N-CSRS 1 a_internationalequity.htm PUTNAM INTERNATIONAL EQUITY FUND a_internationalequity.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES



Investment Company Act file number: (811-06190)
Exact name of registrant as specified in charter: Putnam International Equity Fund
Address of principal executive offices: 100 Federal Street, Boston, Massachusetts 02110
Name and address of agent for service: Stephen Tate, Vice President
100 Federal Street
Boston, Massachusetts 02110
Copy to:         Bryan Chegwidden, Esq.
Ropes & Gray LLP
1211 Avenue of the Americas
New York, New York 10036
        James E. Thomas, Esq.
Ropes & Gray LLP
800 Boylston Street
Boston, Massachusetts 02199
Registrant’s telephone number, including area code: (617) 292-1000
Date of fiscal year end: June 30, 2024
Date of reporting period: July 1, 2023 – December 31, 2023



Item 1. Report to Stockholders:

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


 

 

Message from the Trustees

February 8, 2024

Dear Fellow Shareholder:

With the new year comes new beginnings. We are pleased to report that on January 1, 2024, Franklin Resources, Inc., a leading global asset management firm operating as Franklin Templeton, acquired Putnam Investments.

With complementary capabilities and an established infrastructure serving over 150 countries, Franklin Templeton enhances Putnam’s investment, risk management, operations, and technology platforms. Together, our firms are committed to delivering strong fund performance and more choices for our investors.

As we enter this new chapter, you can rest assured that your fund continues to be actively managed by the same experienced professionals. Your investment team is exploring new and attractive opportunities for your fund, while monitoring changing market conditions. The following pages provide an update on your fund.

Thank you for investing with Putnam.


 


Allocations are shown as a percentage of the fund’s net assets as of 12/31/23. Cash and net other assets, if any, represent the market value weights of cash, derivatives, short-term securities, and other unclassified assets in the portfolio. Summary information may differ from the information in the portfolio schedule notes included in the financial statements due to the inclusion of derivative securities, any interest accruals, the exclusion of as-of trades, if any, and rounding. Holdings and allocations may vary over time. Due to rounding, percentages may not equal 100%.

2 International Equity Fund 

 

 

Your fund’s expenses

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

Expense ratios

  Class A  Class B  Class C  Class R  Class R5  Class R6  Class Y 
Total annual operating expenses for the               
fiscal year ended 6/30/23  1.26%  2.01%  2.01%  1.51%  0.93%  0.83%  1.01% 
Annualized expense ratio for the               
six-month period ended 12/31/23*  1.21%  1.96%  1.96%  1.46%  0.89%  0.79%  0.96% 

 

Fiscal year expense information in this table is taken from the most recent prospectus, is subject to change, and may differ from that shown for the annualized expense ratio and in the financial highlights of this report.

Expenses are shown as a percentage of average net assets.

* Includes a decrease of 0.03% from annualizing the performance fee adjustment for the six months ended 12/31/23.

Expenses per $1,000

The following table shows the expenses you would have paid on a $1,000 investment in each class of the fund from 7/1/23 to 12/31/23. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.

  Class A  Class B  Class C  Class R  Class R5  Class R6  Class Y 
Expenses paid per $1,000*†  $6.26  $10.12  $10.12  $7.55  $4.61  $4.09  $4.97 
Ending value (after expenses)  $1,058.20  $1,054.30  $1,054.30  $1,056.80  $1,060.00  $1,060.60  $1,059.70 

 

* Expenses for each share class are calculated using the fund’s annualized expense ratio for each class, which represents the ongoing expenses as a percentage of average net assets for the six months ended 12/31/23. The expense ratio may differ for each share class.

† Expenses are calculated by multiplying the expense ratio by the average account value for the period; then multiplying the result by the number of days in the period (184); and then dividing that result by the number of days in the year (366).

International Equity Fund 3 

 

 

Estimate the expenses you paid

To estimate the ongoing expenses you paid for the six months ended 12/31/23, use the following calculation method. To find the value of your investment on 7/1/23, call Putnam at 1-800-225-1581.


Compare expenses using the SEC’s method

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

  Class A  Class B  Class C  Class R  Class R5  Class R6  Class Y 
Expenses paid per $1,000*†  $6.14  $9.93  $9.93  $7.41  $4.52  $4.01  $4.88 
Ending value (after expenses)  $1,019.05  $1,015.28  $1,015.28  $1,017.80  $1,020.66  $1,021.17  $1,020.31 

 

* Expenses for each share class are calculated using the fund’s annualized expense ratio for each class, which represents the ongoing expenses as a percentage of average net assets for the six months ended 12/31/23. The expense ratio may differ for each share class.

† Expenses are calculated by multiplying the expense ratio by the average account value for the six-month period; then multiplying the result by the number of days in the six-month period (184); and then dividing that result by the number of days in the year (366).

4 International Equity Fund 

 

 

Other information for shareholders

Important notice regarding delivery of shareholder documents

In accordance with Securities and Exchange Commission (SEC) regulations, your fund’s manager sends a single notice of internet availability, or a single printed copy, of annual and semiannual shareholder reports, prospectuses, and proxy statements to shareholders who share the same address, unless a shareholder requests otherwise. If you prefer to receive your own copy of these documents, please call 1-800-225-1581 or, for exchange-traded funds only, 1-833-228-5577. We will begin sending individual copies within 30 days.

Proxy voting

The Putnam funds’ proxy voting guidelines and procedures, as well as information regarding how your fund voted proxies relating to portfolio securities during the 12-month period ended June 30, 2023, are available in the Individual Investors section of putnam.com and on the SEC’s website, www.sec.gov. If you have questions about finding forms on the SEC’s website, you may call the SEC at 1-800-SEC-0330. You may also obtain the Putnam funds’ proxy voting guidelines and procedures at no charge by calling Shareholder Services at 1-800-225-1581 or, for exchange-traded funds only, 1-833-228-5577.

Fund portfolio holdings

The fund will file a complete schedule of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT within 60 days of the end of such fiscal quarter. Shareholders may obtain the fund’s Form N-PORT on the SEC’s website at www.sec.gov.

International Equity Fund 5 

 

 

Important notice regarding Putnam’s privacy policy

In order to conduct business with our shareholders, we must obtain certain personal information such as account holders’ names, addresses, Social Security numbers, and dates of birth. Using this information, we are able to maintain accurate records of accounts and transactions.

It is our policy to protect the confidentiality of our shareholder information, whether or not a shareholder currently owns shares of our funds. In particular, it is our policy not to sell information about you or your accounts to outside marketing firms. We have safeguards in place designed to prevent unauthorized access to our computer systems and procedures to protect personal information from unauthorized use.

Under certain circumstances, we must share account information with outside vendors who provide services to us, such as mailings and proxy solicitations. In these cases, the service providers enter into confidentiality agreements with us, and we provide only the information necessary to process transactions and perform other services related to your account. Finally, it is our policy to share account information with your financial representative, if you’ve listed one on your Putnam account.

6 International Equity Fund 

 

 

Financial statements

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

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

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

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

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

Financial highlights provide an overview of the fund’s investment results, per-share distributions, expense ratios, net investment income ratios, and portfolio turnover (not required for money market funds) in one summary table, reflecting the five most recent reporting periods. In a semiannual report, the highlights table also includes the current reporting period.

International Equity Fund 7 

 

 

The fund’s portfolio 12/31/23 (Unaudited)
COMMON STOCKS (97.6%)* Shares Value
Australia (2.3%)
BHP Group, Ltd. (ASE Exchange) 494,412 $16,948,714
16,948,714
Canada (1.9%)
Canadian National Railway Co. 111,600 14,027,380
14,027,380
China (1.4%)
Prosus NV 339,540 10,124,103
10,124,103
Denmark (2.6%)
Novo Nordisk A/S Class B 95,050 9,831,481
Novozymes A/S Class B 169,391 9,326,695
19,158,176
France (15.2%)
AXA SA 391,559 12,781,609
Danone SA 113,003 7,329,520
Euronext NV 136,149 11,822,092
LVMH Moet Hennessy Louis Vuitton SA 22,182 17,992,381
Sanofi SA 201,363 19,963,409
STMicroelectronics NV 226,407 11,360,297
Thales SA 75,033 11,097,070
Vinci SA 156,680 19,677,941
112,024,319
Germany (7.9%)
AIXTRON SE 211,689 9,037,884
Deutsche Boerse AG 48,554 9,996,613
Merck KGaA 42,442 6,750,729
Rheinmetall AG 22,132 7,015,894
Scout24 SE 175,488 12,415,945
Siemens AG 68,205 12,793,217
58,010,282
Hong Kong (3.1%)
AIA Group, Ltd. 1,171,000 10,170,610
CK Hutchison Holdings, Ltd. 2,372,500 12,769,661
22,940,271
Ireland (5.6%)
Bank of Ireland Group PLC 1,309,162 11,866,917
CRH PLC 288,223 19,862,050
Ryanair Holdings PLC ADR † 70,000 9,335,200
41,064,167
Italy (2.7%)
PRADA SpA 952,100 5,432,971
Prysmian SpA 323,340 14,741,548
20,174,519
Japan (21.7%)
Asahi Group Holdings, Ltd. 291,200 10,838,649
Asics Corp. 109,100 3,403,285
Coca-Cola Bottlers Japan Holdings, Inc. 337,900 4,846,828
Ebara Corp. 72,500 4,269,031


