate value of investments in the fund and all Putnam funds as of that date by the Trustees and Putnam employees. These amounts include investments by the Trustees’ and employees’ immediate family members and investments through retirement and deferred compensation plans.

	Assets in the fund	Total assets in all Putnam funds
Trustees	$147,000	$32,000,000
Putnam employees	$2,204,000	$332,000,000

Other Putnam funds managed by the Portfolio Manager

Simon Davis does not manage any other Putnam mutual funds. He may also manage other accounts and variable trust funds advised by Putnam Management or an affiliate.

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Terms and definitions

Important terms

Total return shows how the value of the fund’s shares changed over time, assuming you held the shares through the entire period and reinvested all distributions in the fund.

Net asset value (NAV) is the price, or value, of one share of a mutual fund, without a sales charge. NAVs fluctuate with market conditions. NAV is calculated by dividing the net assets of each class of shares by the number of outstanding shares in the class.

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 generally a charge applied at the time of the redemption of class B or C shares and assumes redemption at the end of the period. Your fund’s class B 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. The CDSC for class C shares is 1% for one year after purchase.

Share classes

Class A shares are generally subject to an initial sales charge and no CDSC (except on certain redemptions of shares bought without an initial sales charge).

Class B shares are not subject to an initial sales charge. They may be subject to a CDSC.

Class C shares are not subject to an initial sales charge and are subject to a CDSC only if the shares are redeemed during the first year.

Class M shares have a lower initial sales charge and a higher 12b-1 fee than class A shares and no CDSC (except on certain redemptions of shares bought without an initial sales charge).

Class R shares are not subject to an initial sales charge or CDSC and are available only to certain defined contribution plans.

Class Y shares are not subject to an initial sales charge or CDSC, and carry no 12b-1 fee. They are generally only available to corporate and institutional clients and clients in other approved programs.

Comparative indexes

Barclays Capital Aggregate Bond Index is an unmanaged index of U.S. investment-grade fixed-income securities.

Merrill Lynch U.S. 3-Month Treasury Bill Index is an unmanaged index that seeks to measure the performance of U.S. Treasury bills available in the marketplace.

Morgan Stanley Capital International (MSCI) Europe Index is an unmanaged index of Western European equity securities.

S&P 500 Index is an unmanaged index of common stock performance.

Indexes assume reinvestment of all distributions and do not account for fees. Securities and performance of a fund and an index will differ. You cannot invest directly in an index.

Lipper is a third-party industry-ranking entity that ranks mutual funds. Its rankings do not reflect sales charges. Lipper rankings are based on total return at net asset value relative to other funds that have similar current investment styles or objectives as determined by Lipper. Lipper may change a fund’s category assignment at its discretion. Lipper category averages reflect performance trends for funds within a category.

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Trustee approval of management contract

General conclusions

The Board of Trustees of the Putnam funds oversees the management of each fund and, as required by law, determines annually whether to approve the continuance of your fund’s management contract with Putnam Investment Management (“Putnam Management”) and the sub-management contract, in respect of your fund, between Putnam Management’s affiliate, Putnam Investments Limited (“PIL”), and Putnam Management. In May 2008, the Board of Trustees also approved a new sub-advisory contract among Putnam Management, PIL and another affiliate, The Putnam Advisory Company (“PAC”), in respect of your fund. In this regard, the Board of Trustees, with the assistance of its Contract Committee consisting solely of Trustees who are not “interested persons” (as such term is defined in the Investment Company Act of 1940, as amended) of the Putnam funds (the “Independent Trustees”), requests and evaluates all information it deems reason ably necessary under the circumstances. Over the course of several months ending in June 2008, the Contract Committee met several times to consider the information provided by Putnam Management and other information developed with the assistance of the Board’s independent counsel and independent staff. The Contract Committee reviewed and discussed key aspects of this information with all of the Independent Trustees. The Contract Committee recommended, and the Independent Trustees approved, the continuance of your fund’s management, sub-management and sub-advisory contracts, effective July 1, 2008. (Because PIL and PAC are affiliates of Putnam Management and Putnam Management remains fully responsible for all services provided by PIL and PAC, the Trustees have not evaluated PIL and PAC as separate entities, except as otherwise indicated below, and all subsequent references to Putnam Management below should be deemed to include reference to PIL and PAC as necessary or a ppropriate in the context.)

The Independent Trustees’ approval was based on the following conclusions:

• That the fee schedule in effect for your fund represented reasonable compensation in light of the nature and quality of the services being provided to the fund, the fees paid by competitive funds and the costs incurred by Putnam Management in providing such services, and

• That this fee schedule represented an appropriate sharing between fund shareholders and Putnam Management of such economies of scale as may exist in the management of the fund at current asset levels.

These conclusions were based on a comprehensive consideration of all information provided to the Trustees, were subject to the continued application of certain expense reductions and waivers and other considerations noted below, and were not the result of any single factor. Some of the factors that figured particularly in the Trustees’ deliberations and how the Trustees considered these factors are described below, although individual Trustees may have evaluated the information presented differently, giving different weights to various factors. It is also important to recognize that the fee arrangements for your fund and the other Putnam funds are the result of many years of review and discussion between the Independent Trustees and Putnam Management, that certain aspects of such arrangements may receive greater scrutiny in some years than others, and that the Trustees’ conclusions may be based, in part, on their

19

consideration of these same arrangements in prior years.

Management fee schedules and categories; total expenses

The Trustees reviewed the management fee schedules in effect for all Putnam funds, including fee levels and breakpoints, and the assignment of funds to particular fee categories. In reviewing fees and expenses, the Trustees generally focused their attention on material changes in circumstances — for example, changes in a fund’s size or investment style, changes in Putnam Management’s operating costs or responsibilities, or changes in competitive practices in the mutual fund industry — that suggest that consideration of fee changes might be warranted. The Trustees concluded that the circumstances did not warrant changes to the management fee structure of your fund, which had been carefully developed over the years, re-examined on many occasions and adjusted where appropriate. In this regard, the Trustees also noted that shareholders of your fund voted in 2007 to approve new management contracts containing an identical fee structure. The Trustees focuse d on two areas of particular interest, as discussed further below:

• Competitiveness. The Trustees reviewed comparative fee and expense information for competitive funds, which indicated that, in a custom peer group of competitive funds selected by Lipper Inc., your fund ranked in the 31st percentile in management fees and in the 56th percentile in total expenses (less any applicable 12b-1 fees) as of December 31, 2007 (the first percentile being the least expensive funds and the 100th percentile being the most expensive funds). (Because the fund’s custom peer group is smaller than the fund’s broad Lipper Inc. peer group, this expense information may differ from the Lipper peer expense information found elsewhere in this report.) The Trustees noted that expense ratios for a number of Putnam funds, which show the percentage of fund assets used to pay for management and administrative servi ces, distribution (12b-1) fees and other expenses, had been increasing recently as a result of declining net assets and the natural operation of fee breakpoints.

The Trustees noted that the expense ratio increases described above were currently being controlled by expense limitations initially implemented in January 2004. The Trustees have received a commitment from Putnam Management and its parent company to continue this program through at least June 30, 2009. These expense limitations give effect to a commitment by Putnam Management that the expense ratio of each open-end fund would be no higher than the average expense ratio of the competitive funds included in the fund’s relevant Lipper universe (exclusive of any applicable 12b-1 charges in each case). The Trustees observed that this commitment to limit fund expenses has served shareholders well since its inception.

In order to ensure that the expenses of the Putnam funds continue to meet evolving competitive standards, the Trustees requested, and Putnam Management agreed, to extend for the twelve months beginning July 1, 2008, an additional expense limitation for certain funds at an amount equal to the average expense ratio (exclusive of 12b-1 charges) of a custom peer group of competitive funds selected by Lipper to correspond to the size of the fund. This additional expense limitation will be applied to those open-end funds that had above-average expense ratios (exclusive of 12b-1 charges) based on the custom peer group data for the period ended December 31, 2007. This additional expense limitation will be applied to your fund.

In addition, the Trustees devoted particular attention to analyzing the Putnam funds’ fees and expenses relative to those of competitors

20

in fund complexes of comparable size and with a comparable mix of asset categories. The Trustees concluded that this analysis did not reveal any matters requiring further attention at the current time.

• Economies of scale. Your fund currently has the benefit of breakpoints in its management fee that provide shareholders with significant economies of scale, which means that the effective management fee rate of the fund (as a percentage of fund assets) declines as the fund grows in size and crosses specified asset thresholds. Conversely, if the fund shrinks in size — as has been the case for many Putnam funds in recent years — these breakpoints result in increasing fee levels. In recent years, the Trustees have examined the operation of the existing breakpoint structure during periods of both growth and decline in asset levels. The Trustees concluded that the fee schedule in effect for your fund represented an appropriate sharing of economies of scale at current asset levels.

In connection with their review of the management fees and total expenses of the Putnam funds, the Trustees also reviewed the costs of the services to be provided and profits to be realized by Putnam Management and its affiliates from the relationship with the funds. This information included trends in revenues, expenses and profitability of Putnam Management and its affiliates relating to the investment management and distribution services provided to the funds. In this regard, the Trustees also reviewed an analysis of Putnam Management’s revenues, expenses and profitability with respect to the funds’ management contracts, allocated on a fund-by-fund basis.

Investment performance

The quality of the investment process provided by Putnam Management represented a major factor in the Trustees’ evaluation of the quality of services provided by Putnam Management under your fund’s management contract. The Trustees were assisted in their review of the Putnam funds’ investment process and performance by the work of the Investment Oversight Coordinating Committee of the Trustees and the Investment Oversight Committees of the Trustees, which had met on a regular monthly basis with the funds’ portfolio teams throughout the year. The Trustees concluded that Putnam Management generally provides a high-quality investment process — as measured by the experience and skills of the individuals assigned to the management of fund portfolios, the resources made available to such personnel, and in general the ability of Putnam Management to attract and retain high-quality personnel —but also recognized that t his does not guarantee favorable investment results for every fund in every time period. The Trustees considered the investment performance of each fund over multiple time periods and considered information comparing each fund’s performance with various benchmarks and with the performance of competitive funds.

