-----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, UICwNRq1RQ3lpCUR/GMPyKe2Tl5wLrWcirTQyanVq8wpWoQvTNtOmc2BFEqXie+E Kh48pmuvjkSP7LxxK90Gmg== 0000950146-95-000086.txt : 19950613 0000950146-95-000086.hdr.sgml : 19950613 ACCESSION NUMBER: 0000950146-95-000086 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950308 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM OVERSEAS GROWTH FUND CENTRAL INDEX KEY: 0000868648 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 046661045 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-06190 FILM NUMBER: 95519332 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 SEMIANNUAL REPORT Putnam Overseas Growth Fund SEMIANNUAL REPORT December 31, 1994 (Graphic: Balance Scales) B O S T O N * L O N D O N * T O K Y O Performance highlights > "According to the World Bank, the global economy will grow roughly 3.5% in 1995, more than twice as fast as it expanded between 1990 and 1993." - -- U.S. News & World Report, December 12, 1994 > The fund's class A shares outperformed 50% of the funds in Lipper's international fund category for 1-year performance and 75% of the funds for 2-year and 3-year performance as of December 31, 1994.* > Performance should always be considered in light of a fund's investment strategy. Putnam Overseas Growth Fund is designed for investors seeking capital appreciation through equity securities of issuers located outside North America. SEMIANNUAL RESULTS AT A GLANCE
Class A Class B Class M(1) Total return: NAV POP NAV CDSC NAV POP ............................................................................................................ (change in value during period plus reinvested distributions) 6 months ended 12/31/94 0.76% -5.02% 0.34% -4.61% -- --
Share value: NAV POP NAV NAV POP ............................................................................................................ 6/30/94 $ 11.83 $ 12.55 $11.82 -- -- 12/1/94(1) -- -- -- $ 11.87 $12.30 12/31/94 11.75 12.47 11.69 11.75 12.18
Capital gains Distributions: No. Income Long-term Short-term Total ........................................................................................................... Class A 1 -- $ 0.082 $ 0.086 $0.168 Class B 1 -- 0.082 0.086 0.168 Class M 1 -- 0.082 0.086 0.168
Performance data represent past results and will differ for each share class. For performance over longer periods, see page 8. POP assumes 5.75% maximum sales charge for class A shares and 3.50% for class M shares. CDSC for class B shares assumes 5% maximum contingent deferred sales charge. (1) On 12/2/94, the fund began offering class M shares. Performance for these shares is not shown because of the brevity of the reporting period. * Lipper Analytical Services is an independent research organization; rankings vary over time and do not reflect the effects of sales charges. The fund's class A shares ranked 78 out of 157 (top 50%) international funds for 1-year performance, 19 out of 111 for 2-year performance, and 18 out of 81 for 3-year performance. From the Chairman Dear Shareholder: [Photo George Putnam] (c) Karsh, Ottawa The year just ended was not an easy one for U.S. investors in international equities. For most of 1994, the widespread weakness in the world's bond markets retarded equity performance in Europe and much of the Pacific Rim. The year's challenges ranged from sharp downturns in the equity markets of smaller emerging nations to erratic movements in the Japanese stock market, from the strength of other currencies against the dollar to the devaluation of the peso in Mexico. Given this environment, we think you'll appreciate the active management style and disciplined investment strategy employed by Putnam Overseas Growth Fund's manager, Justin Scott. At the outset of fiscal 1995 last June, Justin had already reduced the fund's exposure to the volatile emerging markets of Southeast Asia, shifting a good portion of the fund's assets into the world's more mature equity markets of Europe and Japan, a strategy he maintained throughout the past six months and one that has helped the fund's performance during the period. Indeed, the United Kingdom, Ireland, France, and Japan have seen recent growth in corporate earnings, a positive development Justin expects may continue in the coming year. Justin's decision to exit Mexico this past summer also proved to be well timed. Unlike many other international stock funds, your fund was spared the performance-diminishing effects of the Mexican peso's devaluation. In the report that follows, Justin reviews the semiannual period just ended, and discusses his investment strategy for the remaining months of fiscal 1995. Respectfully yours, (George Putnam signature) George Putnam Chairman of the Trustees February 15, 1995 Report from the fund manager Justin Scott With few exceptions, markets around the world experienced mixed and generally flat performance throughout the six months ended December 31, 1994. The primary reasons for the indifferent-to-disappointing results was a weak bond market, caused by investors' overwhelming fear of inflation, and concern about the repercussions of U.S. interest-rate increases. The expansion of government borrowing and the subsequent squeeze on global liquidity were additional factors. In this less-than-robust environment, Putnam Overseas Growth Fund's class A shares returned a total of 0.76% at net asset value (NAV) and -5.02% at public offering price. Class B share performance was 0.34% at NAV. In comparison, the Morgan Stanley Capital International (MSCI) Europe, Australia, and Far East Index posted a return of -0.92%, while the MSCI World Index (excluding the U.S.) returned -0.62%. > EMPHASIS REMAINS ON CORE EQUITY MARKETS Our philosophy is that the fund's performance should not depend on any one country or any one investment position. We prefer to have the majority of the fund's assets allocated among 8-10 countries, taking an "odds-in-our-favor" approach. While it's always desirable to discover and invest in the top-performing markets, the key to your fund's performance thus far has been our avoidance of the troubling roller-coaster rides in the markets of Mexico, Brazil, and Thailand. Former emerging-market darlings, these markets were down significantly by period's end. The fund did hold positions in Mexico at the outset of fiscal 1995, but during the market recovery preceding the recent presidential election, we sold the fund's positions. In retrospect, this was a fortunate move, given the dramatic devaluation of the peso in December. The market valuations in Brazil and Thailand have not held our interest for some time. Other pitfalls included Hong Kong and Malaysia, in which your fund's positions were relatively low 1.8% and 2.8% of net assets, respectively, on December 31, 1994. In general, your fund's country allocation did not change significantly during the semiannual period. Japan, the United Kingdom, France, the Netherlands, and Germany remain the top five markets in which your fund is invested. > VALUATION TECHNIQUES DOMINATE STOCK SELECTION As always, in selecting stocks for your fund's portfolio, we continue to use our valuation techniques. We look at the price that we have to pay for corporate assets and compare it with the return we expect to earn. We apply the same valuation techniques to growth companies, cyclical companies, and companies that are downsizing. No matter what the sector, we strive to find stocks we believe are mispriced, selling significantly below what we believe to be their true long-term worth. This approach should not be confused with a "basic-value" style of investing, which focuses solely on low price-to-earnings and low price-to-book ratios. The higher a company's payback potential, the higher the price we expect to pay for its stock. We are interested only in companies whose current stock prices are substantially below their potential relative paybacks. We conduct intensive research, rigorously comparing price with prospective payback. We're not deliberately contrarian, but we often purchase companies that have been ignored or have not been STOCK MARKET PERFORMANCE Based on 1994 month-end values in U.S. dollars.
