-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PLJJeWBcKhC7hePNLoIYj4ithBhTCVV34wFN5T0retH1wHM1hLvj3akIZZfXz4bT USWvnDjRfQCt4OVfhKOVmQ== 0000928816-96-000045.txt : 19960305 0000928816-96-000045.hdr.sgml : 19960305 ACCESSION NUMBER: 0000928816-96-000045 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960304 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: 96530642 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 Putnam Overseas Growth Fund [GRAPHIC OMITTED: ARTWORK] SEMIANNUAL REPORT December 31, 1995 [LOGO: BOSTON * LONDON * TOKYO] Fund highlights * "Putnam Overseas Growth Fund's three-year trailing returns are among the highest in the foreign stock group, while its three-year risk score is among the mildest. It has earned these numbers by its consistency." -- Morningstar Inc., November 10, 1995 * "Expected declines in interest rates overseas, particularly in Europe and Japan, should bolster overseas markets, as they have over the year in the United States. Stock markets love the prospect of cheaper money, which tends to persuade investors to favor stocks over bonds."* -- The New York Times, January 2, 1996 *Please see page 8 for performance information. CONTENTS 4 Report from Putnam Management 8 Fund performance summary 11 Portfolio of investments owned 17 Financial statements [GRAPHIC OMITTED: photo of George Putman (copyright) Karsh, Ottawa] From the Chairman Dear Shareholder: The dramatic rise in the U.S. stock market throughout 1995 tended to overshadow the generally positive performance of many of the world's other equity markets during the year. Thus, it might be easy to overlook the positive performance of Putnam Overseas Growth Fund during the six months ended December 31, 1995. Furthermore, while the U.S. market might be heading toward a pause as investors digest the sustained advance, other markets may be poised for further growth as your fund reaches the midpoint of fiscal 1996. Fund Manager Justin Scott believes benign inflation will continue on the Continent as in the United States during the next several months. In addition, there is a growing likelihood of interest-rate cuts in Europe, a move that may bolster economic and market prospects there. In Asia, Japan's prospects at last seem on the rise and other economies may continue to expand, albeit at a slower rate. Overall, Justin remains cautiously optimistic about your fund's prospects over the remainder of fiscal 1996. Respectfully yours, /s/George Putman George Putnam Chairman of the Trustees February 21, 1996 Report from the Fund Manager Justin M. Scott While fairly strong overseas equity markets were overshadowed in 1995 by a pronounced rally in the U.S. stock market, their performance was certainly attractive on an absolute basis. Unlike the U.S. market, where stock valuations currently appear somewhat extended in light of slowing corporate earnings, international equities may have room to grow in the months ahead. Putnam Overseas Growth Fund was able to take advantage of the generally positive environment. For the six months ended December 31, 1995, the fund's class A shares provided a total return of 10.67%; its class B shares, 10.29%; and its class M shares, 10.45%, each at net asset value. These results were well ahead of the Morgan Stanley Capital International's Europe, Australia and Far East (EAFE) Index, which rose 8.39% over the same period. Total return at the maximum public offering price for class A shares was 4.30%; class B shares returned 5.29% at the contingent deferred sales charge and class M shares, 6.57% for the period. * SLOWING ECONOMIES APPARENT IN CORE EUROPEAN COUNTRIES Economic slowdown is increasingly pronounced in the major European countries. Accordingly, we are closely monitoring macroeconomic conditions as we invest in Europe, which currently accounts for nearly 50% of your fund's portfolio. Despite slow growth -- in many ways because of slow growth -- we see some positive developments for stock markets in the core European countries. Negligible inflation has provided a relatively benign backdrop for stock markets, as has the possibility of central bank interest rate cuts. Just as important, however, is the gradual emergence of a European equity culture. Indeed, companies across the Continent are seeking to increase shareholder value by deploying their corporate assets productively, emphasizing return on equity, and cutting inefficiencies. We believe a number of holdings in your fund's portfolio embody this positive attitude of companies toward their shareholders. The Dutch airline KLM, Switzerland's Ciba-Geigy conglomerate, Union Bank of Switzerland, and Swiss Reinsurance are all striving to improve their returns on equity and bolster their competitiveness. We believe these moves may help such European companies to weather otherwise weak regional business conditions. Within the fund's U.K. holdings, which account for more than 9% of the portfolio, Vodafone, a cellular phone company, had strong earnings over the year and appears poised for further gains in the months ahead. Elsewhere, the fund's shares of Austria Mikro Systeme have faltered in recent weeks as semiconductor manufacturers in Europe, Asia, and North America all declined in unison. Indeed, your fund's performance over the period was hampered slightly by technology holdings; however, we believe they retain exceptional long-term growth potential. Elsewhere in Europe, in several of the so-called peripheral nations, we are finding attractively valued stocks and relatively strong economies. Ireland today boasts one of Europe's fastest-growing economies -- we anticipate GDP growth of some 5.5% this year -- and may continue to benefit from European Union regional development funds. Spain, like Ireland, may grow faster this year than many other European countries; accordingly, we currently have positioned some 5.4% of the fund's portfolio in Spanish equities. Spain's growth rate appears manageable, and thus the country may enjoy stable-to-declining interest rates throughout 1996. [GRAPHIC OMITTED: Horizonatal bar chart TOP COUNTRY ALLOCATIONS (12/31/95)* showing: Japan 25.7% United Kingdom 9.2% France 6.0% Spain 5.4% Netherlands 5.3% Switzerland 5.1% Hong Kong 4.9% Singapore 4.7% *Based on percentage of net assets. Holdings will vary over time.] * ASIA MAY BE POISED FOR MODERATE GROWTH IN 1996 After suffering for several years from an overvalued yen, falling industrial production, and political paralysis, the Japanese stock market has been showing some signs of renewed vigor recently. Over the past six months, a steadily weakening yen has helped to reignite Japanese corporate profits and spur a strong market recovery (in local currency terms). In addition, extremely low real interest rates have had a positive effect on market liquidity, and government assistance to failing banks has apparently defused that issue, at least for now. During this ongoing rebound, we have seen strong performance from your fund's Japanese financial services holdings. However, several formerly strong Japanese technology companies have seen stocks turn downward in recent months. Ultimately, with improving conditions in mind, we have maintained a significant weighting in Japan, allocating more than 25% of the fund's portfolio there. Elsewhere in Asian markets, Singapore, Malaysia, and Thailand struggled to overcome different obstacles as they were forced to