While the Trustees noted the satisfactory investment performance of certain Putnam funds, they considered the disappointing investment performance of many funds in recent periods, particularly over periods in 2007 and 2008. They discussed with senior management of Putnam Management the factors contributing to such underperformance and actions being taken to improve performance. The Trustees recognized that, in recent years, Putnam Management has taken steps to strengthen its investment personnel and processes to address areas of underperformance, including recent efforts to further centralize Putnam Management’s equity research function. In this regard, the Trustees took into consideration efforts by Putnam Management to improve its ability to assess and mitigate

21

investment risk in individual funds, across asset classes, and across the complex as a whole. The Trustees indicated their intention to continue to monitor performance trends to assess the effectiveness of these efforts and to evaluate whether additional changes to address areas of underperformance are warranted.

In the case of your fund, the Trustees considered that your fund’s class A share cumulative total return performance at net asset value was in the following percentiles of its Lipper Inc. peer group (Lipper European Region Funds) for the one-year, three-year and five-year periods ended December 31, 2007 (the first percentile being the best-performing funds and the 100th percentile being the worst-performing funds):

One-year period	77th
Three-year period	74th
Five-year period	72nd

(Because of the passage of time, these performance results may differ from the performance results for more recent periods shown elsewhere in this report.) Over the one-year, three-year and five-year periods ended December 31, 2007, there were 103, 92, and 84 funds, respectively, in your fund’s Lipper peer group.* Past performance is no guarantee of future returns.

The Trustees noted the disappointing performance for your fund for the one-year period ended December 31, 2007. In this regard, the Trustees considered that Putnam Management continues to have confidence in the investment process for your fund given its stronger longer-term record, recognizing the tendency for short-term variability over a market cycle. The Trustees also considered Putnam Management’s belief that the Large Cap Equities team’s leadership changes and the research centralization efforts underway in the equity space at Putnam Management more generally will strengthen the fund’s investment process, which focuses on a blend of quantitative techniques and fundamental analysis, and enhance its performance potential.

As a general matter, the Trustees believe that cooperative efforts between the Trustees and Putnam Management represent the most effective way to address investment performance problems. The Trustees noted that investors in the Putnam funds have, in effect, placed their trust in the Putnam organization, under the oversight of the funds’ Trustees, to make appropriate decisions regarding the management of the funds. Based on the responsiveness of Putnam Management in the recent past to Trustee concerns about investment performance, the Trustees concluded that it is preferable to seek change within Putnam Management to address performance shortcomings. In the Trustees’ view, the alternative of engaging a new investment adviser for an underperforming fund would entail significant disruptions and would not provide any greater assurance of improved investment performance.

* The percentile rankings for your fund’s class A share annualized total return performance in the Lipper European Region Funds category for the one-year, five-year, and ten-year periods ended December 31, 2008, were 37%, 74%, and 83%, respectively. Over the one-year, five-year, and ten-year periods ended December 31, 2008, your fund ranked 39th out of 107, 65th out of 88, and 37th out of 44 funds, respectively. Note that this more recent information was not available when the Trustees approved the continuance of your fund’s management contract.

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Brokerage and soft-dollar allocations; other benefits

The Trustees considered various potential benefits that Putnam Management may receive in connection with the services it provides under the management contract with your fund. These include benefits related to brokerage and soft-dollar allocations, whereby a portion of the commissions paid by a fund for brokerage may be used to acquire research services that may be useful to Putnam Management in managing the assets of the fund and of other clients. The Trustees considered changes made in 2008, at Putnam Management’s request, to the Putnam funds’ brokerage allocation policy, which expanded the permitted categories of brokerage and research services payable with soft dollars and increased the permitted soft dollar allocation to third-party services over what had been authorized in previous years. The Trustees indicated their continued intent to monitor the potential benefits associated with the allocation of fund brokerage and trends in industry practice to ensure that the principle of seeking “best price and execution” remains paramount in the portfolio trading process.

The Trustees’ annual review of your fund’s management contract arrangements also included the review of its distributor’s contract and distribution plan with Putnam Retail Management Limited Partnership and the investor servicing agreement with Putnam Fiduciary Trust Company (“PFTC”), each of which provides benefits to affiliates of Putnam Management. In the case of the investor servicing agreement, the Trustees considered that certain shareholder servicing functions were shifted to a third-party service provider by PFTC in 2007.

Comparison of retail and institutional fee schedules

The information examined by the Trustees as part of their annual contract review has included for many years information regarding fees charged by Putnam Management and its affiliates to institutional clients such as defined benefit pension plans, college endowments, etc. This information included comparisons of such fees with fees charged to the funds, as well as a detailed assessment of the differences in the services provided to these two types of clients. The Trustees observed, in this regard, that the differences in fee rates between institutional clients and mutual funds are by no means uniform when examined by individual asset sectors, suggesting that differences in the pricing of investment management services to these types of clients reflect to a substantial degree historical competitive forces operating in separate market places. The Trustees considered the fact that fee rates across different asset classes are typically higher on average for mutual funds than for institutional clients, as well as the differences between the services that Putnam Management provides to the Putnam funds and those that it provides to institutional clients of the firm, but did not rely on such comparisons to any significant extent in concluding that the management fees paid by your fund are reasonable.

Approval of the Sub-Advisory Contract among Putnam Management, Putnam Investments Limited andThe Putnam Advisory Company

In May 2008, the Trustees approved a new sub-advisory contract among Putnam Management, PIL and PAC in respect of your fund, under which PAC’s Singapore branch would begin providing discretionary investment management services for your fund. The Contract Committee reviewed information provided by Putnam Management

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and PAC and, upon completion of this review, recommended, and the Independent Trustees and the full Board of Trustees approved, the sub-advisory contract in respect of your fund, effective October 30, 2008.

The Trustees considered numerous factors they believed relevant in approving your fund’s sub-advisory contract, including Put-nam Management’s belief that the interest of shareholders would be best served by utilizing investment professionals in PAC’s Singapore office to manage a portion of your fund’s assets and PAC’s expertise in managing assets invested in Asian markets. The Trustees also considered that applicable securities laws require a sub-advisory relationship among Putnam Management, PIL and PAC in order for Putnam’s investment professionals in Sin-gapore to be involved in the management of your fund. The Trustees noted that Putnam Management and/or PIL, but not your fund, would pay the sub-advisory fee to PAC for its services and that the sub-advisory relationship with PAC will not reduce the nature, quality or overall level of service provided to your fund.

Other information for shareholders

Important notice regarding delivery of shareholder documents

In accordance with SEC regulations, Putnam sends a single copy of annual and semiannual shareholder reports, prospectuses, and proxy statements to Putnam shareholders who share the same address, unless a shareholder requests otherwise. If you prefer to receive your own copy of these documents, please call Putnam at 1-800-225-1581, and Putnam will begin sending individual copies within 30 days.

Proxy voting

Putnam is committed to managing our mutual funds in the best interests of our shareholders. The Putnam funds’ proxy voting guidelines and procedures, as well as information regarding how your fund voted proxies relating to portfolio securities during the 12-month period ended June 30, 2008, are available in the Individual Investors section of www.putnam.com, and on the SEC’s Web site, www.sec.gov. If you have questions about finding forms on the SEC’s Web site, you may call the SEC at 1-800-SEC-0330. You may also obtain the Putnam funds’ proxy voting guidelines and procedures at no charge by calling Putnam’s Shareholder Services at 1-800-225-1581.

Fund portfolio holdings

The fund will file a complete schedule of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Shareholders may obtain the fund’s Forms N-Q on the SEC’s Web site at www.sec.gov. In addition, the fund’s Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. You may call the SEC at 1-800-SEC-0330 for information about the SEC’s Web site or the operation of the Public Reference Room.

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Financial statements

A guide to financial statements

These sections of the report, as well as the accompanying Notes, constitute the fund’s financial statements.

The fund’s portfolio lists all the fund’s investments and their values as of the last day of the reporting period. Holdings are organized by asset type and industry sector, country, or state to show areas of concentration and diversification.

Statement of assets and liabilities shows how the fund’s net assets and share price are determined. All investment and noninvestment assets are added together. Any unpaid expenses and other liabilities are subtracted from this total. The result is divided by the number of shares to determine the net asset value per share, which is calculated separately for each class of shares. (For funds with preferred shares, the amount subtracted from total assets includes the liquidation preference of preferred shares.)

Statement of operations shows the fund’s net investment gain or loss. This is done by first adding up all the fund’s earnings —from dividends and interest income — and subtracting its operating expenses to determine net investment income (or loss). Then, any net gain or loss the fund realized on the sales of its holdings — as well as any unrealized gains or losses over the period — is added to or subtracted from the net investment result to determine the fund’s net gain or loss for the fiscal period.

Statement of changes in net assets shows how the fund’s net assets were affected by the fund’s net investment gain or loss, by distributions to shareholders, and by changes in the number of the fund’s shares. It lists distributions and their sources (net investment income or realized capital gains) over the current reporting period and the most recent fiscal year-end. The distributions listed here may not match the sources listed in the Statement of operations because the distributions are determined on a tax basis and may be paid in a different period from the one in which they were earned. Dividend sources are estimated at the time of declaration. Actual results may vary. Any non-taxable return of capital cannot be determined until final tax calculations are completed after the end of the fund’s fiscal year.

Financial highlights provide an overview of the fund’s investment results, per-share distributions, expense ratios, net investment income ratios, and portfolio turnover in one summary table, reflecting the five most recent reporting periods. In a semiannual report, the highlight table also includes the current reporting period.

