N-Q 1 a_intlequity.htm PUTNAM INTERNATIONAL EQUITY FUND a_intlequity.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED MANAGEMENT 
INVESTMENT COMPANY
Investment Company Act file number: (811-06190)   
Exact name of registrant as specified in charter:  Putnam International Equity Fund 
Address of principal executive offices: One Post Office Square, Boston, Massachusetts 02109 
Name and address of agent for service:  Beth S. Mazor, Vice President 
  One Post Office Square 
  Boston, Massachusetts 02109 
Copy to:  John W. Gerstmayr, Esq. 
  Ropes & Gray LLP 
  800 Boylston Street 
  Boston, Massachusetts 02199-3600 
Registrant’s telephone number, including area code:  (617) 292-1000 
Date of fiscal year end: June 30, 2011     
Date of reporting period: September 30, 2010     

Item 1. Schedule of Investments:


Putnam International Equity Fund     
 
The fund's portfolio     
9/30/10 (Unaudited)     
 
COMMON STOCKS (97.2%)(a)     
  Shares  Value 
 
Australia (1.7%)     
Qantas Airways, Ltd. (NON)  4,722,166  $12,740,073 
Telstra Corp., Ltd.  5,078,451  12,866,459 
    25,606,532 
 
Belgium (1.4%)     
Anheuser-Busch InBev NV  351,750  20,703,568 
    20,703,568 
 
Brazil (1.0%)     
Petroleo Brasileiro SA ADR (Preference) (S)  471,838  15,485,723 
    15,485,723 
 
Canada (4.2%)     
Agrium, Inc.  193,160  14,510,024 
National Bank of Canada  193,831  12,246,226 
Nexen, Inc.  880,634  17,737,787 
Teck Resources, Ltd. Class B  468,200  19,280,163 
    63,774,200 
 
China (9.3%)     
Camelot Information Systems, Inc. ADR (NON)  114,050  2,003,859 
China Construction Bank Corp.  17,372,000  15,225,143 
China Ming Yang Wind Power Group, Ltd. ADS (NON)  171,847  2,405,858 
China Mobile, Ltd.  2,454,000  25,128,763 
China National Materials Co., Ltd.  13,203,000  10,992,786 
China Power New Energy Development Co., Ltd. (NON)  1,616,000  160,374 
China WindPower Group, Ltd. (NON)  54,010,000  6,125,753 
Dongfeng Motor Group Co., Ltd.  8,040,000  16,455,428 
Industrial & Commercial Bank of China  16,809,000  12,521,961 
Lonking Holdings, Ltd.  5,996,000  6,058,712 
PCD Stores, Ltd. (NON)  9,298,000  2,936,015 
Ping An Insurance (Group) Co. of China, Ltd.  2,226,500  22,727,440 
Renhe Commercial Holdings Co., Ltd.  18,416,000  3,441,644 
Sohu.com, Inc. (NON) (S)  233,600  13,460,032 
Trony Solar Holdings Co., Ltd.  1,029,000  596,802 
    140,240,570 
 
Denmark (0.5%)     
D/S Norden  188,097  7,450,136 
    7,450,136 
 
France (12.3%)     
Alstom SA  189,017  9,647,948 
ArcelorMittal  119,166  3,927,169 
AXA SA  879,759  15,390,452 
BNP Paribas SA  489,046  34,801,730 
Christian Dior SA  199,986  26,155,192 
Sanofi-Aventis  568,052  37,870,859 
Societe Generale  298,897  17,225,767 
Technip SA  173,622  13,970,548 
Total SA  528,500  27,253,641 
    186,243,306 
 
Germany (9.6%)     
Biotest AG (Preference)  78,319  3,621,572 
Deutsche Post AG  1,715,030  31,125,540 
Henkel AG & Co. KGaA  310,656  16,695,762 
Kabel Deutschland Holding AG (NON)  445,511  17,684,049 
Lanxess AG  139,682  7,657,531 
Metro AG  267,655  17,433,277 
MTU Aero Engines Holding AG  306,527  17,529,604 
Porsche Automobil Holding SE (Preference)  682,678  33,826,092 
    145,573,427 
 
