-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, LhaEFLTBVmutYiDxs6YJzdsMV+xQv/Fd9RXu1khnlXNovyJ/41Fega4j5HRdnUdq 1itoat5kghfVjfZGfAFsPQ== 0000950146-94-000161.txt : 19940902 0000950146-94-000161.hdr.sgml : 19940902 ACCESSION NUMBER: 0000950146-94-000161 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940901 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM OVERSEAS GROWTH FUND CENTRAL INDEX KEY: 0000868648 STANDARD INDUSTRIAL CLASSIFICATION: 0000 IRS NUMBER: 046661045 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-06190 FILM NUMBER: 94547615 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQ CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6172921471 FORMER COMPANY: FORMER CONFORMED NAME: PUTNAM INTERNATIONAL GROWTH FUND DATE OF NAME CHANGE: 19901107 N-30D 1 Putnam Overseas Growth Fund ANNUAL REPORT June 30, 1994 (Balance Scales) B O S T O N * L O N D O N * T O K Y O Performance highlights For the 12 months ended June 30, 1994, the fund's total return ranked among the top quartile of all 139 international funds tracked by Lipper Analytical Services.* With the help of state-of-the-art trading rooms and advanced technology, Putnam now manages more than $11 billion in international equity and fixed income assets, an increase of more than 514% from 5 years ago. Performance should always be considered in light of a fund's investment strategy. Putnam Overseas Growth Fund is for investors seeking capital appreciation through equity securities of issuers located outside North America. FISCAL 1994 RESULTS AT A GLANCE
Total return: NAV POP ................................................................................................. 12 months ended 6/30/94 (change in value during period plus reinvested distributions) 25.81% 18.63% Share value: NAV POP ................................................................................................. Class A 6/30/93 $ 9.58 $10.16 6/30/94 11.83 12.55 Capital gains Distributions: No. Income Long-term Short-term Total ................................................................................................. Class A 1 -- $0.215 -- $0.215
Performance data represent past results and will differ for each share class. The fund began operations 2/28/91 offering shares now known as class A. Effective 6/1/94, the fund began offering class B shares. For additional performance information, see pages 9 and 10. POP assumes 5.75% maximum sales charge. The fund's performance reflects a voluntary expense limitation in effect. Had the expense limitation not been in effect, the fund's total return would have been lower. * Lipper Analytical Services is an industry research firm whose rankings vary over time and do not include the effects of sales charges. For periods ended 6/30/94, the fund ranked as follows: for one year, 21 of 139 funds; for two years, 17 of 94 funds; for three years, 20 of 68 funds. Past performance is not indicative of future results. From the Chairman Dear Shareholder: (George Putnam photo) (c) Karsh, Ottawa The first six months of 1994 served as a reminder that the world's closely linked financial markets are always shifting and sometimes do so dramatically. This spring, higher interest rates in the United States lessened fears of inflation and moderated growth while sparking volatility that affected virtually every sector of the stock and bond markets, at home and overseas. Conditions now appear more stable. Most of the world's major economies show stronger fundamentals, while Japan and Europe appear on the brink of recovery. Yet, apprehension lingers. The markets remain skittish about rising U.S. interest rates and discount the generally good economic news. Meanwhile, the dollar poses a new concern as it loses ground to other currencies. Most stocks, domestic and foreign, joined other investments in losing value at some point during the past five months. However it is important to remember that market declines may have the hidden potential to pave the way for opportunities that could make up for the downturns. In the report that follows, Fund Manager Justin Scott explains how he plans to use Putnam's considerable resources in positioning your fund to meet the challenges of the coming months. Respectfully yours, (George Putnam signature) George Putnam Chairman of the Trustees August 17, 1994 Report from the fund manager Justin Scott Putnam Overseas Growth Fund provided an exceptionally strong total return for the 12 months ended June 30, 1994. Although the fund became available to the public on June 1, 1994, the fund's class A shares have a track record dating back to February 25, 1991. The fund has outperformed average returns measured by both the Standard & Poor's 500(R) Index and the Dow Jones Industrial Average--unmanaged indexes representative of U.S. stock market performance--for the 3-year and 1-year periods ended June 30, 1994. > THE FORCES DRIVING EUROPEAN STOCK MARKETS SHIFT European stock markets lost ground steadily relative to the U.S. market during 1991 and 1992. The underperformance was largely a reflection of the strength of the U.S. market rather than of any significant weakness in European markets. The end of 1992 marked the turn of such relative underperformance. During calendar 1993, which included the first six months of your fund's fiscal year, European markets were driven primarily by falling interest rates. A drop in rates across the Continent provided the impetus for a bull market in both bonds and stocks. As we moved into the latter half of your fund's fiscal year, the forces driving the stock markets changed. Rising interest rates in the U.S. and the resulting decline in bond prices caused turmoil in European markets, distracting investors' attention from what we believe will drive European stock market performance in 1994 and 1995--corporate earnings growth. Initially, we anticipate that earnings growth will come about as a result of the substantial cost-cutting that many European corporations are undergoing and then, eventually, economic recovery. The extent of the cost-cutting and corporate restructuring is dramatic. Management and labor are embarking on programs of a scale not witnessed in Europe for 20 years. The combination of a political shift to the right, a prolonged recession, and the new challenge of a skilled and inexpensive workforce in Eastern Europe, has provided company management with the will, as well as the means, to attack costs. We believe these measures will gain momentum at the same time that European economies begin to recover. In our last report, we wrote that the economic recession in Europe was abating but that a recovery was unlikely before year's end. Since then, the early signs of recovery have strengthened considerably and the economy is picking up sooner than expected. The combined effects should create a stronger environment for European stocks over the next two to three years. PACIFIC RIM: RIDING SOUTHEAST ASIA'S TIGER During 1993, the stock market returns of Hong Kong, Malaysia, and Indonesia were exceptional by any standards. While these markets flourished, Japan languished. Low consumer confidence and spending, recurrent government crises, the threat of deflation, and trade friction with the Clinton administration added to Japan's woes. DIVERSIFICATION BY COUNTRY* Japan 27.4% .................................... United Kingdom 10.1% .................................... France 6.2% .................................... Netherlands 6.2% .................................... Switzerland 4.3% .................................... Singapore 3.9% .................................... Hong Kong 3.3% .................................... Ireland 2.5% .................................... Germany 1.9% .................................... Malaysia 