8 International Equity Fund



COMMON STOCKS (97.6%)* cont. Shares Value
Japan cont.
Hoya Corp. 107,700 $13,394,555
ITOCHU Corp. 370,200 15,111,311
Japan Exchange Group, Inc. 274,800 5,797,922
Kokusai Electric Corp. † 258,100 5,592,036
Mitsubishi Corp. 780,300 12,428,252
Mitsubishi Electric Corp. 772,000 10,898,003
Mitsubishi UFJ Financial Group, Inc. 1,803,400 15,519,514
Nintendo Co., Ltd. 321,600 16,805,579
Pan Pacific International Holdings Corp. 344,800 8,206,088
Renesas Electronics Corp. † 509,200 9,138,614
Sony Group Corp. 154,800 14,668,024
Taiyo Nippon Sanso Corp. 328,800 8,768,135
159,685,826
Netherlands (6.2%)
ASML Holding NV 19,664 14,846,579
ASR Nederland NV 189,787 8,974,220
Universal Music Group NV 305,733 8,730,557
Wolters Kluwer NV 92,240 13,107,708
45,659,064
Norway (1.5%)
DNB Bank ASA 508,445 10,801,752
10,801,752
South Korea (2.2%)
Samsung Electronics Co., Ltd. (Preference) 343,510 16,564,676
16,564,676
Spain (2.2%)
Coca-Cola Europacific Partners PLC S 244,900 16,344,626
16,344,626
Switzerland (2.9%)
Nestle SA 185,542 21,474,144
21,474,144
United Kingdom (16.1%)
Anglo American PLC (London Exchange) 377,759 9,479,187
AstraZeneca PLC 115,992 15,622,196
BP PLC 1,724,365 10,190,165
Compass Group PLC 657,372 17,962,634
Experian PLC 340,446 13,873,777
InterContinental Hotels Group PLC 126,636 11,437,581
London Stock Exchange Group PLC 163,248 19,298,162
Persimmon PLC 736,093 12,982,844
Prudential PLC 652,392 7,344,067
118,190,613
United States (2.1%)
Linde PLC 37,250 15,298,946
15,298,946
Total common stocks (cost $605,856,430) $718,491,578


International Equity Fund 9



U.S. TREASURY OBLIGATIONS (0.3%)* Principal
amount		 Value
U.S. Treasury Inflation Index Notes 0.625%, 1/15/26 i $2,590 $2,509
U.S. Treasury Notes    
2.00%, 11/15/26 i 196,000 185,878
1.625%, 5/15/31 i 481,000 413,597
1.625%, 2/15/26 i 238,000 227,035
1.375%, 1/31/25 i 186,000 180,550
1.125%, 2/28/25 i 202,000 194,791
1.00%, 7/31/28 i 243,000 214,874
0.625%, 8/15/30 i 756,000 616,107
0.375%, 4/30/25 i 131,000 124,053
0.125%, 1/15/24 i 172,000 171,787
Total U.S. treasury obligations (cost $2,331,181) $2,331,181

SHORT-TERM INVESTMENTS (2.0%)* Principal amount/
shares		 Value
Putnam Cash Collateral Pool, LLC 5.59% d Shares 1,023,750 $1,023,750
Putnam Short Term Investment Fund Class P 5.53% L Shares 11,016,084 11,016,084
State Street Institutional U.S. Government Money Market Fund, Premier Class 5.32% P Shares 1,890,000 1,890,000
U.S. Treasury Bills 5.383%, 3/21/24 ∆ $900,000 889,746
Total short-term investments (cost $14,819,393) $14,819,580

TOTAL INVESTMENTS
Total investments (cost $623,007,004) $735,642,339

Key to holding’s abbreviations
ADR American Depository Receipts: Represents ownership of foreign securities on deposit with a custodian bank.
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, 2023 through December 31, 2023 (the reporting period). Within the following notes to the portfolio, references to “Putnam Management” represent Putnam Investment Management, LLC, the fund’s manager, an indirect wholly-owned subsidiary of Franklin Resources, Inc., and references to “ASC 820” represent Accounting Standards Codification 820 Fair Value Measurements and Disclosures.
* Percentages indicated are based on net assets of $735,938,898.
† This security is non-income-producing.
∆ This security, in part or in entirety, was pledged and segregated with the custodian for collateral on certain derivative contracts at the close of the reporting period. Collateral at period end totaled $775,423 and is included in Investments in securities on the Statement of assets and liabilities (Notes 1 and 8).
d Affiliated company. See Notes 1 and 5 to the financial statements regarding securities lending. The rate quoted in the security description is the annualized 7-day yield of the fund at the close of the reporting period.
i This security was pledged, or purchased with cash that was pledged, to the fund for collateral on certain derivative contracts (Note 1).
L Affiliated company (Note 5). The rate quoted in the security description is the annualized 7-day yield of the fund at the close of the reporting period.
P This security was pledged, or purchased with cash that was pledged, to the fund for collateral on certain derivative contracts. The rate quoted in the security description is the annualized 7-day yield of the fund at the close of the reporting period.
S Security on loan, in part or in entirety, at the close of the reporting period (Note 1).


10 International Equity Fund



Unless otherwise noted, the rates quoted in Short-term investments security descriptions represent the weighted average yield to maturity.
The dates shown on debt obligations are the original maturity dates.
The fund had the following sector concentrations greater than 10% at the close of the reporting period (as a percentage of net assets):
Industrials 23.3%
Financials 16.9
Consumer discretionary 13.9
Materials 10.8

FORWARD CURRENCY CONTRACTS at 12/31/23 (aggregate face value $306,061,650) (Unaudited)
Counterparty Currency Contract
type*		 Delivery
date		 Value Aggregate
face value		 Unrealized
appreciation/
(depreciation)
Bank of America N.A.
Australian Dollar Buy 1/17/24 $11,144,900 $10,359,611 $785,289
British Pound Sell 3/20/24 6,270,464 6,208,844 (61,620)
Canadian Dollar Sell 1/17/24 1,742,811 1,682,072 (60,739)
Euro Sell 3/20/24 450,468 441,217 (9,251)
Hong Kong Dollar Buy 2/21/24 2,038,537 2,036,034 2,503
Japanese Yen Sell 2/21/24 656,655 622,986 (33,669)
Swedish Krona Buy 3/20/24 2,513,201 2,421,950 91,251
Swiss Franc Buy 3/20/24 7,109,620 6,866,703 242,917
Barclays Bank PLC
Canadian Dollar Sell 1/17/24 2,995,720 2,933,734 (61,986)
Swedish Krona Buy 3/20/24 1,143,207 1,101,054 42,153
Swiss Franc Buy 3/20/24 8,839,421 8,537,737 301,684
Citibank, N.A.
Australian Dollar Buy 1/17/24 260,022 241,582 18,440
Danish Krone Sell 3/20/24 394,826 385,954 (8,872)
Goldman Sachs International
British Pound Sell 3/20/24 2,135,974 2,111,639 (24,335)
Chinese Yuan (Offshore) Buy 2/21/24 175,354 171,250 4,104
Indian Rupee Buy 2/21/24 5,937,000 5,921,340 15,660
Indian Rupee Sell 2/21/24 5,937,000 5,919,157 (17,843)
Japanese Yen Buy 2/21/24 3,615,665 3,393,624 222,041
South Korean Won Sell 2/21/24 15,082,226 14,912,604 (169,622)
Swedish Krona Buy 3/20/24 1,991,057 1,914,549 76,508
Swiss Franc Buy 3/20/24 7,839,768 7,572,692 267,076
HSBC Bank USA, National Association
Australian Dollar Buy 1/17/24 6,989,654 6,493,665 495,989
Chinese Yuan (Offshore) Sell 2/21/24 2,905,100 2,897,951 (7,149)
Danish Krone Buy 3/20/24 4,775,530 4,726,701 48,829
Euro Sell 3/20/24 10,839,351 10,783,326 (56,025)
Japanese Yen Sell 2/21/24 8,951,372 8,499,950 (451,422)
Singapore Dollar Buy 2/21/24 5,095,739 4,947,867 147,872
Swiss Franc Buy 3/20/24 1,165,024 1,124,763 40,261
JPMorgan Chase Bank N.A.
Chinese Yuan (Offshore) Sell 2/21/24 7,408,184 7,259,882 (148,302)
Hong Kong Dollar Sell 2/21/24 652,029 654,834 2,805