Hong Kong (1.4%)     
Longtop Financial Technologies Ltd. ADR (NON) (S)  172,800  6,799,680 
Wharf (Holdings), Ltd.  2,119,000  13,628,063 
    20,427,743 
 
Ireland (2.9%)     
Covidien PLC  233,109  9,368,651 
Governor & Co. of The Bank of Ireland (The) (NON)  3,562,859  3,013,149 
Irish Life & Permanent PLC (NON)  1,647,705  3,124,097 
Kerry Group PLC Class A  324,832  11,402,846 
WPP PLC  1,448,822  16,040,734 
    42,949,477 
 
Italy (2.3%)     

 


Fiat SpA  982,246  15,166,906 
Mediaset SpA  2,758,430  19,565,710 
    34,732,616 
 
Japan (20.1%)     
Aisin Seiki Co., Ltd.  1,094,200  34,168,327 
Astellas Pharma, Inc.  639,000  23,103,310 
Fujitsu, Ltd.  2,911,000  20,456,242 
Hitachi Construction Machinery Co., Ltd. (S)  356,000  7,705,720 
Hoya Corp.  413,100  10,081,047 
Japan Tobacco, Inc.  9,833  32,768,806 
Mitsubishi Electric Corp.  1,055,000  9,083,703 
Mitsui & Co., Ltd.  1,229,200  18,307,548 
Mizuho Financial Group, Inc.  11,037,700  16,148,212 
Nippon Telegraph & Telephone (NTT) Corp.  728,600  31,847,308 
ORIX Corp.  358,320  27,414,337 
Sankyo Co., Ltd.  281,100  14,899,412 
Sumitomo Mitsui Financial Group, Inc.  286,400  8,352,618 
Suzuken Co., Ltd.  510,100  16,901,383 
Tokyo Gas Co., Ltd.  3,514,000  15,970,812 
Toyo Suisan Kaisha, Ltd.  786,000  16,221,441 
    303,430,226 
 
Netherlands (1.6%)     
AerCap Holdings NV (NON)  564,542  6,678,532 
ING Groep NV (NON)  1,642,294  17,047,702 
    23,726,234 
 
Norway (0.7%)     
DnB NOR ASA  740,396  10,088,976 
    10,088,976 
 
Russia (1.5%)     
Mobile Telesystems ADR  363,700  7,721,351 
Sberbank OJSC (NON)  5,486,392  15,389,330 
    23,110,681 
 
South Korea (0.7%)     
Shinhan Financial Group Co., Ltd.  262,090  10,033,088 
    10,033,088 
 
Spain (3.2%)     
Banco Bilbao Vizcaya Argentaria SA (BBVA)  458,572  6,195,727 
Banco Santander Central Hispano SA  2,360,626  30,000,851 
Endesa SA  473,876  12,691,879 
    48,888,457 
 
Switzerland (5.1%)     
Nestle SA  751,941  40,104,031 
Syngenta AG  69,655  17,329,480 
Zurich Financial Services AG  83,375  19,562,185 
    76,995,696 
 
Taiwan (0.9%)     
Taiwan Semiconductor Manufacturing Co., Ltd.  2,950,000  5,854,392 
Wistron Corp.  4,388,000  8,005,890 
    13,860,282 
 