1.9% .................................... Denmark 1.9% .................................... Italy 1.8% .................................... Spain 1.7% .................................... Sweden 1.5% .................................... Mexico 1.5% .................................... Austria 1.5% .................................... Belgium 0.9% .................................... Taiwan 0.8% .................................... Australia 0.8% .................................... Greece 0.7% .................................... Argentina 0.5% .................................... Finland 0.5% .................................... Portugal 0.4% .................................... Norway 0.2% *Based on net assets on 6/30/94. Geographic allocations will vary in the future. Last fall, Japan's situation prompted us to redirect a portion of the fund's assets from Japan into the Southeast Asian markets. As a result, your fund was able to benefit from opportunities in those markets as they approached their peaks. During the winter, we sensed that opportunities might again be forthcoming in Japan. We began reducing positions in Hong Kong, Singapore, Malaysia, and Thailand and gradually began diverting the assets back into Japanese stocks. This tactical shift helped reduce the performance-dampening effects of a sudden change in investor sentiment. Early in 1994, the markets of Southeast Asia underwent a significant correction when investors hastily took profits after rising U.S. interest rates caused uncertainty in markets around the world. > FUND POSITIONED TO BENEFIT FROM CHANGING CURRENCY TRENDS The one development that surprised markets was on the currency front. Over the last six months, against consensus expectations, the dollar weakened against European currencies. Hindsight shows why. The U.S. economy has strengthened and foreign markets have become disenchanted with the Clinton administration's tacit support of a weaker dollar to reduce trade deficits. With a weaker dollar, we phased out the currency hedges we had in place at midyear and positioned the fund to benefit from stronger overseas currencies. > OUTLOOK As the fund enters fiscal 1995, our outlook for foreign stocks is optimistic. *In Europe, stocks have only partially recovered their previous underperformance against the U.S. market. In our opinion, valuations remain attractive. The market's concerns about election results and a potential political shift to the left have diminished. We will remain focused on companies that have cut costs, improved productivity, and show the greatest potential for stronger-than-expected results. *In Japan, we will be on the watch for slowly improving fundamentals and a strong recovery in corporate profits over the next 18-24 months. TOTAL RETURN IN STOCK MARKETS 6 months ended 6/30/94, net dividends Local currency U.S. $ - --------------------------------------------- U.K. -12.45% -8.66% ............................................. France -13.59 -6.93 ............................................. Netherlands -7.59 0.55 ............................................. Spain -9.17 -1.36 ............................................. Germany -9.53 -1.29 ............................................. Switzerland -8.81 1.21 ............................................. Japan 14.88 29.98 ............................................. Australia -6.87 0.25 ............................................. Hong Kong -24.11 -24.13 ............................................. Singapore -9.69 -4.72 ............................................. Malaysia -21.50 -18.76 ............................................. United States -3.78 -3.78 ............................................. MSCI EAFE Index -- 8.78 - --------------------------------------------- Source: Morgan Stanley Capital International. *Despite the declines recently experienced by the smaller Southeast Asian markets, their economic fundamentals and corporate earnings outlooks remain attractive. We are at this time however, limiting our exposure to this region as we believe the market correction has not yet run its course. In selecting stocks, we will continue to use our valuation techniques, looking at the price that we as investors have to pay for corporate assets and comparing it to the return that we expect to earn. We apply this valuation technique to growth companies, cyclical companies, and to companies that are downsizing. We strive to find stocks that we believe are mispriced, selling significantly below what we believe to be a company's true worth. Performance summary This section provides, at a glance, information about your fund's performance. Total return shows how the value of the fund's shares changed over time, assuming you held the shares through the entire period and reinvested all distributions back into the fund. We show total return in two ways: on a cumulative long-term basis and on average how the fund might have grown each year over varying periods. For comparative purposes, we show how the fund performed relative to appropriate indexes and benchmarks. TOTAL RETURN FOR PERIODS ENDING 6/30/94
Standard MSCI Consumer & Class A Poor's(r) EAFE Price NAV POP 500 Index Index Index - -------------------------------------------------------------------------------- 1 year 25.81% 18.63% 1.43% 17.00% 2.49 - ----------------------------------------------------------------------------- 3 years 49.65 41.03 30.59 39.81 8.82 Annual average 14.38 12.14 9.30 11.82 2.86 - ------------------------------------------------------------------------------- Life of fund 41.85 33.64 34.18 24.25 9.79 (since 2/28/91) Annual average 11.03 9.07 9.20 6.73 2.84 - --------------------------------------------------------------------------------
Fund performance data do not take into account any adjustment for taxes payable on reinvested distributions or, for class A shares, distribution fees prior to implementation of the class A distribution plan in 1991. Effective June 1, 1994, the fund began offering class B shares. Performance of share classes will differ. Performance data represent past results and are not indicative of future performance. Investment returns and net asset value will fluctuate so an investor's shares, when sold, may be worth more or less than their original cost. (LINE GRAPH: GROWTH OF A $10,000 INVESTMENT)
Fund's Class A shares at POP MSCI EAFE CPI 2/28/91 9,425 10,000 10,000 6/30/91 8,930 8,887 10,089 6/30/92 9,780 8,829 10,401 6/30/93 10,623 10,620 10,712 6/30/94 13,364 12,425 10,979
TERMS AND DEFINITIONS Class A shares are generally subject to an initial sales charge. Class B shares may be subject to a sales charge upon redemption. Net asset value (NAV) is the value of all your fund's assets, minus any liabilities, divided by the number of outstanding shares, not including any initial or contingent deferred sales charge. Public offering price (POP) is the price of a mutual fund share plus the maximum sales charge levied at the time of purchase. POP performance figures shown here assume the maximum 5.75% sales charge. Contingent deferred sales charge (CDSC) is a charge applied at the time of the redemption of shares and assumes redemption at the end of the period. Your fund's CDSC declines from a 5% maximum during the first year to 1% during the sixth year. After the sixth year, the CDSC no longer applies. COMPARATIVE BENCHMARKS The Europe, Australia and the Far East (EAFE) component of the Morgan Stanley Capital International (MSCI) World Index is an unmanaged list of international equity securities, excluding U.S., with all values expressed in U.S. dollars. The Europe component of the World Index is an unmanaged list of 639 companies representing 13 European countries, with values expressed in U.S. dollars. The fund's portfolio