International Equity Fund 11



FORWARD CURRENCY CONTRACTS at 12/31/23 (aggregate face value $306,061,650) (Unaudited) cont.
Counterparty Currency Contract
type*		 Delivery
date		 Value Aggregate
face value		 Unrealized
appreciation/
(depreciation)
JPMorgan Chase Bank N.A. cont.
Japanese Yen Sell 2/21/24 $2,285,801 $2,168,079 $(117,722)
New Zealand Dollar Buy 1/17/24 288,587 269,731 18,856
Norwegian Krone Sell 3/20/24 380,089 357,659 (22,430)
Swedish Krona Buy 3/20/24 6,133,251 5,909,213 224,038
Swiss Franc Buy 3/20/24 2,026,510 1,956,839 69,671
Morgan Stanley & Co. International PLC
Australian Dollar Sell 1/17/24 3,191,036 2,989,169 (201,867)
Euro Sell 3/20/24 5,335,185 5,235,704 (99,481)
Japanese Yen Sell 2/21/24 4,449,068 4,042,490 (406,578)
New Zealand Dollar Buy 1/17/24 1,207,641 1,128,443 79,198
Norwegian Krone Sell 3/20/24 2,789,846 2,597,099 (192,747)
Swedish Krona Buy 3/20/24 4,663,889 4,492,193 171,696
NatWest Markets PLC
Canadian Dollar Sell 1/17/24 3,559,069 3,435,129 (123,940)
Swedish Krona Buy 3/20/24 6,260,572 6,030,572 230,000
Swiss Franc Buy 3/20/24 6,576,120 6,351,578 224,542
State Street Bank and Trust Co.
British Pound Buy 3/20/24 1,053,387 1,059,675 (6,288)
Chinese Yuan (Offshore) Buy 2/21/24 1,973,684 1,926,976 46,708
Euro Sell 3/20/24 19,099,253 18,807,293 (291,960)
Israeli Shekel Buy 1/17/24 4,525,002 4,262,583 262,419
Japanese Yen Buy 2/21/24 6,703,193 6,364,423 338,770
Singapore Dollar Buy 2/21/24 5,611,085 5,448,880 162,205
Swiss Franc Buy 3/20/24 7,373,015 7,121,510 251,505
Toronto-Dominion Bank
Australian Dollar Buy 1/17/24 14,641,500 13,603,005 1,038,495
British Pound Sell 3/20/24 2,570,539 2,541,306 (29,233)
Canadian Dollar Sell 1/17/24 1,984,591 1,915,346 (69,245)
Japanese Yen Buy 2/21/24 12,379,678 12,161,430 218,248
Swiss Franc Buy 3/20/24 2,125,492 2,052,858 72,634
UBS AG
British Pound Sell 3/20/24 4,629,623 4,576,933 (52,690)
Euro Sell 3/20/24 3,169,330 3,104,491 (64,839)
Norwegian Krone Sell 3/20/24 2,301,443 2,166,496 (134,947)
Swiss Franc Buy 3/20/24 6,091,752 5,884,259 207,493
WestPac Banking Corp.
Australian Dollar Buy 1/17/24 7,086,260 6,583,134 503,126
British Pound Buy 3/20/24 1,564,843 1,529,851 34,992
Canadian Dollar Sell 1/17/24 3,208,363 3,095,934 (112,429)
Euro Sell 3/20/24 8,228,676 8,021,066 (207,610)
Hong Kong Dollar Sell 2/21/24 8,202,329 8,193,422 (8,907)
Japanese Yen Sell 2/21/24 1,644,171 1,559,143 (85,028)
Swiss Franc Buy 3/20/24 4,094,722 3,972,466 122,256
Unrealized appreciation 7,082,234
Unrealized (depreciation) (3,338,776)
Total $3,743,458
* The exchange currency for all contracts listed is the United States Dollar.


12 International Equity Fund


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 $— $16,948,714 $—
Canada 14,027,380 — —
China — 10,124,103 —
Denmark — 19,158,176 —
France — 112,024,319 —
Germany — 58,010,282 —
Hong Kong — 22,940,271 —
Ireland 9,335,200 31,728,967 —
Italy — 20,174,519 —
Japan — 159,685,826 —
Netherlands — 45,659,064 —
Norway — 10,801,752 —
South Korea — 16,564,676 —
Spain 16,344,626 — —
Switzerland — 21,474,144 —
United Kingdom — 118,190,613 —
United States 15,298,946 — —
Total common stocks 55,006,152 663,485,426 —
U.S. treasury obligations — 2,331,181 —
Short-term investments 1,890,000 12,929,580 —
Totals by level $56,896,152 $678,746,187 $—
Valuation inputs
Other financial instruments: Level 1 Level 2 Level 3
Forward currency contracts $— $3,743,458 $—
Totals by level $— $3,743,458 $—


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


International Equity Fund 13


Statement of assets and liabilities 12/31/23 (Unaudited)

ASSETS   
Investment in securities, at value, including $1,002,300 of securities on loan (Notes 1 and 5):   
Unaffiliated issuers (identified cost $610,967,170)  $723,602,505 
Affiliated issuers (identified cost $12,039,834) (Notes 1 and 5)  12,039,834 
Foreign currency (cost $418,987) (Note 1)  419,553 
Dividends, interest and other receivables  986,838 
Foreign tax reclaim  1,399,073 
Receivable for shares of the fund sold  678,023 
Receivable for investments sold  987,602 
Unrealized appreciation on forward currency contracts (Note 1)  7,082,234 
Prepaid assets  56,910 
Total assets  747,252,572 
 
LIABILITIES   
Payable for shares of the fund repurchased  1,055,704 
Payable for compensation of Manager (Note 2)  402,580 
Payable for custodian fees (Note 2)  16,322 
Payable for investor servicing fees (Note 2)  244,146 
Payable for Trustee compensation and expenses (Note 2)  551,538 
Payable for administrative services (Note 2)  10,252 
Payable for distribution fees (Note 2)  352,760 
Collateral on securities loaned, at value (Note 1)  1,023,750 
Collateral on certain derivative contracts, at value (Notes 1 and 8)  4,221,181 
Unrealized depreciation on forward currency contracts (Note 1)  3,338,776 
Other accrued expenses  96,665 
Total liabilities  11,313,674 
 
Net assets  $735,938,898 
 
REPRESENTED BY   
Paid-in capital (Unlimited shares authorized) (Notes 1 and 4)  $650,581,150 
Total distributable earnings (Note 1)  85,357,748 
Total — Representing net assets applicable to capital shares outstanding  $735,938,898 

 

(Continued on next page)

 

14 International Equity Fund 

 

 

Statement of assets and liabilities cont.

COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE   
Net asset value and redemption price per class A share   
($579,698,206 divided by 23,089,711 shares)  $25.11 
Offering price per class A share (100/94.25 of $25.11)*  $26.64 
Net asset value and offering price per class B share ($797,158 divided by 33,693 shares)**  $23.66 
Net asset value and offering price per class C share ($5,300,384 divided by 219,049 shares)**  $24.20 
Net asset value, offering price and redemption price per class R share   
($1,019,717 divided by 41,387 shares)  $24.64 
Net asset value, offering price and redemption price per class R5 share   
($12,076 divided by 464 shares)†  $26.05 
Net asset value, offering price and redemption price per class R6 share   
($32,747,050 divided by 1,274,762 shares)  $25.69 
Net asset value, offering price and redemption price per class Y share   
($116,364,307 divided by 4,558,201 shares)  $25.53 

 

*On single retail sales of less than $50,000. On sales of $50,000 or more the offering price is reduced.

**Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.

†Net asset value may not recalculate due to rounding of fractional shares.

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

International Equity Fund 15 

 

 

Statement of operations Six months ended 12/31/23 (Unaudited)

INVESTMENT INCOME   
Dividends (net of foreign taxes paid and refunded of $1,461,442)  $6,858,840 
Interest (including interest income of $466,320 from investments in affiliated issuers) (Note 5)  660,389 
Securities lending (net of expenses) (Notes 1 and 5)  1,349 
Total investment income  7,520,578 
 
EXPENSES   
Compensation of Manager (Note 2)  2,344,464 
Investor servicing fees (Note 2)  742,100 
Custodian fees (Note 2)  63,107 
Trustee compensation and expenses (Note 2)  15,503 
Distribution fees (Note 2)  738,341 
Administrative services (Note 2)  14,427 
Other  196,120 
Total expenses  4,114,062 
Expense reduction (Note 2)  (8,039) 
Net expenses  4,106,023 
 
Net investment income  3,414,555 
 
REALIZED AND UNREALIZED GAIN (LOSS)   
Net realized gain (loss) on:   
Securities from unaffiliated issuers (Notes 1 and 3)  9,084,372 
Foreign currency transactions (Note 1)  (294,498) 
Forward currency contracts (Note 1)  2,637,882 
Total net realized gain  11,427,756 
Change in net unrealized appreciation (depreciation) on:   
Securities from unaffiliated issuers  21,889,939 
Assets and liabilities in foreign currencies  130,634 
Forward currency contracts  3,480,480 
Total change in net unrealized appreciation  25,501,053 
 
Net gain on investments  36,928,809 
 
Net increase in net assets resulting from operations  $40,343,364 

 

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

16 International Equity Fund 

 

 

Statement of changes in net assets

INCREASE IN NET ASSETS  Six months ended 12/31/23*  Year ended 6/30/23 
Operations     
Net investment income  $3,414,555  $9,601,098 
Net realized gain (loss) on investments     
and foreign currency transactions  11,427,756  (19,932,406) 
Change in net unrealized appreciation of investments     
and assets and liabilities in foreign currencies  25,501,053  138,927,502 
Net increase in net assets resulting from operations  40,343,364  128,596,194 
Distributions to shareholders (Note 1):     
From ordinary income     
Net investment income     
Class A  (10,721,465)  — 
Class B  (5,200)  — 
Class C  (53,775)  — 
Class R  (16,735)  — 
Class R5  (250)  — 
Class R6  (720,416)  — 
Class Y  (2,364,277)  — 
Decrease from capital share transactions (Note 4)  (16,142,041)  (63,487,454) 
Total increase in net assets  10,319,205  65,108,740 
 
NET ASSETS     
Beginning of period  725,619,693  660,510,953 
End of period  $735,938,898  $725,619,693 

 

* Unaudited.

