-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, L7aEDH+3xFoZYn3JdbkoEGuY0EjmRCpEAv2SpheODkwwJfeq/WMbmV8t2czgk9zG 9nb9oC9yTHgCsvveQanZtA== 0000915707-95-000047.txt : 19950901 0000915707-95-000047.hdr.sgml : 19950901 ACCESSION NUMBER: 0000915707-95-000047 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950830 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM OVERSEAS GROWTH FUND CENTRAL INDEX KEY: 0000868648 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 046661045 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-06190 FILM NUMBER: 95569136 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQ CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6172921471 FORMER COMPANY: FORMER CONFORMED NAME: PUTNAM INTERNATIONAL GROWTH FUND DATE OF NAME CHANGE: 19901107 N-30D 1 PUTNAM OVERSEAS GROWTH FUND ANNUAL REPORT June 30, 1995 [LOGO] BOSTON * LONDON * TOKYO PERFORMANCE HIGHLIGHTS Lipper Analytical Services ranked the fund's class A share total return in the top 30% of all international funds rated for the 12- month period ended June 30, 1995. Class B shares placed in the top 33% of international funds over the same period.* FISCAL 1995 RESULTS AT A GLANCE
CLASS A CLASS B CLASS M TOTAL RETURN: NAV POP NAV CDSC NAV POP - ---------------------------------------------------------------------- (change in value during period plus reinvested distributions) 12 months ended 6/30/95 3.76% -2.19% 3.00% -2.00% -- -- Life of class M -- -- -- -- 3.33% -0.28% - ---------------------------------------------------------------------- CLASS A CLASS B CLASS M SHARE VALUE: NAV POP NAV NAV POP - ---------------------------------------------------------------------- 6/30/94 $11.83 $12.55 $11.82 -- -- 12/1/94 (inception of class M shares) -- -- -- 11.87 12.30 6/30/95 12.10 12.84 12.00 12.09 12.53 - ---------------------------------------------------------------------- CAPITAL GAINS SHORT- LONG- DISTRIBUTIONS: NO. INCOME TERM TERM TOTAL - ---------------------------------------------------------------------- Class A 1 -- $0.086 $0.082 $0.168 Class B 1 -- 0.086 0.082 0.168 Class M 1 -- 0.086 0.082 0.168 - ---------------------------------------------------------------------- Performance data represent past results and will differ for each share class. For performance over longer periods, see pages 8 and 9. POP assumes 5.75% maximum sales charge for class A shares and 3.50% for class M shares, which became effective 12/1/94. CDSC assumes 5% maximum contingent deferred sales charge. * Lipper Analytical Services, an independent research organization, ranks funds according to total- return performance. Their rankings vary over time, and do not reflect the effects of sales charges. For periods ended 6/30/95, the fund's class A shares ranked 58 out of 198 and 14 out of 90 for 1- and 3-year performance, respectively. Class B shares ranked 64 out of 198 for 1-year performance. Class M shares have been offered for less than 1 year and therefore were not tracked over these periods. Past performance is not indicative of future results.
FROM THE CHAIRMAN [PHOTO OF GEORGE PUTNAM] (C) KARSH, OTTAWA DEAR SHAREHOLDER: Putnam Overseas Growth Fund's fiscal year, which ended on June 30, 1995, was marked by challenge as the world's stock markets digested economic disaster (in Mexico), natural disaster (Japan's earthquake and Europe's floods), and a final round of interest-rate increases. However, because securities markets have finally begun to show signs of renewed strength, the fund has embarked on fiscal 1996 with an air of optimism. The most significant development for global stock markets in recent months was the return of stability to the world's bond markets. This long-awaited stabilization finally allowed investors to turn their attention back to economic fundamentals, which include the prospect of continued strong corporate earnings growth in Europe. Stronger earnings, in turn, have contributed to improved stock-market performance. Fund Manager Justin Scott's biggest challenge remains Japan, where many attractive valuations are present but economic uncertainty and an overvalued yen make stock selection difficult. Nevertheless, Justin believes overseas stock markets will do well as a whole in the remaining months of 1995. In the pages that follow, he reviews your fund's performance in fiscal 1995 and what he sees as its prospects for fiscal 1996. Respectfully yours, [SIGNATURE] George Putnam Chairman of the Trustees August 15, 1995 REPORT FROM THE FUND MANAGER JUSTIN M. SCOTT Putnam Overseas Growth Fund's 1995 fiscal year was marked by an environment of stagnation in key international markets. This was due in large part to events such as the Kobe earthquake in Japan, the collapse of Barings Bank in England, and the floods in continental Europe. At the same time, major international currencies continued to strengthen against the U.S. dollar. During this period, your fund delivered a solid performance relative to most other foreign stock funds. Moreover, not all the market news was disagreeable. Indeed, a sweeping recovery in bond markets throughout Europe and Asia was a major source of support for equity markets during the fiscal year's second half. This welcome development, along with good stock selection and the continuation of generally strong corporate earnings -- especially in Europe -- enabled the fund to post market-beating results for the fiscal year ended June 30, 1995. The fund's 3.76% and 3.00% total returns at net asset value for class A and class B shares, respectively, surpassed the 1.65% return measured by Morgan Stanley Capital International's Europe, Australia, and Far East (EAFE) Index, the fund's market standard. PRUDENT INVESTMENT IN STRUGGLING JAPANESE MARKET Since the fiscal year began last July, Japan's economy has steadily weakened. Economic contraction (negative growth) impaired the performance of some Japanese companies, and deflation (negative inflation) eroded corporate revenues. Furthermore, the Japanese government's failure to aggressively bolster the economy during this period fostered a pessimistic outlook among Japanese consumers, local investors, and overseas money managers. In response, we reduced the portfolio's allocation to Japan slightly during the period. However, because some Japanese companies continued to report healthy profit growth, fund holdings in Japan continued to outweigh those in any other country. We researched and purchased stocks of high-quality Japanese companies that became less expensive as the country's economy faltered. At the end of 1994, we were concerned that the U.S. dollar would begin to strengthen against the yen, and we initiated a series of defensive currency hedges. A hedge can be considered a sort of currency insurance policy designed to lock in specific exchange rates. In this case, the strategy was intended to protect the performance of the fund's Japanese holdings, should the yen decline in value relative to the dollar. Although the yen subsequently remained strong relative to the dollar, to the fund's disadvantage, we remain convinced that hedges are necessary to protect investors in the long term. CORPORATE EARNINGS RISE AND BOND MARKETS RALLY ACROSS EUROPE Emphasizing stock selection over country selection has proved invaluable in helping us navigate the European markets. At the end of 1994, we anticipated a continuing recovery in corporate earnings across Europe, and began to increase holdings in European stocks. As it turned out, your fund benefited from this increased exposure, particularly in Spain, Switzerland, the Netherlands, and the United Kingdom. While many European investors concentrated on one market sector at a time, switching sectors only after securities became overvalued, [BAR CHART] TOP COUNTRY ALLOCATIONS (6/30/95)* - ---------------------------------------------------------------------- JAPAN 26.5% UNITED KINGDOM 10.9% FRANCE 8.1% SWITZERLAND 5.8% NETHERLANDS 5.6% SINGAPORE 5.6% * Based on percentage of net assets. Country allocations will vary over time. we diversified your fund's holdings across different countries and market sectors, endeavoring to pay as little as possible for stocks with attractive growth potential. The fund particularly benefited from investment in smaller capitalization stocks. STRICT ADHERENCE TO A PROVEN VALUATION STYLE In selecting stocks for your fund's portfolio, we continue to apply our established valuation techniques across all sectors, comparing the cost of corporate assets with the return we expect to receive. We extensively research corporate assets and profitability to find securities that we believe are not priced appropriately, selling significantly below what we consider to be their true long-term worth. While we are not deliberately contrarian, we often invest in companies that have been ignored or overlooked by the bulk of international investors. For fiscal 1995, this approach enabled the fund to comfortably outperform its market index. OUTLOOK: SHORT-TERM STRENGTH IN JAPAN; ONGOING STABILITY IN EUROPE We believe that the depressed Japanese economy may yield relatively cheap stock prices over the next 12 to 18 months, presenting opportunities to purchase high-quality stocks at inexpensive prices. Barring a substantial exacerbation of the current banking crisis, we may modestly increase allocations to Japan during this period. Over the longer term, however, Japan's low rate of return on corporate capital could stifle the growth potential of attractively valued companies. We will proceed, therefore, with caution. Southeast Asia. Historically, Southeast Asian markets have proved sensitive to U.S. interest rate fluctuations. These markets performed poorly in 1994 until U.S. interest rates began to decline. We remain attracted to long-term opportunities in this dynamic growth region. Europe. Through the remainder of 1995, we anticipate that European bond markets will remain stable and corporate earnings will continue to be strong. Accordingly, we expect equity markets to perform well. We will continue to employ our research techniques to identify attractive stocks.