United Kingdom (15.6%)     
BAE Systems PLC  1,988,147  10,695,069 
Barclays PLC  3,669,163  17,275,754 
BG Group PLC  1,496,918  26,312,505 
Cairn Energy PLC (NON)  2,033,616  14,496,735 
Compass Group PLC  1,130,661  9,426,403 
GlaxoSmithKline PLC  1,823,378  35,948,070 
International Power PLC  1,533,204  9,348,886 
Kingfisher PLC  1,897,531  6,983,996 
Reckitt Benckiser Group PLC  430,203  23,669,754 
Rio Tinto PLC  459,785  26,887,020 
Telecity Group PLC (NON)  1,006,465  7,837,373 
TUI Travel PLC  2,157,121  7,268,210 
Tullow Oil PLC  446,931  8,948,250 
Vedanta Resources PLC (S)  221,399  7,532,892 
Xstrata PLC  1,175,617  22,503,048 
    235,133,965 
 
United States (1.2%)     
First Solar, Inc. (NON) (S)  48,000  7,072,800 
XL Group PLC  495,800  10,739,058 
    17,811,858 
Total common stocks (cost $1,265,363,092)    $1,466,266,761 
 
 
SENIOR LOANS (0.5%)(a)(c)     
  Principal amount  Value 
Visteon Corp. bank term loan FRN Ser. B, 5 1/4s, 2013  $3,924,318  $4,264,427 
Visteon Corp. bank term loan FRN Ser. B1, 5 1/4s, 2013  3,705,000  4,026,101 

 


Total senior loans (cost $8,171,125)    $8,290,528 
 
 
U.S. TREASURY OBLIGATIONS (0.1%)(a)(i)     
  Principal amount  Value 
U.S. Treasury Bonds 6 5/8s, February 15, 2027  $133,000  $193,128 
U.S. Treasury Notes 2 3/4s, February 15, 2019  92,000  95,779 
U.S. Treasury Inflation Protected Securities 2 1/2s,     
July 15, 2016  351,920  400,440 
U.S. Treasury Inflation Protected Securities 2 3/8s,     
April 15, 2011  168,048  171,948 
Total U.S. treasury obligations (cost $861,295)    $861,295 
 
 
MORTGAGE-BACKED SECURITIES (0.1%)(a)(i)     
  Principal amount  Value 
Fannie Mae Ser. 2010-45, Class PJ, 4.5s, 2037  $230,238  $247,674 
Fannie Mae Ser. 2010-99, Class JU, 3s, 2040  891,335  922,400 
Total mortgage-backed securities (cost $1,170,074)    $1,170,074 
 
 
SHORT-TERM INVESTMENTS (4.2%)(a)     
  Principal amount/shares  Value 
Putnam Cash Collateral Pool, LLC 0.22% (d)  48,741,140  $48,741,140 
Putnam Money Market Liquidity Fund 0.15% (e)  9,522,157  9,522,157 
U.S. Treasury Bills with effective yields ranging from     
of 0.23% to 0.39%, November 18, 2010  $227,000  226,890 
U.S. Treasury Bills with effective yields ranging from     
of 0.17% to 0.31%, March 10, 2011  221,000  220,821 
U.S. Treasury Bills with an effective yield of 0.20%,     
June 2, 2011  676,000  675,081 
U.S. Treasury Bills with an effective yield of 0.24%,     
July 28, 2011  210,000  209,597 
U.S. Treasury Bills zero %, November 12, 2010 (i)  660,000  659,868 
U.S. Treasury Bills zero %, November 18, 2010 (i)  568,000  567,886 
U.S. Treasury Bills zero %, December 2, 2010 (i)  131,000  130,974 
U.S. Treasury Bills zero %, January 20, 2011 (i)  324,000  323,838 
SSgA Prime Money Market Fund 0.18% (i) (P)  910,000  910,000 
SSgA Prime Money Market Fund 0.18% (i) (P)  1,480,000  1,480,000 
Total short-term investments (cost $63,668,120)    $63,668,252 
 
 
TOTAL INVESTMENTS     
Total investments (cost $1,339,233,706)(b)    $1,540,256,910 

 