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The fund’s portfolio 12/31/08 (Unaudited)

COMMON STOCKS (99.6%)*	Shares	Value
Belgium (1.7%)
InBev NV 144A	88,579	$2,062,289
UCB SA	43,678	1,428,737
		3,491,026
Finland (3.6%)
Nokia OYJ	351,757	5,476,217
Sampo OYJ Class A	70,984	1,331,436
Sampo OYJ 144A Class A	39,150	734,331
		7,541,984
France (18.7%)
AXA SA	209,246	4,684,712
BNP Paribas SA	68,772	2,916,217
Electricite de France	73,468	4,288,000
France Telecom SA	200,300	5,626,208
SCOR	79,163	1,827,642
Total SA	171,647	9,397,182
UBISOFT Entertainment †	92,273	1,811,665
Vinci SA	66,190	2,799,188
Vivendi SA	166,684	5,449,682
		38,800,496
Germany (12.4%)
Allianz SE	24,004	2,585,460
BASF SE	106,129	4,211,289
Bayerische Motoren Werke (BMW) AG	138,346	4,270,495
E.On AG	184,958	7,510,656
MTU Aero Engines Holding AG	109,533	3,031,240
Muenchener Rueckversicherungs-Gesellschaft AG	16,783	2,648,499
Tognum AG	113,746	1,459,046
		25,716,685
Greece (0.9%)
Hellenic Telecommunication Organization (OTE) SA	115,548	1,930,283
		1,930,283
Italy (2.8%)
Finmeccanica SpA	235,132	3,620,384
Prysmian SpA	134,908	2,141,216
		5,761,600
Luxembourg (0.9%)
ArcelorMittal	77,708	1,880,895
		1,880,895
Netherlands (4.7%)
Koninklijke (Royal) KPN NV	339,225	4,939,757
Koninklijke Ahold NV	391,935	4,837,352
		9,777,109
Norway (3.8%)
DnB Holdings ASA	851,112	3,423,425
StatoilHydro ASA	272,500	4,519,258
		7,942,683
Spain (3.0%)
Banco Santander Central Hispano SA	649,689	6,296,621
		6,296,621

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COMMON STOCKS (99.6%)* cont.	Shares	Value
Switzerland (20.7%)
Credit Suisse Group	93,822	$2,553,953
Nestle SA	256,716	10,048,448
Novartis AG	191,444	9,526,418
Roche Holding AG	60,831	9,299,720
Swisscom AG	13,157	4,218,379
Syngenta AG	9,466	1,821,277
Zurich Financial Services AG	25,046	5,399,584
		42,867,779
United Kingdom (26.4%)
BAE Systems PLC	608,899	3,366,318
BG Group PLC	200,850	2,828,605
BHP Billiton PLC	324,616	6,202,575
BP PLC	1,282,664	9,969,296
Britvic PLC	427,298	1,653,816
Centrica PLC	1,163,032	4,533,359
Davis Service Group PLC	354,097	1,413,026
GlaxoSmithKline PLC	435,844	8,207,391
Premier Foods PLC	2,718,598	1,214,530
Prudential PLC	485,998	3,001,354
Reckitt Benckiser PLC	95,202	3,597,635
Royal Bank of Scotland Group PLC	2,318,575	1,700,195
Vodafone Group PLC	2,870,561	5,861,763
WPP PLC	216,890	1,282,463
		54,832,326
Total common stocks (cost $257,409,164)		$206,839,487
SHORT-TERM INVESTMENTS (1.6%)*	Principal amount/shares	Value
U.S. Treasury Bills for an effective yield of 0.472%,
November 19, 2009 #	$228,000	$226,725
U.S. Treasury Cash Management Bills for an effective yield
of 0.883%, May 15, 2009 #	375,000	373,772
Federated Prime Obligations Fund	2,653,008	2,653,008
Total short-term investments (cost $3,253,505)		$3,253,505
TOTAL INVESTMENTS
Total investments (cost $260,662,669)		$210,092,992

* Percentages indicated are based on net assets of $207,670,559.

† Non-income-producing security.

# These securities were pledged and segregated with the custodian to cover margin requirements for futures contracts at December 31, 2008.

At December 31, 2008, liquid assets totaling $894,936 have been designated as collateral for open forward contracts.

144A after the name of an issuer represents securities exempt from registration under Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.

The fund had the following industry concentrations greater than 10% at December 31, 2008 (as a percentage of net assets):

Pharmaceuticals	13.7%
Oil and gas	12.9

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FORWARD Total investments CURRENCY (cost $260,662,669) CONTRACTS TO BUY at 12/31/08 (aggregate face value $40,481,864) (Unaudited) $210,092,992
				Unrealized
		Aggregate	Delivery	appreciation/
	Value	face value	date	(depreciation)
British Pound	$6,704,038	$6,785,642	1/21/09	$(81,604)
Euro	25,315,758	23,359,827	1/21/09	1,955,931
Norwegian Krone	1,562,126	1,506,468	1/21/09	55,658
Swedish Krona	7,171,069	6,956,538	1/21/09	214,531
Swiss Franc	1,994,932	1,873,389	1/21/09	121,543
Total				$2,266,059
FORWARD CURRENCY CONTRACTS TO SELL at 12/31/08 (aggregate face value $39,785,595) (Unaudited)
				Unrealized
		Aggregate	Delivery	appreciation/
	Value	face value	date	(depreciation)
British Pound	$637,723	$649,150	1/21/09	$11,427
Euro	13,855,335	12,910,019	1/21/09	(945,316)
Norwegian Krone	7,830,438	7,684,235	1/21/09	(146,203)
Swedish Krona	1,813,894	1,766,302	1/21/09	(47,592)
Swiss Franc	18,809,200	16,775,889	1/21/09	(2,033,311)
Total				$(3,160,995)
FUTURES CONTRACTS OUTSTANDING at 12/31/08 (Unaudited)
Number of			Expiration	Unrealized
	contracts	Value	date	appreciation
Dow Jones Euro Stoxx 50 Index (Long)	33	$1,128,585	Mar-09	$10,431
FTSE 100 Index (Long)	15	960,356	Mar-09	28,581
Total				$39,012

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157). SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. While the adoption of SFAS 157 does not have a material effect on the fund’s net asset value, it does require additional disclosures about fair value measurements. The Standard establishes a three-level hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of the fund’s investments. The three levels are defined as follows:

Level 1 – Valuations based on quoted prices for identical securities in active markets.

Level 2 – Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3 – Valuations based on inputs that are unobservable and significant to the fair value measurement.

The following is a summary of the inputs used to value the fund’s net assets as of December 31, 2008:

Valuation inputs	Investments in securities	Other financial instruments
Level 1	$2,653,008	$39,012
Level 2	207,439,984	(894,936)
Level 3	—	—
Total	$210,092,992	$(855,924)

Other financial instruments include futures, written options, TBA sale commitments, swaps and forward contracts which are valued at the unrealized appreciation/(depreciation) on the instrument.

The accompanying notes are an integral part of these financial statements.

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Statement of assets and liabilities 12/31/08 (Unaudited)

ASSETS
Investment in securities, at value, (Note 1):
Unaffiliated issuers (identified cost $260,662,669)	$210,092,992
Foreign currency (cost $84,945) (Note 1)	139,444
Dividends, interest and other receivables	743,498
Receivable for shares of the fund sold	175,491
Receivable for variation margin (Note 1)	3,719
Receivable for open forward currency contracts (Note 1)	2,391,873
Receivable for closed forward currency contracts (Note 1)	1,109,568
Receivable for receivable purchase agreement (Note 2)	21,857
Total assets	214,678,442
LIABILITIES
Payable to custodian (Note 2)	203
Payable for securities purchased	460,897
Payable for shares of the fund repurchased	658,989
Payable for compensation of Manager (Notes 2 and 5)	346,560
Payable for investor servicing fees (Note 2)	63,671
Payable for custodian fees (Note 2)	24,423
Payable for Trustee compensation and expenses (Note 2)	144,638
Payable for administrative services (Note 2)	1,575
Payable for distribution fees (Note 2)	132,745
Payable for open forward currency contracts (Note 1)	3,286,809
Payable for closed forward currency contracts (Note 1)	1,786,285
Other accrued expenses	101,088
Total liabilities	7,007,883
Net assets	$207,670,559
REPRESENTED BY
Paid-in capital (Unlimited shares authorized) (Notes 1 and 4)	$350,603,276
Accumulated net investment loss (Note 1)	(1,932,249)
Accumulated net realized loss on investments and foreign currency transactions (Note 1)	(89,626,590)
Net unrealized depreciation of investments and assets and liabilities in foreign currencies	(51,373,878)
Total — Representing net assets applicable to capital shares outstanding	$207,670,559
(Continued on next page)

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Statement of assets and liabilities (Continued)

COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE
Net asset value and redemption price per class A share ($178,340,108 divided by 12,477,374 shares)	$14.29
Offering price per class A share (100/94.25 of $14.29)*	$15.16
Net asset value and offering price per class B share ($13,911,546 divided by 1,012,601 shares)**	$13.74
Net asset value and offering price per class C share ($2,443,672 divided by 173,555 shares)**	$14.08
Net asset value and redemption price per class M share ($3,899,959 divided by 275,132 shares)	$14.17
Offering price per class M share (100/96.50 of $14.17)*	$14.68
Net asset value, offering price and redemption price per class R share
($74,647 divided by 5,268 shares)	$14.17
Net asset value, offering price and redemption price per class Y share
($9,000,627 divided by 627,803 shares)	$14.34

* On single retail sales of less than $50,000. On sales of $50,000 or more 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.

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Statement of operations Six months ended 12/31/08 (Unaudited)

INVESTMENT INCOME
Dividends (net of foreign tax of $189,148)	$4,100,485
Interest (including interest income of $26,050 from investments in affiliated issuers) (Note 5)	47,837
Securities lending	890
Total investment income	4,149,212
EXPENSES
Compensation of Manager (Note 2)	1,136,912
Investor servicing fees (Note 2)	518,689
Custodian fees (Note 2)	29,473
Trustee compensation and expenses (Note 2)	16,297
Administrative services (Note 2)	9,789
Distribution fees — Class A (Note 2)	309,542
Distribution fees — Class B (Note 2)	104,458
Distribution fees — Class C (Note 2)	17,242
Distribution fees — Class M (Note 2)	19,889
Distribution fees — Class R (Note 2)	214
Other	112,607
Fees waived and reimbursed by Manager (Note 5)	(92,544)
Total expenses	2,182,568
Expense reduction (Note 2)	(35,763)
Net expenses	2,146,805
Net investment income	2,002,407
Net realized loss on investments (Notes 1 and 3)	(79,153,109)
Net realized loss on futures contracts (Note 1)	(1,339,015)
Net realized loss on foreign currency transactions (Note 1)	(3,483,222)
Net unrealized depreciation of assets and liabilities in foreign currencies during the period	(1,080,538)
Net unrealized depreciation of investments and futures contracts during the period	(62,177,549)
Net loss on investments	(147,233,433)
Net decrease in net assets resulting from operations	$(145,231,026)

The accompanying notes are an integral part of these financial statements.