contains securities that differ from those in the indexes. Investment in the fund is subject to special international risks, such as currency fluctuations and political developments. Standard & Poor's 500 Index is an unmanaged list of large-capitalization common stocks and assumes reinvestment of all distributions. The index is a widely used measure of stock market performance and does not take into account brokerage commissions or other costs. The fund's portfolio contains securities that do not match those in the index. Consumer Price Index is a commonly used measure of inflation; it does not represent an investment return. The Putnam Fund Selector(TM) The Putnam Fund Selector shows the many opportunities for investors within every investment strategy. All investors should first accumulate a base of conservative, cash-equivalent investments. Then, with the help of your investment advisor, diversify your portfolio by investing in the Putnam Family of Funds. (Graphic: RISK/REWARD Pyramid) RISK/REWARD PUTNAM GROWTH FUNDS PUTNAM GROWTH AND INCOME FUNDS PUTNAM INCOME OR TAX-FREE INCOME FUNDS MOST CONSERVATIVE INVESTMENTS PUTNAM GROWTH FUNDS Asia Pacific Growth Fund Diversified Equity Trust Europe Growth Fund Global Growth Fund Health Sciences Trust Investors Fund Natural Resources Fund New Opportunities Fund OTC Emerging Growth Fund Overseas Growth Fund Vista Fund Voyager Fund PUTNAM GROWTH AND INCOME FUNDS Convertible Income-Growth Trust Dividend Growth Fund Equity Income Fund The George Putnam Fund of Boston The Putnam Fund for Growth and Income Managed Income Trust Utilities Growth and Income Fund PUTNAM INCOME FUNDS Adjustable Rate U.S. Government Fund American Government Income Fund Balanced Government Fund Corporate Asset Trust Diversified Income Trust Federal Income Trust Global Governmental Income Trust High Yield Advantage Fund High Yield Trust Income Fund U.S. Government Income Trust PUTNAM TAX-FREE INCOME FUNDS Intermediate Tax Exempt Fund Municipal Income Fund Tax Exempt Income Fund Tax-Free High Yield Fund Tax-Free Insured Fund State tax-free income funds* Arizona, California, Florida, Massachusetts, Michigan, Minnesota, New Jersey, New York, Ohio, and Pennsylvania LIFESTAGE(SM) FUNDS Putnam Asset Allocation Funds--three investment portfolios that spread your money across a variety of stocks, bonds, and money market investments to help maximize your return and reduce your risk. The three portfolios: Putnam Asset Allocation: Balanced Portfolio Putnam Asset Allocation: Conservative Portfolio Putnam Asset Allocation: Growth Portfolio MOST CONSERVATIVE INVESTMENTS+ Putnam money market funds: California Tax Exempt Money Market Fund Daily Dividend Trust New York Tax-Exempt Money Market Fund Tax Exempt Money Market Fund CDs and savings accounts++ *Not available in all states. +Relative to above. ++Not offered by Putnam Investments. Certificates of deposit offer a fixed rate of return and may be insured, up to certain limits, by federal/state agencies. Savings accounts may also be insured up to certain limits. Please call your financial advisor or Putnam at 1-800-225-1581 to obtain a prospectus for any Putnam fund. It contains more complete information, including charges and expenses. Read it carefully before you invest or send money. Report of Independent Accountants For the Fiscal Year Ended June 30, 1994 To the Trustees and Shareholders of Putnam Overseas Growth Fund We have audited the accompanying statement of assets and liabilities of Putnam Overseas Growth Fund, including the portfolio of investments owned, as of June 30, 1994, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the "Financial Highlights" for each of the three years in the period then ended and for the period February 28, 1991 (commencement of operations) to June 30, 1991 for class A shares and for the period June 1, 1994 (commencement of operations) to June 30, 1994 for class B shares. These financial statements and "Financial Highlights" are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and "Financial Highlights" based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and "Financial Highlights" are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of June 30, 1994 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and "Financial Highlights" referred to above present fairly, in all material respects, the financial position of Putnam Overseas Growth Fund as of June 30, 1994, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the "Financial Highlights" for each of the three years in the period then ended and for the period February 28, 1991 (commencement of operations) to June 30, 1991 for class A shares and for the period June 1, 1994 (commencement of operations) to June 30, 1994 for class B shares, in conformity with generally accepted accounting principles. Coopers & Lybrand L.L.P. Boston, Massachusetts August 17, 1994 Portfolio of investments owned June 30, 1994
Common Stocks (82.1%)(a) Number of Shares Value - ------------------------------------------------------------------- Japan (27.4%)(b) - ------------------------------------------------------------------- 5,000 Best Denki Co., Ltd. (c) $ 89,368 3,000 CSK Corp. (c) 115,771 124 Chain Store Okuwa Co., Ltd. 2,644 8,000 Daiwa Securities Ltd. 140,550 11,000 Fujitsu, Ltd. (c) 126,232 3,000 Futaba Industrial Co., Ltd. 155,073 1,000 Ito Yokado Ltd. 55,347 2,000 Japan CBM Corp. (c) 84,290 14,000 Komatsu, Ltd. 136,489 4,000 Komori Corp. 126,722 5,000 Kurita Water Ltd. 146,745 6,000 Matsushita Electric Ind. Ltd. 110,287 11,000 Mitsubishi Cable Ind. Ltd. 95,400 16,000 Mitsubishi Motors Corp. (c) 159,237 6,000 Mitsui Fudosan Co., Ltd. 73,119 3,000 Murata Manufacturing Co. Ltd. 141,363 6,000 Nippondenso Co., Ltd. (c) 126,130 25,000 Nisshin Steel Co., Ltd. 113,740 8,000 Omron Corp. 143,800 12,000 Rengo Co, Ltd. (c) 108,216 5,000 Rikei Corp. (c) 80,736 100 Santen Pharmaceutical Co., Ltd. 2,437 2,000 Sony Corp. (c) 122,880 4,000 Taihei Dengyo (c) 116,990 5,000 Takuma Co., Ltd. (c) 96,476 8,000 Tokio Marine & Fire Insurance Co. (c) 103,178 17,000 Toray Industries, Inc. (c) 128,444 2,000 Toyo Seikan Kaisha (c) 64,994 8,000 Yamato Transport Co., Ltd. (c) 106,428 ------------- 3,073,086 Number of Shares Value - ------------------------------------------------------------------- United Kingdom (10.1%)(b) - ------------------------------------------------------------------- 15,000 Argyll Group PLC $ 53,252 22,300 Associated British Ports PLC 85,362 5,700 BAT Industries PLC 35,192 45,200 British Steel PLC 99,069 7,150 Burmah Oil 95,572 3,000 East Midlands Electric PLC 27,829 8,500 General Electric Co. (The) PLC 36,933 3,200 Guinness PLC 21,584 12,700 Molins PLC 111,735 14,661 North West Water Group PLC 107,263 9,600 Pearson PLC 86,831 5,300 Rothmans International Units (c) 29,695 5,100 Royal Insurance Holdings PLC 19,522 2,850 Securicor Group PLC Class A 34,532 7,000 Security Services PLC 65,692 29,000 Senior Engineering Group PLC 54,274 4,600 Shell Transportation & Trading Co. PLC 48,281 5,000 South Western Electric PLC 47,463 11,100 Tate & Lyle PLC 70,073 ------------- 1,130,154 France (6.2%)(b) - ------------------------------------------------------------------- 630 Credit Local de France 43,213 350 Docks de France 41,063 1,500 Elf Aquitaine 104,708 1,000 Essilor Intl. Pfd. ADP 98,382 1,700 Michelin Class B (c) 70,651 585 Pechiney International 16,298 650 Societe Generale D'Enterprises 66,817 200 Societe Generale D'Enterprises 7,668 300 Sommer-Allbert 102,887 1,200 Sovac 117,837 53 Zodiac SA 21,393 ------------- 690,917 Number of Shares Value - ------------------------------------------------------------------- Netherlands (6.2%)(b) - ------------------------------------------------------------------- 1,591 ABN AMRO Holding N.V. $ 52,693 925 Aegon