July August September October November December Japan -3.59% 0.68% -2.47% 2.74% -5.03% 1.15% ...................................................................................................... United Kingdom 5.38 5.73 -4.61 5.82 -4.34 0.12 ...................................................................................................... France 9.88 0.52 -6.77 3.56 -1.07 -3.43 ...................................................................................................... Netherlands 6.11 3.56 -2.79 6.71 -5.09 2.68 ...................................................................................................... Germany 4.92 3.67 -5.93 5.58 -5.26 3.60 ...................................................................................................... Switzerland -2.32 4.17 -0.67 0.94 -2.14 2.48 ...................................................................................................... Singapore/Malaysia 2.56 5.00 4.25 4.80 -5.56 0.77 ...................................................................................................... Finland 11.92 9.49 1.83 12.34 -9.92 2.79 ...................................................................................................... Spain 6.00 -1.12 -2.90 2.93 -1.73 -6.26
Table compares month-by-month stock market performance of top 10 countries represented in the portfolio (Singapore and Malaysia markets combined). These 10 markets represented 68.5% of the fund's net assets on 12/31/94. Portfolio weightings may vary in the future. Returns are based on U.S. dollars and assume dividend reinvestment net of each country's respective foreign tax rates. Source: Morgan Stanley Capital International. as well followed by other international investors. This approach has enabled the majority of our stock selections to outperform their respective indexes during this semiannual period. > CURRENCY HEDGES INCREASED The persistent weakness of the U.S. dollar has certainly been a factor in the fund's performance. At present, this weakness has been further exacerbated by the Mexican crisis. However, we believe the dollar has tested its 12-month lows against the European currencies and may recover, going forward. A stronger dollar, in turn, creates the possibility that positive returns in European local currency may be eroded. In defense, we've begun to hedge the underlying value of the fund's invested assets in the French franc, Dutch guilder, Swiss franc, and British pound sterling. Your fund's Japanese yen holdings have also been hedged, but for a different reason. This move was based on the high value of the yen rather than the low value of the dollar. Although a weak yen would probably prove favorable for the Japanese market -- in particular, Japanese exporting stocks -- it would hamper the performance of these stocks in dollar terms. Should Japanese stocks rise in value while the yen is depreciating, the dollar value of these securities would not appreciate as much as we would prefer. Thus, our currency hedging strategy overall is not a money-making one, but rather a defensive, performance-protecting move. > OUTLOOK Europe. In the core European countries, we anticipate continued recovery in corporate earnings with industrial production and exports showing continued growth. The combination of high real yields on long-term bonds and an increase in short-term rates should eventually slow, but not reverse, the momentum of economic growth. This trend could prove favorable for general stock-market performance and could help dampen inflationary fears, taking the pressure off bond markets. In France, Germany, and the United Kingdom, stock market valuations are looking increasingly attractive as higher profit levels are established, a trend we believe will persist throughout the remainder of fiscal 1995. Peripheral markets such as Italy, Spain, and Sweden face weaker currencies and bond markets amidst large budget deficits and political instability, a combination that could possibly interrupt economic recovery. Japan. The recent earthquake in Kobe has struck Japan's industrial heartland and the cost will be well in excess of that incurred by the Los Angeles earthquake in early 1994. The disaster will necessitate yet another stimulatory package by the Japanese parliament, spurring construction activity and perhaps raising inflationary fears. In the short term, the result could be further weakness in the bond market. Your fund's portfolio is reasonably well represented in the industrial, steel, and construction sectors, which are likely to benefit from the rebuilding. Southeast Asia. For the most part, there has been no deterioration in the economic fundamentals of the smaller Southeast Asian markets. The exception is Hong Kong, which has been negatively affected by China's rising inflation, as well as numerous bankruptcies and a real estate decline of its own. We believe the inherent long-term growth rates of these emerging economies remain high. However, the possibility exists for further interest-rate increases over the short term. On a valuation basis, stocks prices are becoming more reasonable. We are on the lookout to make selective investments in the region once again, should future setbacks produce more attractive valuations. Latin America. The fund has virtually no exposure to the emerging Latin American markets, the exception being a very small holding in Argentina, representing less than 0.25% of the fund's net assets. Having been significantly damaged by the devaluation of the peso, the stocks of Latin American companies, particularly those of Mexico, remain unattractive for the time being. As