-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EcJw+Hilwzhj5knod+KY2OnUIsTM2PN8TEr0NZedlTVRf3uvsch1HIed5ijkmCOf 0BhtVznx0x/n7ZJWzEcnCQ== 0000928816-02-000956.txt : 20021217 0000928816-02-000956.hdr.sgml : 20021217 20021217114927 ACCESSION NUMBER: 0000928816-02-000956 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20021031 FILED AS OF DATE: 20021217 EFFECTIVENESS DATE: 20021217 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM GLOBAL GROWTH FUND CENTRAL INDEX KEY: 0000081251 IRS NUMBER: 046145734 STATE OF INCORPORATION: MA FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-01403 FILM NUMBER: 02859675 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQ CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6172921000 FORMER COMPANY: FORMER CONFORMED NAME: PUTNAM EQUITIES FUND INC DATE OF NAME CHANGE: 19790906 FORMER COMPANY: FORMER CONFORMED NAME: PUTNAM INTERNATIONAL EQUITIES FUND INC /PRED/ DATE OF NAME CHANGE: 19821109 FORMER COMPANY: FORMER CONFORMED NAME: PUTNAM INTERNATIONAL EQUITIES FUND DATE OF NAME CHANGE: 19900722 N-30D 1 pge.txt PUTNAM GLOBAL EQUITY FUND Putnam Global Equity Fund* ANNUAL REPORT ON PERFORMANCE AND OUTLOOK 10-31-02 *Formerly Putnam Global Growth Fund [GRAPHIC OMITTED: MAP] [SCALE LOGO OMITTED] FROM THE TRUSTEES [GRAPHIC OMITTED: PHOTO OF JOHN A. HILL AND GEORGE PUTNAM III] Dear Fellow Shareholder: We wish this first report to Putnam Global Equity Fund's recently expanded shareholder base carried more positive results for the fiscal year ended October 31, 2002. However, it is comforting to note that in the challenging global market environment that continues to bedevil equity investors, your fund outperformed at net asset value its benchmark and came in above the Lipper average for its peer group. You will find the details on page 7. It is also worth noting here that we must not lose sight of the fact that history has shown again and again that investors who persevere through thick and thin are often the ones who can look back on the bargains they obtained when times were tough. As equities continue their long, nerve-wracking struggle to get back on a positive track, investors should not lose their long-term perspective. In the following report, the fund's management team discusses the market environment and gives a full explanation of its strategy and the reasons behind the fund's negative performance during the fiscal year just ended. The managers also offer their views of prospects for the fund in the fiscal year just begun. Respectfully yours, /S/ JOHN A. HILL /S/ GEORGE PUTNAM, III John A. Hill George Putnam, III Chairman of the Trustees President of the Funds December 18, 2002 REPORT FROM FUND MANAGEMENT This fund is managed by the Putnam Global Core Team This report on Putnam Global Equity Fund is reaching a broader new audience, which includes the former shareholders of three different global funds that merged during this past September. To recap briefly, after the approval of shareholders and Putnam Trustees, Putnam Global Growth and Income Fund and the former Putnam Global Equity Fund were merged into Putnam Global Growth Fund in September. It was determined that the former Putnam Global Equity Fund would be the accounting survivor. Accordingly, this annual report covers the fund's abbreviated fiscal year of 8 months from February 28, 2002 -- the fiscal-year end of the former Putnam Global Equity Fund -- through October 31, 2002. Also, subsequent to the merger, on October 1, 2002, Putnam Global Growth Fund changed its name to Putnam Global Equity Fund. Total return for 8 months ended 10/31/02 Class A Class B Class C Class M NAV POP NAV CDSC NAV CDSC NAV POP - ----------------------------------------------------------------------- -14.72% -19.63% -15.20% -19.44% -15.08% -15.93% -15.04% -18.02% - ----------------------------------------------------------------------- Past performance does not indicate future results. Performance information for longer periods and explanation of performance calculation methods begin on page 7. Financial markets changed directions at several points during the fund's fiscal year. After performing relatively well early in the period, stocks worldwide experienced significant declines and volatility during the months of July and September, though an October recovery reduced losses. At the end of the fiscal year, financial markets are facing similar issues they faced at the start -- companies were trying to increase profits amid difficult economic conditions and heightened geopolitical risks. We regret to report that the fund had negative results during the fiscal year. As fund managers, we understand that it requires patience to weather these difficult conditions. The positive news we can report is that your fund continued to outperform its Lipper peer group and its benchmark, the MSCI World Index (see page 7 for details). At this time, such outperformance merely reflects a smaller loss than the average, but we hope to maintain this advantage when market conditions turn positive. [GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY SECTORS] TOP INDUSTRY SECTORS* Banking 11.2% Pharmaceuticals 9.7% Financial 6.7% Oil and gas 6.6% Retail 5.8% Footnote reads: *Based on net assets as of 10/31/02. Holdings will vary over time. * DEFENSIVE STANCE HELPS FUND IN TURBULENT CONDITIONS It might seem strange at first glance that stock markets around the world were weak during much of 2002, since the U.S. economy has been recovering from recession. However, the improvement in conditions in 2002 has been quite uneven. The U.S. economic recovery stalled in the spring, achieving meager 1% growth from April through June. Also, growth has been driven by consumer spending and the housing market, while capital investment by businesses has been disappointing. The world's next-largest economies, Japan and Germany, have delayed structural reforms. The threats of terrorism and war in the Middle East still loom today. Given these conditions, we have been more skeptical than many regarding the pace of recovery in the global economy and corporate profits. The fund's blend strategy is moderate by nature, but for much of the year we positioned the fund with greater caution than usual. Our investment discipline is designed to contain risks by identifying stocks of strong companies when their valuations are attractive. We also take a longer-term view, longer than the next quarter or even the next year. Our research model projects company cash flows over the coming three to five years, and we compare, rank, and select stocks based on these projections. These long-term projections, in particular, advised caution. A broad-based improvement in profits was unlikely for some time. We generally favored defensive stocks that could be expected to have reliable cash flows even during a weak expansion, such as pharmaceuticals companies like Pfizer, consumer staples companies like Philip Morris in the tobacco industry, and financial companies like Freddie Mac. Although these holdings, as well as others mentioned in this report, were viewed favorably at the end of the reporting period, all are subject to review and adjustment in accordance with the fund's strategy. While we take a long-term view of markets, we also recognize short-term opportunities and have tactics to take advantage of such opportunities. During the sharp market drops of the past year we took opportunities to add to existing holdings when we felt they were priced unreasonably low. This helped the fund to benefit during the rapid recoveries in August and October, when stock prices rose by more than 10% in the United States and Europe. * U.S. MARKET OFFERED POCKETS OF STRENGTH We had a majority of the fund's assets invested in the United States during most of the year. This had a neutral effect on overall performance, since the U.S. market generally did better than Europe but underperformed several Asian and emerging markets. U.S. stocks have been attractive based on fundamental business criteria. We believe that in many global sectors, U.S. companies have the best prospects for profit growth because of the quality of their management, business models, and productivity. Fund Profile Putnam Global Equity Fund seeks capital appreciation by investing mainly in common stocks of companies worldwide. The fund targets stocks that offer a combination of growth potential and attractive valuations. It typically invests in midsize and large multinational companies whose size, scale, and power give them a competitive advantage. Several of the fund's largest U.S. holdings were financial stocks. Financials have enjoyed strong business thanks to the booming housing market, the driving force that has kept the economy