grapple with too-robust economic growth. Malaysia's stock market has been particularly volatile over the past six months. After bidding up stocks there over first quarter of 1995, investors began to fear that the booming economy -- GDP growth over that period was among the world's highest -- would ignite inflation. Accordingly, we have significantly trimmed holdings in Malaysia. Singapore, too, had mixed results over the past six months. A more moderate GDP growth rate is forecast for 1996. Coupled with strong export figures, this outlook could bode well for the strength of the country's equity market in the coming months. We have maintained Singapore holdings at some 5% of the portfolio. The Hong Kong market gained during your fund's semiannual period, sparked in part by declining U.S. interest rates. One of the fund's larger holdings within its 5% Hong Kong allocation is HSBC, a diversified financial services company that has the potential to prosper in the months ahead, particularly if interest rates continue to decline. Furthermore, the deflationary land price spiral appears to have bottomed, which is good news for Hong Kong, where property prices are an economic bellwether. [GRAPHIC OMITTED: Graphic list of TOP TEN HOLDINGS (12/31/95)* Showing: Gucci Group (Italy) Luxury Goods Ibedrola (Spain) Electric company Daiwa Securities (Japan) Brokerage firm Bulgari (Italy) Luxury goods ITO Yokado (Japan) Supermarket operator HSBC Holdings (Hong Kong) Financial services Adidas (ADS) Athletic gear Marui Corp. (Japan) Retailer Tele Danamark (Denmark) Communications Banco de Bilbao Vizcaya (Spain) Financial services Footnote reads: These holdings represent 12.1% of the fund's assets. Portfolio holdings will vary over time.] * CAUSE FOR CAUTIOUS OPTIMISM IN THE COMING MONTHS Earlier in this report, we acknowledged the strength of U.S. equities in 1995 compared with international stocks. There is some good news in this for the international investor. The divergence between U.S. and international valuations could bode well for the latter in the months ahead as investors seek less expensive opportunities overseas. Indeed, there are many high-quality international companies with global market niches that have much room to grow -- and could well catalyze overseas markets in 1996. 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 12/31/95, there is no guarantee the fund will continue to hold these securities in the future. International investing involves certain risks, including economic instability, and political developments and currency fluctuations not present with domestic investments. Performance summary 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. This section provides, at a glance, information about your fund's performance. Total return shows how the value of the fund's shares changed over time, assuming you held the shares through the entire period and reinvested all distributions in the fund. TOTAL RETURN FOR PERIODS ENDED 12/31/95 Class A Class B Class M - ------------------------------------------------------------------------ Inception dates (2/28/91) (6/1/94) (12/1/94) NAV POP NAV CDSC NAV POP - ------------------------------------------------------------------------ 6 months 10.67% 4.30% 10.29% 5.29% 10.45% 6.57% - ------------------------------------------------------------------------ 1 year 13.97 7.39 13.21 8.21 13.65 9.64 - ------------------------------------------------------------------------ 3 years 64.38 54.99 -- -- -- -- Annual average 18.02 15.73 -- -- -- -- - ------------------------------------------------------------------------ Life of class 62.90 53.47 13.98 9.98 14.13 10.14 Annual average 10.61 9.25 8.58 6.17 13.02 9.35 - ------------------------------------------------------------------------ COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 12/31/95 Standard & Poor's MSCI EAFE Consumer 500 Index Index Price Index - ------------------------------------------------------------------------ 6 months 14.40% 8.39% 0.66% - ------------------------------------------------------------------------ 1 year 37.45 11.21 2.54 - ------------------------------------------------------------------------ 3 years 53.29 58.88 8.18 Annual average 15.30 16.70 2.65 - ------------------------------------------------------------------------ Life of class A 93.41 36.89 13.87 Annual average 14.60 6.71 2.72 - ------------------------------------------------------------------------ Life of class B 41.35 11.74 4.07 Annual average 24.32 7.25 2.54 - ------------------------------------------------------------------------ Life of class M 40.15 11.90 2.54 Annual average 36.69 10.93 2.35 - ------------------------------------------------------------------------ Performance data represent past results, do not reflect future performance, and will differ for each share class. They do not take into account any adjustment for taxes payable on reinvested distributions. Investment returns and net asset value will fluctuate so that an investor's shares, when sold, may be worth more or less than their original cost. POP assumes 5.75% maximum sales charge for class A shares and 3.50% for class M shares, which became effective 12/1/94. CDSC for class B shares assumes the applicable sales charge, with the maximum being 5%. PRICE AND DISTRIBUTION INFORMATION 6 months ended 12/31/95 Class A Class B Class M - ------------------------------------------------------------------------ Distributions (number) 1 1 1 - ------------------------------------------------------------------------ Income $0.260 $0.195 $0.223 - ------------------------------------------------------------------------ Capital gains - ------------------------------------------------------------------------ Long-term 0.003 0.003 0.003 - ------------------------------------------------------------------------ Short-term 0.002 0.002 0.002 - ------------------------------------------------------------------------ Total $0.265 $0.200 $0.228 - ------------------------------------------------------------------------ Share value: NAV POP NAV NAV POP - ------------------------------------------------------------------------ 6/30/95 $12.10 $12.84 $12.00 $12.09 $12.53 - ------------------------------------------------------------------------ 12/31/95 13.12 13.92 13.03 13.12 13.60 - ------------------------------------------------------------------------ Past performance is not indicative of future results. 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 The Europe, Australia and the Far East (EAFE) component of the Morgan Stanley Capital International World Index (MSCI) is an unmanaged list of international equity securities, excluding 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 common stocks that is frequently used as a general measure of stock market performance. Consumer Price Index (CPI) is a commonly used measure of inflation; it does not represent an investment return. Both the indexes assume reinvestment of all distributions and do not take into account brokerage commissions or other costs. The fund's portfolio contains securities that do not match those in the indexes.