31

Statement of changes in net assets

DECREASE IN NET ASSETS	Six months ended 12/31/08*	Year ended 6/30/08
Operations:
Net investment income	$2,002,407	$7,792,822
Net realized gain (loss) on investments and
foreign currency transactions	(83,975,346)	1,306,211
Net unrealized depreciation of investments and assets
and liabilities in foreign currencies	(63,258,087)	(91,660,523)
Net decrease in net assets resulting from operations	(145,231,026)	(82,561,490)
Distributions to shareholders: (Note 1)
From ordinary income
Net investment income
Class A	—	(7,382,534)
Class B	—	(328,521)
Class C	—	(58,076)
Class M	—	(109,853)
Class R	—	(2,023)
Class Y	—	(228,660)
Net realized short-term gain on investments
Class A	—	(35,148,812)
Class B	—	(4,649,811)
Class C	—	(514,229)
Class M	—	(873,206)
Class R	—	(10,141)
Class Y	—	(942,616)
From net realized long-term gain on investments
Class A	—	(34,015,628)
Class B	—	(4,499,903)
Class C	—	(497,651)
Class M	—	(845,054)
Class R	—	(9,814)
Class Y	—	(912,227)
Redemption fees (Note 1)	1,484	18,636
Decrease from capital share transactions (Note 4)	(47,375,996)	(12,085,501)
Total decrease in net assets	(192,605,538)	(185,657,114)
NET ASSETS
Beginning of period	400,276,097	585,933,211
End of period (including accumulated net investment loss of
$1,932,249 and distributions in excess of net investment income
of $3,934,656, respectively)	$207,670,559	$400,276,097

* Unaudited

The accompanying notes are an integral part of these financial statements.

32

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33

Financial highlights (For a common share outstanding throughout the period)

INVESTMENT OPERATIONS:					LESS DISTRIBUTIONS:						RATIOS AND SUPPLEMENTAL DATA:
			Net										Ratio of net
	Net asset	Net	realized and			From net					Net assets,	Ratio of	investment
	value,	investment	unrealized gain	Total from	From net	realized			Net asset	Total return	end of	expenses to income (loss)
	beginning	income	(loss) on	investment	investment	gain on	Total	Redemption	value, end	at net asset	period	average net	to average	Portfolio
Period ended	of period	(loss) a ,d	investments	operations	income	investments	distributions	fees e	of period	value (%) b	(in thousands)	assets (%) c,d	net assets (%) d	turnover (%)
Class A
December 31, 2008 **	$23.20	.13	(9.04)	(8.91)	—	—	—	—	$14.29	(38.41) *	$178,340	.74 *	.74 *	39.05 *
June 30, 2008	33.47	.48	(5.14)	(4.66)	(.54)	(5.07)	(5.61)	—	23.20	(15.43)	346,192	1.41	1.70	76.88
June 30, 2007	25.58	.37	8.17	8.54	(.56)	(.09)	(.65)	—	33.47	33.69	476,598	1.48	1.26	106.13
June 30, 2006	20.79	.48 g,h	4.59	5.07	(.28)	—	(.28)	—	25.58	24.54 g	341,155	1.46 g	2.04 g,h	80.51
June 30, 2005	18.05	.22 f	2.78	3.00	(.26)	—	(.26)	—	20.79	16.66 f	328,279	1.44	1.13 f	56.35
June 30, 2004	14.84	.12	3.37	3.49	(.28)	—	(.28)	—	18.05	23.59	313,766	1.44	.69	82.35
Class B
December 31, 2008 **	$22.39	.07	(8.72)	(8.65)	—	—	—	—	$13.74	(38.63) *	$13,912	1.12 *	.40 *	39.05 *
June 30, 2008	32.34	.16	(4.85)	(4.69)	(.19)	(5.07)	(5.26)	—	22.39	(16.04)	32,360	2.16	.58	76.88
June 30, 2007	24.68	.05	7.97	8.02	(.27)	(.09)	(.36)	—	32.34	32.68	77,315	2.23	.17	106.13
June 30, 2006	20.03	.21 g,h	4.52	4.73	(.08)	—	(.08)	—	24.68	23.65 g	126,764	2.21 g	.99 g,h	80.51
June 30, 2005	17.40	.04 f	2.70	2.74	(.11)	—	(.11)	—	20.03	15.73 f	177,711	2.19	.23 f	56.35
June 30, 2004	14.31	— e	3.24	3.24	(.15)	—	(.15)	—	17.40	22.69	229,608	2.19	(.04)	82.35
Class C
December 31, 2008 **	$22.94	.07	(8.93)	(8.86)	—	—	—	—	$14.08	(38.62) *	$2,444	1.12 *	.38 *	39.05 *
June 30, 2008	33.11	.25	(5.06)	(4.81)	(.29)	(5.07)	(5.36)	—	22.94	(16.04)	4,912	2.16	.89	76.88
June 30, 2007	25.33	.14	8.08	8.22	(.35)	(.09)	(.44)	—	33.11	32.68	6,983	2.23	.48	106.13
June 30, 2006	20.58	.30 g,h	4.56	4.86	(.11)	—	(.11)	—	25.33	23.66 g	5,455	2.21 g	1.29 g,h	80.51
June 30, 2005	17.88	.06 f	2.75	2.81	(.11)	—	(.11)	—	20.58	15.73 f	5,182	2.19	.33 f	56.35
June 30, 2004	14.68	(.01)	3.33	3.32	(.12)	—	(.12)	—	17.88	22.65	5,482	2.19	(.06)	82.35
Class M
December 31, 2008 **	$23.07	.09	(8.99)	(8.90)	—	—	—	—	$14.17	(38.58) *	$3,900	.99 *	.50 *	39.05 *
June 30, 2008	33.23	.27	(5.03)	(4.76)	(.33)	(5.07)	(5.40)	—	23.07	(15.85)	7,551	1.91	.96	76.88
June 30, 2007	25.38	.19	8.13	8.32	(.38)	(.09)	(.47)	—	33.23	33.02	14,075	1.98	.66	106.13
June 30, 2006	20.61	.34 g,h	4.58	4.92	(.15)	—	(.15)	—	25.38	23.97 g	14,097	1.96 g	1.49 g,h	80.51
June 30, 2005	17.84	.09 f	2.77	2.86	(.09)	—	(.09)	—	20.61	16.05 f	15,227	1.94	.46 f	56.35
June 30, 2004	14.68	(.01)	3.37	3.36	(.20)	—	(.20)	—	17.84	22.97	24,410	1.94	.01	82.35
Class R
December 31, 2008 **	$23.02	.10	(8.95)	(8.85)	—	—	—	—	$14.17	(38.45) *	$75	.87 *	.58 *	39.05 *
June 30, 2008	33.30	.44	(5.13)	(4.69)	(.52)	(5.07)	(5.59)	—	23.02	(15.63)	107	1.66	1.60	76.88
June 30, 2007	25.55	.60	7.84	8.44	(.60)	(.09)	(.69)	—	33.30	33.36	89	1.73	1.94	106.13
June 30, 2006	20.75	.67 g,h	4.39	5.06	(.26)	—	(.26)	—	25.55	24.52 g	6	1.71 g	2.69 g,h	80.51
June 30, 2005	18.03	.20 f	2.75	2.95	(.23)	—	(.23)	—	20.75	16.38 f	2	1.69	1.03 f	56.35
June 30, 2004 †	16.95	.04	1.32	1.36	(.28)	—	(.28)	—	18.03	8.08 *	1	.99 *	.26 *	82.35
Class Y
December 31, 2008 **	$23.24	.15	(9.05)	(8.90)	—	—	—	—	$14.34	(38.30) *	$9,001	.61 *	.86 *	39.05 *
June 30, 2008	33.53	.57	(5.16)	(4.59)	(.63)	(5.07)	(5.70)	—	23.24	(15.22)	9,154	1.16	2.05	76.88
June 30, 2007	25.62	.48	8.14	8.62	(.62)	(.09)	(.71)	—	33.53	34.00	10,873	1.23	1.59	106.13
June 30, 2006 ††	22.46	.53 g,h	2.92	3.45	(.29)	—	(.29)	—	25.62	15.52 *g	6,261	.89 *g	2.19 *g,h	80.51

See notes to financial highlights at the end of this section.

The accompanying notes are an integral part of these financial statements.

34  35 

Financial highlights (Continued)

* Not annualized.

** Unaudited.

† For the period December 1, 2003 (commencement of operations) to June 30, 2004.

†† For the period October 4, 2005 (commencement of operations) to June 30, 2006.

a Per share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding during the period.

b Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

c Includes amounts paid through expense offset and brokerage/service arrangements (Note 2).

d Reflects an involuntary contractual expense limitation and/or waivers of certain fund expenses in connection with investments in Putnam Prime Money Market Fund in effect during the period. As a result of such limitation and/or waivers, the expenses of each class reflect a reduction of the following amounts (Notes 2 and 5):

	Percentage of
	average net assets
December 31, 2008	0.03%
June 30, 2008	<0.01
June 30, 2007	<0.01
June 30, 2006	<0.01
June 30, 2005	0.05
June 30, 2004	0.03

e Amount represents less than $0.01 per share.

f Reflects a non-recurring accrual related to Putnam Management’s settlement with the SEC regarding brokerage allocation practices, which amounted to the following amounts:

		Percentage of
	Per share	average net assets
Class A	$0.01	0.04%
Class B	0.01	0.03
Class C	0.01	0.04
Class M	0.01	0.03
Class R	0.01	0.04

g Reflects a non-recurring reimbursement from Putnam Investments relating to the calculation of certain amounts paid by the fund to Putnam in previous years for transfer agent services, which amounted to $0.01 per share and 0.02% of average net assets for the period ended June 30, 2006.

h Reflects a special dividend received by the fund which amounted to the following amounts:

		Percentage of
	Per share	average net assets
Class A	$0.23	0.96%
Class B	0.20	0.87
Class C	0.22	0.95
Class M	0.23	0.97
Class R	0.31	1.27
Class Y	0.23	0.94

The accompanying notes are an integral part of these financial statements.