we enter the second half of fiscal 1995, we're looking for the stabilization of domestic and foreign bond markets -- which would be a long-term plus for global equity markets. We believe the fundamentals for investing in equities around the world remain strong and we will continue to search the globe for attractive individual investments in the months ahead. The views expressed here are exclusively those of Putnam Management. They are not meant as investment advice. Although the described holdings were viewed favorably as of December 31, 1994, there is no guarantee the fund will continue to hold these securities in the future. Investments in non-U.S. securities may be subject to certain risks such as currency fluctuations and political developments. Performance summary This section provides, at a glance, information about your fund's performance. Total return shows how the value of the fund's shares changed over time, assuming you held the shares through the entire period and reinvested all distributions back into the fund. We show total return in two ways: on a cumulative long-term basis and on average how the fund might have grown each year over varying periods. For comparative purposes, we show how the fund performed relative to appropriate indexes and benchmarks. TOTAL RETURN FOR PERIODS ENDED 12/31/94
Standard MSCI Class A Class B & Poor's((r)) EAFE NAV POP NAV POP 500 Index Index 6 months 0.76% -5.02% 0.34% -4.61% 4.87% -0.92% 1 year 0.17 -5.62 -- -- 1.36 7.78 3 years 38.79 30.86 -- -- 20.01 25.48 Annual average 11.55 9.38 -- -- 6.27 7.86 Life of class A 42.93 34.66 -- -- 40.72 23.10 Annual average 9.75 8.06 -- -- 9.30 5.57 Life of class B -- -- 0.68 -4.28 2.84 0.48
Fund performance data do not take into account any adjustment for taxes payable on reinvested distributions. The fund began offering what are now known as class A shares on 2/28/91. Effective 6/1/94, the fund began offering class B shares and on 12/1/94 it began offering class M shares. Performance for class M shares is not shown because of the brevity of the reporting period. Performance of share classes will differ. Performance data represent past results. Investment returns and principal value will fluctuate so an investor's shares, when sold, may be worth more or less than their original cost. TERMS AND DEFINITIONS Class A shares are generally subject to an initial sales charge. Class B shares may be subject to a sales charge upon redemption. Class M shares have a lower initial sales charge and higher 12b-1 fees than class A shares and no sales charge on redemptions. Net asset value (NAV) is the value of all your fund's assets, minus any liabilities, divided by the number of outstanding shares, not including any initial or contingent deferred sales charge. Public offering price (POP) is the price of a mutual fund share plus the maximum sales charge levied at the time of purchase. POP performance figures shown here assume the maximum 5.75% sales charge for class A shares, and 3.50% for class M shares. Contingent deferred sales charge (CDSC) is a charge applied at the time of the redemption of class B shares and assumes redemption at the end of the period. Your fund's CDSC declines from a 5% maximum during the first year to 1% during the sixth year. After the sixth year, the CDSC no longer applies. COMPARATIVE BENCHMARKS The Europe, Australia, and the Far East (EAFE) component of the Morgan Stanley Capital International World Index 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 597 companies representing 14 European countries, with values expressed in U.S. dollars. Standard & Poor's 500 Index is an unmanaged list of U.S. 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 differ from those in the indexes. 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-Pyramid showing risk\rewards.) Putnam Growth Funds Putnam Growth and Income Funds Putnam Income or Tax-Free Funds Most Conservative Investments Putnam Family of Funds PUTNAM GROWTH FUNDS Asia Pacific Growth Fund Capital Appreciation 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 Please call your financial advisor or Putnam 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. 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: Money Market Fund(section) California Tax Exempt Money Market Fund New York Tax Exempt Money Market Fund Tax Exempt Money Market Fund CDs and savings accounts** *Formerly Energy-Resources Trust. +Not available in all states. ++Relative to above. (section)Formerly Daily Dividend Trust. **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. Portfolio of investments owned December 31, 1994 (Unaudited) Common Stocks (81.3%)(a) Number of Shares Value Japan (29.8%) 25,000 Bridgestone Corp. Japan 391,173 10,000 CSK Corp. (b) 324,975 25,000 Dai Nippon Printing Co., Ltd. 426,280 31,000 Daiwa Securities Ltd. 447,742 40,000 Fujitsu, Ltd. (b) 405,216 7,000 Futaba Industrial Co., Ltd. 374,925 15,000 Glory Ltd. (Glory Kogyo) 485,958 10,000 Ito Yokado Ltd. 534,604 4,000 Japan CBM Corp. (b) 148,445 44,000 Komatsu, Ltd. 397,192 13,000 Komori Corp. 348,144 16,000 Kurita Water Ltd. 414,042 17,600 Ktk Telecommunications 197,713 40,000 Maeda Corp. 417,252 26,000 Marui Co., Ltd. 474,625 12,000 Maruichi Steel Tube Ltd. 215,447 28,000 Matsushita Electric Ind. Ltd. 460,583 40,000 Mitsubishi Motors Corp. (b) 391,976 50,000 Mitsui Fudoscan Co. Ltd. 426,280 10,500 Murata Manufacturing Co. Ltd. 405,467 31,000 Nichicon 453,961 20,000 Nippondenso Co., Ltd. (b) 421,264 83,000 Nisshin Steel Co., Ltd. 417,913 25,000 Omron Corp. 461,385 6,000 Sony Corp. (b) 340,020 8,000 Taihei Dengyo (b) 190,973 14,000 Takuma