TOP 10 HOLDINGS (6/30/95) - ---------------------------------------------------------------------- Tarkett AG GERMANY Hardwood floors and floor covering manufacturer - ---------------------------------------------------------------------- Tokyo Electric Power Company Inc. JAPAN Information systems and home electrical appliance producer - ---------------------------------------------------------------------- Austria Mikro Systeme International AUSTRIA Specialized semiconductor manufacturer - ---------------------------------------------------------------------- United Overseas Bank Ltd. SINGAPORE Commercial banking, stockbroking, and insurance provider - ---------------------------------------------------------------------- Development Bank of Singapore SINGAPORE International banking and financial service provider - ---------------------------------------------------------------------- CRH PLC IRELAND Construction products manufacturer - ---------------------------------------------------------------------- Credit Locale de France S.A. FRANCE Property finance and mortgage service provider - ---------------------------------------------------------------------- Glory Ltd. (Glory Kogyo) JAPAN Machine manufacturer specializing in vending machines - ---------------------------------------------------------------------- Omron Tateisi Electronics Corp. JAPAN Electric fund transfer systems and personal computer manufacturer - ---------------------------------------------------------------------- Greencore Group PLC IRELAND Food products manufacturer and distributor - ---------------------------------------------------------------------- These holdings represent 11.4% of the fund's net assets. Portfolio holdings will vary over time.
Latin America. Stocks of Mexican companies were significantly damaged by the devaluation of the Mexican peso and remain largely unattractive. Elsewhere in this region, we will continue to search for individual stocks that offer attractive potential. Overall, we expect to maintain a relatively low allocation to this region. The views expressed here are exclusively those of Putnam Management. They are not meant as investment advice. Although the described holdings were viewed favorably as of 6/30/95, there is no guarantee the fund will continue to hold these securities in the future. Investments in non-U.S. securities may be subject to certain risks associated with currency fluctuations and political developments. PERFORMANCE SUMMARY This section provides, at a glance, information about your fund's performance. Total return shows how the value of the fund's shares changed over time, assuming you held the shares through the entire period and reinvested all distributions back into the fund. We show total return in two ways: on a cumulative long-term basis and on average how the fund might have grown each year over varying periods. For comparative purposes, we show how the fund performed relative to appropriate indexes and benchmarks. Performance should always be considered in light of a fund's investment strategy. Putnam Overseas Growth Fund is designed for investors seeking capital appreciation through equity securities of issuers located outside North America. TOTAL RETURN FOR PERIODS ENDED 6/30/95
CLASS A CLASS B CLASS M NAV POP NAV CDSC NAV POP - ---------------------------------------------------------------------- 1 year 3.76% -2.19% 3.00% -2.00% -- -- - ---------------------------------------------------------------------- 3 years 41.79 33.61 -- -- -- -- Annual average 12.34 10.14 -- -- -- -- - ---------------------------------------------------------------------- Life of class A47.19 38.67 -- -- -- -- Annual average 9.31 7.82 -- -- -- -- - ---------------------------------------------------------------------- Life of class B -- -- 3.35 -0.65 -- -- Annual average -- -- 3.10 -0.60 -- -- - ---------------------------------------------------------------------- Life of class M -- -- -- -- 3.33% -0.28% - ----------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 6/30/95
STANDARD & POOR'S MSCI EAFE CONSUMER 500 INDEX INDEX PRICE INDEX - ---------------------------------------------------------------------- 1 year 25.99% 1.65% 3.04% - ---------------------------------------------------------------------- 3 years 45.14 43.06 8.77 Annual average 13.22 12.69 2.84 - ---------------------------------------------------------------------- Life of class A 69.06 26.30 13.13 Annual average 12.86 5.54 2.88 - ---------------------------------------------------------------------- Life of class B 23.56 3.09 3.39 Annual average 21.64 2.85 3.13 - ---------------------------------------------------------------------- Life of class M 22.51 3.24 1.87 - ---------------------------------------------------------------------- The fund began investment operations on 2/28/91, offering shares now known as class A shares. Effective 6/1/94, the fund began offering class B shares and on 12/1/94, class M shares. Fund performance data do not take into account any adjustment for taxes payable on reinvested distributions. Performance data represent past results and differ for each share class. Investment returns and net asset value will fluctuate so an investor's shares, when sold, may be worth more or less than their original cost.