afloat. Two holdings that benefited from this trend by providing mortgages and refinancings were Freddie Mac and U.S. Bancorp. Pharmaceuticals stocks were also prominent in the fund. We favored them because of their defensive qualities -- spending on medicine tends to be stable even when the economy is weak. Pfizer, one of the fund's larger holdings, agreed to acquire another fund holding, Pharmacia, during the year. We believe the merger is positive and should strengthen the new company's position in the industry. * EUROPEAN MARKETS BEGAN TO LOOK BETTER ON RELATIVE BASIS When we compare companies globally, we find that U.S. companies generally are the most competitive. However, during the fiscal period, doubts emerged regarding this advantage when several U.S. companies corrected past financial statements to show lower earnings. This trend in turn revealed weak oversight by corporate boards of directors. By comparison, European companies began to look more attractive. European companies had not generally followed aggressive accounting practices. Also, European corporate boards have been exercising more effective supervision of corporate executives on behalf of shareholders. [GRAPHIC OMITTED: TOP 10 HOLDINGS] TOP 10 HOLDINGS Citigroup, Inc. United States Financial TotalFinaElf SA Class B France Oil and gas Microsoft Corp. United States Software Philip Morris Cos., Inc. United States Tobacco Freddie Mac United States Financial U.S. Bancorp United States Banking Pfizer, Inc. United States Pharmaceuticals Pharmacia Corp. United States Pharmaceuticals Nestle SA Switzerland Food MBNA Corp. United States Consumer finance Footnote reads: These holdings represent 24.8% of the fund's net assets as of 10/31/02. Portfolio holdings will vary over time. In addition, European stock valuations have been generally more attractive than those in the United States. In fact, the disparity has become more pronounced during the year, because many European markets have seen greater price declines than the United States. Given the difference in valuations, we believe that European equities in many cases have a more positive outlook for appreciation. Altadis was one of the fund's best- performing European holdings this year. This tobacco company is the product of a merger of two smaller companies, one French and the other Spanish. The company has reduced its cost structure, demonstrating the benefits of greater cross-border integration within the European Union. One of the fund's largest holdings has been TotalFinaElf, a global energy company that is the product of a merger of two French companies and a Belgian company several years ago. Thanks to the merger, the company has become much more profitable. * HEALTHIER MARKET CONDITIONS SEEN IN CLOSING MONTH The rally in U.S. stock prices during October brought relief to investors. Of course, we have seen a few rallies over the past year give way to renewed declines, so we have not dispensed with caution. However, there were some encouraging factors in the most recent climb. Above all, the market took negative news in its stride. Our long-term outlook suggests modest and uneven improvement in corporate profits. There are strong, profitable companies in each region and market, but also considerable risks. The global economy is still struggling to grow, and among the three largest economies, Japan needs to reform its banking sector, Germany needs to loosen its labor market regulations, and the United States needs to establish better corporate governance. We believe the coming years look better than the past couple of years, but our research and investment discipline will be vital to identifying opportunities among multiple risks. 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 10/31/02, there is no guarantee the fund will continue to hold these securities in the future. International investing involves certain risks, such as currency fluctuations, economic instability, and political developments. The fund is managed by the Putnam Global Core Team. The members of the team are Paul Warren (Portfolio Leader), Mark Bogar (Portfolio Member), Geirulv Lode (Portfolio Member), Shigeki Makino (Portfolio Member), Stephen Oler (Portfolio Member), David Gerber, Omid Kamshad, and Justin Scott. PUTNAM'S POLICY ON CONFIDENTIALITY In order to conduct business with our shareholders, we must obtain certain personal information such as account holders' addresses, telephone numbers, Social Security numbers, and the names of their financial advisors. We use this information to assign an account number and to help us maintain accurate records of transactions and account balances. It is our policy to protect the confidentiality of your information, whether or not you currently own shares of our funds, and in particular, not to sell information about you or your accounts to outside marketing firms. We have safeguards in place designed to prevent unauthorized access to our computer systems and procedures to protect personal information from unauthorized use. Under certain circumstances, we share this information with outside vendors who provide services to us, such as mailing and proxy solicitation. In those cases, the service providers enter into confidentiality agreements with us, and we provide only the information necessary to process transactions and perform other services related to your account. We may also share this information with our Putnam affiliates to service your account or provide you with information about other Putnam products or services. It is also our policy to share account information with your financial advisor, if you've listed one on your Putnam account. If you would like clarification about our confidentiality policies or have any questions or concerns, please don't hesitate to contact us at 1-800-225-1581, Monday through Friday, 8:30 a.m. to 7:00 p.m., or Saturdays from 9:00 a.m. to 5:00 p.m. Eastern Time. PERFORMANCE SUMMARY This section provides information about your fund's performance, which should always be considered in light of its investment strategy. TOTAL RETURN FOR PERIODS ENDED 10/31/02 Class A Class B Class C Class M (inception dates) (7/1/94) (7/1/94) (2/1/99) (7/3/95) NAV POP NAV CDSC NAV CDSC NAV POP - ------------------------------------------------------------------------------ 8 months -14.72% -19.63% -15.20% -19.44% -15.08% -15.93% -15.04% -18.02% - ------------------------------------------------------------------------------ 1 year -11.73 -16.81 -12.48 -16.85 -12.40 -13.28 -12.27 -15.34 - ------------------------------------------------------------------------------ 5 years 10.78 4.41 6.98 5.72 7.24 7.24 8.35 4.56 Annual average 2.07 0.87 1.36 1.12 1.41 1.41 1.62 0.89 - ------------------------------------------------------------------------------ Life of fund 102.71 91.05 92.26 92.26 92.12 92.12 96.32 89.45 Annual average 8.85 8.08 8.16 8.16 8.15 8.15 8.43 7.97 - ------------------------------------------------------------------------------ COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 10/31/02 MSCI World Consumer Index price index - ------------------------------------------------------------------------------ 8 months -16.85% 1.85% - ------------------------------------------------------------------------------ 1 year -14.85 2.08 - ------------------------------------------------------------------------------ 5 years -7.69 12.26 Annual average -1.59 2.34 - ------------------------------------------------------------------------------ Life of fund 44.14 22.58 Annual average 4.48 2.47 - ------------------------------------------------------------------------------ Past performance does not indicate future results. More recent returns may be less or more than those shown. Investment return and principal value will fluctuate and you may have a gain or a loss when you sell your shares. Performance assumes reinvestment of distributions and does not account for taxes. Returns at public offering price (POP) for class A and M shares reflect a sales charge of 5.75% and 3.50%, respectively. Class B share returns reflect the applicable contingent deferred sales charge (CDSC), which is 5% in the first year, declining to 1% in the sixth year, and is eliminated thereafter. Class C shares reflect a 1% CDSC the first year that is eliminated thereafter. Performance for class B, C, and M shares before their inception is derived from the historical performance of class A shares, adjusted for the applicable sales charge (or CDSC) and higher operating expenses for such shares. A 1% redemption fee on total assets redeemed or exchanged within 90 days of purchase will be imposed for all share classes. LIPPER INFORMATION: The average cumulative return for the 321 funds in the Lipper