FORWARD CURRENCY CONTRACTS at 9/30/10 (aggregate face value $611,166,209) (Unaudited)  
            Unrealized 
    Contract  Delivery    Aggregate  appreciation/ 
Counterparty  Currency  type  date  Value  face value  (depreciation) 
Bank of America N.A.             
  Australian Dollar  Buy  10/20/10  $13,411,591  $12,570,622  $840,969 
  British Pound  Buy  10/20/10  14,610,644  14,361,845  248,799 
  Canadian Dollar  Sell  10/20/10  30,543,797  29,925,409  (618,388) 
  Euro  Sell  10/20/10  4,586,180  4,303,960  (282,220) 
  Norwegian Krone  Sell  10/20/10  2,624,320  2,499,814  (124,506) 
  Swedish Krona  Buy  10/20/10  3,325,656  3,084,388  241,268 
  Swiss Franc  Buy  10/20/10  19,022,407  18,451,959  570,448 
 
Barclays Bank PLC             
  British Pound  Buy  10/20/10  9,823,187  9,656,538  166,649 
  Euro  Buy  10/20/10  4,547,445  4,265,976  281,469 
  Hong Kong Dollar  Sell  10/20/10  34,625,916  34,579,643  (46,273) 
  Japanese Yen  Sell  10/20/10  290,664  289,030  (1,634) 
  Norwegian Krone  Sell  10/20/10  1,239,715  1,181,014  (58,701) 
  Singapore Dollar  Buy  10/20/10  6,818,692  6,729,965  88,727 
  Swedish Krona  Buy  10/20/10  877,702  813,602  64,100 
  Swiss Franc  Buy  10/20/10  8,647,734  8,389,482  258,252 
 
Citibank, N.A.             
  Australian Dollar  Buy  10/20/10  5,060,120  4,742,014  318,106 
  British Pound  Buy  10/20/10  12,994,816  12,775,849  218,967 
  Danish Krone  Buy  10/20/10  10,589,699  9,955,746  633,953 
  Euro  Buy  10/20/10  1,226,946  1,151,272  75,674 
  Hong Kong Dollar  Sell  10/20/10  19,939,419  19,911,676  (27,743) 
  Norwegian Krone  Sell  10/20/10  964,835  919,835  (45,000) 
  Singapore Dollar  Sell  10/20/10  2,648,410  2,593,180  (55,230) 
  Swedish Krona  Buy  10/20/10  9,615,352  8,924,899  690,453 
  Swiss Franc  Buy  10/20/10  168,435  163,422  5,013 
 
Credit Suisse AG             
  Australian Dollar  Buy  10/20/10  8,436,686  7,905,481  531,205 
  British Pound  Buy  10/20/10  10,792,401  10,609,309  183,092 
  Canadian Dollar  Sell  10/20/10  14,392,530  14,041,489  (351,041) 
  Euro  Sell  10/20/10  13,505,266  12,673,599  (831,667) 
  Japanese Yen  Buy  10/20/10  9,681,230  9,587,703  93,527 
  Norwegian Krone  Buy  10/20/10  1,421,325  1,355,287  66,038 
  Swedish Krona  Buy  10/20/10  4,643,839  4,307,118  336,721 
  Swiss Franc  Buy  10/20/10  6,873,822  6,667,886  205,936 
 
Deutsche Bank AG             
  Australian Dollar  Buy  10/20/10  20,076,805  18,812,695  1,264,110 
  Euro  Buy  10/20/10  5,983,746  5,616,007  367,739 
  Swedish Krona  Buy  10/20/10  2,757,680  2,559,025  198,655 
  Swiss Franc  Sell  10/20/10  2,482,499  2,407,887  (74,612) 
 
Goldman Sachs International             
  Australian Dollar  Buy  10/20/10  13,554,034  12,700,201  853,833 
  British Pound  Buy  10/20/10  2,970,809  2,920,901  49,908 
  Euro  Sell  10/20/10  1,484,446  1,393,272  (91,174) 
  Japanese Yen  Sell  10/20/10  700,150  692,593  (7,557) 
  Norwegian Krone  Buy  10/20/10  1,197,264  1,140,665  56,599 
  Swedish Krona  Buy  10/20/10  6,032,453  5,602,902  429,551 
 