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

International Equity Fund 17 

 

 

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

  INVESTMENT OPERATIONS      LESS DISTRIBUTIONS            RATIOS AND SUPPLEMENTAL DATA   
                            Ratio of net   
  Net asset  Net  Net realized      From              Ratio of  investment   
  value,  investment  and unrealized  Total from  From  net realized      Non-recurring  Net asset  Total return  Net assets,  expenses  income (loss)   
  beginning  income  gain (loss) on  investment  net investment  gain on  From  Total  reimburse-­  value, end  at net asset  end of period  to average  to average  Portfolio 
Period ended­  of period­  (loss) a  investments­  operations­  income­  investments­  return of capital­  distributions  ments­  of period­  value (%)b  (in thousands)  net assets (%)c  net assets (%)  turnover (%) 
Class A                               
December 31, 2023**   $24.18­  .11­  1.29­  1.40­  (.47)  —­  —­  (.47)  —­  $25.11­  5.82*  $579,698­  .61*  .46*  34* 
June 30, 2023­  20.01­  .30­  3.87­  4.17­  —­  —­  —­  —­  —­  24.18­  20.84­  575,684­  1.26­  1.36­  64­ 
June 30, 2022  28.93­  .48­d  (5.81)  (5.33)  (.41)  (3.15)  (.03)  (3.59)  —­  20.01­  (20.88)  526,727­  1.26­e  1.87­d  89­ 
June 30, 2021  22.21­  .19­  7.21­  7.40­  (.30)  (.38)  —­  (.68)  —­  28.93­  33.64­  716,014­  1.23­  .72­  91­ 
June 30, 2020  23.07­  .22­  (.69)  (.47)  (.34)  —­  (.05)  (.39)  —­  22.21­  (2.20)  591,165­  1.20­  .97­  84­ 
June 30, 2019  25.36­  .35­  (1.36)  (1.01)  (.44)  (.80)  (.04)  (1.28)  —­f  23.07­  (3.04)  673,425­  1.21­g  1.55­  77­ 
Class B                               
December 31, 2023**   $22.59­  .01­  1.22­  1.23­  (.16)  —­  —­  (.16)  —­  $23.66­  5.43*  $797­  .99 *  .05*  34* 
June 30, 2023­  18.84­  .09­  3.66­  3.75­  —­  —­  —­  —­  —­  22.59­  19.90­  1,210­  2.01­  .45­  64­ 
June 30, 2022  27.38­  .25­d  (5.45)  (5.20)  (.16)  (3.15)  (.03)  (3.34)  —­  18.84­  (21.45)  2,119­  2.01­e  1.02­d  89­ 
June 30, 2021  21.03­  (.02)  6.84­  6.82­  (.09)  (.38)  —­  (.47)  —­  27.38­  32.62­  4,127­  1.98­  (.07)  91­ 
June 30, 2020  21.89­  .05­  (.67)  (.62)  (.21)  —­  (.03)  (.24)  —­  21.03­  (2.94)  4,752­  1.95­  .22­  84­ 
June 30, 2019  24.05­  .16­  (1.27)  (1.11)  (.21)  (.80)  (.04)  (1.05)  —­f  21.89­  (3.79)  7,041­  1.96­g  .73­  77­ 
Class C                               
December 31, 2023**   $23.19­  .02­  1.24­  1.26­  (.25)  —­  —­  (.25)  —­  $24.20­  5.43*  $5,300­  .99 *  .07*  34* 
June 30, 2023­  19.34­  .11­  3.74­  3.85­  —­  —­  —­  —­  —­  23.19­  19.91­  6,224­  2.01­  .53­  64­ 
June 30, 2022  28.00­  .26­d  (5.60)  (5.34)  (.14)  (3.15)  (.03)  (3.32)  —­  19.34­  (21.44)  7,679­  2.01­e  1.03­d  89­ 
June 30, 2021  21.51­  (.02)  6.99­  6.97­  (.10)  (.38)  —­  (.48)  —­  28.00­  32.63­  14,722­  1.98­  (.07)  91­ 
June 30, 2020  22.40­  .05­  (.68)  (.63)  (.23)  —­  (.03)  (.26)  —­  21.51­  (2.94)  15,288­  1.95­  .23­  84­ 
June 30, 2019  24.35­  .16­  (1.24)  (1.08)  (.03)  (.80)  (.04)  (.87)  —­f  22.40­  (3.78)  20,888­  1.96­g  .72­  77­ 
Class R                               
December 31, 2023**   $23.71­  .07­  1.27­  1.34­  (.41)  —­  —­  (.41)  —­  $24.64­  5.68*  $1,020­  .73*  .32*  34* 
June 30, 2023­  19.67­  .24­  3.80­  4.04­  —­  —­  —­  —­  —­  23.71­  20.54­  1,022­  1.51­  1.12­  64­ 
June 30, 2022  28.49­  .40­d  (5.71)  (5.31)  (.33)  (3.15)  (.03)  (3.51)  —­  19.67­  (21.08)  789­  1.51­e  1.54­d  89­ 
June 30, 2021  21.83­  .11­  7.10­  7.21­  (.17)  (.38)  —­  (.55)  —­  28.49­  33.26­  1,553­  1.48­  .43­  91­ 
June 30, 2020  22.66­  .16­  (.68)  (.52)  (.27)  —­  (.04)  (.31)  —­  21.83­  (2.44)  1,688­  1.45­  .71­  84­ 
June 30, 2019  24.88­  .28­  (1.32)  (1.04)  (.34)  (.80)  (.04)  (1.18)  —­f  22.66­  (3.26)  2,796­  1.46­g  1.25­  77­ 
Class R5                               
December 31, 2023**   $25.10­  .16­  1.34­  1.50­  (.55)  —­  —­  (.55)  —­  $26.05­  6.00*  $12­  .45*  .62*  34* 
June 30, 2023­  20.70­  .31­  4.09­  4.40­  —­  —­  —­  —­  —­  25.10­  21.26­  11­  .93­  1.41­  64­ 
June 30, 2022  29.80­  .58­d  (6.00)  (5.42)  (.50)  (3.15)  (.03)  (3.68)  —­  20.70­  (20.62)  23­  .95­e  2.21­d  89­ 
June 30, 2021  22.65­  .22­  7.45­  7.67­  (.14)  (.38)  —­  (.52)  —­  29.80­  34.07­  30­  .90­  .86­  91­ 
June 30, 2020  23.48­  .33­  (.75)  (.42)  (.36)  —­  (.05)  (.41)  —­  22.65­  (1.93)  370­  .86­  1.41­  84­ 
June 30, 2019  25.81­  .45­  (1.42)  (.97)  (.52)  (.80)  (.04)  (1.36)  —­f  23.48­  (2.73)  1,641­  .87­g  1.93­  77­ 

 

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

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

18 International Equity Fund  International Equity Fund 19 

 

 

Financial highlights cont.

  INVESTMENT OPERATIONS      LESS DISTRIBUTIONS            RATIOS AND SUPPLEMENTAL DATA   
                            Ratio of net   
  Net asset  Net  Net realized      From              Ratio of  investment   
  value,  investment  and unrealized  Total from  From  net realized      Non-recurring  Net asset  Total return  Net assets,  expenses  income (loss)   
  beginning  income  gain (loss) on  investment  net investment  gain on  From  Total  reimburse­-  value, end  at net asset  end of period  to average  to average  Portfolio 
Period ended­  of period­  (loss)a  investments­  operations­  income­  investments­  return of capital­  distributions  ments­  of period­  value (%)b  (in thousands)  net assets (%)c  net assets (%)  turnover (%) 
Class R6                               
December 31, 2023**   $24.77­  .17­  1.32­  1.49­  (.57)  —­  —­  (.57)  —­  $25.69­  6.06*  $32,747­  .40*  .68*  34* 
June 30, 2023­  20.42­  .41­  3.94­  4.35­  —­  —­  —­  —­  —­  24.77­  21.30­  31,335­  .83­  1.83­  64­ 
June 30, 2022  29.45­  .60­d  (5.92)  (5.32)  (.53)  (3.15)  (.03)  (3.71)  —­  20.42­  (20.53)  23,487­  .85­e  2.31­d  89­ 
June 30, 2021  22.59­  .30­  7.35­  7.65­  (.41)  (.38)  —­  (.79)  —­  29.45­  34.22­  29,354­  .80­  1.11­  91­ 
June 30, 2020  23.45­  .33­  (.72)  (.39)  (.42)  —­  (.05)  (.47)  —­  22.59­  (1.83)  27,486­  .76­  1.42­  84­ 
June 30, 2019  25.78­  .47­  (1.41)  (.94)  (.55)  (.80)  (.04)  (1.39)  —­f  23.45­  (2.60)  96,661­  .77­g  2.01­  77­ 
Class Y                               
December 31, 2023**   $24.60­  .14­  1.32­  1.46­  (.53)  —­  —­  (.53)  —­  $25.53­  5.97*  $116,364­  .48*  .59*  34* 
June 30, 2023­  20.31­  .36­  3.93­  4.29­  —­  —­  —­  —­  —­  24.60­  21.12­  110,134­  1.01­  1.63­  64­ 
June 30, 2022  29.32­  .56­d  (5.90)  (5.34)  (.49)  (3.15)  (.03)  (3.67)  —­  20.31­  (20.68)  99,686­  1.01­e  2.14­d  89­ 
June 30, 2021  22.50­  .26­  7.30­  7.56­  (.36)  (.38)  —­  (.74)  —­  29.32­  33.95­  128,719­  .98­  .99­  91­ 
June 30, 2020  23.35­  .28­  (.70)  (.42)  (.38)  —­  (.05)  (.43)  —­  22.50­  (1.96)  90,755­  .95­  1.23­  84­ 
June 30, 2019  25.67­  .39­  (1.37)  (.98)  (.50)  (.80)  (.04)  (1.34)  —­f  23.35­  (2.81)  121,179­  .96­g  1.66­  77­ 

 

* Not annualized.