Global Funds category over the 8 months ended 10/31/02 was -16.61%. Over the 1- and 5-year and life-of-fund periods ended 10/31/02, the average annualized returns for the category were -13.92%, -0.76%, and 5.06%, respectively. Upon completion of the merger of Putnam Global Growth and Income Fund and Putnam Global Equity Fund into the Putnam Global Growth Fund on September 23, 2002, the merged fund assumed the performance and accounting history of Putnam Global Equity Fund. On October 1, 2002, the name Putnam Global Growth Fund was changed to Putnam Global Equity Fund. [GRAPHIC OMITTED: worm chart GROWTH OF A $10,000 INVESTMENT] GROWTH OF A $10,000 INVESTMENT Cumulative total return of a $10,000 investment since 7/1/94 Fund's class A MSCI World Consumer price Date shares at POP Index index 7/1/94 9,425 10,000 10,000 10/31/94 9,913 10,503 10,101 10/31/95 11,837 11,499 10,385 10/31/96 13,885 13,373 10,696 10/31/97 17,246 15,615 10,919 10/31/98 18,587 17,998 11,074 10/31/99 26,185 22,482 11,358 10/31/00 31,302 22,728 11,750 10/31/01 21,644 16,929 12,000 10/31/02 $19,105 $14,414 $12,258 Footnote reads: Past performance does not indicate future results. At the end of the same time period, a $10,000 investment in the fund's class B and class C shares would have been valued at $19,226 and $19,212, respectively, and no contingent deferred sales charges would apply; a $10,000 investment in the fund's class M shares would have been valued at $19,632 ($18,945 at public offering price). See first page of performance section for performance calculation method. PRICE AND DISTRIBUTION INFORMATION 8 MONTHS ENDED 10/31/02 Class A Class B Class C Class M - ------------------------------------------------------------------------------ Distributions (number) 1 -- -- 1 - ------------------------------------------------------------------------------ Income $0.039526 -- -- $0.011404 - ------------------------------------------------------------------------------ Capital gains -- -- -- -- - ------------------------------------------------------------------------------ Total $0.039526 -- -- $0.011404 - ------------------------------------------------------------------------------ Share value: NAV POP NAV NAV NAV POP - ------------------------------------------------------------------------------ 2/28/02 $7.01 $7.44 $6.44 $6.77 $6.78 $7.03 - ------------------------------------------------------------------------------ 10/31/02 5.94 6.30 5.46 5.75 5.75 5.96 - ------------------------------------------------------------------------------ TOTAL RETURN FOR PERIODS ENDED 9/30/02 (most recent calendar quarter) Class A Class B Class C Class M (inception dates) (7/1/94) (7/1/94) (2/1/99) (7/3/95) NAV POP NAV CDSC NAV CDSC NAV POP - ------------------------------------------------------------------------------ 1 year -17.13% -21.89% -17.67% -21.79% -17.63% -18.46% -17.51% -20.39% - ------------------------------------------------------------------------------ 5 years -1.78 -7.43 -5.10 -6.21 -4.84 -4.84 -3.90 -7.26 Annual average -0.36 -1.53 -1.04 -1.27 -0.99 -0.99 -0.79 -1.50 - ------------------------------------------------------------------------------ Life of fund 89.74 78.83 80.28 80.28 80.09 80.09 84.03 77.58 Annual average 8.08 7.30 7.41 7.41 7.40 7.40 7.68 7.21 - ------------------------------------------------------------------------------ Past performance does not indicate future results. More recent returns may be more or less than those shown. Investment return and principal value will fluctuate, and you may have a gain or a loss when you sell your shares. See first page of performance section for performance calculation method. TERMS AND DEFINITIONS Total return shows how the value of the fund's shares changed over time, assuming you held the shares through the entire period and reinvested all distributions in the fund. Net asset value (NAV) is the price, or value, of one share of a mutual fund, without a sales charge. NAVs fluctuate with market conditions. The NAV is calculated by dividing the net value of all the fund's assets by the number of outstanding shares. 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 5.75% maximum 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 or C shares and assumes redemption at the end of the period. Your fund's class B 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. The CDSC for class C shares is 1% for one year after purchase. Class A shares are generally subject to an initial sales charge and no sales charge on redemption (except on certain redemptions of shares bought without an initial sales charge). Class B shares may be subject to a sales charge upon redemption. Class C shares are not subject to an initial sales charge and are subject to a contingent deferred sales charge only if the shares are redeemed during the first year. Class M shares have a lower initial sales charge and a higher 12b-1 fee than class A shares and no sales charge on redemption (except on certain redemptions of shares bought without an initial sales charge). COMPARATIVE BENCHMARKS Morgan Stanley Capital International (MSCI) World Index is an unmanaged index of developed and emerging markets. Indexes assume reinvestment of all distributions and do not account for fees. Securities and performance of a fund and an index will differ. You cannot invest directly in an index. Consumer price index (CPI) is a commonly used measure of inflation; it does not represent an investment return. Lipper Inc. is a third-party industry ranking entity that ranks funds (without sales charges) with similar current investment styles or objectives as determined by Lipper. A GUIDE TO THE FINANCIAL STATEMENTS These sections of the report, as well as the accompanying Notes, preceded by the Report of independent accountants, constitute the fund's financial statements. The fund's portfolio lists all the fund's investments and their values as of the last day of the reporting period. Holdings are organized by asset type and industry sector, country, or state to show areas of concentration and diversification. Statement of assets and liabilities shows how the fund's net assets and share price are determined. All investment and noninvestment assets are added together. Any unpaid expenses and other liabilities are subtracted from this total. The result is divided by the number of shares to determine the net asset value per share, which is calculated separately for each class of shares. (For funds with preferred shares, the amount subtracted from total assets includes the net assets allocated to remarketed preferred shares.) Statement of operations shows the fund's net investment gain or loss. This is done by first adding up all the fund's earnings -- from dividends and interest income -- and subtracting its operating expenses to determine net investment income (or loss). Then, any net gain or loss the fund realized on the sales of its holdings -- as well as any unrealized gains or losses over the period -- is added to or subtracted from the net investment result to determine the fund's net gain or loss for the fiscal year. Statement of changes in net assets shows how the fund's net assets were affected by distributions to shareholders and by changes in the number of the fund's shares. It lists distributions and their sources (net investment income or realized capital gains) over the current reporting period and the most recent fiscal year-end. The distributions listed here may not match the sources listed in the Statement of operations because the distributions are determined on a tax basis and may be paid in a different period from the one in which they were earned. Financial highlights provide an overview of the fund's investment results, per-share distributions, expense ratios, net investment income ratios, and portfolio turnover in one summary table, reflecting the five most recent reporting periods. In a semiannual report, the highlight table also includes the current reporting period. For open-end funds, a separate table is provided for each share class. REPORT OF INDEPENDENT ACCOUNTANTS The Board of Trustees and Shareholders Putnam Global Equity Fund We have audited the accompanying statement of assets and liabilities of Putnam Global Equity Fund, formerly Putnam Global Growth Fund, including the fund's portfolio, as of October 31, 2002, and the related statements of operations for each of the year end periods in the two-year period then ended, the statements of changes in net assets for each of the years and periods in the three-year period then ended and financial highlights for each of the years or periods in the three-year period then ended. 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 auditing standards generally accepted in the United States of America. Those standards require that we plan and perform our 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 October 31, 2002 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 Global Equity Fund as of October 31, 2002, the results of its operations for each of the years or periods in the two-year period then ended, changes in its net assets for each of the years or periods in the three-year period then ended and financial highlights for each of the years or periods in the three-year period then ended in conformity with accounting principles generally accepted in the United States of America. KPMG LLP Boston, Massachusetts December 3, 2002