36

Notes to financial statements 12/31/08 (Unaudited)

Note 1: Significant accounting policies

Putnam Europe Equity Fund (the “fund”), a Massachusetts business trust, 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 and other securities of European companies.

The fund offers class A, class B, class C, class M, class R and class Y shares. Class A and class M shares are sold with a maximum front-end sales charge of 5.75% and 3.50%, respectively, and generally do not pay a contingent deferred sales charge. Class B shares, which convert to class A shares after approximately eight years, do not pay a front-end sales charge and are subject to a contingent deferred sales charge, if those shares are redeemed within six years of purchase. Class C shares have a one-year 1.00% contingent deferred sales charge and do not convert to class A shares. Class R shares, which are offered to qualified employee-benefit plans, are sold at net asset value. The expenses for class A, class B, class C, class M and class R shares may differ based on the distribution fee of each class, which is identified in Note 2. Class Y shares, which are sold at net asset value, are generally subject to the same expenses as class A, class B, class C, class M an d class R shares, but do not bear a distribution fee. Class Y shares are generally only available to corporate and institutional clients and clients in other approved programs.

A 1.00% redemption fee may apply on any shares that are redeemed (either by selling or exchanging into another fund) within 90 days of purchase. The redemption fee is accounted for as an addition to paid-in-capital.

Investment income, realized and unrealized gains and losses and expenses of the fund are borne pro-rata based on the relative net assets of each class to the total net assets of the fund, except that each class bears expenses unique to that class (including the distribution fees applicable to such classes). 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. If the fund were liquidated, shares of each class would receive their pro-rata share of the net assets of the fund. In addition, the Trustees declare separate dividends on each class of shares.

In the normal course of business, the fund enters into contracts that may include agreements to indemnify another party under given circumstances. The fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be, but have not yet been, made against the fund. However, the fund’s management team expects the risk of material loss to be remote.

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 accounting principles generally accepted in the United States of America and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

A) Security valuation Investments for which market quotations are readily available are valued at the last reported sales price on their principal exchange, or official closing price for certain markets. If no sales are reported — as in the case of some securities traded over-the-counter — a security is valued at its last reported bid price. Many securities markets and exchanges outside the U.S. close prior to the close of the New York Stock Exchange and therefore the closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the close of the New York Stock Exchange. Accordingly, on certain days, the fund will fair value foreign equity securities taking into account multiple factors, including movements in the U.S. securities markets. The number of days on which fair value prices will be used will depend on market activity and it is possib le that fair value prices will be used by the fund to a significant extent. At December 31, 2008, fair value pricing was used for certain foreign securities in the portfolio. Securities quoted in foreign currencies, if any, are translated into U.S. dollars at the current exchange rate. To the extent a pricing service or dealer is unable to value a security or provides a valuation which Putnam Management does not believe accurately reflects the security’s fair value, the security will be valued at fair value by Putnam Management. Certain investments, including certain restricted and illiquid securities and derivatives, are also valued at fair value following procedures approved by the Trustees. Such valuations and procedures are reviewed periodically by the Trustees. The fair value of securities is generally determined as the amount that the fund could reasonably expect to realize from an orderly disposition

37

of such securities over a reasonable period of time. By its nature, a fair value price is a good faith estimate of the value of a security at a given point in time and does not reflect an actual market price, which may be different by a material amount.

B) Joint trading account Pursuant to an exemptive order from the Securities and Exchange Commission (the “SEC”), the fund may transfer uninvested cash balances, including cash collateral received under security lending arrangements, into a joint trading account along with the cash of other registered investment companies and certain other accounts managed by Putnam Investment Management, LLC (“Putnam Management”), the fund’s manager, a wholly-owned subsidiary of Putnam Investments, LLC.These balances may be invested in issues of short-term investments having maturities of up to 397 days for collateral received under security lending arrangements and up to 90 days for other cash investments.

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 recorded on the trade date (the date the order to buy or sell is executed). Gains or losses on securities sold are determined on the identified cost basis.

Interest income is recorded on the accrual basis. Dividend income, net of applicable withholding taxes, is recognized on the ex-dividend date except that certain dividends from foreign securities, if any, are recognized as soon as the fund is informed of the ex-dividend date. Non-cash dividends, if any, are recorded at the fair market value of the securities received. Dividends representing a return of capital or capital gains, if any, are reflected as a reduction of cost and/or as a realized gain.

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 is 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 earned 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 ex change gains or losses on closed forward currency contracts, disposition of foreign currencies, currency gains and losses realized between the trade and settlement dates on securities transactions 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. Investments in foreign securities involve certain risks, including those related to economic instability, unfavorable political developments, and currency fluctuations, not present with domestic investments.

F) Forward currency contracts The fund may buy and sell forward currency contracts, which are agreements between two parties to buy and sell currencies at a set price on a future date. These contracts are used 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), or for other investment purposes. 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 r ecords 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. Risks may exceed amounts recognized on the Statement of assets and liabilities.

38

Forward currency contracts outstanding at period end, if any, are listed after the fund’s portfolio.

G) Futures and options contracts The fund may use futures and options contracts to hedge against changes in the values of securities the fund owns, owned or expects to purchase, or for other investment purposes. The fund may also write options on swaps or securities it owns or in which it may invest to increase its current returns.

The potential risk to the fund is that the change in value of futures and options contracts may not correspond to the change in value of the hedged instruments. In addition, losses may arise from changes in the value of the underlying instruments, if there is an illiquid secondary market for the contracts, or if the counterparty to the contract is unable to perform. Risks may exceed amounts recognized on the Statement of assets and liabilities.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. Realized gains and losses on purchased options are included in realized gains and losses on investment securities. If a written call option is exercised, the premium originally received is recorded as an addition to sales proceeds. If a written put option is exercised, the premium originally received is recorded as a reduction to the c ost of investments.

Futures contracts are valued at the quoted daily settlement prices established by the exchange on which they trade. The fund and the broker agree to exchange an amount of cash equal to the daily fluctuation in the value of the futures contract. Such receipts or payments are known as “variation margin.” Exchange traded options are valued at the last sale price or, if no sales are reported, the last bid price for purchased options and the last ask price for written options. Options traded over-the-counter are valued using prices supplied by dealers. Futures and written option contracts outstanding at period end, if any, are listed after the fund’s portfolio.

H) Securities lending The fund may lend securities, through its agents, to qualified borrowers in order to earn additional income. The loans are collateralized by cash and/or securities in an amount at least equal to the market value of the securities loaned. The market value of securities loaned is determined daily and any additional required collateral is allocated to the fund on the next business day. The risk of borrower default will be borne by the fund’s agents; the fund will bear the risk of loss with respect to the investment of the cash collateral. Income from securities lending is included in investment income on the Statement of operations. At December 31, 2008, the fund had no securities out on loan.

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 of 1986, as amended (the “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 Code. The fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The fund did not have any unrecognized tax benefits in the accompanying financial statements. Therefore, no provision has been made for federal taxes on income, capital gains or unrealized appreciation on securities held nor for excise tax on i ncome and capital gains. Each of the fund’s federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service.

Pursuant to federal income tax regulations applicable to regulated investment companies, the fund has elected to defer to its fiscal year ending June 30, 2009 $6,941,626 of losses recognized during the period November 1, 2007 to June 30, 2008.

The aggregate identified cost on a tax basis is $263,104,685, resulting in gross unrealized appreciation and depreciation of $12,540,110 and $65,551,803, respectively, or net unrealized depreciation of $53,011,693.

J) Distributions to shareholders Distributions to shareholders from net investment income are recorded by the fund on the ex-dividend date. Distributions from capital gains, 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. Dividend sources are estimated at the time of declaration. Actual results may vary. Any non-taxable return of capital cannot be determined until final tax calculations are completed after the end of the fund’s fiscal year. 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.

39

Note 2: Management fee, administrative services and other transactions

The fund pays Putnam Management for management and investment advisory services quarterly based on the average net assets of the fund. Such fee is based on the following annual rates: 0.80% of the first $500 million of average net assets, 0.70% of the next $500 million, 0.65% of the next $500 million, 0.60% of the next $5 billion, 0.575% of the next $5 billion, 0.555% of the next $5 billion, 0.54% of the next $5 billion and 0.53% thereafter.

Putnam Management has agreed to waive fees and reimburse expenses of the fund through June 30, 2009 to the extent necessary to ensure that the fund’s expenses do not exceed the simple average of the expenses of all front-end load funds viewed by Lipper, Inc. as having the same investment classification or objective as the fund. The expense reimbursement is based on a comparison of the fund’s expenses with the average annualized operating expenses of the funds in its Lipper peer group for each calendar quarter during the fund’s last fiscal year, excluding 12b-1 fees and without giving effect to any expense offset and brokerage/service arrangements that may reduce fund expenses.

Putnam Management has further agreed to waive fees and reimburse expenses of the fund for the period from July 1, 2008 through June 30, 2009 to the extent necessary to ensure that the fund’s expenses do not exceed the simple average of the expenses of a custom group of competitive funds selected by Lipper, Inc. based on the size of the fund. The expense reimbursement is based on a comparison of the fund’s total expenses with the average operating expenses of the funds in this Lipper custom peer group for their respective 2007 fiscal years, excluding 12b-1 fees and after adjustment for certain expense offset and brokerage/service arrangements that reduced expenses of the fund.

For the period ended December 31, 2008, the fund’s expenses were limited to the lower of the limits specified above and accordingly, Putnam Management waived $91,487 of its management fee from the fund.