[MOUNTAIN CHART] GROWTH OF A $10,000 INVESTMENT - ---------------------------------------------------------------------- Date POP MSCI EAFE Index CPI 2/28/91 $9,425 $10,000 $10,000 6/30/91 8,930 $8,887 $10,089 6/30/92 9,780 $8,829 $10,401 6/30/93 10,623 $10,619 $10,712 6/30/94 13,364 $12,425 $10,979 6/30/95 13,867 $12,630 $11,313 Past performance is not indicative of future results. A $10,000 investment in the fundOs class B shares at inception on 6/1/94 would have been valued at $10,335 on 6/30/95 ($9,935 with a redemption at the end of the period). A $10,000 investment in the fundOs class M shares at inception on 12/1/94 would have been valued at $10,333 at net asset value, and $9,972 at public offering price, on 6/30/95. TERMS AND DEFINITIONS CLASS A SHARES are generally subject to an initial sales charge. CLASS B SHARES may be subject to a sales charge upon redemption. CLASS M SHARES have a lower initial sales charge and a higher 12b-1 fee than class A shares and no sales charge on redemption. NET ASSET VALUE (NAV) is the value of all your fund's assets, minus any liabilities, divided by the number of outstanding shares, not including any initial or contingent deferred sales charge. PUBLIC OFFERING PRICE (POP) is the price of a mutual fund share plus the maximum sales charge levied at the time of purchase. POP performance figures shown here assume the maximum 5.75% sales charge for class A shares and 3.50% for class M shares. CONTINGENT DEFERRED SALES CHARGE (CDSC) is a charge applied at the time of the redemption of class B shares and assumes redemption at the end of the period. Your fund's CDSC declines from a 5% maximum during the first year to 1% during the sixth year. After the sixth year, the CDSC no longer applies. COMPARATIVE BENCHMARKS EUROPE, AUSTRALIA, AND THE FAR EAST (EAFE) component of the Morgan Stanley Capital International World Index is an unmanaged list of international equity securities, excluding the U.S., with all values expressed in U.S. dollars. Performance figures reflect changes in market prices and reinvestment of distributions net of withholding taxes. STANDARD & POOR'S 500 INDEX is an unmanaged list of large- capitalization common stocks and assumes reinvestment of all distributions. The index is a widely used measure of stock market performance and does not take into account brokerage commissions or other costs. CONSUMER PRICE INDEX (CPI) is a commonly used measure of inflation; it does not represent an investment return. The fund's portfolio contains securities that differ from those in the indexes. REPORT OF INDEPENDENT ACCOUNTANTS for the year ended June 30, 1995 To the Trustees and Shareholders of Putnam Overseas Growth Fund We have audited the accompanying statement of assets and liabilities of Putnam Overseas Growth Fund, including the portfolio of investments owned, as of June 30, 1995 and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the "Financial Highlights" for each of the periods indicated therein. These financial statements and "Financial Highlights" are the responsibility of the fund's management. Our responsibility is to express an opinion on these financial statements and "Financial Highlights" based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and "Financial Highlights" are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of June 30, 1995, by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and "Financial Highlights" referred to above present fairly, in all material respects, the financial position of Putnam Overseas Growth Fund as of June 30, 1995, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the "Financial Highlights" for each of the periods indicated therein, in conformity with generally accepted accounting principles. Coopers & Lybrand L.L.P. Boston, Massachusetts August 15, 1995 PORTFOLIO OF INVESTMENTS OWNED June 30, 1995
COMMON STOCKS (89.9%)* NUMBER OF SHARES VALUE AUSTRALIA (0.3%) - ---------------------------------------------------------------------- 27,400 Amcor, Ltd. $ 201,733 Austria (2.3%) - ---------------------------------------------------------------------- 5,300 Austria Mikro Systeme International 696,688 17,500 Mayr-Melnhof Karton AG 144A ADS 251,563 3,500 VA Technologie AG 438,151 ---------- 1,386,402 BELGIUM (0.9%) - ---------------------------------------------------------------------- 270 Bekaert S.A. 213,856 600 Solvay S.A. 332,664 ---------- 546,520 CANADA (0.9%) - ---------------------------------------------------------------------- 12,400 Magna International, Inc., Class A 547,150 DENMARK (1.0%) - ---------------------------------------------------------------------- 8,000 Danisco A/S 342,571 9,000 Tele Danmark A/S ADS 252,000 ---------- 594,571 FINLAND (0.3%) - ---------------------------------------------------------------------- 8,000 Effjohn Oy Ser. A+ 56,239 6,500 Repola 137,083 ---------- 193,322 FRANCE (7.6%) - ---------------------------------------------------------------------- 7,100 Credit Local de France S.A. 659,783 489 Docks de France S.A. 74,625 7,000 Lafarge Coppee (Bearer) 545,256 13,000 Michelin Corp. Class B (Registered)+ 576,913 585 Pechiney International 14,799 2,300 Peugeot S.A. 319,649 15,000 Sgs-Thomson Microelectronic ADR+ 609,375 1,400 Societe Generale Paris 163,924 6,000 Societe Nationale Elf Aquitaine (Bearer) 444,192 1,350 Sommer-Allibert 497,625 3,610 Sovac 320,551 4,500 Ugine S.A. (Bearer) 316,882 620 Zodiac S.A. 77,460 ---------- 4,621,034 GERMANY (4.0%) - ---------------------------------------------------------------------- 900 Jungheinrich Prior 182,305 1,500 Mayr-Melnhof Karton AG+ 86,727 7,500 SGL Carbon AG+ 335,311 COMMON STOCKS NUMBER OF SHARES VALUE GERMANY (continued) - ---------------------------------------------------------------------- 6,900 Schering AG $ 482,696 33,000 Tarkett AG+ 857,050 1,300 VEBA AG 510,671 ---------- 2,454,760 HONG KONG (4.1%) - ---------------------------------------------------------------------- 70,000 Cheung Kong Holdings Ltd. 346,508 36,600 Guoco Group Ltd. 170,767 44,000 HSBC Holdings PLC 564,416 87,000 Hong Kong Electric Holdings, Ltd.+ 295,727 110,000 Hong Kong Land Holdings Ltd. 200,200 80,000 Hutchison Whampoa, Ltd. 386,703 30,000 Swire Pacific Ltd. Class A 228,765 180,000 Varitronix International Ltd. 315,230 ---------- 2,508,316 IRELAND (3.0%) - ---------------------------------------------------------------------- 63,426 Allied Irish Banks 299,574 35,000 Bank of Ireland 199,178 100,000 CRH PLC 669,120 82,755 Greencore Group PLC 624,304 ---------- 1,792,176 ITALY (0.5%) - ---------------------------------------------------------------------- 12,150 Danieli & Co. 78,159 65,600 Danieli & Co. (Savings Shares) 199,944 ---------- 278,103 JAPAN (26.5%) - ---------------------------------------------------------------------- 48,000 Asahi Bank Ltd. 513,172 31,000 Bridgestone Corp. 457,767 10,000 CSK Corp. 231,542 35,000 Dai Nippon Printing Co., Ltd. 558,181 40,000 Daiwa Securities Ltd. 422,445 58,000 Fujitsu, Ltd. 578,972 7,000 Futaba Industrial Co., Ltd. 317,543 21,000 Glory Ltd. (Glory Kogyo) 647,490 6,000 Hirose Electric Co. Ltd. 372,121 10,000 Ito Yokado Co., Ltd. 528,057 800 JGC Corp. 7,797 45,000 KAO Corp.