THE FUND'S PORTFOLIO October 31, 2002 COMMON STOCKS (99.5%) (a) NUMBER OF SHARES VALUE Advertising and Marketing Services (0.8%) - ------------------------------------------------------------------------------------------------------------------- 3,718,878 Havas Advertising SA (France) $16,937,481 174,603 Omnicom Group, Inc. 10,062,371 ------------- 26,999,852 Airlines (0.7%) - ------------------------------------------------------------------------------------------------------------------- 3,331,382 Qantas Airways, Ltd. (Australia) 6,969,161 977,400 Southwest Airlines Co. 14,270,040 ------------- 21,239,201 Automotive (1.5%) - ------------------------------------------------------------------------------------------------------------------- 2,054,800 Toyota Motor Corp. (Japan) 49,994,317 Banking (11.2%) - ------------------------------------------------------------------------------------------------------------------- 1,009,779 Abbey National PLC (United Kingdom) 10,426,009 1,973,082 Bank of New York Co., Inc. (The) 51,300,132 1,235,539 Comerica, Inc. 53,943,633 195,700 Commerce Bancorp, Inc. 8,984,587 2,003,492 Danske Bank A/S (Denmark) 31,909,542 256,400 Fifth Third Bancorp 16,281,400 21,643,117 Grupo Financiero BBVA Bancomer SA de CV (Mexico) (NON) 17,065,340 256,442 M&T Bank Corp. 21,007,729 713,700 Mellon Financial Corp. 20,190,573 4,741,000 Overseas-Chinese Banking Corp. (Singapore) 27,929,308 3,468,366 U.S. Bancorp 73,147,839 496,000 Wells Fargo & Co. 25,033,120 ------------- 357,219,212 Beverage (3.0%) - ------------------------------------------------------------------------------------------------------------------- 621,100 Companhia de Bebidas das Americas (AmBev) ADR (Brazil) 8,987,317 2,419,703 Diageo PLC (United Kingdom) 27,273,687 241,700 Fomento Economico Mexicano SA de CV ADR (Mexico) 8,749,540 735,400 PepsiCo, Inc. 32,431,140 2,761,010 SABMiller PLC (United Kingdom) (NON) 18,659,480 ------------- 96,101,164 Broadcasting (0.5%) - ------------------------------------------------------------------------------------------------------------------- 661,183 Societe Television Francaise I (France) 17,020,570 Cable Television (0.6%) - ------------------------------------------------------------------------------------------------------------------- 866,217 Comcast Corp. Class A (NON) 19,931,653 Chemicals (1.9%) - ------------------------------------------------------------------------------------------------------------------- 735,500 BASF AG (Germany) (NON) 27,381,017 205,817 Ciba Specialty Chemicals AG (Switzerland) 14,504,959 346,780 Syngenta AG (Switzerland) 20,644,184 ------------- 62,530,160 Commercial and Consumer Services (1.1%) - ------------------------------------------------------------------------------------------------------------------- 1,772,800 Autostrade SpA (Italy) 14,656,331 5,677,224 Hays PLC (United Kingdom) 7,971,101 1,376,600 ServiceMaster Co. (The) 14,110,150 ------------- 36,737,582 Communications Equipment (1.5%) - ------------------------------------------------------------------------------------------------------------------- 1,943,400 Nokia OYJ ADR (Finland) 32,299,308 19,198,179 Telefonaktiebolaget LM Ericsson AB Class B (Sweden) (NON) 15,511,139 ------------- 47,810,447 Computers (1.7%) - ------------------------------------------------------------------------------------------------------------------- 1,395,416 Dell Computer Corp. (NON) 39,922,852 248,600 Lexmark International, Inc. (NON) 14,771,812 ------------- 54,694,664 Conglomerates (1.1%) - ------------------------------------------------------------------------------------------------------------------- 2,365,742 Tyco International, Ltd. (Bermuda) 34,208,629 Construction (1.3%) - ------------------------------------------------------------------------------------------------------------------- 675,847 Cemex SA de CV ADR (Mexico) 13,699,419 340,639 Lafarge (France) 27,133,104 ------------- 40,832,523 Consumer Finance (2.0%) - ------------------------------------------------------------------------------------------------------------------- 276,700 Acom Co., Ltd. (Japan) 8,562,157 2,741,450 MBNA Corp. 55,678,850 ------------- 64,241,007 Consumer Goods (1.2%) - ------------------------------------------------------------------------------------------------------------------- 611,000 KAO Corp. (Japan) 13,967,995 1,442,654 Reckitt Benckiser PLC (United Kingdom) 26,179,900 ------------- 40,147,895 Consumer Services (0.3%) - ------------------------------------------------------------------------------------------------------------------- 869,959 Deutsche Post AG (Germany) 8,742,666 Consumer Staples (0.1%) - ------------------------------------------------------------------------------------------------------------------- 74,000 Fuji Photo Film Cos., Ltd. (Japan) 2,042,129 Electric Utilities (2.5%) - ------------------------------------------------------------------------------------------------------------------- 801,888 Edison International (NON) 8,058,974 758,759 Entergy Corp. 33,453,684 1,524,777 Iberdrola SA (Spain) 18,116,180 652,300 PG&E Corp. (NON) 7,077,455 772,100 Tokyo Electric Power Co. (Japan) 14,278,303 ------------- 80,984,596 Electrical Equipment (1.0%) - ------------------------------------------------------------------------------------------------------------------- 661,400 Emerson Electric Co. 31,866,252 Electronics (2.8%) - ------------------------------------------------------------------------------------------------------------------- 548,607 Intel Corp. 9,490,901 517,100 Murata Manufacturing Co., Ltd. (Japan) 24,444,881 194,070 Samsung Electronics Co., Ltd. (South Korea) 54,970,566 ------------- 88,906,348 Energy (0.4%) - ------------------------------------------------------------------------------------------------------------------- 479,081 GlobalSantaFe Corp. 11,450,036 Engineering & Construction (0.6%) - ------------------------------------------------------------------------------------------------------------------- 760,550 Bouygues SA (France) 20,022,817 Financial (6.7%) - ------------------------------------------------------------------------------------------------------------------- 3,171,240 Citigroup, Inc. 117,177,318 293,563 Fannie Mae 19,627,622 1,271,200 Freddie Mac 78,280,496 ------------- 215,085,436 Food (1.9%) - ------------------------------------------------------------------------------------------------------------------- 285,122 Nestle SA (Switzerland) 61,151,395 3,729,392 Tesco PLC (United Kingdom) (NON) 11,566,422 ------------- 72,717,817 Forest Products and Packaging (0.3%) - ------------------------------------------------------------------------------------------------------------------- 377,900 Aracruz Celulose SA ADR (Brazil) 6,042,621 64,310 Weyerhaeuser Co. 2,913,243 ------------- 8,955,864 Gaming & Lottery (0.7%) - ------------------------------------------------------------------------------------------------------------------- 290,125 International Game Technology (NON) 21,820,301 Health Care Services (3.6%) - ------------------------------------------------------------------------------------------------------------------- 514,900 Cardinal Health, Inc. 35,636,229 206,000 CIGNA Corp. 7,444,840 849,501 HCA, Inc. 36,944,798 398,210 UnitedHealth Group, Inc. 36,217,200 ------------- 116,243,067 Insurance (2.6%) - ------------------------------------------------------------------------------------------------------------------- 1,329,787 ING Groep NV (Netherlands) 22,237,747 61,395 Muenchener Rueckversicherungs-Gesellschaft AG (Germany) 7,902,335 529,100 Radian Group, Inc. 18,661,357 624,702 Travelers Property Casualty Corp. Class A (NON) 8,339,772 267,821 Travelers Property Casualty Corp. Class B (NON) 3,620,940 293,537 XL Capital, Ltd. Class A (Bermuda) 22,352,843 ------------- 83,114,994 Investment Banking/Brokerage (0.8%) - ------------------------------------------------------------------------------------------------------------------- 503,600 Federated Investors, Inc. 13,496,480 