Putnam Investments Limited (“PIL”), an affiliate of Putnam Management, is authorized by the Trustees to manage a separate portion of the assets of the fund as determined by Putnam Management from time to time. Putnam Management pays a quarterly sub-management fee to PIL for its services at an annual rate of 0.35% of the average net assets of the portion of the fund managed by PIL.

The Putnam Advisory Company, LLC (“PAC”), an affiliate of Putnam Management, is authorized by the Trustees to manage a separate portion of the assets of the fund, as designated from time to time by Putnam Management or PIL. Putnam Management or PIL, as applicable, pays a quarterly sub-advisory fee to PAC for its services at the annual rate of 0.35% of the average net assets of the portion of the fund’s assets for which PAC is engaged as sub-adviser.

On September 26, 2008, the fund entered into an Agreement with another registered investment company (the “Purchaser”) managed by Putnam Management. Under the Agreement, the fund sold to the Purchaser the fund’s right to receive, in the aggregate, $84,811 in net payments from Lehman Brothers Special Financing, Inc. in connection with certain terminated derivatives transactions (the “Receivable”), in exchange for an initial payment plus (or minus) additional amounts based on the applicable Purchaser’s ultimate realized gain (or loss) on the Receivable. The Receivable will be offset against the funds net receivable from Lehman Brothers Special Financing, Inc. which is included in the Statement of assets and liabilites within the Receivable and Payable for closed forward currency contracts. The Agreement, which is included in the Statement of assets and liabilities, is valued at fair value following procedures approved by the Trustees. All remaining payments under the Agreement will be recorded as realized gain or loss.

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 theTrustees.

Custodial functions for the fund’s assets were provided by State Street Bank andTrust Company (“State Street”). Custody fees are based on the fund’s asset level, the number of its security holdings and transaction volumes.

Putnam Investor Services, a division of Putnam Fiduciary Trust Company (“PFTC”), which is an affiliate of Putnam Management, provided investor servicing agent functions to the fund through December 31, 2008. Subsequent to December 31, 2008, these services were provided by Putnam Investor Services, Inc., another affiliate of Putnam Management. Putnam Investor Services received fees for investor servicing, subject to certain limitations, based on the number of shareholder accounts in the fund and the level of defined contribution plan assets in the fund. During the period

40

ended December 31, 2008, the amounts incurred for investor servicing agent functions provided by PFTC are included in Investor servicing fees in the Statement of operations.

Under the custodian contract between the fund and State Street, the custodian 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 custodian bank for the settlement of securities purchased by the fund. At December 31, 2008, the payable to the custodian bank represents the amount due for cash advanced for the settlement of securities purchased.

The fund has entered into expense offset arrangements with PFTC and State Street whereby PFTC’s and State Street’s fees are reduced by credits allowed on cash balances. The fund also reduced expenses through brokerage/service arrangements. For the six months ended December 31, 2008, the fund’s expenses were reduced by $3,002 under the expense offset arrangements and by $32,761 under the brokerage/service arrangements.

Each independent Trustee of the fund receives an annual Trustee fee, of which $363, as a quarterly retainer, has been allocated to the fund, and an additional fee for each Trustees meeting attended. Trustees receive additional fees for attendance at certain committee meetings and industry seminars and for certain compliance-related matters. Trustees also are reimbursed for expenses they incur relating to their services as Trustees.

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 invested in certain Putnam funds until distribution in accordance with the Deferral Plan.

The fund has adopted an unfunded noncontribu-tory defined benefit pension plan (the “Pension Plan”) covering all Trustees of the fund who have served as a Trustee for at least five years and were first elected prior to 2004. Benefits under the Pension Plan are equal to 50% of the Trustee’s average annual attendance and retainer fees for the three years ended December 31, 2005. The retirement benefit is payable during a Trustee’s lifetime, beginning the year following retirement, for the number of years of service through December 31, 2006. Pension expense for the fund is included in Trustee compensation and expenses in the Statement of operations. Accrued pension liability is included in Payable for Trustee compensation and expenses in the Statement of assets and liabilities. The Trustees have terminated the Pension Plan with respect to any Trustee first elected after 2003.

The fund has adopted distribution plans (the “Plans”) with respect to its class A, class B, class C, class M and class R shares pursuant to Rule 12b-1 under the Investment Company Act of 1940. The purpose of the Plans is to compensate Putnam Retail Management Limited Partnership, a wholly-owned subsidiary of Putnam Investments, LLC and Putnam Retail Management GP, Inc., for services provided and expenses incurred in distributing shares of the fund. The Plans provide for payments by the fund to Putnam Retail Management Limited Partnership at an annual rate of up to 0.35%, 1.00%, 1.00%, 1.00% and 1.00% of the average net assets attributable to class A, class B, class C, class M and class R shares, respectively. The Trustees have approved payment by the fund at an annual rate of 0.25%, 1.00%, 1.00%, 0.75% and 0.50% of the average net assets attributable to class A, class B, class C, class M and class R shares, respectively.

For the six months ended December 31, 2008, Putnam Retail Management Limited Partnership, acting as underwriter, received net commissions of $5,292 and $45 from the sale of class A and class M shares, respectively, and received $10,024 and $148 in contingent deferred sales charges from redemptions of class B and class C shares, respectively. A deferred sales charge of up to 1.00% and 0.65% is assessed on certain redemptions of class A and class M shares, respectively. For the six months ended December 31, 2008, Putnam Retail Management Limited Partnership, acting as underwriter, received no monies on class A and class M redemptions, respectively.

Note 3: Purchases and sales of securities

During the six months ended December 31, 2008, cost of purchases and proceeds from sales of investment securities other than short-term investments aggregated $112,506,583 and $160,168,099, respectively. There were no purchases or sales of U.S. government securities.

Note 4: Capital shares

At December 31, 2008, there was an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows:

41

	Six months ended 12/31/08		Year ended 6/30/08
Class A	Shares	Amount	Shares	Amount
Shares sold	400,600	$6,890,929	1,562,557	$44,856,942
Shares issued in connection with	—	—	2,762,061	70,460,184
reinvestment of distributions
	400,600	6,890,929	4,324,618	115,317,126
Shares repurchased	(2,842,076)	(47,757,503)	(3,645,500)	(100,153,103)
Net increase (decrease)	(2,441,476)	$(40,866,574)	679,118	$15,164,023
	Six months ended 12/31/08		Year ended 6/30/08
Class B	Shares	Amount	Shares	Amount
Shares sold	20,862	$343,479	116,001	$3,277,199
Shares issued in connection with	—	—	359,541	8,884,251
reinvestment of distributions
	20,862	343,479	475,542	12,161,450
Shares repurchased	(453,726)	(7,912,406)	(1,420,649)	(38,759,542)
Net decrease	(432,864)	$(7,568,927)	(945,107)	$(26,598,092)
	Six months ended 12/31/08		Year ended 6/30/08
Class C	Shares	Amount	Shares	Amount
Shares sold	3,275	$55,475	27,151	$787,794
Shares issued in connection with	—	—	34,848	882,368
reinvestment of distributions
	3,275	55,475	61,999	1,670,162
Shares repurchased	(43,872)	(753,895)	(58,740)	(1,620,372)
Net increase (decrease)	(40,597)	$(698,420)	3,259	$49,790
	Six months ended 12/31/08		Year ended 6/30/08
Class M	Shares	Amount	Shares	Amount
Shares sold	1,665	$25,900	36,674	$1,152,128
Shares issued in connection with	—	—	48,746	1,239,616
reinvestment of distributions
	1,665	25,900	85,420	2,391,744
Shares repurchased	(53,876)	(965,851)	(181,655)	(5,292,546)
Net decrease	(52,211)	$(939,951)	(96,235)	$(2,900,802)
	Six months ended 12/31/08		Year ended 6/30/08
Class R	Shares	Amount	Shares	Amount
Shares sold	1,500	$25,870	3,363	$93,466
Shares issued in connection with	—	—	867	21,978
reinvestment of distributions
	1,500	25,870	4,230	115,444
Shares repurchased	(900)	(16,230)	(2,236)	(56,032)
Net increase	600	$9,640	1,994	$59,412

42

	Six months ended 12/31/08		Year ended 6/30/08
Class Y	Shares	Amount	Shares	Amount
Shares sold	325,526	$4,528,020	113,939	$3,493,792
Shares issued in connection with	—	—	81,561	2,081,442
reinvestment of distributions
	325,526	4,528,020	195,500	5,575,234
Shares repurchased	(91,550)	(1,839,784)	(125,965)	(3,435,066)
Net increase	233,976	$2,688,236	69,535	$2,140,168

Note 5: Investment in Putnam Prime Money Market Fund

The fund invested in Putnam Prime Money Market Fund, an open-end management investment company managed by Putnam Management. Investments in Putnam Prime Money Market Fund were valued at its closing net asset value each business day. Management fees paid by the fund were reduced by an amount equal to the management fees paid by Putnam Prime Money Market Fund with respect to assets invested by the fund in Putnam Prime Money Market Fund. For the period ended December 31, 2008, management fees paid were reduced by $1,057 relating to the fund’s investment in Putnam Prime Money Market Fund. Income distributions earned by the fund were recorded as interest income in the Statement of operations and totaled $26,050 for the period ended December 31, 2008. During the period ended December 31, 2008, cost of purchases and proceeds of sales of investments in Putnam Prime Money Market Fund aggregated $19,711,210 and $27,746,705, respectively.

On September 17, 2008, the Trustees of the Putnam Prime Money Market Fund voted to close that fund effective September 17, 2008. On September 24, 2008, the fund received shares of Federated Prime Obligations Fund, an unaffiliated management investment company registered under the Investment Company Act of 1940, in liquidation of its shares of Putnam Prime Money Market Fund.