Co. Ltd. (b) 252,759 36,000 Tokio Marine & Fire Insurance Co. Ltd. (b) 440,521 65,000 Toray Industries, Inc. (b) 472,667 35,000 Yamanashi Chuo Bank Limited Ordinary 389,669 18,000 Yamanouchi Pharm Co. Ltd. 370,111 16,000 Yamato Transport Co. Ltd. (b) 197,392 ---------- 12,096,674 United Kingdom (9.9%) 30,000 Argyll Group PLC 125,907 27,000 Associated British Ports PLC 115,007 50,114 BAT Industries PLC 338,635 180,000 British Steel PLC 433,386 25,265 Burmah Oil PLC 322,455 38,500 General Electric Co. (The) PLC 165,800 8,200 Guinness PLC 57,785 13,500 Meyer International PLC 75,263 58,000 Molins PLC 449,599 40,000 North West Water Group PLC 339,508 25,000 Pearson PLC 217,283 35,100 Royal Insurance Holdings PLC 153,355 225,000 Sears PLC 387,585 2,850 Securicor Group PLC Class A 44,765 17,500 Security Services PLC 225,269 29,000 Senior Engineering Group PLC 37,239 4,600 Shell Transport & Trading Co. PLC (Registered) 50,137 5,000 South Western Electric PLC 69,061 60,000 Tate & Lyle PLC 397,452 ---------- 4,005,491 France (7.4%) 3,000 Credit Local de France 214,768 489 Docks de France 59,842 5,400 Elf Aquitaine (Bearer) 380,408 2,200 Essilor Intl. Pfd. ADP 204,085 375 Galeries Layfayette 160,935 3,450 Lafarge Coppee (Bearer Shares) 245,690 5,000 Michelin Class B (b) 182,065 585 Pechiney International 17,541 2,300 Peugeot S.A. 315,517 16,400 Sgs-Thomson Microelec Ny Shs ADR 373,100 3,200 Societe Generale D'Enterprises 336,432 204 Societe Generale D'Enterprises 7,551 350 Sommer-Allibert 110,457 2,300 Sovac 161,207 2,300 Ugine (Bearer) 161,638 153 Zodiac S.A. 67,382 ---------- 2,998,618 Netherlands (5.1%) 10,040 ABN AMRO Holding N.V. 349,082 2,936 Aegon N.V. (Bearer) 187,912 2,200 Akzo N.V. 254,212 800 DSM N.V. 63,611 7,000 Getronics Electric N.V. 255,492 3,900 IHC Caland N.V. 98,720 4,700 Randstad Holdings (b) 254,472 7,000 Royal Ptt Nederland N.V (b) 236,118 5,250 Wolters Kluwer N.V. 388,687 ---------- 2,088,306 Germany (3.9%) 2,200 BASF AG 447,812 900 Jungheinrich Prior 206,262 1,500 Mayr-Melnhof Karton AG (Bearer) (b) 88,171 600 Schering AG 393,157 1,300 VEBA AG 450,510 ---------- 1,585,912 Switzerland (3.3%) 116 BBC Brown Boveri AG (Bearer) 99,910 35 Baer Holding AG (b) 35,843 200 Ciba-Geigy AG (Registered) 119,373 450 George Fischer (Bearer) (b) 526,175 180 Nestle S.A. (Registered) 171,540 130 Rieter Holding AG (Registered) 178,831 25 Rieter Holding AG 6,400 150 SGS Societe Generale De Surveillance Holdings S.A. (Bearer) 207,489 110 Swiss Bank Corp. (Registered) 14,711 ---------- 1,360,272 Singapore (3.1%) 26,000 Cycle & Carriage Ltd. 233,769 7,500 Genting Berhad 64,361 112,000 Informatics Holdings Ltd. 86,094 17,000 Singapore Airlines Ltd. (Foreign Registered) 156,349 13,000 Singapore Press Holdings (Foreign Registered) 236,445 37,750 United Overseas Bank Ltd. (b) (Foreign Registered) 399,006 32,000 Venture Manufacturing Ltd. (b) 70,282 ---------- 1,246,306 Malaysia (2.8%) 20,000 Genting Berhad 171,630 31,000 Hong Leong Industries Berhad 160,344 50,000 Malayan Banking Berhad 301,725 55,000 SungeiWay Holdings 219,830 30,000 Telekom Malaysia Berhad 203,370 20,000 United Engineers Berhad 98,746 ---------- 1,155,645 Spain (2.6%) 4,380 Argentaria ADS (Registered) 155,205 5,000 Hidrolectrica del Cantabrico 136,726 55,000 Iberduero S.A. 339,235 1,700 Inmobiliaria Metropolitana Vasco Central 54,687 13,250 Repsol S.A. 359,306 ---------- 1,045,159 Ireland (2.4%) 53,426 Allied Irish Banks 222,824 35,000 Bank of Ireland 162,194 62,000 CRH PLC 341,905 42,109 Greencore PLC 260,183 ---------- 987,106 Austria (1.9%) 5,300 Austria Mikro Systeme Intl (b) 399,505 2,500 Mayr-Melnhof Karton AG ADS 144A (b) 36,563 3,500 VA Technologie AG (Bearer) (b) 352,407 ---------- 788,475 Hong Kong (1.8%) 35,000 Cheung Kong Holdings Ltd. 142,499 31,000 Guoco Group Ltd. 132,621 29,000 Hong Kong Land Holdings Ltd. 56,599 50,000 Hutchison Whampoa, Ltd. 202,275 12,800 Jardine Matheson Holdings Ltd. 91,405 80,000 Varitronix International Ltd. 113,736 ---------- 739,135 Denmark (1.6%) 10,500 Danisco A/S 372,842 750 NKT Holdings 40,317 9,000 Tele Danmark A/S ADR (b) 229,500 ---------- 642,659 Sweden (1.3%) 3,000 Arjo AB 54,922 4,600 Autoliv AB 177,097 30,000 Foreningsbanken AB 58,557 14,500 Svenska Cellulosa AB (b) 227,395 ---------- 517,971 Belgium (1.2%) 270 Bekaert S.A. 191,310 600 Solvay S.A 285,939 ---------- 477,249 Taiwan (1.2%) 8,500 Hocheng Group Corp. Gdr 144A (b) 204,531 15,500 Yageo Gdr 144A 263,500 ---------- 468,031 Australia (0.9%) 27,400 Amcor, Ltd. 197,910 12,000 Brambles Industries, Ltd. 114,576 40,000 MIM Holdings Ltd. 66,652 ---------- 379,138 Finland (0.5%) 8,000 Effjohn OY Ser.A (Bearer) 86,218 6,500 Repola 117,440 ---------- 203,658 Italy (0.3%) 4,950 Danieli & Co. 31,609 20,000 Danieli & Co. (Savings Shares) 71,638 ---------- 103,247 Portugal (0.1%) 400 Banco Commercial Portugues, S.A. (Registered) 5,233 2,295 Banco Totta and Accores (BTA) Nationalisert (Registered) 51,385 ----------- 56,618 Argentina (0.1%) 6,400 Ciadea 56,000 Norway (0.1%) 1,500 Christiana Bank Kreditkass ADR 144A (b) 30,375 5,000 Christiana Bank OG Kreditkass 10,201 ----------- 40,576 Mexico (--%) 600 Grupo Iusacell S.A. Ser. D ADR (b) 9,900 Total Common Stocks (cost $33,018,403) $33,052,146 Foreign Bonds and Notes (0.6%) (a)(b) (cost $268,417) Denmark (0.4%) 1,200 Danisco Cv. Bond 5s, 2004 $180,750 Finland (0.1%) 350,000 Effjohn OYy - AB Cv. bond 7s, 2004 51,843 Italy (0.1%) 37,422,000 Danieli & Co 7-1/4s, 2000 23,389 $255,982 Warrants (--%) (a)(b) (cost $--) Expiration Number of Warrants Date Value Italy (--%) 6,237 Danieli & Co 11/30/99 $4,968 Short-Term Investments (17.8%)(a) Principal Amount Value $6,000,000 Federal Home Loan Banks, 5.75s, January 3, 1995 $5,998,080 1,227,000 Interest in $267,187,000 repurchase agreement dated December 30, 1994 with JP Morgan Sec. due January 3, 1995 with respect to various U.S. Treasury obligations--maturity value of $1,227,361 for an effective yield of 5.3% 1,227,361 Total Short-Term Investments (cost $7,225,441) $7,225,441 Total Investments (cost $40,512,261)(c) $40,538,537 (a) Percentages indicated are based on total net assets of $40,634,207, which correspond to a net asset value per share for class A, class B and class M shareholders of $11.75, $11.69, and $11.75 respectively. (b) Non-income-producing security. (c) The aggregate identified cost on a tax basis is $40,523,730 resulting in gross unrealized appreciation and depreciation of $2,166,709 and $2,151,902 respectively, or net unrealized appreciation of $14,807. 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. 144A after the name of a security represents those exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. Forward Currency Contracts Outstanding at December 31, 1994
Unrealized Aggregate Delivery Appreciation/ Contracts Market Value Face Value Date (Depreciation) Swiss Francs (Sells) $ 705,180 $ 694,287 2/22/95 $(10,893) French Francs (Sells) 1,056,936 1,042,186 2/22/95 (14,750) Japanese Yen (Sells) 1,008,460 1,025,326 2/22/95 16,866 Japanese Yen (Sells) 1,008,460 1,036,957 2/22/95 28,497 Japanese Yen (Sells) 4,427,563 4,395,695 2/22/95 (31,868) Dutch Guilders (Sells) 819,908 807,506 2/22/95 (12,402) Pounds Sterling (Sells) 1,502,976 1,499,640 2/22/95 (3,336) --------- $(27,886)
Percentage of net assets invested in foreign countries at December 31, 1994 Japan 29.8% United Kingdom 9.9 France 7.4 Netherlands 5.1 Germany 3.9 Switzerland 3.3 Singapore 3.1 Malaysia 2.8 Spain 2.6 Ireland 2.4 Denmark 2.0 Austria 1.9 Hong Kong 1.8 Sweden 1.3 Belgium 1.2 Taiwan 1.2 Australia 0.9 Finland 0.6 Italy 0.3 Argentina 0.1 Norway 0.1 Portugal 0.1 Mexico -- The accompanying notes are an integral part of these financial statements. Statement of assets and liabilities December 31, 1994 (Unaudited) Assets Investments in securities, at value (identified cost $40,512,261) (Note 1) $40,538,537 Cash 149 Dividends, interest and other receivables 51,214 Receivable for foreign tax 14,183 Receivable for shares of the fund sold 303,574 Receivable for open forward currency contracts 45,363 Unamortized organization expenses (Note 1) 3,293 Total assets 40,956,313 Liabilities Payable for securities purchased 114,394 Payable for shares of the fund repurchased 16,724 Payable for compensation of Manager (Note 2) 63,973 Payable for investor servicing and custodian fees (Note 2) 4,230 Payable for administrative services (Note 2) 20 Payable for distribution fees--Class A (Note 2) 12,762 Payable for distribution fees--Class B (Note 2) 13,112 Payable for distribution fees--Class M (Note 2) 30 Payable for compensation of Trustees (Note 2) 145 Payable for open forward currency contracts 73,249 Other accrued expenses 23,467 Total liabilities 322,106 Net assets $40,634,207 Represented by Paid-in capital (Notes 1 and 4) $40,709,989 Net investment loss (34,893) Accumulated net realized loss on investment transactions (37,835) Net unrealized foreign currency translation loss (1,444) Net unrealized depreciation of investments and forward currency contracts (1,610) Total--Representing net assets applicable to capital shares outstanding $40,634,207 Computation of net asset value and offering price Net asset value and redemption price of class A shares ($23,905,009 divided by 2,035,302 shares) $ 11.75 Offering price per share (100/94.25 of $11.75)* $ 12.47 Net asset value and offering price of class B shares ($16,640,227 divided by 1,424,048 shares)+ $ 11.69 Net asset value and redemption price of class M shares ($88,971 divided by 7,575 shares) $ 11.75 Offering price per share (100/96.50 of $11.75) $ 12.18
*On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales, the offering price is reduced. +Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. The accompanying notes are an integral part of these financial statements. Statement of operations Six months ended December 31, 1994 (Unaudited) Investment income: Dividends (net of foreign tax of $16,239) $ 111,276 Interest 65,447 Total investment income $ 176,723 Expenses: Compensation of Manager (Note 2) $ 68,373 Investor servicing and custodian fees (Note 2) 20,505 Reports to shareholders 8,682 Compensation of Trustees (Note 2) 776 Administrative services (Note 2) 20 Distribution fees--class A (Note 2) 20,532 Distribution fees--class B (Note 2) 49,055 Distribution fees--class M (Note 2) 30 Auditing 5,747 Legal 5,228 Postage 2,469 Registration fees 30,343 Amortization of organization expenses (Note 1) 1,437 Other 186 Fees waived by Manager (Note 2) (1,767) Total expenses 211,616 Net investment loss (34,893) Net realized gain on investments (Notes 1 and 3) 174,036 Net realized loss on foreign currency (Notes 1 and 3) (90) Net unrealized foreign currency translation loss during the period (2,837) Net unrealized depreciation of investments and forward currency contracts during the period (689,402) Net loss on investments (518,293) Net decrease in net assets resulting from operations $(553,186)
The accompanying notes are an integral part of these financial statements. Statement of changes in net assets