** Unaudited.

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

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

c Includes amounts paid through expense offset and brokerage/service arrangements, if any (Note 2). Also excludes acquired fund fees and expenses, if any.

d Reflects a dividend received by the fund from a single issuer which amounted to the following amounts:

  Per share  Percentage of average net assets 
Class A  $0.22  0.87% 
Class B  0.22  0.90 
Class C  0.22  0.89 
Class R  0.24  0.95 
Class R5  0.23  0.89 
Class R6  0.23  0.87 
Class Y  0.23  0.87 

 

e Includes one-time proxy cost of 0.01%.

f Reflects a non-recurring reimbursement pursuant to a settlement between the Securities and Exchange Commission (the SEC) and Canadian Imperial Holdings, Inc. and CIBC World Markets Corp., which amounted to less than $0.01 per share outstanding on March 6, 2019.

g Includes one time merger costs of 0.03%.

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

20 International Equity Fund  International Equity Fund 21 

 

 

Notes to financial statements 12/31/23 (Unaudited)

Unless otherwise noted, the “reporting period” represents the period from July 1, 2023 through December 31, 2023. The following table defines commonly used references within the Notes to financial statements:

References to  Represent 
Franklin Templeton  Franklin Resources, Inc. 
Putnam Management  Putnam Investment Management, LLC, the fund’s manager, an indirect wholly-owned 
  subsidiary of Franklin Templeton 
State Street  State Street Bank and Trust Company 
JPMorgan  JPMorgan Chase Bank, N.A. 
SEC  Securities and Exchange Commission 
OTC  over-the-counter 
PAC  The Putnam Advisory Company, LLC, an affiliate of Putnam Management 
PIL  Putnam Investments Limited, an affiliate of Putnam Management 

 

Putnam International Equity Fund (the fund) is a Massachusetts business trust, which is registered under the Investment Company Act of 1940, as amended, as a diversified open-end management investment company. The goal of the fund is to seek capital appreciation. The fund invests mainly in common stocks (growth or value stocks or both) of large and midsize companies outside the United States that Putnam Management believes have favorable investment potential. For example, the fund may purchase stocks of companies with stock prices that reflect a value lower than that which Putnam Management places on the company. Under normal circumstances, Putnam Management invests at least 80% of the fund’s net assets in equity investments. This policy may be changed only after 60 days’ notice to shareholders. Putnam Management may consider, among other factors, a company’s valuation, financial strength, growth potential, competitive position in its industry, projected future earnings, cash flows and dividends when deciding whether to buy or sell investments. Putnam Management may also consider other factors that it believes will cause the stock price to rise. The fund invests mainly in developed countries but may invest in emerging markets. At times Putnam Management may also use derivatives, such as certain foreign currency transactions, futures, options, warrants and swap contracts, for both hedging and non-hedging purposes. For example, we typically use foreign currency forward contracts in connection with the fund’s investments in foreign securities in order to hedge the fund’s currency exposure relative to the fund’s benchmark index.

The fund offers the following share classes. The expenses for each class of shares may differ based on the distribution and investor servicing fees of each class, which are identified in Note 2.

Share class  Sales charge  Contingent deferred sales charge  Conversion feature 
    1.00% on certain redemptions of shares   
Class A  Up to 5.75%  bought with no initial sales charge  None 
      Converts to class A shares 
Class B*  None  5.00% phased out over six years  after 8 years 
      Converts to class A shares 
Class C  None  1.00% eliminated after one year  after 8 years 
Class R†  None  None  None 
Class R5†  None  None  None 
Class R6†  None  None  None 
Class Y†  None  None  None 

 

* Purchases of class B shares are closed to new and existing investors except by exchange from class B shares of another Putnam fund or through dividend and/or capital gains reinvestment.

† Not available to all investors.

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

22 International Equity Fund 

 

 

The fund has entered into contractual arrangements with an investment adviser, administrator, distributor, shareholder servicing agent and custodian, who each provide services to the fund. Unless expressly stated otherwise, shareholders are not parties to, or intended beneficiaries of these contractual arrangements, and these contractual arrangements are not intended to create any shareholder right to enforce them against the service providers or to seek any remedy under them against the service providers, either directly or on behalf of the fund.

Under the fund’s Amended and Restated Agreement and Declaration of Trust, any claims asserted by a shareholder against or on behalf of the fund, including claims against Trustees and Officers, must be brought in state and federal courts located within the Commonwealth of Massachusetts.

Note 1: Significant accounting policies

The fund follows the accounting and reporting guidance in Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946, Financial Services – Investment Companies (ASC 946) and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP), including, but not limited to, ASC 946. The following is a summary of significant accounting policies consistently followed by the fund in the preparation of its financial statements. The preparation of financial statements is in conformity with accounting principles generally accepted in the United States of America and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and the reported amounts of increases and decreases in net assets from operations. Actual results could differ from those estimates. Subsequent events after the Statement of assets and liabilities date through the date that the financial statements were issued have been evaluated in the preparation of the financial statements.

Investment income, realized and unrealized gains and losses and expenses of the fund are borne pro-rata based on the relative net assets of each class to the total net assets of the fund, except that each class bears expenses unique to that class (including the distribution fees applicable to such classes). Each class votes as a class only with respect to its own distribution plan or other matters on which a class vote is required by law or determined by the Trustees. If the fund were liquidated, shares of each class would receive their pro-rata share of the net assets of the fund. In addition, the Trustees declare separate dividends on each class of shares.

Security valuation Portfolio securities and other investments are valued using policies and procedures adopted by the Board of Trustees. The Trustees have formed a Pricing Committee to oversee the implementation of these procedures and have delegated responsibility for valuing the fund’s assets in accordance with these procedures to Putnam Management. Putnam Management has established an internal Valuation Committee that is responsible for making fair value determinations, evaluating the effectiveness of the pricing policies of the fund and reporting to the Pricing Committee.

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 under Accounting Standards Codification 820 Fair Value Measurements and Disclosures (ASC 820). If no sales are reported, as in the case of some securities that are traded OTC, a security is valued at its last reported bid price and is generally categorized as a Level 2 security.

Investments in open-end investment companies (excluding exchange-traded funds), if any, which can be classified as Level 1 or Level 2 securities, are valued based on their net asset value. The net asset value of such investment companies equals the total value of their assets less their liabilities and divided by the number of their outstanding shares.

Market quotations are not considered to be readily available for certain debt obligations (including short-term investments with remaining maturities of 60 days or less) and other investments; 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 consider such factors as security prices, yields, maturities and ratings). These securities will generally be categorized as Level 2.

Many securities markets and exchanges outside the U.S. close prior to the scheduled 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 scheduled close of the New York Stock Exchange. Accordingly, on certain days, the fund will fair value certain 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. The foreign equity securities, which

International Equity Fund 23 

 

 

would generally be classified as Level 1 securities, will be transferred to Level 2 of the fair value hierarchy when they are valued at fair value. 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. At the close of the reporting period, fair value pricing was used for certain foreign securities in the portfolio. Securities quoted in foreign currencies, if any, are translated into U.S. dollars at the current exchange rate.

To the extent a pricing service or dealer is unable to value a security or provides a valuation that Putnam Management does not believe accurately reflects the security’s fair value, the security will be valued at fair value by Putnam Management, which has been designated as valuation designee pursuant to Rule 2a–5 under the Investment Company Act of 1940, in accordance with policies and procedures approved by the Trustees. 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, recovery rates, sales and other multiples and resale restrictions. These securities are classified as Level 2 or as Level 3 depending on the priority of the significant inputs.

To assess the continuing appropriateness of fair valuations, the Valuation Committee reviews and affirms the reasonableness of such valuations on a regular basis after considering all relevant information that is reasonably available. 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.

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

Interest income, net of any applicable withholding taxes, if any, is recorded on the accrual basis. Amortization and accretion of premiums and discounts on debt securities, if any, is recorded on the accrual basis.

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

Foreign currency translation The accounting records of the fund are maintained in U.S. dollars. The fair value of foreign securities, currency holdings, and other assets and liabilities is recorded in the books and records of the fund after translation to U.S. dollars based on the exchange rates on that day. The cost of each security is determined using historical exchange rates. Income and withholding taxes are translated at prevailing exchange rates when earned or incurred. The fund does not isolate that portion of realized or unrealized gains or losses resulting from changes in the foreign exchange rate on investments from fluctuations arising from changes in the market prices of the securities. Such gains and losses are included with the net realized and unrealized gain or loss on investments. Net realized gains and losses on foreign currency transactions represent net realized exchange gains or losses on disposition of foreign currencies, currency gains and losses realized between the trade and settlement dates on securities transactions and the difference between the amount of investment income and foreign withholding taxes recorded on the fund’s books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized appreciation and depreciation of assets and liabilities in foreign currencies arise from changes in the value of assets and liabilities other than investments at the period end, resulting from changes in the exchange rate.

Forward currency contracts The fund buys and sells 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 hedge foreign exchange risk.

The U.S. dollar value of forward currency contracts is determined using current forward currency exchange rates supplied by a quotation service. The fair value of the contract will fluctuate with changes in currency exchange rates. The contract is marked to market daily and the change in fair value is recorded as an unrealized gain or loss. 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 when the contract matures or by delivery of the currency. The fund could be exposed to risk if the value of the currency changes unfavorably, if the counterparties to the contracts

24 International Equity Fund 

 

 

are unable to meet the terms of their contracts or if the fund is unable to enter into a closing position. Risks may exceed amounts recognized on the Statement of assets and liabilities.

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

Master agreements The fund is a party to ISDA (International Swaps and Derivatives Association, Inc.) Master Agreements (Master Agreements) with certain counterparties that govern OTC 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 pledged 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, is presented in the fund’s portfolio.