Portfolio of investments owned December 31, 1995 (Unaudited) COMMON STOCKS (88.7%)* NUMBER OF SHARES VALUE Australia (2.3%) - -------------------------------------------------------------------------------------- 86,400 Amcor Ltd. $ 609,444 100,000 National Australia Bank Ltd. 898,425 190,000 QBE Insurance Group Ltd. 877,487 ------------ 2,385,356 Austria (1.7%) - -------------------------------------------------------------------------------------- 6,360 Austria Mikro Systeme International 1,029,055 17,500 Mayr-Melnhof Karton AG 144A ADS 218,750 1,500 Mayr-Melnhof Karton AG 74,963 3,500 VA Technolgies AG 443,345 ------------ 1,766,113 Belgium (0.5%) - -------------------------------------------------------------------------------------- 270 N.V. Bekaert S.A. 221,851 600 Solvay S.A. 323,247 ------------ 545,098 Canada (0.5%) - -------------------------------------------------------------------------------------- 12,400 Magna International, Inc. Class A 536,300 Denmark (2.8%) - -------------------------------------------------------------------------------------- 21,000 Danisco A/S 1,010,976 30,000 Scandinavian Mobility International + 716,736 42,000 Tele Danmark A/S ADS 1,160,250 ------------ 2,887,962 Finland (0.1%) - -------------------------------------------------------------------------------------- 8,000 Effjohn Oy Ab Class A + 24,405 6,500 Repola 122,256 ------------ 146,661 France (5.7%) - -------------------------------------------------------------------------------------- 4,380 Chargeurs S.A. 870,553 11,300 Credit Local de France S.A. 902,986 489 Docks de France S.A. 74,165 11,700 Lafarge Coppee (Bearer) 752,492 13,000 Michelin Corp. Class B (Registered) 517,562 2,900 Peugeot S.A. 381,898 17,000 Sgs-Thomson Microelectronic ADR + 684,250 3,700 Societe Generale Paris 456,325 11,100 Societe Nationale Elf Aquitaine (Bearer) 816,406 1,350 Sommer-Allibert 356,936 620 Zodiac S.A. 96,561 ------------ 5,910,134 Germany (4.5%) - -------------------------------------------------------------------------------------- 45,000 Adidas AG 144A ADS + 1,198,125 240 Munich Re (Registered) + 520,832 1,040 Preussag AG 290,074 12,500 SGL Carbon AG + 965,083 33,000 Tarkett AG + 711,553 23,300 VEBA AG 986,972 ------------ 4,672,639 Hong Kong (4.9%) - -------------------------------------------------------------------------------------- 496,000 Amoy Properties Ltd. + 493,947 150,000 Cheung Kong Holdings Ltd. 913,735 51,600 Guoco Group Ltd. 248,924 80,625 HSBC Holdings PLC 1,220,011 180,000 Hong Kong Electric Holdings Ltd. 590,145 120,000 Hutchison Whampoa, Ltd. 730,988 70,000 Swire Pacific Ltd. Class A 543,197 180,000 Varitronix International Ltd. 334,066 ------------ 5,075,013 Ireland (2.9%) - -------------------------------------------------------------------------------------- 163,588 Allied Irish Banks PLC 883,302 35,380 Bank of Ireland 254,903 134,000 CRH PLC 1,001,824 101,900 Greencore Group PLC 874,157 ------------ 3,014,186 Italy (3.1%) - -------------------------------------------------------------------------------------- 150,000 Bulgari S.P.A. + 1,265,596 18,150 Danieli & Co. 114,367 91,200 Danieli & Co. (Savings Shares) 247,108 37,000 Gucci Group + 1,438,375 18,300 Sitri S.P.A. 102,858 ------------ 3,168,304 Japan (25.7%) - -------------------------------------------------------------------------------------- 40,000 Bridgestone Corp. 634,736 57,000 Dai Nippon Printing Co., Ltd. 965,167 7,000 Daikin Industries Ltd. 68,408 88,000 Daiwa Securities Co. Ltd. 1,345,332 87,000 Fujitsu Ltd. 968,070 10,000 Futaba Corp. 457,668 25,000 Glory Ltd.(Glory Kogyo) 919,207 12,300 Hirose Electric Co. Ltd. 706,938 20,000 Ito-Yokado Co., Ltd. 1,230,769 68,000 KAO Corp. + 842,187 15,000 Komori Corp., Ltd. 377,359 30,000 Kurita Water Industries Ltd. 798,258 8,000 Kyocera Corp. 593,711 7,000 Mabuchi Motor 434,833 49,000 Maeda Corp. 478,858 57,000 Marui Co., Ltd. 1,185,777 40,000 Mitsubishi Bank Ltd. 940,494 52,000 Mitsubishi Motors Corp. 423,145 112,000 Mitsui Fudoscan Co. Ltd. 981,829 27,000 Murata Manufacturing Co. Ltd. 992,743 70,000 Nichicon 1,029,512 63 Nippon Telegraph and Telephone Corp. 508,999 25,000 Nippondenso Co., Ltd. 466,860 79,000 Nisshin Steel Co., Ltd. 318,752 44,000 Omron Tateisi Electronics Corp. 1,013,256 17,000 Rohm Co. Ltd. 958,974 36,000 Santen Pharmaceutical Co., Ltd. 815,094 60,000 Sekisui Chemical Co., Ltd. 882,438 65,000 Sharp Corp. 1,037,736 80,000 Tokio Marine & Fire Insurance Co. Ltd. (The) 1,044,993 133,000 Toray Industries, Inc. 875,085 28,000 Tostem Corp. 929,270 39,000 Yamanouchi Pharmaceutical Co. Ltd. 837,736 40,000 Yamato Transport Co. Ltd. 476,052 ------------ 26,540,246 Malaysia (1.1%) - -------------------------------------------------------------------------------------- 44,000 Genting Berhad 367,461 70,000 Leader Universal 159,937 42,000 Malayan Banking Berhad 354,067 60,000 Sungei Way Holdings 216,269 ------------ 1,097,734 Netherlands (5.3%) - -------------------------------------------------------------------------------------- 15,040 ABN AMRO Holding N.V. 684,147 18,835 Aegon N.V. 832,162 6,500 Akzo-Nobel N.V. 750,716 2,900 DSM N.V. 238,208 15,149 Getronics Electric N.V. 707,016 13,400 IHC Caland N.V. 450,280 14,980 K.L.M.-Royal Dutch Airlines 525,745 7,000 Koninklijke PPT Nederland N.V. 253,951 7,400 Unilever N.V. 1,038,395 ------------ 5,480,620 Portugal (0.1%) - -------------------------------------------------------------------------------------- 400 Banco Comercial Portugues, S.A. (Registered) 5,434 2,295 Banco Totta & Accores S.A. 37,903 ------------ 43,337 Singapore (4.7%) - -------------------------------------------------------------------------------------- 90,000 City Developments Ltd. 655,680 58,000 Cycle & Carriage Ltd. 578,441 80,000 Development Bank of Singapore Ltd. (Registered) 995,898 42,800 Jardine Matheson Holdings Ltd. 293,180 51,000 Singapore Airlines Ltd. (Registered) 476,164 30,600 Singapore Press Holdings (Registered) 541,095 104,100 United Overseas Bank Ltd. (Registered) 1,001,386 90,000 Venture Manufacturing Ltd. 301,740 ------------ 4,843,584 Spain (5.4%) - -------------------------------------------------------------------------------------- 6,880 Argentaria Corp. (Registered) 282,848 30,000 Banco de Bilbao Vizcaya S. A. (Registered) 1,077,947 147,600 Iberdola S.A. 1,347,114 1,700 Immobiliaria Metropolitana Vasco Central 55,912 11,500 Mapfre Vida Seguros 680,809 19,600 Repsol S.A. 640,602 17,000 Repsol S.A. ADR 558,875 24,000 Tabacalera S.A. Ser. A 907,745 ------------ 5,551,852 Sweden (2.9%) - -------------------------------------------------------------------------------------- 22,100 Astra AB 881,711 4,600 Autoliv AB 268,706 30,000 Foreningsbanken AB + 84,912 50,000 IRO AB + 564,572 46,300 Svenska Cellulosa AB 717,970 12,900 Pharmacia & Upjohn, Inc. 508,837 ------------ 3,026,708 Switzerland (5.1% - -------------------------------------------------------------------------------------- 560 BBC Brown Boveri & Cie AG, Ltd. (Bearer) 650,542 185 Baer Holdings AG 206,090 1,220 Ciba-Geigy AG (Registered) 1,073,515 500 Nestle S.A. (Registered) 553,099 2,675 Rieter Holding AG (Registered) 772,237 450 SGS 'Societe Generale de Surveillance Holdings S.A. 893,368 300 Swiss Reinsurance Co. (Registered) 349,025 660 Union Bank of Switzerland (Bearer) 715,215 ------------ 5,213,091 Taiwan (0.2%) - -------------------------------------------------------------------------------------- 23,146 Yageo Corp. 144A GDR + 208,314 United Kingdom (9.2%) - -------------------------------------------------------------------------------------- 45,000 Anglian Water PLC 421,988 113,172 Argyll Group PLC 596,416 107,249 BAT Industries PLC 943,389 33,268 Barclays Bank PLC 381,068 