+ 542,233 11,000 Komori Corp. 224,808 16,000 Kurita Water Ltd. 412,050 4,000 Kyocera Corp. 329,829 6,000 Mabuchi Motor Co. Ltd. 413,940 49,000 Maeda Corp. 544,123 26,000 Marui Co., Ltd. 414,649 34,000 Matsushita Electric Industrial Co., Ltd. 530,183 24,000 Mitsubishi Bank 518,842 40,000 Mitsubishi Motors Corp. 330,301 40,000 Mitsui Fudoscan Co. Ltd. 312,818 14,500 Murata Manufacturing Co. Ltd. 549,852 31,000 Nichicon 373,538 20,000 Nippondenso Co., Ltd. 363,851 COMMON STOCKS NUMBER OF SHARES VALUE JAPAN (continued) - ---------------------------------------------------------------------- 78,000 Nisshin Steel Co., Ltd. $ 286,568 33,000 Omron Tateisi Electronics Corp. 631,542 12,000 Rohm Co. Ltd. 620,910 18,700 Santen Pharmaceutical Co., Ltd. 499,256 48,000 Sekisui Chemical Co., Ltd. 567,041 13,000 Takuma Co. Ltd. 121,016 34,000 Tokio Marine & Fire Insurance Co. Ltd. 390,408 24,400 Tokyo Electric Power Co., Inc. 749,439 65,000 Toray Industries, Inc. 404,666 16,000 Tostem Corp. 493,326 25,000 Yamanouchi Pharmaceutical Co. Ltd. 564,087 17,600 Yamato Transport Co. Ltd. 187,539 ---------- 16,011,902 MALAYSIA (3.2%) - ---------------------------------------------------------------------- 45,000 Genting Berhad 444,923 31,000 Hong Leong Industries Berhad 193,313 70,000 Leader Universal 249,846 50,000 Malayan Banking Berhad 395,897 60,000 Sungei Way Holdings 244,923 34,000 Telekom Malaysia 258,051 20,000 United Engineers 127,179 ---------- 1,914,132 NETHERLANDS (5.6%) - ---------------------------------------------------------------------- 10,040 ABN AMRO Holding N.V. 387,900 8,835 Aegon N.V. 305,954 3,000 Akzo-Nobel N.V. 358,961 800 Dutch State Mines N.V. 69,001 10,149 Getronics Electric N.V. 497,680 13,400 IHC Caland N.V. 380,928 7,580 K.L.M.-Royal Dutch Airlines+ 246,333 7,000 Koninklijke PPT Nederland N.V. 251,906 6,200 Randstad Holdings 439,023 5,327 Wolters Kluwer N.V. 470,475 ---------- 3,408,161 NORWAY (0.1%) - ---------------------------------------------------------------------- 1,500 Christiana Bank Kreditkass 144A ADR 34,500 5,000 Christiana Bank OG Kreditkass 11,612 ---------- 46,112 PORTUGAL (0.1%) - ---------------------------------------------------------------------- 400 Banco Commercial Portugues, S.A. (Registered) 5,300 2,295 Banco Totta and Accores (BTA) Nationalisert 48,696 ---------- 53,996 SINGAPORE (5.6%) - ---------------------------------------------------------------------- 90,000 City Developments Ltd. 551,020 32,000 Cycle & Carriage Ltd. 286,430 58,000 Development Bank of Singapore (Registered) 660,365 7,500 Genting Berhad 74,154 30,000 Informatics Holdings Ltd. 15,467 42,800 Jardine Matheson Holdings Ltd. 314,580 COMMON STOCKS NUMBER OF SHARES VALUE SINGAPORE (continued) - ---------------------------------------------------------------------- 46,000 Singapore Airlines Ltd. (Registered) $ 424,919 15,600 Singapore Press Holdings (Registered) 233,469 72,100 United Overseas Bank Ltd. (Registered) 681,504 62,000 Venture Manufacturing Ltd. 163,380 ---------- 3,405,288 SPAIN (3.5%) - ---------------------------------------------------------------------- 6,880 Argentaria Corp. (Registered) 254,762 5,000 Hidrolectrica del Cantabrico 153,082 70,000 Iberdrola S.A. 528,258 1,700 Immobiliaria Metropolitana Vasco Central 50,641 11,500 Mapfre Vida Seguros 566,198 17,000 Repsol S.A. 535,954 ---------- 2,088,895 SWEDEN (3.2%) - ---------------------------------------------------------------------- 18,500 Astra AB Free 571,208 4,600 Autoliv AB 246,101 30,000 Foreningsbanken AB+ 51,162 50,000 IRO AB+ 505,433 30,000 Svenska Cellulosa, Ser. B 557,007 ---------- 1,930,911 SWITZERLAND (5.8%) - ---------------------------------------------------------------------- 400 BBC Brown Boveri & Cie, AG, Ltd. 414,970 35 Baer Holding AG 41,123 800 Ciba-Geigy AG (Registered) 587,641 280 Georg Fischer (Bearer) 377,720 500 Nestle S.A. (Registered) 521,758 1,175 Rieter Holding AG (Registered) 352,807 250 SGS Societe Generale De Surveillance Holdings S.A. 435,161 300 Swiss Reinsurance (Registered) 231,593 500 Union Bank of Switzerland (Bearer) 519,147 ---------- 3,481,920 TAIWAN (0.5%) - ---------------------------------------------------------------------- 23,250 Yageo Corp. GDR 144A+ 331,313 UNITED KINGDOM (10.9%) - ---------------------------------------------------------------------- 110,479 Argyll Group PLC 591,337 58,078 BAT Industries PLC 445,013 20,000 Barclays Bank PLC 215,214 41,137 Burmah Oil PLC 596,990 55,000 General Electric Co. (The) PLC 268,978 50,200 Guinness PLC 378,251 600 Ktk Telecommunications PLC 6,167 66,000 Molins PLC 702,322 60,000 North West Water Group PLC 530,469 25,000 Pearson PLC 236,959 36,132 Royal Insurance Holdings PLC 177,855 300,000 Sears PLC 475,511 13,600 Securicor Group PLC, Class A 210,149 17,500 Security Services PLC 249,504 4,600 Shell Transportation & Trading Co. PLC 55,032 COMMON STOCKS NUMBER OF SHARES VALUE UNITED KINGDOM (continued) - ---------------------------------------------------------------------- 30,000 Siebe PLC $ 299,165 5,000 South Western Electric PLC 53,366 84,281 Tate & Lyle PLC 570,603 70,200 Vodafone Group PLC 261,120 75,000 Weir Group PLC (The) 303,467 ---------- 6,627,472 - ---------------------------------------------------------------------- TOTAL COMMON STOCKS (cost $50,816,997) $54,424,189 - ---------------------------------------------------------------------- PREFERRED STOCKS (0.5%)* (COST $210,471) NUMBER OF SHARES VALUE FRANCE (0.5%) - ---------------------------------------------------------------------- 2,200 Essilor International ADP $ 295,302 CONVERTIBLE BONDS AND NOTES (0.4%)* PRINCIPAL AMOUNT VALUE DENMARK (0.3%) - ---------------------------------------------------------------------- $1,200,000 Danisco Cv. Bond 5s, 2004 $ 215,219 FINLAND (0.1%) - ---------------------------------------------------------------------- 350,000 Effjohn Oy--AB Cv. Bond 7s, 2004 41,008 - ---------------------------------------------------------------------- TOTAL CONVERTIBLE BONDS AND NOTES (cost $244,414) $ 256,227 - ----------------------------------------------------------------------
WARRANTS (--%)*+ EXPIRATION NUMBER OF WARRANTS DATE VALUE SWITZERLAND (--%) - ---------------------------------------------------------------------- 1,175 Rieter Holding 3/13/96 $3,886 ITALY (--%) - ---------------------------------------------------------------------- 6,237 Danieli & Co 11/30/99 4,394 - ---------------------------------------------------------------------- TOTAL WARRANTS (cost $--) $ 8,280 - ----------------------------------------------------------------------
SHORT-TERM INVESTMENTS (11.2%)* PRINCIPAL AMOUNT VALUE $5,000,000 Federal National Mortgage Assn. 5.91s, July 20, 1995 $4,984,404 1,776,000 Interest in $453,426,000 joint repurchase agreement dated June 30, 1995 with Lehman Brothers, Inc. due July 3, 1995 with respect to various U.S. Treasury obligations -- maturity value of $1,776,921 for an effective yield of 6.22 % $1,776,307 - ---------------------------------------------------------------------- TOTAL SHORT-TERM INVESTMENTS (cost $6,760,711) $6,760,711 - ---------------------------------------------------------------------- TOTAL INVESTMENTS (cost $58,032,593)*** $61,744,709 - ---------------------------------------------------------------------- NOTES - ---------------------------------------------------------------------- * Percentages indicated are based on net assets of $60,525,428, which correspond to a net asset value per class A, class B, and class M shares of $12.10, $12.00, and $12.09, respectively. + Non-income-producing security. *** The aggregate identified cost for federal income tax purposes is $58,044,045, resulting in gross unrealized appreciation and depreciation of $5,708,699, and $2,008,035, respectively, or net unrealized appreciation of $3,700,664. ADR, ADS or GDR after the name of a foreign holding stands for American Depository Receipt, American Depository Shares or Global Depository Receipts, respectively, representing ownership of foreign securities on deposit with a domestic custodian bank. 144A after the name of a security represents those exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.