Six months ended Year ended December 31 June 30 1994* 1994 Increase in net assets Operations: Net investment loss $ (34,893) $ (7,646) Net realized gain on investments 173,946 584,650 Net unrealized foreign currency translation gains (losses) (2,837) 1,884 Net unrealized appreciation (depreciation) of investments and forward currency contracts (689,402) 227,688 Net increase (decrease) in net assets resulting from operations (553,186) 806,576 Distributions to shareholders from: Net realized gain on investments--class A (Note 1) (327,617) (70,167) Net realized gain on investments--class B (Note 1) (224,423) -- Net realized gain on investments--class M (Note 1) (731) -- Increase from capital share transactions (Note 4) 30,488,888 7,656,085 Total increase in net assets 29,382,931 8,392,494 Net assets Beginning of period 11,251,276 2,858,782 End of period (including net investment loss of $34,893 and $0, respectively) $40,634,207 $11,251,276
*Unaudited The accompanying notes are an integral part of these financial statements. Financial Highlights (For a share outstanding throughout the period)
For the period For the period December 1, 1994 June 1, 1994 (commencement Six months (commencement of operations) to ended of operations) to December 31* December 31* June 30 1994 1994 1994 Class M Class B Net asset value, beginning of period $11.87 $ 11.82 $11.78 Investment operations Net investment income (loss) (.01) (.03) (.01)(a)(b) Net realized and unrealized gain (loss) on investments .06 .07 .05 Total from investment operations .05 .04 .04 Distributions to shareholders from: Net investment income -- -- -- Net realized gain on investments (.17) (.17) -- Total distributions (.17) (.17) -- Net asset value, end of period $11.75 $ 11.69 $11.82 Total investment return at net asset value (%) (c) 0.42(d) 0.34(d) 0.34(d) Net assets, end of period (in thousands) $ 89 $16,640 $2,470 Ratio of expenses to average net assets (%) .12(d) 1.18(d) .15(a)(b)(d) Ratio of net investment income (loss) to average net assets (%) (.10)(d) (.43)(d) (.06)(a)(b)(d) Portfolio turnover (%) 10.74(d) 10.74(d) 96.13(d)
*Unaudited (a)Reflects an expense limitation applicable during the period. As a result of such limitation expenses for class A shares of the fund for the periods ended June 30, 1994, June 30, 1993, and June 30, 1991 reflect per share reductions of approximately $0.03, $0.05 and $0.10 respectively. Expenses for class B shares of the fund for the period ended June 30, 1994 reflect a reduction of less than $0.01 per share. (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)Not annualized. Financial Highlights (cont'd) (For a share outstanding throughout the period)
For the period Feb. 28, 1991 Six months (commencement ended of operations) to December 31* Year ended June 30 June 30 1994 1994 1993 1992 1991 Class A Net asset value, beginning of period $ 11.83 $ 9.58 $ 8.82 $ 8.18 $ 8.63 Investment operations Net investment income (loss) -- (.06)(a) .07(a) .06 .07(a) Net realized and unrealized gain (loss) on investments .09 2.53 .69 .71 (.52) Total from investment operations .09 2.47 .76 .77 (.45) Distributions to shareholders from: Net investment income -- -- -- (.13) -- Net realized gain on investments (.17) (.22) -- -- -- Total distributions (.17) (.22) -- (.13) -- Net asset value, end of period $ 11.75 $11.83 $ 9.58 $ 8.82 $ 8.18 Total investment return at net asset value (%) (c) 0.76(d) 25.81 8.62 9.52 (5.21)(d) Net assets, end of period (in thousands) $23,905 $8,781 $2,859 $2,502 $2,054 Ratio of expenses to average net assets (%) .71(d) 2.17(a) 1.80(a) 1.98 .78(a)(d) Ratio of net investment income to average net assets (%) .04(d) (.17)(a) .81(a) .76 .86(a)(d) Portfolio turnover (%) 10.74(d) 96.13 80.92 82.45 14.54(d)
*Unaudited (a)Reflects an expense limitation applicable during the period. As a result of such limitation expenses for class A shares of the fund for the periods ended June 30, 1994, June 30, 1993, and June 30, 1991 reflect per share reductions of approximately $0.03, $0.05 and $0.10 respectively. Expenses for class B shares of the fund for the period ended June 30, 1994 reflect a reduction of less than $0.01 per share. (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)Not annualized. Notes to financial statements December 31, 1994 (Unaudited) Note 1 Significant accounting policies The fund is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. The fund seeks capital appreciation by investing primarily in equity securities of companies located outside North America. The fund offers class A, class B and class M shares. The fund commenced its public offering of class M shares on December 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 do 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. Class M shares are sold with a maximum front-end sales charge of 3.50%. 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 separated dividends on each class of share. The following is a summary of significant accounting policies consistently followed by the fund in the preparation of its financial statements. The policies are in conformity with generally accepted accounting principles. A Security valuation Investments for which market quotations are readily available are stated at market value, which is determined using the last reported sale price on the principal market in which the securities are traded, or, if no sales are reported--as in the case of some securities traded over-the-counter--the last reported bid price, except that certain U.S. government obligations are stated at the mean between the last reported bid and asked prices. Short-term investments having remaining maturities of 60 days or less are stated at amortized cost, which approximates market value, and other investments are stated at fair value following procedures approved by the Trustees. B Joint trading account Pursuant to an