Note 6: Regulatory matters and litigation

In late 2003 and 2004, Putnam Management settled charges brought by the Securities and Exchange Commission (the “SEC”) and the Massachusetts Securities Division in connection with excessive short-term trading in Putnam funds. Distribution of payments from Putnam Management to certain open-end Putnam funds and their shareholders is expected to be completed in the next several months. These allegations and related matters have served as the general basis for certain lawsuits, including purported class action lawsuits against Putnam Management and, in a limited number of cases, some Putnam funds. Putnam Management believes that these lawsuits will have no material adverse effect on the funds or on Putnam Management’s ability to provide investment management services. In addition, Putnam Management has agreed to bear any costs incurred by the Putnam funds as a result of these matters.

Note 7: New accounting pronouncement

In March 2008, Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (“SFAS 161”) — an amendment of FASB Statement No. 133, was issued and is effective for fiscal years and interim periods beginning after November 15, 2008. SFAS 161 requires enhanced disclosures about how and why an entity uses derivative instruments and how derivative instruments affect an entity’s financial position. Putnam Management is currently evaluating the impact the adoption of SFAS 161 will have on the fund’s financial statement disclosures.

Note 8: Market and credit risk

In the normal course of business the fund trades finan-cial instruments and enters into financial transactions where risk of potential loss exists due to changes in the market (market risk) or failure of the contracting party to the transaction to perform (credit risk). The fund may be exposed to additional credit risk that an institution or other entity with which the funds have unsettled or open transactions will default.

Note 9: Other

The fund is a party to ISDA (International Swaps and Derivatives Association, Inc.) Master Agreements with certain counterparties that govern OTC derivative and foreign exchange contracts entered into from time to time. As of December 31, 2008, due to a decrease in the fund’s net asset value during the year, such counterpar-ties were entitled to elect, but had not yet elected, to terminate early, and cause settlement of all outstanding derivative and foreign exchange contracts outstanding under the applicable Master Agreements, including the payment by the fund of any losses and costs resulting from such early termination, as reasonably determined by such counterparty. Any decision by the counterparty to elect early termination could impact the fund’s future derivative activity. At December 31, 2008, the fund had net unrealized gains/ (losses) on derivative contracts subject to the Master Agreements of $790,850 and $(1,685,786). The fund intends to seek a waiver of or other relief from this provision, from the counterparties.

43

Brokerage commissions (unaudited)

Brokerage commissions are paid to firms that execute trades on behalf of your fund. When choosing these firms, Putnam is required by law to seek the best execution of the trades, taking all relevant factors into consideration, including expected quality of execution and commission rate. Listed below are the largest relationships based upon brokerage commissions for your fund and the other funds in Putnam’s International group for the year ended December 31, 2008. The Putnam mutual funds in this group are Putnam Europe Equity Fund, Putnam Global Equity Fund, Putnam International Capital Opportunities Fund, Putnam International Equity Fund, Putnam International Growth and Income Fund, Putnam International New Opportunities Fund, Putnam VT Global Equity Fund, Putnam VT International Equity Fund, Putnam VT International Growth and Income Fund, and Putnam VT International New Opportunities Fund.

The top five firms that received brokerage commissions for trades executed for the International group are (in descending order) Credit Suisse First Boston, UBS Securities, Deutsche Bank Securities, Citigroup Global Markets, and Goldman, Sachs & Co. Commissions paid to these firms together represented approximately 47% of the total brokerage commissions paid for the year ended December 31, 2008.

Commissions paid to the next 10 firms together represented approximately 34% of the total brokerage commissions paid during the period. These firms are Sanford C. Bernstein & Co., CLSA, Keefe, Bruyette & Woods, Lehman Brothers, Macquarie Securities (USA), Merrill Lynch, Pierce, Fenner and Smith, J.P.Morgan Securities, Morgan Stanley & Co., RBC Capital Markets, and Redburn Partners.

Commission amounts do not include “mark-ups” paid on bond or derivative trades made directly with a dealer. Additional information about brokerage commissions is available on the Securities and Exchange Commission (SEC) Web site at www.sec.gov. Putnam funds disclose commissions by firm to the SEC in semiannual filings on Form N-SAR.

44

Putnam puts your interests first

Putnam has introduced a number of voluntary initiatives designed to reduce fund expenses, provide investors with more useful information, and help safeguard the interests of all Putnam investors. Visit the Individual Investors section at www.putnam.com for details.

Cost-cutting initiatives

Ongoing expenses will be limited Through calendar 2008, total ongoing expenses, including management fees for all funds, will be maintained at or below the average of each fund’s industry peers in its Lipper load-fund universe. For more information, please see the Statement of Additional information.

Lower class B purchase limit To help ensure that investors are in the most cost-effective share class, the maximum amount that can be invested in class B shares has been reduced to $100,000. (Larger trades or accumulated amounts will be refused.)

Improved disclosure

Putnam fund prospectuses and shareholder reports have been revised to disclose additional information that will help shareholders compare funds and weigh their costs and risks along with their potential benefits. Shareholders will find easy-to-understand information about fund expense ratios, portfolio manager compensation, risk comparisons, turnover comparisons, brokerage commissions, and employee and trustee ownership of Putnam funds. Disclosure of breakpoint discounts has also been enhanced to alert investors to potential cost savings.

Protecting investors’ interests

Short-term trading fee introduced To discourage short-term trading, which can interfere with a fund’s long-term strategy, a 1% short-term trading fee may be imposed on any Putnam fund shares (other than money market funds) redeemed or exchanged within 7 calendar days of purchase (for certain funds, this fee applies for 90 days).

45

The Putnam family of funds

The following is a list of Putnam’s open-end mutual funds offered to the public. Investors should carefully consider the investment objective, risks, charges, and expenses of a fund before investing. For a prospectus containing this and other information for any Putnam fund or product, call your financial advisor at 1-800-225-1581 and ask for a prospectus. Please read the prospectus carefully before investing.

Growth	Value
Growth Opportunities Fund	Convertible Income-Growth Trust
International New Opportunities Fund*	Equity Income Fund
New Opportunities Fund	The George Putnam Fund of Boston
Small Cap Growth Fund*	The Putnam Fund for Growth and Income
Vista Fund	International Growth and Income Fund*
Voyager Fund	Mid Cap Value Fund
	Small Cap Value Fund*
Blend
Capital Opportunities Fund*	Income
Europe Equity Fund*	American Government Income Fund
Global Equity Fund*	Diversified Income Trust
Global Natural Resources Fund*	Floating Rate Income Fund
International Capital Opportunities Fund*	Global Income Trust*
International Equity Fund*	High Yield Advantage Fund*
Investors Fund	High Yield Trust*
Research Fund	Income Fund
	Money Market Fund†
	U.S. Government Income Trust

* A 1% redemption fee on total assets redeemed or exchanged within 90 days of purchase may be imposed for all share classes of these funds.

† An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.

46

Tax-free income
AMT-Free Municipal Fund‡
Tax Exempt Income Fund
Tax Exempt Money Market Fund†
Tax-Free High Yield Fund

State tax-free income funds:

Arizona, California, Massachusetts, Michigan, Minnesota, New Jersey, New York, Ohio, and Pennsylvania

Absolute Return
Absolute Return 100 Fund
Absolute Return 300 Fund
Absolute Return 500 Fund
Absolute Return 700 Fund

Global Sector
Global Consumer Fund
Global Energy Fund
Global Financials Fund
Global Health Care Fund**
Global Industrials Fund
Global Natural Resources Fund
Global Technology Fund
Global Telecommunications Fund
Global Utilities Fund††

Asset allocation
Income Strategies Fund

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

Putnam RetirementReady^®

Putnam RetirementReady Funds — 10 investment portfolios that offer diversification among stocks, bonds, and money market instruments and adjust to become more conservative over time based on a target date for withdrawing assets.

The 10 funds:
Putnam RetirementReady 2050 Fund
Putnam RetirementReady 2045 Fund
Putnam RetirementReady 2040 Fund
Putnam RetirementReady 2035 Fund
Putnam RetirementReady 2030 Fund
Putnam RetirementReady 2025 Fund
Putnam RetirementReady 2020 Fund
Putnam RetirementReady 2015 Fund
Putnam RetirementReady 2010 Fund
Putnam RetirementReady Maturity Fund

‡ Prior to November 30, 2008, the fund was known as Putnam AMT-Free Insured Municipal Fund.

** Prior to January 2, 2009, the fund was known as Putnam Health Sciences Trust.

Prior to January 2, 2009, the fund was known as Putnam Utilities Growth and Income Fund.

With the exception of money market funds, a 1% redemption fee may be applied to shares exchanged or sold within 7 days of purchase (90 days, for certain funds).

Check your account balances and the most recent month-end performance in the Individual Investors section at www.putnam.com.

47

Services for shareholders

Investor services

Systematic investment plan Tell us how much you wish to invest regularly — weekly, semimonthly, or monthly — and the amount you choose will be transferred automatically from your checking or savings account. There’s no additional fee for this service, and you can suspend it at any time. This plan may be a great way to save for college expenses or to plan for your retirement.

Please note that regular investing does not guarantee a profit or protect against loss in a declining market. Before arranging a systematic investment plan, consider your financial ability to continue making purchases in periods when prices are low.

Systematic exchange You can make regular transfers from one Putnam fund to another Putnam fund. There are no additional fees for this service, and you can cancel or change your options at any time.

Dividends PLUS You can choose to have the dividend distributions from one of your Put-nam funds automatically reinvested in another Putnam fund at no additional charge.

Free exchange privilege You can exchange money between Putnam funds free of charge, as long as they are the same class of shares. A signature guarantee is required if you are exchanging more than $500,000.

Reinstatement privilege If you’ve sold Put-nam shares or received a check for a dividend or capital gain, you may reinvest the proceeds with Putnam within 90 days of the transaction and they will be reinvested at the fund’s current net asset value — with no sales charge. However, reinstatement of class B shares may have special tax consequences. Ask your financial or tax representative for details.

Check-writing service You have ready access to many Putnam accounts. It’s as simple as writing a check, and there are no special fees or service charges. For more information about the check-writing service, call Putnam or visit our Web site.

Dollar cost averaging When you’re investing for long-term goals, it’s time, not timing, that counts. Investing on a systematic basis is a better strategy than trying to figure out when the markets will go up or down. This means investing the same amount of money regularly over a long period. This method of investing is called dollar cost averaging. When a fund’s share price declines, your investment dollars buy more shares at lower prices. When it increases, they buy fewer shares. Over time, you will pay a lower average price per share.