N.V. (Bearer) 47,488 1,200 Akzo N.V. 128,880 5,564 Getronics Electric N.V. 136,409 1,500 IHC Caland N.V. 30,702 3,000 Randstad Holdings (c) 134,615 1,400 Royal Ptt Nederland N.V. (c) 39,204 2,000 Wolters Kluwer N.V. 118,646 ------------- 688,637 Switzerland (4.3%)(b) - ------------------------------------------------------------------- 56 BBC Brown Boveri AG (Bearer) 49,313 35 Baer Holding AG (c) 36,754 35 Baer Holding AG Rights (c) 1,417 100 Ciba-Geigy AG (Registered) 59,181 155 Georg Fischer (Bearer) (c) 159,860 28 Nestle SA (Registered) 23,585 60 Rieter Holdings Ltd. AG 74,482 25 Rieter Holdings Ltd. AG 5,532 30 SGS Societe Generale De Surveillance Holdings SA 44,779 110 Swiss Bank Corp. (Registered) 16,048 ------------- 470,951 Singapore (3.9%)(b) - ------------------------------------------------------------------- 12,000 Cycle & Carriage Ltd. 89,687 5,000 Genting Berhad 59,531 56,000 Informatics Holdings Ltd. 82,606 5,000 Jurong Shipyard Ltd. 44,254 7,000 Singapore Airlines Ltd. 57,825 9,750 United Overseas Bank Ltd. (c) 77,984 475 United Overseas Bank Ltd. Rights (c) 2,351 7,000 Venture Manufacturing Ltd. 15,145 2,800 Venture Manufacturing Ltd. Rights (c) 1,285 ------------- 430,668 Number of Shares Value - ------------------------------------------------------------------- Hong Kong (3.3%)(b) - ------------------------------------------------------------------- 4,000 Cheung Kong Holdings Ltd. $ 17,466 9,000 Guoco Group Ltd. 38,425 8,800 HSBC Holdings PLC 97,243 13,000 Hong Kong Land Holdings Ltd. 32,796 12,800 Jardine Matheson Holdings Ltd. 98,533 4,000 Swire Pacific Ltd. Class A 28,722 40,000 Varitronix International Ltd. 61,584 ------------- 374,769 Ireland (2.5%)(b) - ------------------------------------------------------------------- 15,144 Allied Irish Banks 54,968 14,000 Bank of Ireland 55,087 25,000 CRH PLC 123,915 10,000 Greencore PLC 51,091 ------------- 285,061 Germany (1.9%)(b) - ------------------------------------------------------------------- 550 BASF AG 105,769 80 Spar Handels AG 18,411 300 VEBA AG 94,672 ------------- 218,852 Malaysia (1.9%)(b) - ------------------------------------------------------------------- 19,000 Development & Commercial Bank 43,419 2,000 Genting Berhad 23,812 23,000 Hong Leong Industries Berhad 104,236 15,500 Pilecon Engineering Berhad 23,337 5,000 United Engineers Berhad 20,164 ------------- 214,968 Denmark (1.9%)(b) - ------------------------------------------------------------------- 800 Danisco A/S 118,110 750 NKT Holdings 34,903 2,400 Tele Danmark A/S ADR (c) 59,100 ------------- 212,113 Number of Shares Value - ------------------------------------------------------------------- Italy (1.8%)(b) - ------------------------------------------------------------------- 15,000 Banca Commerciale Italiana $ 43,421 4,950 Danieli & Co. 35,155 14,300 Danieli & Co. (Savings Shares) 53,501 13,600 Fiat Privilege SPA 33,935 6,000 Instituto Mobiliare Italiano 40,634 ------------- 206,646 Spain (1.7%)(b) - ------------------------------------------------------------------- 880 Argentaria ADS 34,260 1,000 Hidrolectrica del Cantabrico 29,771 1,700 Inmobiliaria Metropolitana Vasco Central 60,214 2,500 Repsol S.A. 72,138 ------------- 196,383 Sweden (1.5%)(b)(c) - ------------------------------------------------------------------- 3,000 Arjo AB 51,337 2,600 Autoliv AB 59,096 30,000 Foreningsbanken AB 61,134 ------------- 171,567 Mexico (1.5%)(b) - ------------------------------------------------------------------- 1,200 Grupo Embotellador De Mexico SA de CV 30,300 2,750 Grupo Financiero Banacci (Registered) 17,400 1,400 Grupo Financiero Serfin SA de CV ADR 24,675 600 Grupo Iusacell SA Ser. D ADR (c) 15,825 1,400 Grupo Iusacell SA Ser. L ADR (c) 36,400 500 Grupo Televisa SA ADS 25,375 350 Tolmex SA de CV 1,500 600 Transportacion MaritimaMexicana, SA ADS 4,575 2,200 Transportacion MaritimaMexicana, SA Class A ADS 15,400 ------------- 171,450 Number of Shares Value - ------------------------------------------------------------------- Austria (1.5%)(b) - ------------------------------------------------------------------- 1,400 Austria Mikro Systeme Intl. (d) $ 80,721 2,500 Mayr-Melnhof Karton AG ADS (c)(d) 37,500 625 VA Technologie AG (c) 51,560 ------------- 169,781 Belgium (0.9%)(b) - ------------------------------------------------------------------- 145 Bekaert SA 106,611 Taiwan (0.8%) (b) - ------------------------------------------------------------------- 3,000 Hocheng Group Corp.(c)(d) 91,500 Australia (0.8%)(b) - ------------------------------------------------------------------- 7,400 Amcor, Ltd. 48,733 1,600 CRA Ltd. 20,748 10,128 MIM Holdings Ltd. 21,250 115 Western Mining Holdings, Ltd. 604 ------------- 91,335 Greece (0.7%)(b) - ------------------------------------------------------------------- 1,000 Credit Bank of Athens 39,683 3,500 Greek Progress Fund 36,111 ------------- 75,794 Argentina (0.5%)(b) - ------------------------------------------------------------------- 2,300 Banco Del Sud Class B (Registered) 33,891 2,436 Ciadea 26,860 ------------- 60,751 Portugal (0.4%)(b) - ------------------------------------------------------------------- 400 Banco Commercial Portugues, S.A. (Registered) 4,948 2,295 Banco Totta and Accores (BTA) Nationalisert 41,810 ------------- 46,758 Number of Shares Value - ------------------------------------------------------------------- Norway (0.2%)(b) - ------------------------------------------------------------------- 1,500 Christiana Bank OG Kreditkass ADR (c)(d) $ 27,750 Finland (0.2%)(b) - ------------------------------------------------------------------- 1,750 Effjohn OY Ser. A (Bearer) 27,154 - ------------------------------------------------------------------- Total Common Stocks (cost $8,543,796) $9,233,656 - ------------------------------------------------------------------- Foreign Bonds and Notes (0.3%) (a)(b) (cost $29,533) - ------------------------------------------------------------------- Principal Amount Value - ------------------------------------------------------------------- Finland - ------------------------------------------------------------------- FIM150,000 Effjohn OY-AB Cv. bond 7s, 2004 $ 26,681 - ------------------------------------------------------------------- Warrants (--%)(a)(b)(c)(cost $--) - ------------------------------------------------------------------- Expiration Number of Warrants Date Value - ------------------------------------------------------------------- Malaysia (--%) - ------------------------------------------------------------------- 5,167 Pilecon Engineering Berhad 12/31/99 $784 - ------------------------------------------------------------------- Short-Term Investments (25.5%)(a) (cost $2,874,339) Principal Amount Value - ------------------------------------------------------------------ $2,874,000 Interest in $410,000,000 joint repurchase agreement dated June 30, 1994 with Goldman Sachs & Co., Inc. due July 1, 1994 with respect to various U.S. Treasury obligations--maturity value of $2,874,339 for an effective yield of 4.25% $ 2,874,339 - ------------------------------------------------------------------ Total Investments (cost $11,447,668)(e) $12,135,460 - ------------------------------------------------------------------