exemptive order issued by the Securities and Exchange Commission the fund may transfer uninvested cash balances into a joint trading account. The order permits the fund's cash balance to be deposited into a single joint account along with the cash of other registered investment companies managed by Putnam Investment Management, Inc. (Putnam Management), the fund's Manager, a wholly owned subsidiary of Putnam Investments, Inc., and certain other accounts. These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. C Repurchase agreements The fund or any joint trading account, through its custodian, receives delivery of the underlying securities, the market value of which at the time of purchase is required to be in an amount at least equal to the resale price, including accrued interest. The fund's Manager is responsible for determining that the value of these underlying securities is at all times at least equal the resale price, including accrued interest. D Security transactions and related investment income Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Interest income is recorded on the accrual basis and dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities are recorded as soon as the fund is informed of the ex-dividend date. E Foreign Currency Translation Securities quoted in foreign currencies are translated into U.S. dollars at the current exchange rate. The fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments form the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investment. Foreign currency-denominated receivables and payables are "marked-to-market" using the current exchange rate. The fluctuation between the original exchange rate and the current exchange rate is recorded as unrealized translation gain or loss. Upon receipt of payment, the fund realizes a gain or loss on foreign currency amounting to the difference between the original value and the ending value of the receivable or payable. F Forward currency contracts 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 forward currency contracts is the aggregate face value in U.S. dollars at the time the contract was opened; however, management believes the likelihood of such a loss to be remote. 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. G Federal taxes It is the policy of the fund to distribute all of its income within the prescribed time and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. It is also the intention of the fund to distribute an amount sufficient to avoid imposition of any excise tax under Section 4982 of the Internal Revenue Code of 1986. Therefore, no provision has been made for federal taxes on income, capital gains or unrealized appreciation of securities held and excise tax on income and capital gains. H Distributions to shareholders Distributions to shareholders are recorded by the fund on the 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. I Unamortized organization expenses Expenses incurred by the fund in connection with its organization, its registration with the Securities and Exchange Commission and with various states and the initial public offering of its shares were $14,123. These expenses are being amortized on a straight-line basis over a five-year period. Note 2 Management fee, administrative services, and other transactions Compensation of Putnam Management, the fund's Manager, for management and investment advisory services is paid quarterly based on the average net assets of the fund for the quarter. Such fee is based on the following annual rates: 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 voluntarily agreed to reduce its compensation to the extent that expenses of the fund exceed 1.90% of average net assets. The fund's expenses subject to this limitation are exclusive of brokerage, interest, taxes, amortization of deferred organizational and extraordinary expenses, and payments required under the fund's Distribution Plan. This limitation is accomplished by a reduction of the compensation payable to the Manager and, if necessary, payment of additional fund expenses by the Manager. For the purposes of determining any such reduction in Putnam Management's compensation, expenses of the fund do not reflect the applications of commissions or cash management credits that may reduce designated fund expenses. For the six months ended December 31, 1994 expenses were reduced by $1,767. For the purpose of determining any such reduction in Putnam Management compensation, expenses of the fund do not reflect the applications of commissions or cash management credits that may reduce designated fund expenses. The fund also reimburses the Manager for the compensation and related expenses of certain officers of the fund and their staff who provide administrative services to the fund. The aggregate amount of all such reimbursements is determined annually by the Trustees. Trustees of the fund receive an annual Trustee's fee of $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 of PFTC. Investor servicing and custodian fees reported in the Statement of operations for the six months ended December 31, 1994 have been reduced by credits allowed by PFTC. 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 the 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. During the six months ended December 31, 1994, Putnam Mutual Funds Corp., acting as an underwriter, received net commissions of $36,680 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 six months ended December 31, 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. 