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 $694,762 on open derivative contracts subject to the Master Agreements. Collateral pledged by the fund at period end for these agreements totaled $775,423 and may include amounts related to unsettled agreements.

Securities lending 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 fair value of the securities loaned. The fair value of securities loaned is determined daily and any additional required collateral is allocated to the fund on the next business day. The remaining maturities of the securities lending transactions are considered overnight and continuous. 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. Income from securities lending, if any, is net of expenses and is included in investment income on the Statement of operations. Cash collateral is invested in Putnam Cash Collateral Pool, LLC, a limited liability company managed by an affiliate of Putnam Management. Investments in Putnam Cash Collateral Pool, LLC are valued at its closing net asset value each business day. There are no management fees charged to Putnam Cash Collateral Pool, LLC. At the close of the reporting period, the fund received cash collateral of $1,023,750 and the value of securities loaned amounted to $1,002,300.

Interfund lending The fund, along with other Putnam funds, may participate in an interfund lending program pursuant to an exemptive order issued by the SEC. This program allows the fund to borrow from or lend to other Putnam funds that permit such transactions. Interfund lending transactions are subject to each fund’s investment policies and borrowing and lending limits. Interest earned or paid on the interfund lending transaction will be based on the average of certain current market rates. During the reporting period, the fund did not utilize the program.

Lines of credit The fund participates, along with other Putnam funds, in a $320 million syndicated unsecured committed line of credit, provided by State Street ($160 million) and JPMorgan ($160 million), and a $235.5 million unsecured uncommitted line of credit, provided by State Street. Borrowings may be made for temporary or emergency purposes, including the funding of shareholder redemption requests and trade settlements. Interest is charged to the fund based on the fund’s borrowing at a rate equal to 1.25% plus the higher of (1) the Federal Funds rate and (2) the Overnight Bank Funding Rate for the committed line of credit and 1.30% plus the higher of (1) the Federal Funds rate and (2) the Overnight Bank Funding Rate for the uncommitted line of credit. A closing fee equal to 0.04% of the committed line of credit and 0.04% of the uncommitted line of credit has been paid by the participating funds and a $75,000 fee has been paid by the participating funds to State Street as agent of the syndicated committed line of credit. In addition, a commitment fee of 0.21% per annum on any unutilized portion of the committed line of credit is allocated to the participating funds based on their relative net assets and paid quarterly. During the reporting period, the fund had no borrowings against these arrangements.

International Equity Fund 25 

 

 

Federal taxes It is the policy of the fund to distribute all of its taxable income within the prescribed time period and otherwise comply with the provisions of the Internal Revenue Code of 1986, as amended (the Code), applicable to regulated investment companies. It is also the intention of the fund to distribute an amount sufficient to avoid imposition of any excise tax under Section 4982 of the Code.

The fund is subject to the provisions of Accounting Standards Codification 740 Income Taxes (ASC 740). ASC 740 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The fund did not have a liability to record for any unrecognized tax benefits in the accompanying financial statements. No provision has been made for federal taxes on income, capital gains or unrealized appreciation on securities held nor for excise tax on income and capital gains. Each of the fund’s federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service.

The fund may also be subject to taxes imposed by governments of countries in which it invests. Such taxes are generally based on either income or gains earned or repatriated. The fund accrues and applies such taxes to net investment income, net realized gains and net unrealized gains as income and/or capital gains are earned. In some cases, the fund may be entitled to reclaim all or a portion of such taxes, and such reclaim amounts, if any, are reflected as an asset on the fund’s books. In many cases, however, the fund may not receive such amounts for an extended period of time, depending on the country of investment.

Under the Regulated Investment Company Modernization Act of 2010, the fund will be permitted to carry forward capital losses incurred for an unlimited period and the carry forwards will retain their character as either short-term or long-term capital losses. At June 30, 2023, the fund had the following capital loss carryovers available, to the extent allowed by the Code, to offset future net capital gain, if any:

  Loss carryover   
Short-term  Long-term  Total 
$29,232,582  $3,471,367  $32,703,949 

 

Tax cost of investments includes adjustments to net unrealized appreciation (depreciation) which may not necessarily be final tax cost basis adjustments, but closely approximate the tax basis unrealized gains and losses that may be realized and distributed to shareholders. The aggregate identified cost on a tax basis is $627,852,660, resulting in gross unrealized appreciation and depreciation of $128,076,860 and $16,543,723, respectively, or net unrealized appreciation of $111,533,137.

Distributions to shareholders Distributions to shareholders from net investment income, if any, are recorded by the fund on the ex-dividend date. Distributions from capital gains, if any, are recorded on the ex-dividend date and paid at least annually. The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Dividend sources are estimated at the time of declaration. Actual results may vary. Any non-taxable return of capital cannot be determined until final tax calculations are completed after the end of the fund’s fiscal year. Reclassifications are made to the fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryovers) under income tax regulations.

Note 2: Management fee, administrative services and other transactions

The fund pays Putnam Management a management fee (base fee) (based on the fund’s average net assets and computed and paid monthly) at annual rates that may vary based on the average of the aggregate net assets of all open-end mutual funds sponsored by Putnam Management (excluding net assets of funds that are invested in, or that are invested in by, other Putnam funds to the extent necessary to avoid “double counting” of those assets). Such annual rates may vary as follows:

0.850%  of the first $5 billion,  0.650%  of the next $50 billion, 
0.800%  of the next $5 billion,  0.630%  of the next $50 billion, 
0.750%  of the next $10 billion,  0.620%  of the next $100 billion and 
0.700%  of the next $10 billion,  0.615%  of any excess thereafter. 

 

In addition, the monthly management fee consists of the monthly base fee plus or minus a performance adjustment for the month. The performance adjustment is determined based on performance over the thirty-six-month period then ended. Each month, the performance adjustment is calculated by multiplying the performance adjustment rate and the fund’s average net assets over the performance period and dividing the result by twelve.

 

26 International Equity Fund 

 

 

The resulting dollar amount is added to or subtracted from the base fee for that month. The performance adjustment rate is equal to 0.03 multiplied by the difference between the fund’s annualized performance (measured by the fund’s class A shares) and the annualized performance of the MSCI EAFE Index (Net Dividends) measured over the performance period. The maximum annualized performance adjustment rate is +/– 0.15%. The monthly base fee is determined based on the fund’s average net assets for the month, while the performance adjustment is determined based on the fund’s average net assets over the thirty-six-month performance period. This means it is possible that, if the fund underperforms significantly over the performance period, and the fund’s assets have declined significantly over that period, the negative performance adjustment may exceed the base fee. In this event, Putnam Management would make a payment to the fund.

Because the performance adjustment is based on the fund’s performance relative to its applicable benchmark index, and not its absolute performance, the performance adjustment could increase Putnam Management’s fee even if the fund’s shares lose value during the performance period provided that the fund outperformed its benchmark index, and could decrease Putnam Management’s fee even if the fund’s shares increase in value during the performance period provided that the fund underperformed its benchmark index.

For the reporting period, the management fee represented an effective rate (excluding the impact of any expense waiver in effect) of 0.333% of the fund’s average net assets, which included an effective base fee of 0.347% and a decrease of 0.014% ($96,374) based on performance.

Putnam Management has contractually agreed, through October 30, 2024, to waive fees and/or reimburse the fund’s expenses to the extent necessary to limit the cumulative expenses of the fund, exclusive of brokerage, interest, taxes, investment-related expenses, extraordinary expenses, acquired fund fees and expenses and payments under the fund’s investor servicing contract, investment management contract and distribution plans, on a fiscal year-to-date basis to an annual rate of 0.20% of the fund’s average net assets over such fiscal year-to-date period. During the reporting period, the fund’s expenses were not reduced as a result of this limit.

PIL is authorized by the Trustees to manage a separate portion of the assets of the fund as determined by Putnam Management from time to time. Putnam Management pays a quarterly sub-management fee to PIL for its services at an annual rate of 0.25% of the average net assets of the portion of the fund managed by PIL.

PAC is authorized by the Trustees to manage a separate portion of the assets of the fund, as designated from time to time by Putnam Management or PIL. PAC did not manage any portion of the assets of the fund during the reporting period. If Putnam Management or PIL were to engage the services of PAC, Putnam Management or PIL, as applicable, would pay a quarterly sub-advisory fee to PAC for its services at the annual rate of 0.25% of the average net assets of the portion of the fund’s assets for which PAC is engaged as sub-adviser.

On January 1, 2024 a subsidiary of Franklin Templeton acquired Putnam U.S. Holdings I, LLC (“Putnam Holdings”), the parent company of Putnam Management, PIL, and PAC, in a stock and cash transaction (the “Transaction”). As a result of the Transaction, Putnam Management (the investment manager to the fund and a wholly-owned subsidiary of Putnam Holdings), PIL (a sub-adviser to the fund and an indirect, wholly-owned subsidiary of Putnam Holdings), and PAC (a sub-adviser to the fund and an indirect, wholly-owned subsidiary of Putnam Holdings) became indirect, wholly owned subsidiaries of Franklin Templeton. The Transaction also resulted in the automatic termination of the investment management contract between the fund and Putnam Management, the sub-management contract for the fund between Putnam Management and PIL, and the sub-advisory contract for the fund among Putnam Management, PIL, and PAC that were in place for the fund before the Transaction. However, Putnam Management, PIL, and PAC continue to provide uninterrupted services with respect to the fund pursuant to new investment management, sub-management, and sub-advisory contracts that were approved by fund shareholders at a shareholder meeting held in connection with the Transaction and that took effect on January 1, 2024. The terms of the new investment management, sub-management, and sub-advisory contracts are substantially similar to those of the previous investment management, sub-management, and sub-advisory contracts, and the fee rates payable under the new investment management, sub-management, and sub-advisory contracts are the same as the fee rates under the previous investment management, sub-management, and sub-advisory contracts.