(a) Percentages indicated are based on total net assets of $11,251,276, which correspond to a net asset value per share for class A and class B shareholders of $11.83 and $11.82, respectively. (b) Securities whose value is determined or significantly influenced by trading on exchanges not in the United States or Canada. ADR or ADS after the name of a foreign holding stands for American Depository Receipt or American Depository Shares, respectively, representing foreign securities on deposit with a domestic custodian bank. (c) Non-income-producing security. (d) Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At June 30,1994, these securities amounted to $237,471 or 2.1% of net assets. (e) The aggregate identified cost on a tax basis is $11,459,119, resulting in gross unrealized appreciation and depreciation of $1,359,585 and $683,244, respectively, or net unrealized appreciation of $676,341. Percentage of net assets invested in foreign countries at June 30, 1994: Japan 27.4% Spain 1.7% United Kingdom 10.1 Sweden 1.5 France 6.2 Mexico 1.5 Netherlands 6.2 Austria 1.5 Switzerland 4.3 Belgium 0.9 Singapore 3.9 Taiwan 0.8 Hong Kong 3.3 Australia 0.8 Ireland 2.5 Greece 0.7 Germany 1.9 Argentina 0.5 Malaysia 1.9 Finland 0.5 Denmark 1.9 Portugal 0.4 Italy 1.8 Norway 0.2 The accompanying notes are an integral part of these financial statements. Statement of assets and liabilities June 30, 1994 Assets - --------------------------------------------------------------------------------------------- Investments in securities, at value (identified cost $8,573,329) (Note 1) $ 9,261,121 Repurchase agreement, at value (identified cost $2,874,339) (Note 1) 2,874,339 Dividends, interest and other receivables 22,086 Receivable for securities sold 48,216 Receivable for shares of the fund sold 619,860 Receivable from Manager (Note 2) 2,632 Unamortized organization expenses (Note 1) 4,730 - ---------------------------------------------------------------------------------------------- Total assets 12,832,984 Liabilities Payable for securities purchased $ 1,558,633 Payable to the subcustodian (Note 2) 3,784 Payable for shares of the fund repurchased 1,897 Payable for investor servicing and custodian fees (Note 2) 6,923 Payable for administrative services (Note 2) 10 Payable for distribution fees--class A (Note 2) 3,320 Payable for distribution fees--class B (Note 2) 757 Payable for compensation of Trustees (Note 2) 101 Other accrued expenses 6,283 - ---------------------------------------------------------------------------------------------- Total liabilities 1,581,708 - ---------------------------------------------------------------------------------------------- Net assets $11,251,276 Represented by - --------------------------------------------------------------------------------------------- Paid-in capital (Notes 1 and 4) $10,221,101 Accumulated net realized gain on investment transactions 340,990 Net unrealized foreign currency translation gain 1,393 Net unrealized appreciation of investments 687,792 - ---------------------------------------------------------------------------------------------- Total--Representing net assets applicable to capital shares outstanding $11,251,276 Computation of net asset value and offering price - --------------------------------------------------------------------------------------------- Net asset value and redemption price of class A shares ($8,781,002 divided by 742,421 shares) $11.83 ------------- Offering price per share (100/94.25 of $11.83)* $12.55 Net asset value and offering price of class B shares ($2,470,274 divided by 209,041 shares)+ $11.82 - ---------------------------------------------------------------------------------------------
*On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales, the offering price is reduced. +Redemption price per share is equal to net asset value less any applicable contingent defferred sales charge. The accompanying notes are an integral part of these financial statements. Statement of operations Year ended June 30, 1994 Investment income: - -------------------------------------------------------------------------------- Dividends (net of foreign tax of $8,170) $ 82,999 Interest 491 - --------------------------------------------------------------------------------- Total investment income $ 83,490 Expenses: - -------------------------------------------------------------------------------- Compensation of Manager (Note 2) $ 32,861 Investor servicing and custodian fees (Note 2) 34,481 Reports to shareholders 130 Compensation of Trustees (Note 2) 1,402 Administrative services (Note 2) 40 Distribution fees--class A (Note 2) 13,641 Distribution fees--class B (Note 2) 757 Auditing 10,702 Legal 13,038 Postage 139 Registration fees 3,033 Amortization of organization expenses (Note 1) 2,794 Other 978 Fees waived by Manager (Note 2) (22,860) - --------------------------------------------------------------------------------- Total expenses 91,136 - --------------------------------------------------------------------------------- Net investment loss (7,646) - --------------------------------------------------------------------------------- Net realized gain on investments (Notes 1 and 3) 587,507 Net realized gain on foreign currency (Note 1) 744 Net realized loss on forward currency contracts (Notes 1 and 3) (3,601) Net unrealized foreign currency translation gain during the year 1,884 Net unrealized appreciation of investments and forward currency contracts during the year 227,688 - --------------------------------------------------------------------------------- Net gain on investments 814,222 - --------------------------------------------------------------------------------- Net increase in net assets resulting from operations $806,576 - --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. Statement of changes in net assets
Year ended June 30 ------------------------------ 1994 1993 - ------------------------------------------------------------------------------------- Increase in net assets - ------------------------------------------------------------------------------------- Operations: Net investment income (loss) $ (7,646) $ 20,199 Net realized gain (loss) on investments 587,507 (71,834) Net realized gain on foreign currency 744 -- Net realized loss on options -- (303) Net realized loss on forward currency contracts (3,601) (26,175) Net unrealized foreign currency translation gains (losses) 1,884 (1,153) Net unrealized appreciation of investments and forward currency contracts 227,688 305,046 Net increase in net assets resulting from operations 806,576 225,780 Distributions to shareholders from: Net realized gain on investments--class A (Note 1) (70,167) -- Increase from capital share transactions (Note 4) 7,656,085 130,947 - -------------------------------------------------------------------------------------- Total increase in net assets 8,392,494 356,727 Net assets - ------------------------------------------------------------------------------------- Beginning of year 2,858,782 2,502,055 End of year (including undistributed net investment income of $0 and $23,084, respectively) $11,251,276 $2,858,782 - -------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. Financial Highlights* (For a share outstanding throughout the period)
For the period June 1, 1994 For the period (commencement February 28, 1991 of (commencement operations) to of operations) to June 30 Year ended June 30 June 30 - -------------------------------------------------------------------------------------------------------- 1994 1994 1993 1992 1991 - -------------------------------------------------------------------------------------------------------- Class B Class A - -------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $11.78 $ 9.58 $ 8.82 $ 8.18 $ 8.63 Investment operations Net investment income (loss) (.01)(a)(b) (.06)(a) .07(a) .06 .07(a) Net realized and unrealized gain (loss) on investments .05 2.53 .69 .71 (.52) Total from investment operations .04 2.47 .76 .77 (.45) Distributions to shareholders from: Net investment income -- -- -- (.13) -- Net realized gain on investments -- (.22) -- -- -- Total distributions -- (.22) -- (.13) -- Net asset value, end of period $11.82 $11.83 $ 9.58 $ 8.82 $ 8.18 Total investment return at net asset value (%) (c) 7.50(d) 25.81 8.62 9.52 (15.32)(d) Net assets, end of period (in thousands) $2,470 $8,781 $2,859 $2,502 $ 2,054 Ratio of expenses to average net assets (%) 1.80(a)(b)(d) 2.17(a) 1.80(a) 1.98 2.33(a)(d) Ratio of net investment income (loss) to average net assets (%) (.75)(a)(b)(d) (.17)(a) .81(a) .76 2.57(a)(d) Portfolio turnover (%) 96.13(e) 96.13 80.92 82.45 14.54(e) - --------------------------------------------------------------------------------------------------------