For more information

Visit the Individual Investors section at www.putnam.com A secure section of our Web site contains complete information on your account, including balances and transactions, updated daily. You may also conduct transactions, such as exchanges, additional investments, and address changes. Log on today to get your password.

Call us toll free at 1-800-225-1581 Ask a helpful Putnam representative or your financial advisor for details about any of these or other services, or see your prospectus.

48

Fund information

Founded over 70 years ago, Putnam Investments was built around the concept that a balance between risk and reward is the hallmark of a well-rounded financial program. We manage over 100 mutual funds across income, value, blend, growth, asset allocation, absolute return, and global sector categories.

Investment Manager	Robert J. Darretta	Susan G. Malloy
Putnam Investment	Myra R. Drucker	Vice President and
Management, LLC	Charles E. Haldeman, Jr.	Assistant Treasurer
One Post Office Square	Paul L. Joskow
Boston, MA 02109	Elizabeth T. Kennan	Beth S. Mazor
	Kenneth R. Leibler	Vice President
Investment Sub-Manager	Robert E. Patterson
Putnam Investments Limited	George Putnam, III	James P. Pappas
57–59 St James’s Street	Robert L. Reynolds	Vice President
London, England SW1A 1LD	Richard B. Worley
		Francis J. McNamara, III
Investment Sub-Advisor	Officers	Vice President and
The Putnam Advisory	Charles E. Haldeman, Jr.	Chief Legal Officer
Company, LLC	President
One Post Office Square	Charles E. Porter	Robert R. Leveille
Boston, MA 02109	Executive Vice President,	Vice President and
	Principal Executive Officer,	Chief Compliance Officer
Marketing Services	Associate Treasurer and
Putnam Retail Management	Compliance Liaison	Mark C. Trenchard
One Post Office Square		Vice President and
Boston, MA 02109	Jonathan S. Horwitz	BSA Compliance Officer
	Senior Vice President
Custodian	and Treasurer	Judith Cohen
State Street Bank		Vice President, Clerk and
and Trust Company	Steven D. Krichmar	Assistant Treasurer
	Vice President and
Legal Counsel	Principal Financial Officer	Wanda M. McManus
Ropes & Gray LLP		Vice President, Senior Associate
	Janet C. Smith	Treasurer and Assistant Clerk
Trustees	Vice President, Principal
John A. Hill, Chairman	Accounting Officer and	Nancy E. Florek
Jameson A. Baxter,	Assistant Treasurer	Vice President, Assistant Clerk,
Vice Chairman		Assistant Treasurer
Charles B. Curtis		and Proxy Manager

This report is for the information of shareholders of Putnam Europe Equity Fund. It may also be used as sales literature when preceded or accompanied by the current prospectus, the most recent copy of Putnam’s Quarterly Performance Summary, and Putnam’s Quarterly Ranking Summary. For more recent performance, please visit www.putnam.com. Investors should carefully consider the investment objective, risks, charges, and expenses of a fund, which are described in its prospectus. For this and other information or to request a prospectus, call 1-800-225-1581 toll free. Please read the prospectus carefully before investing. The fund’s Statement of Additional Information contains additional information about the fund’s Trustees and is available without charge upon request by calling 1-800-225-1581

One Post Office Square
Boston, MA 02109

putnam.com

1-800-225-1581

Forwarding service requested

PRSRT STD
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS

SA005 254954 2/09

Item 2. Code of Ethics:

Not applicable

Item 3. Audit Committee Financial Expert:

Not applicable

Item 4. Principal Accountant Fees and Services:

Not applicable

Item 5. Audit Committee of Listed Registrants

Not applicable

Item 6. Schedule of Investments:

The registrant’s schedule of investments in unaffiliated issuers is included in the report to shareholders in Item 1 above.

Item 7. Disclosure of Proxy Voting Policies and Procedures For Closed-End Management Investment Companies:

Not applicable

Item 8. Portfolio Managers of Closed-End Investment Companies

Not Applicable

Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers:

Not applicable

Item 10. Submission of Matters to a Vote of Security Holders:

Not applicable

Item 11. Controls and Procedures:

(a) The registrant's principal executive officer and principal financial officer have concluded, based on their evaluation of the effectiveness of the design and operation of the registrant's disclosure controls and procedures as of a date within 90 days of the filing date of this report, that the design and operation of such procedures are generally effective to provide reasonable assurance that information required to be disclosed by the registrant in this report is recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms.

(b) Changes in internal control over financial reporting: Not applicable

Item 12. Exhibits:

(a)(1) Not applicable

(a)(2) Separate certifications for the principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940, as amended, are filed herewith.

(b) The certifications required by Rule 30a-2(b) under the Investment Company Act of 1940, as amended, are filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Putnam Europe Equity Fund

By (Signature and Title):

/s/Janet C. Smith
Janet C. Smith
Principal Accounting Officer

Date: February 27, 2009

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By (Signature and Title):

/s/Charles E. Porter
Charles E. Porter
Principal Executive Officer

Date: February 27, 2009

By (Signature and Title):

/s/Steven D. Krichmar
Steven D. Krichmar
Principal Financial Officer

Date: February 27, 2009

EX-99.CERT

Certifications

I, Charles E. Porter, the Principal Executive Officer of the funds listed on Attachment A, certify that:

1. I have reviewed each report on Form N-CSR of the funds listed on Attachment A:

2. Based on my knowledge, each report does not contain any untrue statements of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by each report;

3. Based on my knowledge, the financial statements, and other financial information included in each report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in each report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which each report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of each report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed to each registrant's auditors and the audit committee of each registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect each registrant's ability to record, process, summarize, and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in each registrant's internal control over financial reporting.

Date: February 27, 2009

/s/ Charles E. Porter
Charles E. Porter
Principal Executive Officer

Certifications

I, Steven D. Krichmar, the Principal Financial Officer of the funds listed on Attachment A, certify that:

1. I have reviewed each report on Form N-CSR of the funds listed on Attachment A:

2. Based on my knowledge, each report does not contain any untrue statements of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by each report;

3. Based on my knowledge, the financial statements, and other financial information included in each report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in each report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which each report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of each report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed to each registrant's auditors and the audit committee of each registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect each registrant's ability to record, process, summarize, and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in each registrant’s internal control over financial reporting.

Date: February 27, 2009

/s/ Steven D. Krichmar
Steven D. Krichmar
Principal Financial Officer

Attachment A 

N-CSR 

December 31, 2008 

Putnam Europe Equity Fund 

Putnam International Equity Fund 

Putnam New Opportunities Fund 

Putnam Small Cap Growth Fund 

Putnam International Growth & Income Fund 

Putnam Variable Trust 

Putnam VT American Government Income Fund 

Putnam VT Discovery Growth Fund 

Putnam VT Diversified Income Fund 

Putnam VT Equity Income Fund 

Putnam VT The George Putnam Fund of Boston 

Putnam VT Global Asset Allocation Fund 

Putnam VT Global Equity Fund 

Putnam VT Global Health Care Fund 

Putnam VT Global Utilities Fund 

Putnam VT Growth and Income Fund 

Putnam VT Growth Opportunities Fund 

Putnam VT High Yield Fund 

Putnam VT Income Fund 

Putnam VT International Equity Fund 

Putnam VT International Growth and Income Fund 

Putnam VT International New Opportunities Fund 

Putnam VT Investors Fund 

Putnam VT Money Market Fund 

Putnam VT New Opportunities Fund 

Putnam VT New Value Fund 

Putnam VT Research Fund 

Putnam VT Small Cap Value Fund 

Putnam VT Vista Fund 

Putnam VT Voyager Fund 

EX-99.906 CERT

Section 906 Certifications

I, Charles E. Porter, the Principal Executive Officer of the Funds listed on Attachment A, certify that, to my knowledge:

1. The form N-CSR of the Funds listed on Attachment A for the period ended December 31, 2008 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Form N-CSR of the Funds listed on Attachment A for the period ended December 31, 2008 fairly presents, in all material respects, the financial condition and results of operations of the Funds listed on Attachment A.

Date: February 27, 2009

/s/ Charles E. Porter
Charles E. Porter
Principal Executive Officer

Section 906 Certifications

I, Steven D. Krichmar, the Principal Financial Officer of the Funds listed on Attachment A, certify that, to my knowledge:

1. The form N-CSR of the Funds listed on Attachment A for the period ended December 31, 2008 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Form N-CSR of the Funds listed on Attachment A for the period ended December 31, 2008 fairly presents, in all material respects, the financial condition and results of operations of the Funds listed on Attachment A.

Date: February 27, 2009

/s/ Steven D. Krichmar
Steven D. Krichmar
Principal Financial Officer

Attachment A 

N-CSR 

December 31, 2008 

Putnam Europe Equity Fund 

Putnam International Equity Fund 

Putnam New Opportunities Fund 

Putnam Small Cap Growth Fund 

Putnam International Growth & Income Fund 

Putnam Variable Trust 

Putnam VT American Government Income Fund 

Putnam VT Discovery Growth Fund 

Putnam VT Diversified Income Fund 

Putnam VT Equity Income Fund 

Putnam VT The George Putnam Fund of Boston 

Putnam VT Global Asset Allocation Fund 

Putnam VT Global Equity Fund 

Putnam VT Global Health Care Fund 

Putnam VT Global Utilities Fund 

Putnam VT Growth and Income Fund 

Putnam VT Growth Opportunities Fund 

Putnam VT High Yield Fund 

Putnam VT Income Fund 

Putnam VT International Equity Fund 

Putnam VT International Growth and Income Fund 

Putnam VT International New Opportunities Fund 

Putnam VT Investors Fund 

Putnam VT Money Market Fund 

Putnam VT New Opportunities Fund 

Putnam VT New Value Fund 

Putnam VT Research Fund 

Putnam VT Small Cap Value Fund 

Putnam VT Vista Fund 

Putnam VT Voyager Fund