61,601 Burmah Oil PLC 891,800 120,000 General Electric Co. (The) PLC 660,300 50,200 Guinness PLC 368,819 66,000 Molins PLC 789,756 62,148 North West Water Group PLC 593,389 25,000 Pearson PLC 241,800 36,655 Royal Insurance Holdings PLC 217,034 3,600 Scottish Power PLC 20,646 350,000 Sears PLC 564,200 13,600 Securicor Group PLC Class A 186,558 17,500 Security Services PLC 240,870 45,000 Shell Transportation & Trading Co. PLC 594,270 45,000 Siebe PLC 553,815 45,581 Tate & Lyle PLC 333,471 200,200 Vodafone Group PLC 715,265 75,652 Weir Group PLC (The) 249,765 ------------ 9,564,619 ------------ Total Common Stocks (cost $82,896,564) $ 91,677,871 PREFERRED STOCKS (0.3%)*(cost $210,471) NUMBER OF SHARES VALUE France (0.35%) - -------------------------------------------------------------------------------------- 2,200 Essilor International ADP FF 12.3 pfd. $ 306,758 ------------ CONVERTIBLE BONDS AND NOTES (0.2%)* PRINCIPAL AMOUNT VALUE Denmark (0.2%) - -------------------------------------------------------------------------------------- $1,200,000 Danisco cv. bonds 5s, 2004 $ 231,727 Finland (-%) - -------------------------------------------------------------------------------------- 350,000 Effjohn Oy - AB cv. bonds, 7s, 2004 36,929 ------------ Total Convertible Bonds and Notes (cost $244,415) $ 268,656 WARRANTS (-%)*+ EXPIRATION NUMBER OF WARRANTS DATE VALUE Italy (-%) - -------------------------------------------------------------------------------------- 6,237 Danieli & Co. 11/30/99 $ 3,148 Switzerland (-%) - -------------------------------------------------------------------------------------- 1,175 Reiter Holding 3/13/96 2,954 ------------ Total Warrants (cost $-) $ 6,102 Short-Term Investments (10.3%)* (cost $10,607,213) PRINCIPAL AMOUNT VALUE - -------------------------------------------------------------------------------------- $10,602,000 Interest in $308,242,000 joint repurchase agreement dated December 29, 1995 with Lehman Brothers, Inc. due January 2, 1996 with respect to various U.S. Treasury obligations--maturity value of $ 10,608,950 for an effective yield of 5.9%. $ 10,607,213 - -------------------------------------------------------------------------------------- Total Investments (cost $93,958,663)*** $102,866,600 - -------------------------------------------------------------------------------------- * Percentages indicated are based on net assets of $103,411,957 + Non-income-producing security. *** The aggregate identified cost on a tax basis is $93,970,114, resulting in gross unrealized appreciation and depreciation of $11,255,114, and $2,358,628, respectively, or net unrealized appreciation of $8,896,486. 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 Outstanding at December 31, 1995 (Aggregate face value $26,213,153) Unrealized Market Aggregate Delivery Appreciation/ Value Face Value Date (Depreciation) - ------------------------------------------------------------------------------------- British Pounds $ 5,282,197 $ 5,274,324 5/31/96 $ (7,873) French Francs 3,200,550 3,193,397 5/31/96 (7,153) Japanese Yen 13,529,447 14,611,188 2/20/96 1,081,741 Netherland Guilders 3,124,708 3,134,244 5/31/96 9,536 - ------------------------------------------------------------------------------------- $1,076,251 The accompanying notes are an integral part of these financial statements.
Statement of assets and liabilities December 31,1995 (Unaudited) Assets - -------------------------------------------------------------------------------------------------------- Investments in securities, at value (identified cost $ 93,958,663 (Note 1) $102,866,600 - -------------------------------------------------------------------------------------------------------- Cash 393 - -------------------------------------------------------------------------------------------------------- Dividends, interest and other receivables 94,166 - -------------------------------------------------------------------------------------------------------- Foreign tax reclaim 56,111 - -------------------------------------------------------------------------------------------------------- Receivable for shares of the fund sold 1,437,522 - -------------------------------------------------------------------------------------------------------- Receivable for securities sold 94,498 - -------------------------------------------------------------------------------------------------------- Receivable for open forward currency contracts 1,091,277 - -------------------------------------------------------------------------------------------------------- Unamortized organization expenses (Note 1) 404 - -------------------------------------------------------------------------------------------------------- Total assets 105,640,971 Liabilities - -------------------------------------------------------------------------------------------------------- Distributions payable to shareholders 1,566 - -------------------------------------------------------------------------------------------------------- Payable for securities purchased 1,708,156 - -------------------------------------------------------------------------------------------------------- Payable for shares of the fund repurchased 112,508 - -------------------------------------------------------------------------------------------------------- Payable for compensation of Manager (Note 2) 175,655 - -------------------------------------------------------------------------------------------------------- Payable for compensation of Trustees (Note 2) 45 - -------------------------------------------------------------------------------------------------------- Payable for administrative services (Note 2) 1,138 - -------------------------------------------------------------------------------------------------------- Payable for distribution fees (Note 2) 66,647 - -------------------------------------------------------------------------------------------------------- Payable for investor servicing and custodian fees (Note 2) 107,108 - -------------------------------------------------------------------------------------------------------- Payable for open forward currency contracts 15,026 - -------------------------------------------------------------------------------------------------------- Other accrued expenses 41,165 - -------------------------------------------------------------------------------------------------------- Total liabilities 2,229,014 - -------------------------------------------------------------------------------------------------------- Net assets $103,411,957 Represented by - -------------------------------------------------------------------------------------------------------- Paid in capital (Note 4) $ 95,634,291 - -------------------------------------------------------------------------------------------------------- Distributions in excess of net investment income (2,026,619) - -------------------------------------------------------------------------------------------------------- Accumulated net realized loss on investment transactions (180,416) - -------------------------------------------------------------------------------------------------------- Net unrealized appreciation on investments and assets and liabilities in foreign currencies 9,984,701 - -------------------------------------------------------------------------------------------------------- Total - Representing