*Financial highlights for periods ended through June 30, 1992 have been restated to conform with requirements issued by the SEC in April 1993. (a)Reflects a voluntary expense limitation applicable during the period. As a result of such limitation, expenses for class A shares of the fund for the periods ended June 30, 1994, June 30, 1993, and June 30, 1991 reflect per share reductions of approximately $0.03, $0.05, and $0.10, respectively. Expenses for class B shares of the fund for the period ended June 30, 1994 reflect a reduction of less than $0.01 per share. (b)Per share net investment income for the period ended June 30, 1994 has been determined on the basis of the weighted average number of shares outstanding for the period. (c)Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges. (d)Annualized. (e)Not annualized. Notes to financial statements June 30, 1994 Note 1 Significant accounting policies The fund is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. The fund seeks capital appreciation by investing primarily in equity securities of companies located outside North America. The fund offers both class A and class B shares. The fund commenced its public offering of class B shares on June 1, 1994. Class A shares are sold with a maximum front-end sales charge of 5.75%. Class B shares do not pay a front-end sales charge, but pay a higher ongoing distribution fee than class A shares, and may be subject to a contingent deferred sales charge, if those shares are redeemed within six years of purchase. Expenses of the fund are borne pro-rata by the holders of both classes of shares, except that each class bears expenses unique to that class (including the distribution fees applicable to such class) and votes as a class only with respect to its own distribution plan or other matters on which a class vote is required by law or determined by the Trustees. Shares of each class should receive their pro-rata share of the net assets of the fund, if the fund were liquidated. In addition, the Trustees declare separate dividends on each class of shares. The following is a summary of significant accounting policies consistently followed by the fund in the preparation of its financial statements. The policies are in conformity with generally accepted accounting principles. A) Security valuation Investments for which market quotations are readily available are stated at market value, which is determined using the last reported sale price or, if no sales are reported--as in the case of some securities traded over-the-counter--the last reported bid price, except that certain U.S. government obligations are stated at the mean between the bid and asked prices. Short-term investments having remaining maturities of 60 days or less are stated at amortized cost, which approximates market value, and other investments are stated at fair value following procedures approved by the Trustees. Securities quoted in foreign currencies are translated into U.S. dollars at the current exchange rate. Gains and losses that arise from changes in exchange rates are not segregated from gains and losses that arise from changes in market prices of investments. The effects on net investment income arising from changes in exchange rates are also not segregated. B) Joint trading account Pursuant to an exemptive order issued by the Securities and Exchange Commission the fund may transfer uninvested cash balances into a joint trading account. The order permits the fund's cash balance to be deposited into a single joint account along with the cash of other registered investment companies managed by Putnam Investment Management, Inc. (Putnam Management), the fund's Manager, a wholly-owned subsidiary of Putnam Investments, Inc., and certain other accounts. These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. C) Repurchase agreements The fund or any joint trading account, through its custodian, receives delivery of the underlying securities, the market value of which at the time of purchase is required to be in an amount at least equal to the resale price, including accrued interest. The fund's Manager is responsible for determining that the value of these underlying securities is at all times at least equal to the resale price, including accrued interest. D) Security transactions and related investment income Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Interest income is recorded on the accrual basis and dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities are recorded as soon as the fund is informed of the ex-dividend date. Foreign currency-denominated receivables and payables are "marked-to-market" using the current exchange rate. The fluctuation between the original exchange rate and the current exchange rate is recorded as unrealized translation gain or loss. Upon receipt or payment, the fund realizes a gain or loss on foreign currency amounting to the difference between the original value and the ending value of the receivable or payable. Foreign currency gains and losses related to interest receivable are reported as part of interest income. E) Option accounting principles When the fund writes a call or put option, an amount equal to the premium received by the fund is included in the fund's "Statement of assets and liabilities" as an asset and an equivalent liability. The amount of the liability is subsequently "marked-to-market" to reflect the current market value of the option written. The current market value of an option is the last sale price or, in the absence of a sale, the last offering price, except that certain options on U.S. government obligations are stated at fair value on the basis of valuations furnished by a pricing service approved by the Trustees. If an option expires on its stipulated expiration date, or if the fund enters into a closing purchase transaction, the fund realizes a gain (or loss if the cost of a closing purchase transaction exceeds the premium received when the option was written) without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is extinguished. If a written call option is exercised, the fund realizes a gain or loss from the sale of the underlying security and the proceeds of the sale are increased by the premium originally received. If a written put option is exercised, the amount of the premium originally received reduces the cost of the security which the fund purchases upon exercise of the option. The fund writes covered call options; that is, options for which it holds the underlying security or its equivalent. Accordingly, the risk in writing a call option is that the fund relinquishes the opportunity to profit if the market price of the underlying security increases and the option is exercised. In writing a put option, the fund assumes the risk of incurring a loss if the market price of the underlying security decreases and the option is exercised. The premium paid by the fund for the purchase of a call or put option is included in the fund's "Statement of assets and liabilities" as an investment and subsequently "marked-to-market" to reflect the current market value of the option. If an option the fund has purchased expires on the stipulated expiration date, the fund realizes a loss in the amount of the cost of the option. If the fund enters into a closing sale