The fund reimburses Putnam Management an allocated amount for the compensation and related expenses of certain officers of the fund and their staff who provide administrative services to the fund. The aggregate amount of all such reimbursements is determined annually by the Trustees.

International Equity Fund 27 

 

 

Custodial functions for the fund’s assets are provided by State Street. Custody fees are based on the fund’s asset level, the number of its security holdings and transaction volumes.

Putnam Investor Services, Inc., an affiliate of Putnam Management, provides investor servicing agent functions to the fund. Putnam Investor Services, Inc. received fees for investor servicing for class A, class B, class C, class R and class Y shares that included (1) a per account fee for each direct and underlying non-defined contribution account (retail account) of the fund; (2) a specified rate of the fund’s assets attributable to defined contribution plan accounts; and (3) a specified rate based on the average net assets in retail accounts. Putnam Investor Services, Inc. has agreed that the aggregate investor servicing fees for each fund’s retail and defined contribution accounts for these share classes will not exceed an annual rate of 0.25% of the fund’s average assets attributable to such accounts.

Class R5 shares paid a monthly fee based on the average net assets of class R5 shares at an annual rate of 0.15%.

Class R6 shares paid a monthly fee based on the average net assets of class R6 shares at an annual rate of 0.05%.

During the reporting period, the expenses for each class of shares related to investor servicing fees were as follows:

Class A  $608,905  Class R5  8 
Class B  989  Class R6  7,748 
Class C  5,990  Class Y  117,396 
Class R  1,064  Total  $742,100 

 

The fund has entered into expense offset arrangements with Putnam Investor Services, Inc. and State Street whereby Putnam Investor Services, Inc.’s and State Street’s fees are reduced by credits allowed on cash balances. For the reporting period, the fund’s expenses were reduced by $8,039 under the expense offset arrangements.

Each Independent Trustee of the fund receives an annual Trustee fee, of which $598, as a quarterly retainer, has been allocated to the fund, and an additional fee for each Trustees meeting attended. Trustees also are reimbursed for expenses they incur relating to their services as Trustees.

The fund has adopted a Trustee Fee Deferral Plan (the Deferral Plan) which allows the Trustees to defer the receipt of all or a portion of Trustees fees payable from July 1, 1995 through December 31, 2023. The deferred fees remain invested in certain Putnam funds until distribution in accordance with the Deferral Plan.

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

The fund has adopted distribution plans (the Plans) with respect to the following share classes pursuant to Rule 12b–1 under the Investment Company Act of 1940. The purpose of the Plans is to compensate Putnam Retail Management Limited Partnership, an indirect wholly-owned subsidiary of Franklin Templeton, for services provided and expenses incurred in distributing shares of the fund. The Plans provide payments by the fund to Putnam Retail Management Limited Partnership at an annual rate of up to the following amounts (Maximum %) of the average net assets attributable to each class. The Trustees have approved payment by the fund at the following annual rate (Approved %) of the average net assets attributable to each class. During the reporting period, the class-specific expenses related to distribution fees were as follows:

  Maximum %  Approved %  Amount 
Class A  0.35%  0.25%  $703,593 
Class B  1.00%  1.00%  4,578 
Class C  1.00%  1.00%  27,709 
Class R  1.00%  0.50%  2,461 
Total      $738,341 

 

28 International Equity Fund 

 

 

For the reporting period, Putnam Retail Management Limited Partnership, acting as underwriter, received net commissions of $9,393 from the sale of class A shares and received no monies and $384 in contingent deferred sales charges from redemptions of class B and class C shares, respectively.

A deferred sales charge of up to 1.00% is assessed on certain redemptions of class A shares. For the reporting period, Putnam Retail Management Limited Partnership, acting as underwriter, received $69 on class A redemptions.

Note 3: Purchases and sales of securities

During the reporting period, the cost of purchases and the proceeds from sales, excluding short-term investments, were as follows:

  Cost of purchases  Proceeds from sales 
Investments in securities (Long-term)  $232,154,705  $247,760,071 
U.S. government securities (Long-term)  —  — 
Total  $232,154,705  $247,760,071 

 

The fund may purchase or sell investments from or to other Putnam funds in the ordinary course of business, which can reduce the fund’s transaction costs, at prices determined in accordance with SEC requirements and policies approved by the Trustees. During the reporting period, purchases or sales of long-term securities from or to other Putnam funds, if any, did not represent more than 5% of the fund’s total cost of purchases and/or total proceeds from sales.

Note 4: Capital shares

At the close of the reporting period, there were an unlimited number of shares of beneficial interest authorized. Transactions, including, if applicable, direct exchanges pursuant to share conversions, in capital shares were as follows:

  SIX MONTHS ENDED 12/31/23  YEAR ENDED 6/30/23 
Class A  Shares  Amount  Shares  Amount 
Shares sold  294,489  $7,062,327  678,325  $14,704,440 
Shares issued in connection with         
reinvestment of distributions  408,233  10,136,425  —  — 
  702,722  17,198,752  678,325  14,704,440 
Shares repurchased  (1,424,346)  (34,153,749)  (3,190,364)  (67,712,765) 
Net decrease  (721,624)  $(16,954,997)  (2,512,039)  $(53,008,325) 
 
  SIX MONTHS ENDED 12/31/23  YEAR ENDED 6/30/23 
Class B  Shares  Amount  Shares  Amount 
Shares sold  2  $43  —  $— 
Shares issued in connection with         
reinvestment of distributions  214  4,997  —  — 
  216  5,040  —  — 
Shares repurchased  (20,071)  (448,116)  (58,943)  (1,190,663) 
Net decrease  (19,855)  $(443,076)  (58,943)  $(1,190,663) 

 

International Equity Fund 29 

 

 

  SIX MONTHS ENDED 12/31/23  YEAR ENDED 6/30/23 
Class C  Shares  Amount  Shares  Amount 
Shares sold  7,194  $164,627  28,882  $608,901 
Shares issued in connection with         
reinvestment of distributions  2,166  51,839  —  — 
  9,360  216,466  28,882  608,901 
Shares repurchased  (58,709)  (1,346,175)  (157,641)  (3,272,392) 
Net decrease  (49,349)  $(1,129,709)  (128,759)  $(2,663,491) 
 
  SIX MONTHS ENDED 12/31/23  YEAR ENDED 6/30/23 
Class R  Shares  Amount  Shares  Amount 
Shares sold  2,885  $67,155  7,598  $162,401 
Shares issued in connection with         
reinvestment of distributions  644  15,686  —  — 
  3,529  82,841  7,598  162,401 
Shares repurchased  (5,267)  (122,903)  (4,603)  (101,588) 
Net increase (decrease)  (1,738)  $(40,062)  2,995  $60,813 
 
  SIX MONTHS ENDED 12/31/23  YEAR ENDED 6/30/23 
Class R5  Shares  Amount  Shares  Amount 
Shares sold  —  $—  611  $13,462 
Shares issued in connection with         
reinvestment of distributions  10  250  —  — 
  10  250  611  13,462 
Shares repurchased  —  —  (1,286)  (29,051) 
Net increase (decrease)  10  $250  (675)  $(15,589) 
 
  SIX MONTHS ENDED 12/31/23  YEAR ENDED 6/30/23 
Class R6  Shares  Amount  Shares  Amount 
Shares sold  168,656  $4,147,616  399,067  $8,912,568 
Shares issued in connection with         
reinvestment of distributions  27,556  699,910  —  — 
  196,212  4,847,526  399,067  8,912,568 
Shares repurchased  (186,287)  (4,567,593)  (284,654)  (6,496,738) 
Net increase  9,925  $279,933  114,413  $2,415,830 
 
  SIX MONTHS ENDED 12/31/23  YEAR ENDED 6/30/23 
Class Y  Shares  Amount  Shares  Amount 
Shares sold  509,398  $12,575,763  906,046  $20,378,629 
Shares issued in connection with         
reinvestment of distributions  82,729  2,088,089  —  — 
  592,127  14,663,852  906,046  20,378,629 
Shares repurchased  (510,125)  (12,518,232)  (1,337,417)  (29,464,658) 
Net increase (decrease)  82,002  $2,145,620  (431,371)  $(9,086,029) 

 

At the close of the reporting period, Putnam Investments, LLC owned 464 class R5 shares of the fund (100% of class R5 shares outstanding), valued at $12,076.

 

30 International Equity Fund 

 

 

Note 5: Affiliated transactions

Transactions during the reporting period with any company which is under common ownership or control were as follows:

          Shares 
          outstanding 
          and fair 
  Fair value as  Purchase  Sale  Investment  value as 
Name of affiliate  of 6/30/23  cost  proceeds  income  of 12/31/23 
Short-term investments           
Putnam Cash Collateral           
Pool, LLC*  $—  $11,352,875  $10,329,125  $33,819  $1,023,750 
Putnam Short Term           
Investment Fund           
ClassP**  23,717,439  118,226,100  130,927,455  466,320  11,016,084 
Total Short-term           
investments  $23,717,439  $129,578,975  $141,256,580  $500,139  $12,039,834 

 

* No management fees are charged to Putnam Cash Collateral Pool, LLC (Note 1).Investment income shown is included in securities lending income on the Statement of operations. There were no realized or unrealized gains or losses during the period.