net assets applicable to capital shares outstanding $103,411,957 Computation of net asset value and offering price - -------------------------------------------------------------------------------------------------------- Net asset value and redemption price of class A shares ($58,078,079 divided by 4,427,992 shares) $13.12 - -------------------------------------------------------------------------------------------------------- Offering price per class A share (100/94.25 of $13.12)* $13.92 - -------------------------------------------------------------------------------------------------------- Net asset value and offering price of class B shares ($41,356,100 divided by 3,175,089 shares)** $13.03 - -------------------------------------------------------------------------------------------------------- Net asset value and redemption price of class M shares ($3,977,778 divided by 303,225 shares) $13.12 - -------------------------------------------------------------------------------------------------------- Offering price per class M share (100/96.50 of $13.12)* $13.60 - -------------------------------------------------------------------------------------------------------- * On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales the offering price is reduced. ** Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. The accompanying notes are an integral part of these financial statements.
Statement of Operations Six months ended December 31, 1995 (Unaudited) Investment Income - -------------------------------------------------------------------------------------------------------- Interest $ 209,702 - -------------------------------------------------------------------------------------------------------- Dividends (net of foreign tax of $60,498) 376,928 - -------------------------------------------------------------------------------------------------------- Total investment income 586,630 Expenses: - -------------------------------------------------------------------------------------------------------- Compensation of Manager (Note 2) 317,736 - -------------------------------------------------------------------------------------------------------- Investor servicing and custodian fees (Note 2) 228,904 - -------------------------------------------------------------------------------------------------------- Compensation of Trustees (Note 2) 2,409 - -------------------------------------------------------------------------------------------------------- Reports to shareholders 18,209 - -------------------------------------------------------------------------------------------------------- Auditing 14,295 - -------------------------------------------------------------------------------------------------------- Legal 1,944 - -------------------------------------------------------------------------------------------------------- Postage 7,972 - -------------------------------------------------------------------------------------------------------- Registration fees 13,610 - -------------------------------------------------------------------------------------------------------- Distribution fees -- Class A (Note 2) 55,067 - -------------------------------------------------------------------------------------------------------- Distribution fees -- Class B (Note 2) 165,761 - -------------------------------------------------------------------------------------------------------- Distribution fees -- Class M (Note 2) 7,745 - -------------------------------------------------------------------------------------------------------- Amortization of organization expenses (Note 1) 1,468 - -------------------------------------------------------------------------------------------------------- Administrative services (Note 2) 2,250 - -------------------------------------------------------------------------------------------------------- Other expenses 3,240 - -------------------------------------------------------------------------------------------------------- Total expenses 840,610 - -------------------------------------------------------------------------------------------------------- Expense reduction (21,093) - -------------------------------------------------------------------------------------------------------- Net expenses 819,517 - -------------------------------------------------------------------------------------------------------- Net investment loss (232,887) - -------------------------------------------------------------------------------------------------------- Net realized gain on investments (Notes 1 and 3) 183,314 - -------------------------------------------------------------------------------------------------------- Net realized gain on forward currency contracts and foreign currency translation (Notes 1 and 3) 250,266 - -------------------------------------------------------------------------------------------------------- Net unrealized gain on forward currency contracts and foreign currency translation during the period 2,354,613 - -------------------------------------------------------------------------------------------------------- Net unrealized appreciation on investments during the period 5,195,821 - -------------------------------------------------------------------------------------------------------- Net gain on investments 7,984,014 - -------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations $7,751,127 - -------------------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements.
Statement of changes in net assets Six months ended Year ended December 31 June 30 1995* 1994 - ---------------------------------------------------------------------------------------------------- Increase in net assets - ---------------------------------------------------------------------------------------------------- Operations: - ---------------------------------------------------------------------------------------------------- Net investment income (loss) $ (232,887) $ 252,913 - ---------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments and options 433,580 (738,996) - ---------------------------------------------------------------------------------------------------- Net unrealized appreciation of investments and options 7,550,434 1,745,082 - ---------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 7,751,127 1,258,999 - ---------------------------------------------------------------------------------------------------- Distributions to shareholders - ---------------------------------------------------------------------------------------------------- From net investment income: Class A (1,053,305) - - ---------------------------------------------------------------------------------------------------- Class B (570,821) - - ---------------------------------------------------------------------------------------------------- Class M (60,674) - - ---------------------------------------------------------------------------------------------------- From net realized gain on investments: Class A (20,256) (199,229) - ---------------------------------------------------------------------------------------------------- Class B (14,637) (141,301) - ---------------------------------------------------------------------------------------------------- Class M (1,360) (460) - ---------------------------------------------------------------------------------------------------- In excesss of net realized