HSBC Bank USA, National Association             
  Australian Dollar  Sell  10/20/10  2,154,795  2,020,215  (134,580) 
  British Pound  Sell  10/20/10  4,904,051  4,944,005  39,954 
  Euro  Buy  10/20/10  1,943,391  1,823,801  119,590 
  Hong Kong Dollar  Sell  10/20/10  15,588,821  15,572,808  (16,013) 
  Norwegian Krone  Sell  10/20/10  7,501,442  7,152,617  (348,825) 
  Swiss Franc  Sell  10/20/10  2,238,152  2,171,163  (66,989) 
 
JPMorgan Chase Bank, N.A.             
  Australian Dollar  Buy  10/20/10  8,078,358  7,570,886  507,472 
  British Pound  Buy  10/20/10  2,262,441  2,224,513  37,928 
  Euro  Sell  10/20/10  11,780,778  11,055,176  (725,602) 
  Hong Kong Dollar  Sell  10/20/10  26,202,745  26,167,971  (34,774) 
  Japanese Yen  Buy  10/20/10  5,230,461  5,173,019  57,442 
  Norwegian Krone  Buy  10/20/10  9,006,922  8,585,306  421,616 
  Singapore Dollar  Buy  10/20/10  18,633,539  18,253,450  380,089 
  Swedish Krona  Buy  10/20/10  3,259,878  3,024,318  235,560 
  Swiss Franc  Buy  10/20/10  8,599,537  8,341,900  257,637 
 
Royal Bank of Scotland PLC (The)             
  Australian Dollar  Buy  10/20/10  5,068,034  4,797,773  270,261 
  British Pound  Buy  10/20/10  8,486,590  8,345,208  141,382 
  Euro  Sell  10/20/10  11,243,818  10,547,168  (696,650) 
  Israeli Shekel  Buy  10/20/10  4,464,249  4,306,981  157,268 
  Japanese Yen  Buy  10/20/10  8,633,093  8,541,170  91,923 
  Swedish Krona  Buy  10/20/10  5,929,770  5,499,490  430,280 
  Swiss Franc  Sell  10/20/10  1,839,330  1,784,136  (55,194) 
 
State Street Bank and Trust Co.             
  Australian Dollar  Buy  10/20/10  14,022,187  13,139,298  882,889 
  Canadian Dollar  Sell  10/20/10  17,498,842  17,064,911  (433,931) 
  Euro  Sell  10/20/10  11,321,832  10,624,872  (696,960) 
  Israeli Shekel  Buy  10/20/10  4,464,221  4,306,509  157,712 
  Norwegian Krone  Sell  10/20/10  351,619  335,328  (16,291) 
  Swedish Krona  Buy  10/20/10  4,869,185  4,516,796  352,389 
 
UBS AG             
  Australian Dollar  Buy  10/20/10  10,884,957  10,200,953  684,004 
  British Pound  Buy  10/20/10  8,382,409  8,241,216  141,193 
  Euro  Sell  10/20/10  433,850  407,127  (26,723) 
  Israeli Shekel  Buy  10/20/10  4,464,221  4,298,407  165,814 
  Norwegian Krone  Buy  10/20/10  346,296  330,083  16,213 
  Swedish Krona  Buy  10/20/10  3,959,365  3,675,206  284,159 
  Swiss Franc  Buy  10/20/10  5,286,278  5,127,397  158,881 
 
Westpac Banking Corp.             
  Australian Dollar  Buy  10/20/10  11,121,687  10,422,462  699,225 
  British Pound  Buy  10/20/10  6,463,153  6,353,958  109,195 
  Euro  Buy  10/20/10  5,471,883  5,136,363  335,520 
  Japanese Yen  Sell  10/20/10  5,910,928  5,847,089  (63,839) 
Total            $10,543,240 

 


Key to holding's abbreviations

ADR  American Depository Receipts 
FRN  Floating Rate Notes 
OJSC  Open Joint Stock Company 

Notes to the fund's portfolio

Unless noted otherwise, the notes to the fund's portfolio are for the close of the fund's reporting period, which ran from July 1, 2010 through September 30, 2010 (the reporting period).