transaction, the fund realizes a gain or loss, depending on whether proceeds from the closing sale transaction are greater or less than the cost of the option. If the fund exercises a call option, the cost of the securities acquired by exercising the call is increased by the premium paid to buy the call. If the fund exercises a put option, it realizes a gain or loss from the sale of the underlying security and the proceeds from such sale are decreased by the premium originally paid. Options on foreign currencies The fund writes and purchases put and call options on foreign currencies. The accounting principles and risks involved are similar to those described above relating to options on securities. The amount of potential loss to the fund upon exercise of a written call option is the value (in U.S. dollars) of the currency sold, converted at the spot price, less the value of U.S. dollars received in exchange. The amount of potential loss to the fund upon exercise of a written put option is the value (in U.S. dollars) of the currency received converted at the spot price, less the value of the U.S. dollars paid in exchange. Forward currency contracts A forward currency contract ("contract") is an agreement between two parties to buy and sell a currency at a set price on a future date. 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 by the fund as an unrealized gain or loss. When the contract is closed, the fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. The maximum potential loss from such contracts is the aggregate face value in U.S. dollars at the time the contract was opened; however, management of the fund believes the likelihood of such a loss to be remote. The fund may enter into forward foreign currency contracts in connection with planned purchases or sales of securities or to hedge the U.S. dollar value of portfolio securities denominated in a particular currency. The fund will not enter into contracts or maintain a net exposure to such contracts where the consummation of the contracts would obligate the fund to deliver an amount of foreign currency in excess of the value of the fund's securities or other assets denominated in that currency. F) Federal taxes It is the policy of the fund to distribute all of its income within the prescribed time and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. It is also the intention of the fund to distribute an amount sufficient to avoid imposition of any excise tax under Section 4982 of the Internal Revenue Code of 1986. Therefore, no provision has been made for federal taxes on income, capital gains or unrealized appreciation of securities held and excise tax on income and capital gains. G) Distributions to shareholders Distributions to shareholders are recorded by the fund on the ex-dividend date. The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. These differences include treatment of wash sales, foreign currency gains and losses, and post October loss deferrals. Reclassifications are made to the Fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryovers) under income tax regulations. For the year ended June 30, 1994, the Fund reclassified $59,082 to increase undistributed net investment income, $59,232 to decrease accumulated net realized gain on investments, and $150 to increase paid-in capital. H) Unamortized organization expenses Expenses incurred by the fund in connection with its organization, its registration with the Securities and Exchange Commission and with various states and the initial public offering of its shares were $14,123. These expenses are being amortized on a straight-line basis over a five-year period. Note 2 Management fee, administrative services, and other transactions Compensation of Putnam Investment Management for management and investment advisory services is paid quarterly based on the average net assets of the fund for the quarter. Such fee is an annual rate of 0.80% of the first $500 million of average net assets, 0.70% of the next $500 million, 0.65% of the next $500 million, and 0.60% of any amount over $1.5 billion subject to reduction in any year by the amount of certain brokerage commissions and fees (less expenses) received by affiliates of the Manager on the fund's portfolio transactions. Until December 31, 1994, the Manager has voluntarily agreed to reduce its compensation to the extent that expenses of the fund exceed 1.90% of average net assets. The fund's expenses subject to this limitation are exclusive of brokerage, interest, taxes, amortization of deferred organizational and extraordinary expenses, and payments required under the fund's Distribution Plans. This limitation is accomplished by a reduction of the compensation payable to the Manager and, if necessary, payment of additional Fund expenses by the Manager. For the year ended June 30, 1994, the fund's expenses were reduced by $22,860. For the purpose of determining any such reduction in Putnam Management's compensation, expenses of the fund do not reflect the application of commissions or cash management credits that may reduce designated fund expenses. The fund also reimburses the Manager for the compensation and related expenses of certain officers of the fund and their staff who provide administrative services to the fund. The aggregate amount of all such reimbursements is determined annually by the Trustees. For the year ended June 30, 1994, the fund paid $40 for these services. Trustees of the fund receive an annual Trustee's fee of $100 and an additional fee for each Trustees' meeting attended. Trustees who are not interested persons of the Manager and who serve on committees of the Trustees receive additional fees for attendance at certain committee meetings. Custodial functions for the fund are provided by Putnam Fiduciary Trust Company (PFTC), a subsidiary of Putnam Investments, Inc. Investor servicing agent functions are provided by Putnam Investor Services, a division PFTC. Fees paid for these investor servicing and custodial functions for the year ended June 30, 1994 amounted to $34,481. Investor servicing and custodian fees reported in the Statement of operations for the year ended June 30, 1994 have been reduced by credits allowed by PFTC. As part of the custodian contract between Putnam Fiduciary Trust Company and the subcustodian bank, the subcustodian has a lien on the securities of the fund to the extent permitted by the fund's investment restrictions to cover any advances made by the subcustodian for the settlement of securities purchased by the fund. At June 30, 1994, the payable to subcustodian represents the amount due for cash advanced for the settlement of a security purchase. The fund has adopted a distribution plan with respect to its class A shares (the "Class A Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940. The purpose of Class A Plan is to compensate Putnam Mutual Funds Corp., a wholly-owned subsidiary of Putnam Investments, Inc., for services provided and expenses incurred by it in distributing class A shares. The Trustees have approved payment by the fund to Putnam Mutual Funds Corp. at an annual rate of 0.25% of the fund's average net assets attributable to class A shares. For the year ended June 30, 1994, the fund paid $13,641 in distribution fees for class A shares. During the year ended June 30, 1994, Putnam Mutual Funds Corp., acting as an underwriter, received net commissions of $6,203 from the sale of class A shares of the fund. A deferred sales charge of up to 1% is assessed on certain redemptions of class A shares purchased as part of an investment of $1 million or more. For the year ended June 30, 1994, Putnam Mutual Funds Corp., acting as underwriter, received no such charge. The fund has adopted a separate distribution plan with respect to its