FORWARD CURRENCY CONTRACTS TO SELL AT JUNE 30, 1995 ----------------------------------------------------------------- - UNREALIZED AGGREGATE DELIVERY APPRECIATION/ MARKET VALUE FACE VALUE DATE (DEPRECIATION) ----------------------------------------------------------------- - British Pounds $1,798,214 $1,779,496 8/22/95 (18,718) British Pounds 604,709 607,878 8/22/95 3,169 British Pounds 779,757 767,683 8/22/95 (12,074) French Francs 827,009 779,064 8/22/95 (47,945) French Francs 1,134,301 1,124,055 8/22/95 (10,246) French Francs 932,189 878,779 8/22/95 (53,410) Japanese Yen 8,774,558 7,749,238 8/22/95 (1,025,320) Japanese Yen 1,105,070 1,132,028 8/22/95 26,958 Netherland Guilders 712,504 665,960 8/22/95 (46,544) Netherland Guilders 226,706 227,848 8/22/95 1,142 Netherland Guilders 498,752 477,759 8/22/95 (20,993) Swiss Francs 935,112 863,042 8/22/95 (72,070) Swiss Francs 279,662 282,722 8/22/95 3,060 Swiss Francs 174,789 166,875 8/22/95 (7,914) ----------------------------------------------------------------- - Total Forward Currency Contracts to Sell $18,783,332 $17,502,427 $(1,280,905) ----------------------------------------------------------------- -
STATEMENT OF ASSETS AND LIABILITIES June 30, 1995 ASSETS - ---------------------------------------------------------------------- Investments in securities, at value (identified cost $58,032,593) (Note 1) $61,744,709 - ---------------------------------------------------------------------- Cash 837 - ---------------------------------------------------------------------- Dividends, interest and other receivables 236,116 - ---------------------------------------------------------------------- Receivable for securities sold 69,592 - ---------------------------------------------------------------------- Receivable for shares of the fund sold 266,454 - ---------------------------------------------------------------------- Receivable for open forward currency contracts 34,329 - ---------------------------------------------------------------------- Unamortized organization expenses (Note 1) 1,872 - ---------------------------------------------------------------------- TOTAL ASSETS 62,353,909 - ---------------------------------------------------------------------- LIABILITIES - ---------------------------------------------------------------------- Payable for shares of the fund repurchased 292,323 - ---------------------------------------------------------------------- Payable for compensation of Manager (Note 2) 109,168 - ---------------------------------------------------------------------- Payable for investor servicing and custodian fees (Note 2) 42,333 - ---------------------------------------------------------------------- Payable for administrative services (Note 2) 1,223 - ---------------------------------------------------------------------- Payable for distribution fees (Note 2) 40,419 - ---------------------------------------------------------------------- Payable for compensation of Trustees (Note 2) 45 - ---------------------------------------------------------------------- Payable for open forward currency contracts 1,315,234 - ---------------------------------------------------------------------- Other accrued expenses 27,736 - ---------------------------------------------------------------------- TOTAL LIABILITIES 1,828,481 - ---------------------------------------------------------------------- NET ASSETS $60,525,428 - ---------------------------------------------------------------------- REPRESENTED BY Paid-in capital (Notes 1 and 4) 58,777,836 - ---------------------------------------------------------------------- Accumulated net investment loss (Note 1) (108,932) - ---------------------------------------------------------------------- Accumulated net realized loss on investment transactions (Note 1) (577,743) - ---------------------------------------------------------------------- Net unrealized appreciation of investments, forward currency contracts and foreign currency 2,434,267 - ---------------------------------------------------------------------- TOTAL -- REPRESENTING NET ASSETS APPLICABLE TO CAPITAL SHARES OUTSTANDING $60,525,428 - ---------------------------------------------------------------------- COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE - ---------------------------------------------------------------------- Net asset value and redemption price of class A shares ($32,856,412 divided by 2,714,515 shares) $12.10 - ---------------------------------------------------------------------- Offering price per class A share (100/94.25 of $12.10)* $12.84 - ---------------------------------------------------------------------- Net asset value and offering price of class B shares ($25,891,874 divided by 2,157,480 shares)+ $12.00 - ---------------------------------------------------------------------- Net asset value and redemption price of class M shares ($1,777,142 divided by 147,023 shares) $12.09 - ---------------------------------------------------------------------- Offering price per class M share (100/96.50 of $12.09)* $12.53 - ---------------------------------------------------------------------- * On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales, the offering price is reduced. + Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
STATEMENT OF OPERATIONS Year ended June 30, 1995 INVESTMENT INCOME - ---------------------------------------------------------------------- Dividends (net of foreign tax of $89,489) $740,166 - ---------------------------------------------------------------------- Interest 240,597 - ---------------------------------------------------------------------- TOTAL INVESTMENT INCOME 980,763 EXPENSES: - ---------------------------------------------------------------------- Compensation of Manager (Note 2) 297,692 - ---------------------------------------------------------------------- Investor servicing and custodian fees (Note 2) 122,230 - ---------------------------------------------------------------------- Reports to shareholders 28,633 - ---------------------------------------------------------------------- Compensation of Trustees (Note 2) 1,602 - ---------------------------------------------------------------------- Administrative services (Note 2) 4,707 - ---------------------------------------------------------------------- Distribution fees -- class A (Note 2) 55,299 - ---------------------------------------------------------------------- Distribution fees -- class B (Note 2) 145,547 - ---------------------------------------------------------------------- Distribution fees -- class M (Note 2) 3,718 - ---------------------------------------------------------------------- Auditing 11,857 - ---------------------------------------------------------------------- Legal 12,936 - ---------------------------------------------------------------------- Postage 7,485 - ---------------------------------------------------------------------- Registration fees 35,054 - ---------------------------------------------------------------------- Amortization of organization expenses (Note 1) 2,857 - ---------------------------------------------------------------------- Fees waived by Manager (Note 2) (1,767) - ---------------------------------------------------------------------- TOTAL EXPENSES 727,850 - ---------------------------------------------------------------------- NET INVESTMENT INCOME 252,913 - ---------------------------------------------------------------------- Net realized loss on investments (Notes 1 and 3) (418,475) - ---------------------------------------------------------------------- Net realized loss on forward currency contracts and foreign currency (320,521) - ---------------------------------------------------------------------- Net unrealized loss on forward currency contracts and foreign currency translation during the year (1,279,242) - ---------------------------------------------------------------------- Net unrealized appreciation of investments during the year 3,024,324 - ---------------------------------------------------------------------- NET GAIN ON INVESTMENTS 1,006,086 - ---------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $1,258,999 - ----------------------------------------------------------------------