(a) Percentages indicated are based on net assets of $1,508,926,361.

(b) The aggregate identified cost on a tax basis is $1,360,333,035, resulting in gross unrealized appreciation and depreciation of $238,907,141 and $58,983,266, respectively, or net unrealized appreciation of $179,923,875.

(NON) Non-income-producing security.

(c) Senior loans are exempt from registration under the Securities Act of 1933, as amended, but contain certain restrictions on resale and cannot be sold publicly. These loans pay interest at rates which adjust periodically. The interest rates shown for senior loans are the current interest rates at the close of the reporting period. Senior loans are also subject to mandatory and/or optional prepayment which cannot be predicted. As a result, the remaining maturity may be substantially less than the stated maturity shown. Senior loans are purchased or sold on a when-issued or delayed delivery basis and may be settled a month or more after the trade date, which from time to time can delay the actual investment of available cash balances; interest income is accrued based on the terms of the securities. Senior loans can be acquired through an agent, by assignment from another holder of the loan, or as a participation interest in another holder’s portion of the loan. When the fund invests in a loan or participation, the fund is subject to the risk that an intermediate participant between the fund and the borrower will fail to meet its obligations to the fund, in addition to the risk that the borrower under the loan may default on its obligations.

(d) The fund may lend securities, through its agent, to qualified borrowers in order to earn additional income. The loans are collateralized by cash in an amount at least equal to the market value of the securities loaned. The market value of securities loaned is determined daily and any additional required collateral is allocated to the fund on the next business day. The risk of borrower default will be borne by the fund’s agent; the fund will bear the risk of loss with respect to the investment of the cash collateral. At the close of the reporting period, the value of securities loaned amounted to $47,515,412. The fund received cash collateral of $48,741,140 which is invested in Putnam Cash Collateral Pool, LLC, a limited liability company managed by an affiliate of Putnam Investment Management, LLC (Putnam Management), the fund's manager, an indirect wholly-owned subsidiary of Putnam Investments, LLC. Investments in Putnam Cash Collateral Pool, LLC are valued at its closing net asset value each business day. There are no management fees charged by Putnam Cash Collateral Pool, LLC. The rate quoted in the security description is the annualized 7-day yield at the close fo the reporting period.

(e) The fund invested in Putnam Money Market Liquidity Fund, an open-end management investment company managed by Putnam Management. Investments in Putnam Money Market Liquidity Fund are valued at its closing net asset value each business day. Income distributions earned by the fund are recorded as interest income and totaled $2,910 for the reporting period. During the reporting period, cost of purchases and proceeds of sales of investments in Putnam Money Market Liquidity Fund aggregated $106,692,352 and $110,712,829, respectively. Management fees charged to Putnam Money Market Liquidity Fund have been waived by Putnam Management. The rate quoted in the security description is the annualized 7-day yield of the fund at the close of the reporting period.

(i) Securities purchased with cash or securities received, that were pledged to the fund for collateral on certain derivatives contracts.

(P) The rate quoted in the security description is the annualized 7-day yield of the fund at the close of the reporting period.

(S) Securities on loan, in part or in entirety, at the close of the reporting period.

At the close of the reporting period, the fund maintained liquid assets totaling $331,593 to cover certain derivatives contracts.

Debt obligations are considered secured unless otherwise indicated.

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

ADR after the name of a foreign holding represents ownership of foreign securities on deposit with a custodian bank.

The rates shown on FRN are the current interest rates at the close of the reporting period.

The dates shown on debt obligations are the original maturity dates.