class B shares (the "Class B Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940. The purpose of the Class B Plan is to compensate Putnam Mutual Funds Corp. for services provided and expenses incurred by it in distributing Class B shares. The Class B Plan provides for payments by the fund to Putnam Mutual Funds Corp. at an annual rate of 1.00% of the funds average net assets attributable to Class B shares. From June 1, 1994 (commencement of operations) to June 30, 1994, the fund incurred fees of $757 for class B shares. Putnam Mutual Funds Corp. also receives the proceeds of contingent deferred sales charges levied on class B share redemptions within six years of purchase. The charge is based on declining rates, which begin at 5.0% of the net asset value of the redeemed shares. Putnam Mutual Funds Corp. received no contingent deferred sales charges from such redemptions for the period June 1, 1994 (commencement of operations) to June 30, 1994. Note 3 Purchases and sales of securities During the year ended June 30, 1994, purchases and sales of investment securities other than short-term investments aggregated $9,479,600 and $3,879,455, respectively. There were no purchases or sales of U.S. government obligations during the year. In determining the net gain or loss on securities sold, the cost of securities has been determined on the identified cost basis. Transactions in forward currency contracts during the year are summarized as follows:
Sales of Forward Currency Contracts - -------------------------------------------------------------------------------- Number of contracts Aggregate Face Value Contracts outstanding at beginning of year 1,769 $ 576,226 - -------------------------------------------------------------------------------- Contracts opened 5,580 1,508,746 Contracts closed (7,349) (2,084,972) - -------------------------------------------------------------------------------- Open at end of year -- $ -- - --------------------------------------------------------------------------------
Note 4 Capital shares At June 30, 1994, there was an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows:
Year ended June 30 - ------------------------------------------------------------------------------------------- 1994 1993 - ------------------------------------------------------------------------------------------- Class A Shares Amount Shares Amount - ------------------------------------------------------------------------------------------- Shares sold 507,115 $5,922,768 15,778 $138,604 - ------------------------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 6,134 70,166 -- -- - ------------------------------------------------------------------------------------------- 513,249 5,992,934 15,778 138,604 Shares repurchased (69,326) (789,703) (911) (7,657) - ------------------------------------------------------------------------------------------- Net increase 443,923 $5,203,231 14,867 $130,947 - -------------------------------------------------------------------------------------------
From June 1, 1994 (commencement of operations) to June 30, 1994 - ---------------------------------------------------------------- Class B Shares Amount - ---------------------------------------------------------------- Shares sold 209,041 $2,452,854 - ---------------------------------------------------------------- Shares issued in connection with reinvestment of distributions -- -- - ---------------------------------------------------------------- 209,041 2,452,854 Shares repurchased -- -- - ---------------------------------------------------------------- Net increase 209,041 $2,452,854 - ---------------------------------------------------------------- Note 5 Reclassification of capital account Effective July 1, 1993, Putnam Overseas Growth Fund has adopted the provisions of Statement of Position 93-2 "Determination, Disclosure and Financial Statement Presentation of Income, Capital Gain and Return of Capital Distributions by Investment Companies (SOP)." The purpose of this SOP is to report the accumulated net investment income (loss) and accumulated net realized gain (loss) accounts in such a manner as to approximate amounts available for future distributions (or to offset future realized capital gains) and to achieve uniformity in the presentation of distributions by investment companies. As a result of the SOP, the Fund has reclassified $74,520 to increase distributions in excess of net investment income and $83,781 to increase accumulated net realized gain with a decrease of $9,261 to additional paid in capital. These adjustments represent the cumulative amounts necessary to report these balances through June 30, 1993. Federal tax information The fund paid a long term capital gain of $.215 per share for the year ended June 30, 1994. The Form 1099 you receive in January 1995 will show you the tax status of all distributions, if any, paid to your account in calendar year 1994. As required by law, your fund reports to the Internal Revenue Service on a calendar year basis the amount of distributions paid to each shareholder. The fund has elected under Section 853 of the Internal Revenue Code to pass through to its shareholders the opportunity to claim a foreign tax credit or deduction. Therefore, you will be deemed to have received in your December 1994 dividend the allocable amount of foreign taxes and to have paid those taxes directly. When you file your federal income tax return (Form 1040), you may claim the amount of foreign taxes paid either as a foreign tax credit or as an itemized deduction but not both. A foreign tax credit will generally result in a direct reduction in your U.S. tax liability, subject to the limitations of Section 904 of the Code. The amount of your foreign tax credit will be reflected on the Form 1099 that you will receive after December 31, 1994. During the year ended June 30, 1994, the fund earned $91,169 from foreign countries and paid $8,170 in taxes to those foreign countries. Fund information INVESTMENT MANAGER Putnam Investment Management, Inc. One Post Office Square Boston, MA 02109 MARKETING SERVICES Putnam Mutual Funds Corp. One Post Office Square Boston, MA 02109 CUSTODIAN Putnam Fiduciary Trust Company LEGAL COUNSEL Ropes & Gray INDEPENDENT ACCOUNTANTS Coopers & Lybrand L.L.P. TRUSTEES George Putnam, Chairman William Pounds, Vice Chairman Jameson Adkins Baxter Hans H. Estin John A. Hill Elizabeth T. Kennan Lawrence J. Lasser Robert E. Patterson Donald S. Perkins George Putnam, III A.J.C. Smith W. Nicholas Thorndike OFFICERS George Putnam President Charles E. Porter Executive Vice President Patricia C. Flaherty Senior Vice President Lawrence J. Lasser Vice President Gordon H. Silver Vice President Anthony W. Regan Vice President Justin Scott Vice President and Fund Manager William N. Shiebler Vice President John R. Verani Vice President Paul M. O'Neil Vice President John D. Hughes Vice President and Treasurer Beverly Marcus Clerk and Assistant Treasurer This report is for the information of shareholders of Putnam Overseas Growth Fund. It may also be used as sales literature when preceded or accompanied by the current prospectus, which gives details of sales charges, investment objectives and operating policies of the fund, and the most recent Putnam Quarterly Performance Summary. APPENDIX TO FORM N-30D FILINGS TO DESCRIBE DIFFERENCES BETWEEN PRINTED AND EDGAR-FILED TEXTS: (1) Bold and italic typefaces are displayed in normal type. (2) Headers (e.g., the name of the fund) are omitted. (3) Certain tabular and columnar headings and symbols are displayed differently in this filing. (4) Bullet points and similar graphic signals are omitted. (5) Page numbering is omitted. (6) Trademark symbol replaced with (TM) -----END PRIVACY-ENHANCED MESSAGE-----