Statement of changes in net assets
Year ended June 30 ---------------------------- 1995 1994 - ---------------------------------------------------------------------- Increase in net assets - ---------------------------------------------------------------------- Operations: - ---------------------------------------------------------------------- Net investment income (loss) $252,913 $(7,646) - ---------------------------------------------------------------------- Net realized gain (loss) on investments, forward currency contracts and foreign currency translation (738,996) 584,650 - ---------------------------------------------------------------------- Net unrealized appreciation of investments, forward currency contracts and foreign currency translation 1,745,082 229,572 - ---------------------------------------------------------------------- Net increase in net assets resulting from operations 1,258,999 806,576 - ---------------------------------------------------------------------- Distributions to shareholders from: - ---------------------------------------------------------------------- Net realized gain on investments -- class A (Note 1) (199,229) (70,167) - ---------------------------------------------------------------------- Net realized gain on investments -- class B (Note 1) (141,301) -- - ---------------------------------------------------------------------- Net realized gain on investments -- class M (Note 1) (460) -- - ---------------------------------------------------------------------- In excess of net realized gain on investments -- class A (Note 1) (117,199) -- - ---------------------------------------------------------------------- In excess of net realized gain on investments -- class B (Note 1) (83,122) -- - ---------------------------------------------------------------------- In excess of net realized gain on investments -- class M (Note 1) (271) -- - ---------------------------------------------------------------------- Increase from capital share transactions (Note 4) 48,556,735 7,656,085 - ---------------------------------------------------------------------- Total increase in net assets 49,274,152 8,392,494 - ---------------------------------------------------------------------- Net assets - ---------------------------------------------------------------------- Beginning of year 11,251,276 2,858,782 - ---------------------------------------------------------------------- End of year (including accumulated net investment loss of ($108,932) and $0, respectively) $60,525,428 $11,251,276 - ----------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (For a share outstanding throughout the period)
FOR THE PERIOD FOR THE PERIOD DECEMBER 1,1994 DECEMBER 1, 1994 (COMMENCEMENT (COMMENCEMENT OF OPERATIONS) TO YEAR ENDED OF OPERATIONS) TO JUNE 30 JUNE 30 JUNE 30 - ---------------------------------------------------------------------- 1995 1995 1994 - ---------------------------------------------------------------------- CLASS M CLASS B - ---------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $11.87 $11.82 $11.78 - ---------------------------------------------------------------------- INVESTMENT OPERATIONS - ---------------------------------------------------------------------- Net investment income (loss) .03 .01 (.01)(a)(b) - ---------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments .36 .34 .05 - ---------------------------------------------------------------------- TOTAL FROM INVESTMENT OPERATIONS .39 .35 .04 - ---------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: - ---------------------------------------------------------------------- Net investment income -- -- -- - ---------------------------------------------------------------------- Net realized gain on investments (.11) (.11) -- - ---------------------------------------------------------------------- In excess of net realized gain on investments (.06) (.06) -- - ---------------------------------------------------------------------- TOTAL DISTRIBUTIONS (.17) (.17) -- - ---------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $12.09 $12.00 $11.82 - ---------------------------------------------------------------------- Total investment return at net asset value (%)(c) 3.33(d) 3.00 .34(d) - ---------------------------------------------------------------------- NET ASSETS, END OF PERIOD (in thousands) $1,777 $25,892 $2470 - ---------------------------------------------------------------------- Ratio of expenses to average net assets (%) 1.61(a)(d) 2.41(a) .15(a)(b)(d) - ---------------------------------------------------------------------- Ratio of net investment income (loss) to average net assets (%) .58(a)(d) .23(a) (.06)(a)(b)(d) - ---------------------------------------------------------------------- Portfolio turnover (%) 25.83 25.83 96.13 - ----------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
FOR THE PERIOD FEBRUARY 28, 1991 (COMMENCEMENT OF OPERATIONS) TO YEAR ENDED JUNE 30 JUNE 30 - ---------------------------------------------------------------------- 1995 1994 1993 1992 1991 - ---------------------------------------------------------------------- CLASS A - ---------------------------------------------------------------------- $11.83 $9.58 $8.82 $8.18 $8.63 - ---------------------------------------------------------------------- .08 (.06)(a) .07(a) .06 .07(a) .36 2.53 .69 .71 (.52) - ---------------------------------------------------------------------- .44 2.47 .76 .77 (.45) - ---------------------------------------------------------------------- -- -- -- (.13) -- (.11) (.22) -- -- -- (.06) -- -- -- -- - ---------------------------------------------------------------------- (.17) (.22) -- (.13) -- - ---------------------------------------------------------------------- $12.10 $11.83 $9.58 $8.82 $8.18 - ---------------------------------------------------------------------- 3.76 25.81 8.62 9.52 (5.21)(d) - ---------------------------------------------------------------------- $32,856 $8,781 $2,859 $2,502 $2,054 - ---------------------------------------------------------------------- 1.61(a) 2.17(a) 1.80(a) 1.98 .78(a)(d) - ---------------------------------------------------------------------- .97(a) (.17)(a) .81(a) .76 .86(a)(d) - ---------------------------------------------------------------------- 25.83 96.13 80.92 82.45 14.54(d) - ---------------------------------------------------------------------- (a) Reflects an expense limitation applicable during the period. As a result of such limitation, expenses for class A shares of the fund for the periods ended June 30, 1994, June 30, 1993 and June 30, 1991 reflect per share reductions of approximately $0.03, $0.05 and $0.10, respectively. Expenses for class B shares of the fund for the period ended June 30, 1994 reflect a reduction of less than $0.01 per share. Expenses for classes A, B, and M shares of the fund for the period ended June 30, 1995 reflect a reduction of less than $0.01 per share. (b) Per share net investment income for class B shares for the period ended June 30, 1994 has been determined on the basis of the weighted average number of shares outstanding for the period. (c) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges. (d) Not annualized.