** Management fees charged to Putnam Short Term Investment Fund have been waived by Putnam Management. There were no realized or unrealized gains or losses during the period.

Note 6: Market, credit and other risks

In the normal course of business, the fund trades financial instruments and enters into financial transactions where risk of potential loss exists due to changes in the market (market risk) or failure of the contracting party to the transaction to perform (credit risk). The fund may be exposed to additional credit risk that an institution or other entity with which the fund has unsettled or open transactions will default. Investments in foreign securities involve certain risks, including those related to economic instability, unfavorable political developments, and currency fluctuations.

Note 7: Summary of derivative activity

The volume of activity for the reporting period for any derivative type that was held during the period is listed below and was based on an average of the holdings at the end of each fiscal quarter:

Forward currency contracts (contract amount)  $338,600,000 

 

The following is a summary of the fair value of derivative instruments as of the close of the reporting period:

 

Fair value of derivative instruments as of the close of the reporting period   
  ASSET DERIVATIVES  LIABILITY DERIVATIVES 
Derivatives not         
accounted for as  Statement of    Statement of   
hedging instruments  assets and    assets and   
under ASC 815  liabilities location  Fair value  liabilities location  Fair value 
Foreign exchange         
contracts  Receivables  $7,082,234  Payables  $3,338,776 
Total    $7,082,234    $3,338,776 

 

International Equity Fund 31 

 

 

The following is a summary of realized and change in unrealized gains or losses of derivative instruments in the Statement of operations for the reporting period (Note 1):

Amount of realized gain or (loss) on derivatives recognized in net gain or (loss) on investments   
Derivatives not accounted for as  Forward currency   
hedging instruments under ASC 815  contracts  Total 
Foreign exchange contracts  $2,637,882  $2,637,882 
Total  $2,637,882  $2,637,882 

 

Change in unrealized appreciation or (depreciation) on derivatives recognized in net gain or (loss) 
on investments     
Derivatives not accounted for as  Forward currency   
hedging instruments under ASC 815  contracts  Total 
Foreign exchange contracts  $3,480,480  $3,480,480 
Total  $3,480,480  $3,480,480 

 

32 International Equity Fund 

 

 

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International Equity Fund 33 

 

 

Note 8: Offsetting of financial and derivative assets and liabilities

The following table summarizes any derivatives, repurchase agreements and reverse repurchase agreements, at the end of the reporting period, that are subject to an enforceable master netting agreement or similar agreement. For securities lending transactions or borrowing transactions associated with securities sold short, if any, see Note 1. For financial reporting purposes, the fund does not offset financial assets and financial liabilities that are subject to the master netting agreements in the Statement of assets and liabilities.

  Bank of America N.A. Barclays Bank PLC Citibank, N.A. Goldman Sachs International HSBC Bank USA, National Association JPMorgan Chase Bank N.A. Morgan Stanley & Co. International PLC NatWest Markets PLC State Street Bank and Trust Co. Toronto-Dominion Bank UBS AG WestPac Banking Corp. Total
Assets:                           
Forward currency contracts#  $1,121,960  $343,837  $18,440  $585,389  $732,951  $315,370  $250,894  $454,542  $1,061,607  $1,329,377  $207,493  $660,374  $7,082,234 
Total Assets  $1,121,960  $343,837  $18,440  $585,389  $732,951  $315,370  $250,894  $454,542  $1,061,607  $1,329,377  $207,493  $660,374  $7,082,234 
Liabilities:                           
Forward currency contracts#  165,279  61,986  8,872  211,800  514,596  288,454  900,673  123,940  298,248  98,478  252,476  413,974  3,338,776 
Total Liabilities  $165,279  $61,986  $8,872  $211,800  $514,596  $288,454  $900,673  $123,940  $298,248  $98,478  $252,476  $413,974  $3,338,776 
Total Financial and Derivative Net Assets  $956,681  $281,851  $9,568  $373,589  $218,355  $26,916  $(649,779)  $330,602  $763,359  $1,230,899  $(44,983)  $246,400  $3,743,458 
Total collateral received (pledged)†##  $956,681  $250,000  $—  $300,000  $218,355  $26,916  $(634,168)  $330,602  $671,181  $1,200,000  $(44,983)  $—   
Net amount  $—  $31,851  $9,568  $73,589  $—  $—  $(15,611)  $—  $92,178  $30,899  $—  $246,400   
Controlled collateral received (including                           
TBA commitments)**  $1,029,704  $250,000  $—  $300,000  $227,035  $140,000  $—  $403,261  $671,181  $1,200,000  $—  $—  $4,221,181 
Uncontrolled collateral received  $—  $—  $—  $—  $—  $—  $—  $—  $—  $—  $—  $—  $— 
Collateral (pledged) (including                           
TBA commitments)**  $—  $—  $—  $—  $—  $—  $(634,168)  $—  $—  $—  $(141,255)  $—  $(775,423) 

 

** Included with Investments in securities on the Statement of assets and liabilities.

† Additional collateral may be required from certain brokers based on individual agreements.

# Covered by master netting agreement (Note 1).

## Any over-collateralization of total financial and derivative net assets is not shown. Collateral may include amounts related to unsettled agreements.

34 International Equity Fund  International Equity Fund 35 

 

 

Shareholder meeting results (Unaudited)

November 17, 2023 special meeting

At the meeting, a new Management Contract for your fund with Putnam Investment Management, LLC was approved, as follows:

Votes for  Votes against  Abstentions/Votes withheld 
13,859,619  672,963  867,753 

 

At the meeting, a new Sub-Management Contract for your fund between Putnam Investment Management, LLC and Putnam Investments Limited was approved, as follows:

 

Votes for  Votes against  Abstentions/Votes withheld 
13,751,585  751,858  896,892 

 

At the meeting, a new Sub-Advisory Contract for your fund between Putnam Investment Management, LLC, Putnam Investments Limited and The Putnam Advisory Company, LLC was approved, as follows:

 

Votes for  Votes against  Abstentions/Votes withheld 
13,723,904  762,250  914,182 

 

All tabulations are rounded to the nearest whole number.

 

36 International Equity Fund 

 

 

Fund information

Investment Manager  Trustees  Jonathan S. Horwitz 
Putnam Investment  Kenneth R. Leibler, Chair  Executive Vice President, 
Management, LLC  Barbara M. Baumann, Vice Chair  Principal Executive Officer, 
100 Federal Street  Liaquat Ahamed  and Compliance Liaison 
Boston, MA 02110  Katinka Domotorffy   
  Catharine Bond Hill  Kelley Hunt 
Investment Sub-Advisors  Jennifer Williams Murphy  AML Compliance Officer 
Putnam Investments Limited  Marie Pillai   
16 St James’s Street  George Putnam III  Martin Lemaire 
London, England SW1A 1ER  Robert L. Reynolds  Vice President and 
  Manoj P. Singh  Derivatives Risk Manager 
The Putnam Advisory Company, LLC  Mona K. Sutphen   
100 Federal Street  Jane E. Trust  Alan G. McCormack 
Boston, MA 02110    Vice President and 
  Officers  Derivatives Risk Manager 
Marketing Services  Robert L. Reynolds   
Putnam Retail Management  President, The Putnam Funds  Denere P. Poulack 
Limited Partnership    Assistant Vice President, 
100 Federal Street  Kevin R. Blatchford  Assistant Clerk, and 
Boston, MA 02110  Vice President and  Assistant Treasurer 
  Assistant Treasurer   
Custodian    Janet C. Smith 
State Street Bank  James F. Clark  Vice President, 
and Trust Company  Vice President and  Principal Financial Officer, 
  Chief Compliance Officer  Principal Accounting Officer, 
Legal Counsel    and Assistant Treasurer 
Ropes & Gray LLP  Michael J. Higgins   
  Vice President, Treasurer,  Stephen J. Tate 
  and Clerk  Vice President and 
    Chief Legal Officer 

 

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

 


 
Item 2. Code of Ethics:
Not applicable

Item 3. Audit Committee Financial Expert:
Not applicable

Item 4. Principal Accountant Fees and Services:
Not applicable

Item 5. Audit Committee of Listed Registrants
Not applicable

Item 6. Schedule of Investments:
The registrant’s schedule of investments in unaffiliated issuers is included in the report to shareholders in Item 1 above.

Item 7. Disclosure of Proxy Voting Policies and Procedures For Closed-End Management Investment Companies:
Not applicable

Item 8. Portfolio Managers of Closed-End Investment Companies
Not Applicable

Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers:
Not applicable

Item 10. Submission of Matters to a Vote of Security Holders:
Not applicable

Item 11. Controls and Procedures:
(a) The registrant’s principal executive officer and principal financial officer have concluded, based on their evaluation of the effectiveness of the design and operation of the registrant’s disclosure controls and procedures as of a date within 90 days of the filing date of this report, that the design and operation of such procedures are generally effective to provide reasonable assurance that information required to be disclosed by the registrant in this report is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms.

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

Item 12. Disclosures of Securities Lending Activities for Closed-End Investment Companies:
Not Applicable

Item 13. Recovery of Erroneously Awarded Compensation.
Not Applicable

Item 14. Exhibits:
(a)(1) Not applicable

(a)(2) Not applicable

(a)(3) Separate certifications for the principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940, as amended, are filed herewith.

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

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

Putnam International Equity Fund
By (Signature and Title):
/s/ Janet C. Smith
Janet C. Smith
Principal Accounting Officer

Date: February 27, 2024
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: February 27, 2024
By (Signature and Title):
/s/ Janet C. Smith
Janet C. Smith
Principal Financial Officer

Date: February 27, 2024