gain on investments: Class A - (117,199) - ---------------------------------------------------------------------------------------------------- Class B - (83,122) - ---------------------------------------------------------------------------------------------------- Class M - (271) - ---------------------------------------------------------------------------------------------------- Increase from capital share transactions (Note 4) 36,856 ,455 48,556,735 - ---------------------------------------------------------------------------------------------------- Total increase in net assets 42,886,529 49,274,152 - ---------------------------------------------------------------------------------------------------- Net Assets - ---------------------------------------------------------------------------------------------------- Beginning of period 60,525,428 11,251,276 - ---------------------------------------------------------------------------------------------------- End of period (including distributions in excess of net investment income and accumulated net investment loss of $2,026,619 and $108,932, respectively) $103,411,957 $60,525,428 - ---------------------------------------------------------------------------------------------------- * Unaudited The accompanying notes are an integral part of these financial statements.
Financial highlights (For a share outstanding throughout the period) For the period December 1, 1994 Six months (commencement Six months ended of operations) ended December 31 to June 30 December 31 - ------------------------------------------------------------------------------------------ 1995* 1995 1995* - ------------------------------------------------------------------------------------------ Class M - ------------------------------------------------------------------------------------------ Net asset value, beginning of period $12.09 $11.87 $12.00 - ------------------------------------------------------------------------------------------ Investment operations - ------------------------------------------------------------------------------------------ Net investment income(loss) - .03(a) (.02) - ------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments 1.26 .36 1.26 - ------------------------------------------------------------------------------------------ Total from investment operations 1.26 .39 1.24 - ------------------------------------------------------------------------------------------ Less distributions from: - ------------------------------------------------------------------------------------------ Net investment income (.22) - (.20) - ------------------------------------------------------------------------------------------ Net realized gain on investments (.01) (.11) (.01) - ------------------------------------------------------------------------------------------ In excess of net realized gain on investments - (.06) - - ------------------------------------------------------------------------------------------ Total distributions (.23) (.17) (.21) - ------------------------------------------------------------------------------------------ Net asset value, end of period $13.12 $12.09 $13.03 - ------------------------------------------------------------------------------------------ Total investment return at net asset value(%)(c) 10.45(d) 3.33(d) 10.29(d) - ------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $3,978 $1,777 $41,356 - ------------------------------------------------------------------------------------------ Ratio of expenses to average net assets(%)(e) 1.05(d) 1.61(a)(d) 1.29(d) - ------------------------------------------------------------------------------------------ Ratio of net investment income(loss) to average net assets(%) (.30)(d) .58(a)(d) (.51)(d) - ------------------------------------------------------------------------------------------ Portfolio turnover(%) 28.89(d) 25.83(d) 28.89(d) - ------------------------------------------------------------------------------------------ Financial highlights (Continued) (For a share outstanding throughout the period) For the period June 1, 1994 Year (commencement Six Months ended of operations) ended June 30 to June 30 December 31 - --------------------------------------------------------------------------------------------------------------------- 1995 1994 1995* 1995 - --------------------------------------------------------------------------------------------------------------------- Class B - --------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $11.82 $11.78 $12.10 $11.83 - --------------------------------------------------------------------------------------------------------------------- Investment operations - --------------------------------------------------------------------------------------------------------------------- Net investment income(loss) .01(a) (.01)(a)(b) .01 .08 - --------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments .34 .05 1.28 .36 - --------------------------------------------------------------------------------------------------------------------- Total from investment operations .35 .04 1.29 .44 - --------------------------------------------------------------------------------------------------------------------- Less distributions from: - --------------------------------------------------------------------------------------------------------------------- Net investment income - - (.26) - - --------------------------------------------------------------------------------------------------------------------- Net realized gain on investments (.11) - (.01) (.11) - --------------------------------------------------------------------------------------------------------------------- In excess of net realized gain on investments (.06) - - (.06) - --------------------------------------------------------------------------------------------------------------------- Total distributions (.17) - (.27) (.17) - --------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $12.00 $11.82 $13.12 $12.10 - --------------------------------------------------------------------------------------------------------------------- Total investment return at net asset value(%)(c) 3.00 .34(d) 10.67(d) 3.76 - --------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $25,892 $2,470 $58,078 $32,856 - --------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets(%)(e) 2.41(a) .15(a)(b)(d) .90(d) 1.61(a) - --------------------------------------------------------------------------------------------------------------------- Ratio of net investment income(loss) to average net assets(%) .23(a) (.06)(a)(b)(d) (.13)(d) .97(a) - --------------------------------------------------------------------------------------------------------------------- Portfolio turnover(%) 25.83 96.13(d) 28.89(d) 25.83 - --------------------------------------------------------------------------------------------------------------------- Financial highlights (Continued) (For a share outstanding throughout the period) February 28, 1991 (commencement of operations) Year ended June 30 to June 30 - ---------------------------------------------------------------------------------- 1994 1993 1992 1991 - ---------------------------------------------------------------------------------- Class A - ---------------------------------------------------------------------------------- Net asset value, beginning of period $9.58 $8.82 $8.18 $8.63 - ---------------------------------------------------------------------------------- Investment operations - ---------------------------------------------------------------------------------- Net investment income(loss) (.06)(a) .07(a) .06 .07(a) - ---------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 2.53 .69 .71 (.52) - ---------------------------------------------------------------------------------- Total from investment operations 2.47 .76 .77 (.45) - ---------------------------------------------------------------------------------- Less distributions from: - ---------------------------------------------------------------------------------- Net investment income - - (.13) - - ---------------------------------------------------------------------------------- Net realized gain on investments (.22) - - - - ---------------------------------------------------------------------------------- In excess of net realized gain on investments - - - - - ---------------------------------------------------------------------------------- Total distributions (.22) - (.13) - - ---------------------------------------------------------------------------------- Net asset value, end of period $11.83 $9.58 $8.82 $8.18 - ---------------------------------------------------------------------------------- Total investment return at net asset value(%)(c) 25.81 8.62 9.52 (5.21)(d) - ---------------------------------------------------------------------------------- Net assets, end of period (in thousands) $8,781 $2,859 $2,502 $2,054 - ---------------------------------------------------------------------------------- Ratio of expenses to average net assets(%)(e) 2.17(a) 1.80(a) 1.98 .78(a)(d) - ---------------------------------------------------------------------------------- Ratio of net investment income(loss) to average net assets(%) (.17)(a) .81(a) .76 .86(a)(d) - ---------------------------------------------------------------------------------- Portfolio turnover(%) 96.13 80.92 82.45 14.54(d) - ---------------------------------------------------------------------------------- * Unaudited (a) Reflects an expense limitation which expired December 31, 1994. 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. (e) The ratio of expenses to average net assets for the period ended December 31, 1995 included amounts paid through expense offset arangements. Prior period ratios exclude these amounts.
Notes to financial statements December 31, 1995 (Unaudited) 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, which convert to class A shares after eight years, do not pay a front-end sales charge, but pay a higher ongoing distribution fee than class A shares and are subject to a contingent deferred sales charge, if those shares are redeemed within six years of purchase. Class M shares are sold with a maximum front-end sales charge of 3.50% and pay an ongoing distribution fee that is lower than class B shares and higher than class A shares. Expenses of the fund are borne pro-rata by the holders of each class of shares, except that each class bears expenses unique to that class (including the distribution fees applicable to such class). Each class votes as a class only with respect to its own distribution plan or other matters on which a class vote is required by law or determined by the Trustees. Shares of each class would receive their pro-rata share of the net assets of the fund, if the fund were liquidated. In addition, the Trustees declare separate dividends on each class of shares. The following is a summary of significant accounting policies consistently followed by the fund in the preparation of its financial statements. The preparation of financial statements are in conformity with generally accepted accounting principles and require management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. A) Security valuation Investments for which market quotations are readily available are stated at market value, which is determined using the last reported sale price 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 least equal to 102% of the resale price, including accrued interest. Putnam Management is responsible for determining that the value of these underlying securities is at all times at least equal to the resale price, including accrued interest. D) Security transactions and related investment income Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Interest income is recorded on the accrual basis 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 The accounting records of the fund are maintained in U.S. dollars. The market value of foreign securities, currency holdings, other assets and liabilities are recorded in the books and records of the fund after translation to U.S. dollars based on the exchange rates on that day. The cost of each security is determined using historical exchange rates. Income and withholding taxes are translated at prevailing exchange rates when accrued or incurred. The fund does not isolate that portion of realized or unrealized gains or losses resulting from changes in the foreign exchange rate on investments from fluctuations arising from changes in the market prices of the securities. Such fluctuations are included with the net realized and unrealized gain or loss on investments. Net realized gains and losses on foreign currency transactions represent net exchange gains or losses on closed forward currency contracts, disposition of foreign currencies and the difference between the amount of investment income and foreign withholding taxes recorded on the fund's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized gains and losses on foreign currency transactions arise from changes in the value of open forward currency contracts and assets and liabilities other than investments at the period end, resulting from changes in the exchange rate. F) Forward currency contracts The fund may engage in forward currency contracts, which are agreements between two parties to buy and sell currencies at a set price on a future date, to protect against a decline in value relative to the U.S. dollar of the currencies in which its portfolio securities are denominated or quoted (or an increase in the value of a currency in which securities a fund intends to buy are denominated, when a fund holds cash reserves and short-term investments). The U.S. dollar value of forward currency contracts is determined using forward currency exchange rates supplied by a quotation service. The market value of the contract will fluctuate with changes in currency exchange rates. The contract is "marked to market" daily and the change in market value is recorded as an unrealized gain or loss.. When the contract is closed, the fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. The maximum potential loss from forward currency contracts is the aggregate face value in U.S. dollars at the time the contract was opened. The fund could be exposed to risk if the value of the currency changes unfavorably, if the counterparties to the contracts are unable to meet the terms of their contracts or if the fund is unable to enter into a closing position. G) Federal taxes It is the policy of the fund to distribute all of its taxable income within the prescribed time and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. It is also the intention of the fund to distribute an amount sufficient to avoid imposition of any excise tax under Section 4982 of the Internal Revenue Code of 1986. Therefore, no provision has been made for federal taxes on income, capital gains or unrealized appreciation on securities held and for excise tax on income and capital gains. H) Distributions to shareholders Distributions to shareholders from net investment income are recorded by the fund on the ex-dividend date. Capital gain distributions, if any, are recorded on the ex-dividend date and paid annually. The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. 