NOTES TO FINANCIAL STATEMENTS June 30, 1995 Note 1 Significant accounting policies The fund is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. The fund seeks capital appreciation by investing primarily in equity securities of companies located outside North America. The fund offers class A, class B and class M shares. Class A shares are sold with a maximum front-end sales charge of 5.75%. Class B shares do not pay a front-end sales charge, but pay a higher ongoing distribution fee than class A shares, and may be subject to a contingent deferred sales charge, if those shares are redeemed within six years of purchase. The fund commenced its public offering of class M shares on December 1, 1994 which are sold with a maximum front-end sales charge of 3.50%. Expenses of the fund are borne pro-rata by the holders of each class of shares, except that each class bears expenses unique to that class (including the distribution fees applicable to such class) and votes as a class only with respect to its own distribution plan or other matters on which a class vote is required by law or determined by the Trustees. Shares of each class should receive their pro-rata share of the net assets of the fund, if the fund were liquidated. In addition, the Trustees declare separate dividends on each class of shares. The following is a summary of significant accounting policies consistently followed by the fund in the preparation of its financial statements. The policies are in conformity with generally accepted accounting principles. A SECURITY VALUATION Investments for which market quotations are readily available are stated at market value, which is determined using the last reported sale price on the principal market in which the securities are traded, or, if no sales are reported -- as in the case of some securities traded over-the-counter -- the last reported bid price, except that certain U.S. government obligations are stated at the mean between the last reported bid and asked prices. Short-term investments having remaining maturities of 60 days or less are stated at amortized cost, which approximates market value, and other investments are stated at fair value following procedures approved by the Trustees. B JOINT TRADING ACCOUNT Pursuant to an exemptive order issued by the Securities and Exchange Commission, the fund may transfer uninvested cash balances into a joint trading account. The order permits the fund's cash balance to be deposited into a single joint account along with the cash of other registered investment companies managed by Putnam Investment Management, Inc. (Putnam Management), the fund's manager, a wholly owned subsidiary of Putnam Investments, Inc., and certain other accounts. These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. C REPURCHASE AGREEMENTS The fund or any joint trading account, through its custodian, receives delivery of the underlying securities, the market value of which at the time of purchase is required to be in an amount at least equal to the resale price, including accrued interest. The fund's Manager is responsible for determining that the value of these underlying securities is at all times at least equal to the resale price, including accrued interest. D SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Interest income is recorded on the accrual basis and dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities are recorded as soon as the fund is informed of the ex-dividend date. E FOREIGN CURRENCY TRANSLATION Securities quoted in foreign currencies are translated into U.S. dollars at the current exchange rate. The fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investment. Foreign currency-denominated receivables and payables are "marked- to- market" using the current exchange rate. The fluctuation between the original exchange rate and the current exchange rate is recorded as unrealized translation gain or loss. Upon receipt of payment, the fund realizes a gain or loss on foreign currency amounting to the difference between the original value and the ending value of the receivable or payable. F FORWARD CURRENCY CONTRACTS The fund may engage in forward currency contracts, which are agreements between two parties to buy and sell currencies at a set price on a future date, to protect against a decline in value relative to the U.S. dollar of the currencies in which its portfolio securities are denominated or quoted (or an increase in the value of a currency in which securities a fund intends to buy are denominated, when a fund holds cash reserves and short- term investments). The market value of the contract will fluctuate with changes in currency exchange rates. The contract is "marked to market" daily and the change in market value is recorded as an unrealized gain or loss. When the contract is closed, the fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. The fund could be exposed to risk if the value of the currency changes unfavorably. In addition, the fund could be exposed to risks 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. The maximum potential loss from forward currency contracts is the aggregate face value in U.S. dollars at the time the contract was opened; however, management believes the likelihood of such a loss to be remote. G FEDERAL TAXES It is the policy of the fund to distribute all of its income within the prescribed time and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. It is also the intention of the fund to distribute an amount sufficient to avoid imposition of any excise tax under Section 4982 of the Internal Revenue Code of 1986. Therefore, no provision has been made for federal taxes on income, capital gains or unrealized appreciation of securities held and excise tax on income and capital gains. H DISTRIBUTIONS TO SHAREHOLDERS Distributions to shareholders are recorded by the fund on the exdividend date. 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. The differences include realized and unrealized gains and losses on forward foreign currency contracts and post-October losses. Reclassifications are made to the fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryovers) under income tax regulations. For the year ended June 30, 1995, the fund reclassified $361,845 to increase accumulated net investment loss and $361,845 to decrease accumulated net realized loss on investments. I UNAMORTIZED ORGANIZATION EXPENSES Expenses incurred by the fund in connection with its organization, its registration with the Securities and Exchange Commission and with various states and the initial public offering of its shares were $14,123. These expenses are being amortized on a straight-line basis over a five-year period. NOTE 2 MANAGEMENT FEE, ADMINISTRATIVE SERVICES, AND OTHER TRANSACTIONS Compensation of Putnam Management, the fund's Manager, for management and investment advisory services is paid quarterly based on the average net assets of the fund for the quarter. Such fee is based on the following annual rates of 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, and 0.60% of any amount over $1.5 billion, subject to reduction in any year by the amount of certain brokerage commissions and fees (less expenses) received by affiliates of the Manager on the fund's portfolio transactions. Until December 31, 1994, the Manager had voluntarily agreed to reduce its compensation to the extent that expenses of the fund exceed 1.90% of average net assets. The fund's expenses subject to this limitation are exclusive of brokerage, interest, taxes, amortization of deferred organizational and extraordinary expenses, and payments required under the fund's Distribution Plan. This limitation is accomplished by a reduction of the compensation payable to the Manager and, if necessary, payment of additional fund expenses by the Manager. For the purposes of determining any such reduction in Putnam Management's compensation, expenses of the fund do not reflect the applications of commissions or cash management credits that may reduce designated fund expenses. The fund also reimburses the Manager for the compensation and related expenses of certain officers of the fund and their staff who provide administrative services to the fund. The aggregate amount of all such reimbursements is determined annually by the Trustees. Trustees of the fund receive an annual Trustee's fee of $350 and an additional fee for each Trustees' meeting attended. Trustees who are not interested persons of the Manager and who serve on committees of the Trustees receive additional fees for attendance at certain committee meetings. Custodial functions for the fund are provided by Putnam Fiduciary Trust Company (PFTC), a subsidiary of Putnam Investments, Inc. Investor servicing agent functions are provided by Putnam Investor Services, a division of PFTC. Investor servicing and custodian fees reported in the Statement of operations for the year ended June 30, 1995 have been reduced by credits allowed by PFTC, and such credits amounted to $105,424. The fund has adopted