The fund had the following industry concentration greater than 10% at the close of the reporting period (as a percentage of net assets):

Banking  13.8% 

 

Security valuation: Investments for which market quotations are readily available are valued at the last reported sales price on their principal exchange, or official closing price for certain markets and are classified as Level 1 securities. If no sales are reported -- as in the case of some securities traded over-the-counter -- a security is valued at its last reported bid price and is generally categorized as a Level 2 security. Market quotations are not considered to be readily available for certain debt obligations; such investments are valued on the basis of valuations furnished by an independent pricing service approved by the Trustees or dealers selected by Putnam Management. Such services or dealers determine valuations for normal institutional-size trading units of such securities using methods based on market transactions for comparable securities and various relationships, generally recognized by institutional traders,


between securities (which considers such factors as security prices, yields, maturities and ratings) . Many securities markets and exchanges outside the U.S. close prior to the close of the New York Stock Exchange and therefore the closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the close of the New York Stock Exchange. Accordingly, on certain days, the fund will fair value foreign equity securities taking into account multiple factors including movements in the U.S. securities markets, currency valuations and comparisons to the valuation of American Depository Receipts, exchange-traded funds and futures contracts. These securities, which will generally represent a transfer from a Level 1 to a Level 2 security, will be classified as Level 2. The number of days on which fair value prices will be used will depend on market activity and it is possible that fair value prices will be used by the fund to a significant extent. Securities quoted in foreign currencies, if any, are translated into U.S. dollars at the current exchange rate. To the extent a pricing service or dealer is unable to value a security or provides a valuation that Putnam Management does not believe accurately reflects the security's fair value, the security will be valued at fair value by Putnam Management. Certain investments, including certain restricted and illiquid securities and derivatives, are also valued at fair value following procedures approved by the Trustees. These valuations consider such factors as significant market or specific security events such as interest rate or credit quality changes, various relationships with other securities, discount rates, U.S. Treasury, U.S. swap and credit yields, index levels, convexity exposures and recovery rates. These securities are classified as Level 2 or as Level 3 depending on the priority of the significant inputs. Such valuations and procedures are reviewed periodically by the Trustees. The fair value of securities is generally determined as the amount that the fund could reasonably expect to realize from an orderly disposition of such securities over a reasonable period of time. By its nature, a fair value price is a good faith estimate of the value of a security in a current sale and does not reflect an actual market price, which may be different by a material amount.

Forward currency contracts: The fund may buy and sell forward currency contracts, which are agreements between two parties to buy and sell currencies at a set price on a future date. These contracts are used to protect against a decline in value relative to the U.S. dollar of the currencies in which its portfolio securities are denominated or quoted (or an increase in the value of a currency in which securities a fund intends to buy are denominated, when a fund holds cash reserves and short term investments), or for other investment purposes. The U.S. dollar value of forward currency contracts is determined using current forward currency exchange rates supplied by a quotation service. The market value of the contract will fluctuate with changes in currency exchange rates. The contract is marked to market daily and the change in market value is recorded as an unrealized gain or loss. When the contract is closed, the fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. The fund could be exposed to risk if the value of the currency changes unfavorably, if the counterparties to the contracts are unable to meet the terms of their contracts or if the fund is unable to enter into a closing position. Outstanding contracts on forward currency contracts at the close of the reporting period are indicative of the volume of activity during the period.