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 $3,666 in contingent deferred sales charges from such redemptions for the six months ended December 31, 1994. The fund has adopted a separate distribution plan with respect to its class M shares (the "Class M Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940. The purpose of the Class M Plan is to compensate Putnam Mutual Funds Corp., for services provided and expenses incurred by it in distributing class M shares. The Class M Plan provides for payments by the fund to Putnam Mutual Funds Corp. at an annual rate of .75% of the funds average net assets attributable to class M shares. During the period December 1, 1994 (commencement of operations) to December 31, 1994 Putnam Mutual Funds Corp., acting as an underwriter received net commissions of $374 from the sale of class M shares of the fund. Note 3 Purchases and sales of securities During the six months ended December 31, 1994, purchases and sales of investment securities other than short-term investments aggregated $26,776,672 and $2,297,716, respectively. There were no purchases or sales of U.S. government obligations during the year. In determining the net gain or loss on securities sold, the cost of securities has been determined on the identified cost basis. Note 4 Capital shares At December 31, 1994, there was an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows:
Six months ended December 31 Year ended June 30 1994 1994 Class A Shares Amount Shares Amount Shares sold 1,663,388 $20,152,174 507,115 $5,922,768 Shares issued in connection with reinvestment of distributions 27,393 317,759 6,134 70,166 1,690,781 20,469,933 513,249 5,992,934 Shares repurchased (397,900) (4,799,367) (69,326) (789,703) Net increase 1,292,881 $15,670,566 443,923 $5,203,231
For the period June 1, 1994 (commencement Six months ended of operations to December 31 June 30 1994 1994 Class B Shares Amount Shares Amount Shares sold 1,380,498 $16,718,180 209,041 $2,452,854 Shares issued in connection with reinvestment of distributions 18,261 210,919 -- -- 1,398,759 16,929,099 -- -- Shares repurchased (183,752) (2,199,352) -- -- Net increase 1,215,007 $14,729,747 209,041 $2,452,854
For the period December 1, 1994 (commencement of operations) to December 31 1994 Class M Shares Amount Shares sold 7,512 $87,844 Shares issued in connection with reinvestment of distributions 63 731 7,575 88,575 Shares repurchased -- -- Net increase 7,575 $88,575
CHOOSE AWARD-WINNING SERVICE. Our commitment to quality service > Putnam Investor Services has won the DALBAR Quality Tested Service Seal for the past five years, through 1994. DALBAR, an independent research firm, ran more than 10,000 tests of 38 shareholder service components. In every category, Putnam outperformed the industry standard. > HELP YOUR INVESTMENT GROW. Set up a systematic program for investing with as little as $25 a month from a Putnam fund or from your own checking or savings account.* > SWITCH FUNDS EASILY. You can move money from one account to another with the same class of shares without a service charge. (This privilege is subject to change or termination.) > ACCESS YOUR MONEY QUICKLY. You can get checks sent regularly or redeem shares any business day at the then-current net asset value, which may be more or less than their original cost. For details about any of these or other services, contact your financial advisor or call the toll-free number shown below and speak with a helpful Putnam representative. > To make an additional investment in this or any other Putnam fund, contact your financial advisor or call our toll-free number: 1-800-225-1581. *Regular investing, of course, does not guarantee a profit or protect against a loss in a declining market. Investors should consider their ability to continue purchasing shares during periods of low price levels. 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 TRUSTEES George Putnam, Chairman William F. Pounds, Vice Chairman Jameson Adkins Baxter Hans H. Estin John A. Hill Elizabeth T. Kennan Lawrence J. Lasser Robert E. Patterson Donald S. Perkins George Putnam, III A.J.C. Smith W. Nicholas Thorndike OFFICERS George Putnam President Charles E. Porter Executive Vice President Patricia C. Flaherty Senior Vice President Lawrence J. Lasser Vice President Gordon H. Silver Vice President Peter Carman Vice President Brett C. Browchuk Vice President Anthony W. Regan Vice President Justin Scott Vice President and Fund Manager William N. Shiebler Vice President John R. Verani Vice President Paul M. O'Neil Vice President John D. Hughes Vice President and Treasurer Beverly Marcus Clerk and Assistant Treasurer This report is for the information of shareholders of Putnam Overseas Growth Fund. It may also be used as sales literature when preceded or accompanied by the current prospectus, which gives details of sales charges, investment objectives, and operating policies of the fund, and the most recent copy of Putnam's Quarterly Performance Summary. For more information or to request a prospectus, call toll free: 1-800-225-1581. Shares of mutual funds are not deposits of, or guaranteed or endorsed by, any financial institution, are not insured by the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board, or any other agency, and involve risk, including the possible loss of the principal amount invested. PUTNAM INVESTMENTS The Putnam Funds One Post Office Square Boston, Massachusetts 02109 Bulk Rate U.S. Postage PAID Putnam Investments 841/524 16296 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) (7) Section symbol replaced with (S) (8) Dagger symbol replaced with + and double-dagger replaced with ++ -----END PRIVACY-ENHANCED MESSAGE-----