641,600 JPMorgan Chase & Co. 13,313,200 ------------- 26,809,680 Lodging/Tourism (0.4%) - ------------------------------------------------------------------------------------------------------------------- 1,602,900 Hilton Group PLC (United Kingdom) 4,363,184 546,900 Royal Caribbean Cruises, Ltd. 10,041,084 ------------- 14,404,268 Medical Technology (0.6%) - ------------------------------------------------------------------------------------------------------------------- 451,000 Baxter International, Inc. 11,284,020 214,500 Medtronic, Inc. 9,609,600 ------------- 20,893,620 Metals (2.6%) - ------------------------------------------------------------------------------------------------------------------- 1,014,224 Arcelor (Luxembourg) (NON) 10,955,639 7,354,154 BHP Billiton PLC (United Kingdom) 35,895,096 418,400 Companhia Vale do Rio Doce (CVRD) ADR (Brazil) (NON) 11,024,840 1,523,090 Rio Tinto PLC (United Kingdom) 27,520,439 ------------- 85,396,014 Office Equipment & Supplies (0.4%) - ------------------------------------------------------------------------------------------------------------------- 394,200 Pitney Bowes, Inc. 13,225,410 Oil & Gas (6.6%) - ------------------------------------------------------------------------------------------------------------------- 543,300 EnCana Corp. (Canada) 15,774,233 696,196 Exxon Mobil Corp. 23,433,957 956,323 Petroleo Brasileiro SA ADR (Brazil) 12,652,153 7,150,150 Shell Transport & Trading Co. PLC (United Kingdom) (NON) 45,945,241 53,200 Talisman Energy, Inc. (Canada) 1,953,504 761,289 TotalFinaElf SA Class B (France) 104,846,936 61,100 YUKOS ADR (Russia) 8,416,525 ------------- 213,022,549 Pharmaceuticals (9.7%) - ------------------------------------------------------------------------------------------------------------------- 235,200 Allergan, Inc. 12,806,640 761,960 AstraZeneca PLC (United Kingdom) 28,429,444 93,100 Forest Laboratories, Inc. (NON) 9,122,869 722,000 King Pharmaceuticals, Inc. (NON) 11,082,700 748,988 Lilly (Eli) & Co. 41,568,834 302,581 Novartis AG (Switzerland) 11,543,884 497,950 Novo-Nordisk A/S (Denmark) (NON) 13,737,925 2,267,725 Pfizer, Inc. 72,045,623 1,433,671 Pharmacia Corp. 61,647,853 786,403 Sanofi-Synthelabo SA (France) (NON) 48,079,637 ------------- 310,065,409 Photography/Imaging (0.1%) - ------------------------------------------------------------------------------------------------------------------- 274,300 Olympus Optical Co., Ltd. (Japan) 4,163,322 Publishing (0.9%) - ------------------------------------------------------------------------------------------------------------------- 2,336,966 Reed Elsevier NV (Netherlands) 29,131,120 Railroads (0.3%) - ------------------------------------------------------------------------------------------------------------------- 158,700 Burlington Northern Santa Fe Corp. 4,083,351 68,687 Union Pacific Corp. 4,055,967 ------------- 8,139,318 Real Estate (1.1%) - ------------------------------------------------------------------------------------------------------------------- 330,700 Boston Properties, Inc. (R) 11,805,990 1,025,650 Equity Office Properties Trust (R) 24,697,652 ------------- 36,503,642 Retail (5.8%) - ------------------------------------------------------------------------------------------------------------------- 257,400 AutoZone, Inc. (NON) 22,077,198 838,900 Best Buy Cos., Inc. (NON) 17,289,729 1,622,790 Boots Co. PLC (United Kingdom) 15,105,221 8,426,590 Dixons Group PLC (United Kingdom) (NON) 25,112,776 729,325 Industria de Diseno Textil SA (Inditex) (Spain) 16,391,776 214,900 Kohl's Corp. (NON) 12,560,905 655,255 Lowe's Cos., Inc. 27,343,791 1,396,300 Office Depot, Inc. (NON) 20,092,757 1,423,815 TJX Cos., Inc. (The) 29,216,684 ------------- 185,190,837 Software (5.2%) - ------------------------------------------------------------------------------------------------------------------- 453,796 Adobe Systems, Inc. 10,727,737 1,003,493 BMC Software, Inc. (NON) 15,995,678 1,745,500 Microsoft Corp. (NON) 93,331,885 1,321,602 Oracle Corp. (NON) 13,467,124 1,308,000 Siebel Systems, Inc. (NON) 9,836,160 552,646 Symantec Corp. (NON) 22,105,840 ------------- 165,464,424 Technology Services (1.1%) - ------------------------------------------------------------------------------------------------------------------- 442,645 Automatic Data Processing, Inc. 18,825,692 2,010,800 BearingPoint, Inc. (NON) 15,684,240 ------------- 34,509,932 Telecommunications (4.4%) - ------------------------------------------------------------------------------------------------------------------- 26,860 NTT DoCoMo, Inc. (Japan) 49,562,051 97,365 SK Telecom Co., Ltd. (South Korea) 17,986,145 123,500 SK Telecom Co., Ltd. ADR (South Korea) 2,478,645 72,877 Swisscom AG (Switzerland) 21,679,883 6,691,283 Telecom Corp. of New Zealand, Ltd. (New Zealand) 16,458,321 1,165,153 Telecom Corp. of New Zealand, Ltd. 144A (New Zealand) 2,865,887 1,041,930 Telefonos de Mexico SA de CV (Telmex) ADR Class L (Mexico) 31,778,865 ------------- 142,809,797 Textiles (0.3%) - ------------------------------------------------------------------------------------------------------------------- 220,500 Nike, Inc. 10,405,395 Tobacco (4.4%) - ------------------------------------------------------------------------------------------------------------------- 2,137,746 Altadis SA (Spain) 45,189,032 1,687,851 Korea Tobacco & Ginseng Corp. GDR (South Korea) 12,405,705 234,000 Korea Tobacco & Ginseng Corp. 144A GDR (South Korea) 1,719,900 2,052,149 Philip Morris Cos., Inc. 83,625,072 ------------- 142,939,709 Waste Management (0.9%) - ------------------------------------------------------------------------------------------------------------------- 1,265,300 Waste Management, Inc. 29,127,206 Water Utilities (0.3%) - ------------------------------------------------------------------------------------------------------------------- 388,937 Vivendi Environnement (France) (NON) 9,218,971 ------------- Total Common Stocks (cost $3,468,075,537) $3,213,081,822 SHORT-TERM INVESTMENTS (1.4%) (a) PRINCIPAL AMOUNT/SHARES VALUE - ------------------------------------------------------------------------------------------------------------------- $26,433,374 Short-term investments held as collateral for loaned securities with yields ranging from 1.72% to 1.99% and due dates ranging from November 1, 2002 to December 23, 2002 (d) $26,415,740 20,377,443 Short-term investments held in Putnam commingled cash account with yields ranging from 1.67% to 1.93% and due dates ranging from November 1, 2002 to December 20, 2002 (d) 20,377,443 ------------- Total Short-Term Investments (cost $46,793,183) $46,793,183 - ------------------------------------------------------------------------------------------------------------------- Total Investments (cost $3,514,868,720) $3,259,875,005 - ------------------------------------------------------------------------------------------------------------------- (a) Percentages indicated are based on net assets of $3,230,005,776. (NON) Non-income-producing security. (R) Real Estate Investment Trust. (d) See Note 1 to the financial statements. 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. ADR or GDR after the name of a foreign holding stands for American Depositary Receipts or Global Depositary Receipts, respectively, representing ownership of foreign securities on deposit with a custodian bank. DIVERSIFICATION BY COUNTRY Distribution of investments by country of issue at October 31, 2002: (as a percentage of Market Value) Bermuda 1.7% Brazil 1.2 Canada 0.5 Denmark 1.4 Finland 1.0 France 7.5 Germany 1.4 Japan 5.1 Mexico 2.2 Netherlands 1.6 New Zealand 0.6 Singapore 0.9 South Korea 2.8 Spain 2.4 Switzerland 4.0 United Kingdom 8.7 United States 54.0 Other 3.0 ------ Total 100.0% - ------------------------------------------------------------------------------ Forward Currency Contracts to Buy at October 31, 2002 (aggregate face value $94,481,158) Market Aggregate Delivery Unrealized Value Face Value Date Appreciation - ------------------------------------------------------------------------------ Australian Dollars $64,385,071 $63,179,225 12/18/02 $1,205,846 Norwegian Krone 31,531,088 31,301,933 12/18/02 229,155 - ------------------------------------------------------------------------------ $1,435,001 - ------------------------------------------------------------------------------ Forward Currency Contracts to Sell at October 31, 2002 (aggregate face value $63,406,595) Market Aggregate Delivery Unrealized Value Face Value Date Depreciation - ------------------------------------------------------------------------------ Japanese Yen $63,719,079 $63,406,595 12/18/02 $ (312,484) - ------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES October 31, 2002 Assets - ------------------------------------------------------------------------------------------- Investments in securities, at value, including $25,235,274 of securities on loan (identified cost $3,514,868,720) (Note 1) $3,259,875,005 - ------------------------------------------------------------------------------------------- Foreign currency (cost $944,554) (Note 1) 940,444 - ------------------------------------------------------------------------------------------- Dividends, interest and other receivables 4,898,127 - ------------------------------------------------------------------------------------------- Receivable for shares of the fund sold 2,927,917 - ------------------------------------------------------------------------------------------- Receivable for securities sold 19,088,255 - ------------------------------------------------------------------------------------------- Receivable for open forward currency contracts (Note 1) 1,435,001 - ------------------------------------------------------------------------------------------- Total assets 3,289,164,749 Liabilities - ------------------------------------------------------------------------------------------- Payable to subcustodian (Note 2) 112 - ------------------------------------------------------------------------------------------- Payable for securities purchased 12,886,053 - ------------------------------------------------------------------------------------------- Payable for shares of the fund repurchased 11,580,428 - ------------------------------------------------------------------------------------------- Payable for compensation of Manager (Note 2) 4,858,085 - ------------------------------------------------------------------------------------------- Payable for investor servicing and custodian fees (Note 2) 747,918 - ------------------------------------------------------------------------------------------- Payable for compensation of Trustees (Note 2) 329,346 - ------------------------------------------------------------------------------------------- Payable for administrative services (Note 2) 7,886 - ------------------------------------------------------------------------------------------- Payable for distribution fees (Note 2) 1,049,223 - ------------------------------------------------------------------------------------------- Payable for open forward currency contracts (Note 1) 312,484 - ------------------------------------------------------------------------------------------- Collateral on securities loaned, at value (Note 1) 26,415,740 - ------------------------------------------------------------------------------------------- Other accrued expenses 971,698 - ------------------------------------------------------------------------------------------- Total liabilities 59,158,973 - ------------------------------------------------------------------------------------------- Net assets $3,230,005,776 Represented by - ------------------------------------------------------------------------------------------- Paid-in capital (Notes 1, 4 and 5) $6,311,332,187 - ------------------------------------------------------------------------------------------- Undistributed net investment income (Note 1) 5,898,510 - ------------------------------------------------------------------------------------------- Accumulated net realized loss on investments and foreign currency transactions (Note 1) (2,833,538,370) - ------------------------------------------------------------------------------------------- Net unrealized depreciation of investments and assets and liabilities in foreign currencies (Note 5) (253,686,551) - ------------------------------------------------------------------------------------------- Total -- Representing net assets applicable to capital shares outstanding $3,230,005,776 Computation of net asset value and offering price - ------------------------------------------------------------------------------------------- Net asset value and redemption price per class A share ($2,415,849,853 divided by 406,892,686 shares) $5.94 - ------------------------------------------------------------------------------------------- Offering price per class A share (100/94.25 of $5.94)* $6.30 - ------------------------------------------------------------------------------------------- Net asset value and offering price per class B share ($574,020,935 divided by 105,076,006 shares)** $5.46 - ------------------------------------------------------------------------------------------- Net asset value and offering price per class C share ($49,207,118 divided by 8,563,833 shares)** $5.75 - ------------------------------------------------------------------------------------------- Net asset value and redemption price per class M share ($46,210,191 divided by 8,032,728 shares) $5.75 - ------------------------------------------------------------------------------------------- Offering price per class M share (100/96.50 of $5.75)* $5.96 - ------------------------------------------------------------------------------------------- Net asset value, offering price and redemption price per class Y share ($144,717,679 divided by 23,656,083 shares) $6.12 - ------------------------------------------------------------------------------------------- * 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 Eight months ended Year ended October 31 February 28 2002* 2002** - ------------------------------------------------------------------------------------------- Investment income: - ------------------------------------------------------------------------------------------- Dividends (net of foreign tax of $810,170 and $1,026,987, respectively) $14,533,988 $16,468,077 - ------------------------------------------------------------------------------------------- Interest 91,226 552,913 - ------------------------------------------------------------------------------------------- Securities lending 35,844 21,742 - ------------------------------------------------------------------------------------------- Total investment income 14,661,058 17,042,732 - ------------------------------------------------------------------------------------------- Expenses: - ------------------------------------------------------------------------------------------- Compensation of Manager (Note 2) 5,860,901 7,811,517 - ------------------------------------------------------------------------------------------- Investor servicing and custodian fees (Note 2) 1,959,785 1,936,591 - ------------------------------------------------------------------------------------------- Compensation of Trustees (Note 2) 29,789 38,622 - ------------------------------------------------------------------------------------------- Administrative services (Note 2) 12,042 19,819 - ------------------------------------------------------------------------------------------- Distribution fees -- Class A (Note 2) 1,475,346 1,704,017 - ------------------------------------------------------------------------------------------- Distribution fees -- Class B (Note 2) 1,991,609 3,647,196 - ------------------------------------------------------------------------------------------- Distribution fees -- Class C (Note 2) 196,529 347,808 - ------------------------------------------------------------------------------------------- Distribution fees -- Class M (Note 2) 159,169 290,934 - ------------------------------------------------------------------------------------------- Other 1,174,167 661,339 - ------------------------------------------------------------------------------------------- Total expenses 12,859,337 16,457,843 - ------------------------------------------------------------------------------------------- Expense reduction (Note 2) (787,648) (438,950) - ------------------------------------------------------------------------------------------- Net expenses 12,071,689 16,018,893 - ------------------------------------------------------------------------------------------- Net investment income 2,589,369 1,023,839 - ------------------------------------------------------------------------------------------- Net realized loss on investments (Notes 1 and 3) (231,545,991) (184,715,884) - ------------------------------------------------------------------------------------------- Net realized gain (loss) on foreign currency transactions (Note 1) 264,749 (285,005) - ------------------------------------------------------------------------------------------- Net realized loss on written options (Notes 1 and 3) (13,427) -- - ------------------------------------------------------------------------------------------- Net unrealized appreciation (depreciation) of assets and liabilities in foreign currencies during the period (Note 5) 968,649 (2,303) - ------------------------------------------------------------------------------------------- Net unrealized appreciation (depreciation) of investments and written options during the period (Note 5) 197,985,682 (47,533,162) - ------------------------------------------------------------------------------------------- Net loss on investments (32,340,338) (232,536,354) - ------------------------------------------------------------------------------------------- Net decrease in net assets resulting from operations $(29,750,969) $(231,512,515) - ------------------------------------------------------------------------------------------- * The fund changed its fiscal year end from February 28 to October 31. ** The year ended February 28, 2002 Statement of operations is for the former Putnam Global Equity Fund, the accounting survivor in the September 23, 2002 merger with Putnam Global Growth Fund. The accompanying notes are an integral part of these financial statements.