distribution plans (the "Plans") with respect to its class A, class B and class M shares pursuant to Rule 12b-1 under the Investment Company Act of 1940. The purpose of the Plans is to compensate Putnam Mutual Funds Corp., a wholly owned subsidiary of Putnam Investments Inc., for services provided and expenses incurred by it in distributing shares of the fund. The Plans provide for payments by the fund to Putnam Mutual Funds Corp. at an annual rate up to .25%, 1.00% and .75% of the average net assets attributable to class A, class B and class M shares, respectively. The Trustees have approved payment by the fund at an annual rate of .25%, 1.00% and .75% of the average net assets attributable to class A, class B and class M shares respectively. For the year ended June 30, 1995, Putnam Mutual Funds Corp., acting as underwriter received net commissions of $48,353 from the sale of class A shares and $3,908 for the sale of class M shares. There was $13,612 in contingent deferred sales charges from redemptions of class B shares. A deferred sales charge of up to 1% is assessed on certain redemptions of class A shares purchased as part of an investment of $1 million or more. For the year ended June 30, 1995, Putnam Mutual Funds Corp., acting as underwriter received $16,856 on class A redemptions and no monies on class M redemptions. NOTE 3 PURCHASES AND SALES OF SECURITIES During the year ended June 30, 1995, purchases and sales of investment securities other than short-term investments aggregated $51,485,463 and $8,368,425, respectively. There were no purchases or sales of U.S. government obligations during the year. In determining the net gain or loss on securities sold, the cost of securities has been determined on the identified cost basis. NOTE 4 CAPITAL SHARES At June 30, 1995, there was an unlimited number of shares of beneficial interest authorized divided into three classes of shares, class A, class B and class M. Transactions in capital shares were as follows:
YEAR ENDED JUNE 30 - ---------------------------------------------------------------------- 1995 - ---------------------------------------------------------------------- CLASS A SHARES AMOUNT - ---------------------------------------------------------------------- Shares sold 3,343,986 $39,677,281 Shares issued in connection with reinvestment of distributions 27,348 317,828 - ---------------------------------------------------------------------- 3,371,334 39,995,109 - ---------------------------------------------------------------------- Shares repurchased (1,399,240) (16,448,723) - ---------------------------------------------------------------------- NET INCREASE 1,972,094 $23,546,386 - ---------------------------------------------------------------------- YEAR ENDED JUNE 30 - ---------------------------------------------------------------------- 1994 - ---------------------------------------------------------------------- CLASS A SHARES AMOUNT - ---------------------------------------------------------------------- Shares sold 507,115 $5,922,768 Shares issued in connection with reinvestment of distributions 6,134 70,166 - ---------------------------------------------------------------------- 513,249 5,992,934 - ---------------------------------------------------------------------- Shares repurchased (69,326) (789,703) - ---------------------------------------------------------------------- NET INCREASE 443,923 $5,203,231 - ---------------------------------------------------------------------- YEAR ENDED JUNE 30 - ---------------------------------------------------------------------- 1995 - ---------------------------------------------------------------------- CLASS B SHARES AMOUNT - ---------------------------------------------------------------------- Shares sold 2,667,962 $31,655,329 Shares issued in connection with reinvestment of distributions 18,223 210,475 - ---------------------------------------------------------------------- 2,686,185 31,865,804 - ---------------------------------------------------------------------- Shares repurchased (737,746) (8,555,102) - ---------------------------------------------------------------------- Net increase 1,948,439 $23,310,702 - ---------------------------------------------------------------------- FOR THE PERIOD JUNE 1, 1994 (COMMENCEMENT OF OPERATIONS) TO JUNE 30 - ---------------------------------------------------------------------- 1994 - ---------------------------------------------------------------------- CLASS B SHARES AMOUNT - ---------------------------------------------------------------------- Shares sold 209,041 $2,452,854 Shares issued in connection with reinvestment of distributions -- -- - ---------------------------------------------------------------------- 209,041 2,452,854 - ---------------------------------------------------------------------- Shares repurchased -- -- - ---------------------------------------------------------------------- NET INCREASE 209,041 $2,452,854 - ---------------------------------------------------------------------- FOR THE PERIOD DECEMBER 1, 1994 (COMMENCEMENT OF OPERATIONS) TO JUNE 30 - ---------------------------------------------------------------------- 1995 - ---------------------------------------------------------------------- CLASS M SHARES AMOUNT - ---------------------------------------------------------------------- Shares sold 153,859 $1,779,068 Shares issued in connection with reinvestment of distributions 63 731 - ---------------------------------------------------------------------- 153,922 1,779,799 - ---------------------------------------------------------------------- Shares repurchased (6,899) (80,152) - ---------------------------------------------------------------------- Net increase 147,023 $1,699,647 - ----------------------------------------------------------------------
FEDERAL TAX INFORMATION Pursuant to section 852 of the Internal Revenue Code, the fund hereby designates $.082 per share (or if different, the amount necessary to offset capital gain income earned by the fund) as capital gain dividends for its taxable year ended June 30, 1995. For the period, interest and dividends from the foreign countries were $829,892 or $.165 per share. Taxes paid to the foreign countries were $89,489 or $.018 per share. The Form 1099 you receive in January 1996 will show you the status of all distributions, if any, paid to your account in calendar year 1995. FUND INFORMATION INVESTMENT MANAGER Putnam Investment Management, Inc. One Post Office Square Boston, MA 02109 MARKETING SERVICES Putnam Mutual Funds Corp. One Post Office Square Boston, MA 02109 CUSTODIAN Putnam Fiduciary Trust Company LEGAL COUNSEL Ropes & Gray INDEPENDENT ACCOUNTANTS Coopers & Lybrand L.L.P. TRUSTEES George Putnam, Chairman William F. Pounds, Vice Chairman Jameson Adkins Baxter Hans H. Estin John A. Hill Elizabeth T. Kennan Lawrence J. Lasser Robert E. Patterson Donald S. Perkins George Putnam, III Eli Shapiro A.J.C. Smith W. Nicholas Thorndike OFFICERS George Putnam President Charles E. Porter Executive Vice President Patricia C. Flaherty Senior Vice President Lawrence J. Lasser Vice President Gordon H. Silver Vice President Peter Carman Vice President Brett C. Browchuk Vice President Anthony W. Regan Vice President Justin M. Scott Vice President and Fund Manager William N. Shiebler Vice President John R. Verani Vice President Paul M. O'Neil Vice President John D. Hughes Vice President and Treasurer Beverly Marcus Clerk and Assistant Treasurer This report is for the information of shareholders of Putnam Overseas Growth Fund. It may also be used as sales literature when preceded or accompanied by the current prospectus, which gives details of sales charges, investment objectives, and operating policies of the fund, and the most recent copy of Putnam's Quarterly Performance Summary. For more information or to request a prospectus, call toll free: 1-800- 225-1581. SHARES OF MUTUAL FUNDS ARE NOT DEPOSITS OF, OR GUARANTEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION, ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC), THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY, AND INVOLVE RISK, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED. PUTNAM INVESTMENTS THE PUTNAM FUNDS One Post Office Square Boston, Massachusetts 02109 Bulk Rate U.S. Postage PAID Putnam Investments 19393-841/524/891 APPENDIX TO FORM N-30D FILINGS TO DESCRIBE DIFFERENCES BETWEEN PRINTED AND EDGAR-FILED TEXTS. (1) Rule lines for tables are omitted. (2) Italic typefaces is displayed in normal type. (3) Boldface type is displayed in capital letters. (4) Headers (e.g. the names of the fund) and footers (e.g. page numbers and OThe accompanying notes are an integral part of these financial statementsO) are omitted. (5) Because the printed page breaks are not reflected, certain tabular and columnar headings and symbols are displayed differently in this filing. (6) Bullet points and similar graphic symbols are omitted. (7) Page numbering is different. -----END PRIVACY-ENHANCED MESSAGE-----