Master agreements: The fund is a party to ISDA (International Swap and Derivatives Association, Inc.) Master Agreements (Master Agreements) with certain counterparties that govern over the counter derivative and foreign exchange contracts entered into from time to time. The Master Agreements may contain provisions regarding, among other things, the parties’ general obligations, representations, agreements, collateral requirements, events of default and early termination. With respect to certain counterparties, in accordance with the terms of the Master Agreements, collateral posted to the fund is held in a segregated account by the fund’s custodian and with respect to those amounts which can be sold or repledged, are presented in the fund’s portfolio. Collateral posted to the fund which cannot be sold or repledged totaled $1,924,591 at the close of the reporting period. Collateral pledged by the fund is segregated by the fund’s custodian and identified in the fund’s portfolio. Collateral can be in the form of cash or debt securities issued by the U.S. Government or related agencies or other securities as agreed to by the fund and the applicable counterparty. Collateral requirements are determined based on the fund’s net position with each counterparty. Termination events applicable to the fund may occur upon a decline in the fund’s net assets below a specified threshold over a certain period of time. Termination events applicable to counterparties may occur upon a decline in the counterparty’s long-term and short-term credit ratings below a specified level. In each case, upon occurrence, the other party may elect to terminate early and cause settlement of all derivative and foreign exchange contracts outstanding, including the payment of any losses and costs resulting from such early termination, as reasonably determined by the terminating party. Any decision by one or more of the fund’s counterparties to elect early termination could impact the fund's future derivative activity.

At the close of the reporting period, the fund had a net liability position of $406,863 on derivative contracts subject to the Master Agreements. There was no collateral posted by the fund.


Accounting Standards Codification ASC 820 Fair Value Measurements and Disclosures (ASC 820) establishes a three-level hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of the fund’s investments. The three levels are defined as follows:

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

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

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

The following is a summary of the inputs used to value the fund’s net assets as of the close of the reporting period:

      Valuation inputs  
Investments in securities:    Level 1  Level 2  Level 3 
Common stocks:         
  Australia  $25,606,532  $--  $ -- 
  Belgium  20,703,568  --  -- 
  Brazil  15,485,723  --  -- 
  Canada  63,774,200  --  -- 
  China  140,240,570  --  -- 
  Denmark  7,450,136  --  -- 
  France  186,243,306  --  -- 
  Germany  145,573,427  --  -- 
  Hong Kong  20,427,743  --  -- 
  Ireland  42,949,477  --  -- 
  Italy  34,732,616  --  -- 
  Japan  303,430,226  --  -- 
  Netherlands  23,726,234  --  -- 
  Norway  10,088,976  --  -- 
  Russia  23,110,681  --  -- 
  South Korea  10,033,088  --  -- 
  Spain  48,888,457  --  -- 
  Switzerland  76,995,696  --  -- 
  Taiwan  13,860,282  --  -- 
  United Kingdom  235,133,965  --  -- 
  United States  17,811,858  --  -- 
Total common stocks    1,466,266,761  --  -- 
Mortgage-backed securities    --  1,170,074  -- 
Senior loans    --  8,290,528  -- 
U.S. treasury obligations    --  861,295  -- 
Short-term investments    11,912,157  51,756,095  -- 
Totals by level    $1,478,178,918  $62,077,992  $-- 
 
 
 
 
      Valuation inputs  
Other financial instruments:    Level 1  Level 2  Level 3 
Forward currency contracts    $--  $10,543,240  $-- 
Totals by level    $--  $10,543,240  $-- 

Market Values of Derivative Instruments as of the close of the reporting period

  Asset derivatives  Liability derivatives 
 
Derivatives not accounted for as hedging instruments under ASC 815 Market value  Market value 
Foreign exchange contracts  $16,475,357  $5,932,117 
Total  $16,475,357  $5,932,117 

For additional information regarding the fund please see the fund's most recent annual or semiannual shareholder report filed on the Securities and Exchange Commission's Web site, www.sec.gov, or visit Putnam's Individual Investor Web site at www.putnaminvestments.com


Item 2. Controls and Procedures:

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

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

Item 3. Exhibits:

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

SIGNATURES

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

Putnam International Equity Fund

By (Signature and Title):

/s/ Janet C. Smith
Janet C. Smith
Principal Accounting Officer
Date: November 24, 2010

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

By (Signature and Title):

/s/ Jonathan S. Horwitz
Jonathan S. Horwitz
Principal Executive Officer
Date: November 24, 2010

By (Signature and Title):

/s/ Steven D. Krichmar
Steven D. Krichmar
Principal Financial Officer
Date: November 24, 2010