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. The fund will reimburse Putnam Management for the payment of these expenses. Note 2 Management fee, administrative services, and other transactions Compensation of Putnam Management, for management and investment advisory services is paid quarterly based on the average net assets of the fund for the quarter. Such fee is based on the following annual rates of 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, under current law, 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 exceeded 1.90% of average net assets. The fund's expenses subject to this limitation were exclusive of brokerage, interest, taxes, amortization of deferred organizational and extraordinary expenses, and payments required under the fund's Distribution Plan. This limitation was accomplished by a reduction of the compensation payable to the Manager and, if necessary, payment of additional fund expenses by the Manager. For the purpose of determining any such reduction in Putnam Management compensation, expenses of the fund do not reflect the applications of commissions or cash management credits that may reduce designated fund expenses. The fund 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 Trustees fee of $350 and an additional fee for each Trustee's meeting attended. Trustees who are not interested persons of Putnam Management and who serve on committees of the Trustees receive additional fees for attendance at certain committee meetings. During the six months ended December 31, 1995, the fund adopted a Trustee Fee Deferral Plan (the "Plan") which allows the Trustees to defer the receipt of all or a portion of Trustees Fees payable on or after July 1, 1995. The deferred fees remain in the fund and are invested in the fund or in other Putnam funds until distribution in accordance with the Plan. Custodial functions for the fund's assets are provided by Putnam Fiduciary Trust Company (PFTC), a wholly owned subsidiary of Putnam Investments, Inc.. Investor servicing agent functions are provided by Putnam Investor Services, a division of PFTC. For the six months ended December 31, 1995, fund expenses were reduced by $21,093 under expense offset arrangements with PFTC. Investor servicng and custodian fees reported in the Statement of operations exclude these credits. The fund could have invested the assets utilized in connection with the expense offset arrangements in an income producing asset if it had not entered into such arrangements. The fund has adopted distribution plans (the "Plans") with respect to its class A, class B and class M shares pursuant to Rule 12b-1 under the Investment Company Act of 1940. The purpose of the Plans is to compensate Putnam Mutual Funds Corp., a wholly- owned subsidiary of Putnam Investments Inc., for services provided and expenses incurred by it in distributing shares of the fund. The Plans provide for payments by the fund to Putnam Mutual Funds Corp. at an annual rate up to .25%, 1.00% and 1.00% of the average net assets attributable to class A, class B and class M shares, respectively. The Trustees have approved payment by the fund at an annual rate of .25%, 1.00% and .75% of the average net assets attributable to class A, class B and class M shares, respectively. For the six months ended December 31, 1995, Putnam Mutual Funds Corp., acting as underwriter received net commissions of $46,304 and $2,872 from the sale of class A and class M shares, respectively and received $19,819 in contingent deferred sales charges from redemptions of class B shares. A deferred sales charge of up to 1% is assessed on certain redemptions of class A shares. For the six months ended December 31, 1995, Putnam Mutual Funds Corp., acting as underwriter received $621 on class A redemptions. Note 3 Purchases and sales of securities During the six months ended December 31, 1995, purchases and sales of investment securities other than short-term investments aggregated $40,230,843 and $8,328,001, respectively. There were no purchases or sales of U.S. government obligations during the period. 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 December 31, 1995, there was an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows: Six months ended December 31, 1995 Class A Shares Amount - ------------------------------------------ Shares sold 2,412,688 $30,905,424 - ------------------------------------------ Shares issued in connection with reinvestment of distributions 80,150 1,026,754 - ------------------------------------------ 2,492,838 31,932,178 Shares repurchased (779,361) (9,989,150) - ------------------------------------------ Net increase 1,713,477 $21,943,028 - ------------------------------------------ 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 1,972,074 $23,546,386 - ------------------------------------------ Six months ended December 31, 1995 Class B Shares Amount - ------------------------------------------ Shares sold 2,642,270 $33,574,689 - ------------------------------------------ Shares issued in connection with reinvestment of distributions 41,891 533,249 - ------------------------------------------ 2,684,161 34,107,938 Shares repurchased (1,666,552) (21,190,419) - ------------------------------------------ Net increase 1,017,609 $12,917,519 - ------------------------------------------ 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 - ------------------------------------------ Six months ended December 31, 1995 Class M Shares Amount - ------------------------------------------ Shares sold 183,910 $2,349,224 - ------------------------------------------ Shares issued in connection with reinvestment of distributions 4,659 59,679 - ------------------------------------------ 188,569 2,408,903 Shares repurchased (32,367) (412,995) - ------------------------------------------ Net increase 156,202 $1,995,908 - ------------------------------------------ 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 - ------------------------------------------ Fund information INVESTMENT MANAGER Putnam Investment Management, Inc. One Post Office Square MARKETING SERVICES Putnam Mutual Funds Corp. One Post Office Square Boston, MA 02109 CUSTODIAN Putnam Fiduciary Trust Company LEGAL COUNSEL Ropes & Gray 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 John D. Hughes Vice President and Treasurer 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 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 or obligations of, or guaranteed or endorsed by, any financial institution, are not insured by the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board or any other agency, and involve risk, including the possible loss of principal amount invested. The Putnam Funds One Post Office Square Boston Massachusetts, 02109 22802-841/524/891 1/96 Bulk Rate U.S. Postage PAID Putnam Investments -----END PRIVACY-ENHANCED MESSAGE-----