STATEMENT OF CHANGES IN NET ASSETS Year ended Eight months ended February 28 October 31 ----------------------- 2002* 2002** 2001** - ------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets - ------------------------------------------------------------------------------------------------------------- Operations: - ------------------------------------------------------------------------------------------------------------- Net investment income $2,589,369 $1,023,839 $9,046,382 - ------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments and foreign currency transactions (231,294,669) (185,000,889) 31,216,879 - ------------------------------------------------------------------------------------------------------------- Net unrealized appreciation (depreciation) of investments and assets and liabilities in foreign currencies 198,954,331 (47,535,465) (382,353,866) - ------------------------------------------------------------------------------------------------------------- Net decrease in net assets resulting from operations (29,750,969) (231,512,515) (342,090,605) - ------------------------------------------------------------------------------------------------------------- Distributions to shareholders: (Note 1) - ------------------------------------------------------------------------------------------------------------- From net investment income Class A (2,918,182) (442,781) (968,240) - ------------------------------------------------------------------------------------------------------------- Class C -- -- (687) - ------------------------------------------------------------------------------------------------------------- Class M (45,375) -- (4,452) - ------------------------------------------------------------------------------------------------------------- From net realized short-term gain on investments Class A -- -- (56,036,138) - ------------------------------------------------------------------------------------------------------------- Class B -- -- (47,545,849) - ------------------------------------------------------------------------------------------------------------- Class C -- -- (3,499,018) - ------------------------------------------------------------------------------------------------------------- Class M -- -- (4,534,543) - ------------------------------------------------------------------------------------------------------------- From net realized long-term gain on investments Class A -- -- (39,810,179) - ------------------------------------------------------------------------------------------------------------- Class B -- -- (33,778,358) - ------------------------------------------------------------------------------------------------------------- Class C -- -- (2,485,834) - ------------------------------------------------------------------------------------------------------------- Class M -- -- (3,221,509) - ------------------------------------------------------------------------------------------------------------- From return of capital Class A -- (682,651) (4,354,545) - ------------------------------------------------------------------------------------------------------------- Class B -- -- (1,505,558) - ------------------------------------------------------------------------------------------------------------- Class C -- -- (112,629) - ------------------------------------------------------------------------------------------------------------- Class M -- -- (155,451) - ------------------------------------------------------------------------------------------------------------- Increase (decrease) from capital share transactions (Notes 4 and 5) 2,334,610,902 (16,734,521) 299,881,148 - ------------------------------------------------------------------------------------------------------------- Total increase (decrease) in net assets 2,301,896,376 (249,372,468) (240,222,447) Net assets - ------------------------------------------------------------------------------------------------------------- Beginning of period 928,109,400 1,177,481,868 1,417,704,315 - ------------------------------------------------------------------------------------------------------------- End of period (including undistributed net investment income of $5,898,510 and distributions in excess of net investment income of $157,503 and $2,566,923, respectively) $3,230,005,776 $928,109,400 $1,177,481,868 - ------------------------------------------------------------------------------------------------------------- * The fund changed its fiscal year end from February 28 to October 31. ** The years ended February 28, 2002 and February 28, 2001 Statements of changes in net assets are for the former Putnam Global Equity Fund, the accounting survivor in the September 23, 2002 merger with Putnam Global Growth Fund. The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS** (For a common share outstanding throughout the period) CLASS A - ------------------------------------------------------------------------------------------------------------------ Eight months Per-share ended Year ended operating performance October 31+ Year ended February 28 Feb. 29 Year ended February 28 - ------------------------------------------------------------------------------------------------------------------ 2002 2002 2001 2000 1999 1998 - ------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $7.01 $8.62 $13.17 $9.28 $8.98 $8.08 - ------------------------------------------------------------------------------------------------------------------ Investment operations: - ------------------------------------------------------------------------------------------------------------------ Net investment income (loss)(a) .02 .03 .11 (.01) .01 .02 - ------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments (1.05) (1.62) (2.95) 5.70 1.14 2.08 - ------------------------------------------------------------------------------------------------------------------ Total from investment operations (1.03) (1.59) (2.84) 5.69 1.15 2.10 - ------------------------------------------------------------------------------------------------------------------ Less distributions: - ------------------------------------------------------------------------------------------------------------------ From net investment income (.04) (.01) (.01) (.18) -- (.07) - ------------------------------------------------------------------------------------------------------------------ From net realized gain on investments -- -- (1.62) (1.62) (.85) (1.13) - ------------------------------------------------------------------------------------------------------------------ From return of capital -- (.01) (.08) -- -- -- - ------------------------------------------------------------------------------------------------------------------ Total distributions (.04) (.02) (1.71) (1.80) (.85) (1.20) - ------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $5.94 $7.01 $8.62 $13.17 $9.28 $8.98 - ------------------------------------------------------------------------------------------------------------------ Total return at net asset value (%)(b) (14.72)* (18.44) (22.20) 63.14 13.08 27.74 - ------------------------------------------------------------------------------------------------------------------ Ratios and supplemental data - ------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $2,415,850 $579,544 $620,053 $623,649 $302,556 $270,536 - ------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets (%)(c) .90* 1.25 1.17 1.20 1.26 1.37 - ------------------------------------------------------------------------------------------------------------------ Ratio of net investment income (loss) to average net assets (%) .29* .37 .93 (.14) .17 .20 - ------------------------------------------------------------------------------------------------------------------ Portfolio turnover (%) 91.14* (d) 102.99 199.32 209.44 241.46 97.77 - ------------------------------------------------------------------------------------------------------------------ + The fund changed its fiscal year end from February 28 to October 31. * Not annualized. ** On September 23, 2002, Putnam Global Growth Fund acquired the net assets of both Putnam Global Equity Fund and Putnam Global Growth and Income Fund. Putnam Global Growth Fund was the legal survivor and Putnam Global Equity Fund was the accounting and performance survivor in this transaction. In addition, on October 1, 2002, the merged fund changed its name from Putnam Global Growth Fund to Putnam Global Equity Fund. The above financial highlights for the periods prior to October 31, 2002 are those of the former Putnam Global Equity Fund, which have been restated to give effect for this transaction. (a) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding during the period. (b) Total return assumes dividend reinvestment and does not reflect the effect of sales charges. (c) Includes amounts paid through brokerage service and expense offset arrangements (Note 2). (d) Portfolio turnover excludes the impact of assets received from the merger of Putnam Global Growth and Income Fund and Putnam Global Equity Fund. The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS** (For a common share outstanding throughout the period) CLASS B - ------------------------------------------------------------------------------------------------------------------ Eight months Per-share ended Year ended operating performance October 31+ Year ended February 28 Feb. 29 Year ended February 28 - ------------------------------------------------------------------------------------------------------------------ 2002 2002 2001 2000 1999 1998 - ------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $6.44 $7.95 $12.22 $8.65 $8.44 $7.60 - ------------------------------------------------------------------------------------------------------------------ Investment operations: - ------------------------------------------------------------------------------------------------------------------ Net investment income (loss)(a) (.01) (.02) .05 (.08) (.05) (.04) - ------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments (.97) (1.49) (2.75) 5.30 1.06 1.97 - ------------------------------------------------------------------------------------------------------------------ Total from investment operations (.98) (1.51) (2.70) 5.22 1.01 1.93 - ------------------------------------------------------------------------------------------------------------------ Less distributions: - ------------------------------------------------------------------------------------------------------------------ From net investment income -- -- -- (.12) -- (.02) - ------------------------------------------------------------------------------------------------------------------ From net realized gain on investments -- -- (1.54) (1.53) (.80) (1.07) - ------------------------------------------------------------------------------------------------------------------ From return of capital -- -- (.03) -- -- -- - ------------------------------------------------------------------------------------------------------------------ Total distributions -- -- (1.57) (1.65) (.80) (1.09) - ------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $5.46 $6.44 $7.95 $12.22 $8.65 $8.44 - ------------------------------------------------------------------------------------------------------------------ Total return at net asset value (%)(b) (15.20)* (19.01) (22.76) 62.03 12.33 26.98 - ------------------------------------------------------------------------------------------------------------------ Ratios and supplemental data - ------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $574,021 $286,836 $469,505 $709,891 $377,386 $333,642 - ------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets (%)(c) 1.40* 1.98 1.87 1.88 1.92 2.00 - ------------------------------------------------------------------------------------------------------------------ Ratio of net investment income (loss) to average net assets (%) (.12)* (.32) .41 (.81) (.49) (.44) - ------------------------------------------------------------------------------------------------------------------ Portfolio turnover (%) 91.14* (d) 102.99 199.32 209.44 241.46 97.77 - ------------------------------------------------------------------------------------------------------------------ + The fund changed its fiscal year end from February 28 to October 31. * Not annualized. ** On September 23, 2002, Putnam Global Growth Fund acquired the net assets of both Putnam Global Equity Fund and Putnam Global Growth and Income Fund. Putnam Global Growth Fund was the legal survivor and Putnam Global Equity Fund was the accounting and performance survivor in this transaction. In addition, on October 1, 2002, the merged fund changed its name from Putnam Global Growth Fund to Putnam Global Equity Fund. The above financial highlights for the periods prior to October 31, 2002 are those of the former Putnam Global Equity Fund, which have been restated to give effect for this transaction. (a) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding during the period. (b) Total return assumes dividend reinvestment and does not reflect the effect of sales charges. (c) Includes amounts paid through brokerage service and expense offset arrangements (Note 2). (d) Portfolio turnover excludes the impact of assets received from the merger of Putnam Global Growth and Income Fund and Putnam Global Equity Fund. The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS** (For a common share outstanding throughout the period) CLASS C - ----------------------------------------------------------------------------------------------------- Eight months For the period Per-share ended Year ended Feb. 1, 1999++ operating performance October 31+ Year ended February 28 Feb. 29 to Feb. 28 - ----------------------------------------------------------------------------------------------------- 2002 2002 2001 2000 1999 - ----------------------------------------------------------------------------------------------------- Net asset value, beginning of period $6.77 $8.37 $12.81 $9.09 $9.44 - ----------------------------------------------------------------------------------------------------- Investment operations: - ----------------------------------------------------------------------------------------------------- Net investment income (loss)(a) (.01) (.03) .01 (.09) --(e) - ----------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (1.01) (1.57) (2.84) 5.56 (.35) - ----------------------------------------------------------------------------------------------------- Total from investment operations (1.02) (1.60) (2.83) 5.47 (.35) - ----------------------------------------------------------------------------------------------------- Less distributions: - ----------------------------------------------------------------------------------------------------- From net investment income -- -- --(e) (.16) -- - ----------------------------------------------------------------------------------------------------- From net realized gain on investments -- -- (1.59) (1.59) -- - ----------------------------------------------------------------------------------------------------- From return of capital -- -- (.02) -- -- - ----------------------------------------------------------------------------------------------------- Total distributions -- -- (1.61) (1.75) -- - ----------------------------------------------------------------------------------------------------- Net asset value, end of period $5.75 $6.77 $8.37 $12.81 $9.09 - ----------------------------------------------------------------------------------------------------- Total return at net asset value (%)(b) (15.08)* (19.06) (22.68) 61.94 (3.68)* - ----------------------------------------------------------------------------------------------------- Ratios and supplemental data - ----------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $49,207 $29,088 $40,530 $25,539 $190 - ----------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(c) 1.40* 1.98 1.87 1.88 .15* - ----------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average net assets (%) (.09)* (.33) .15 (1.04) (.05)* - ----------------------------------------------------------------------------------------------------- Portfolio turnover (%) 91.14* (d) 102.99 199.32 209.44 241.46 - ----------------------------------------------------------------------------------------------------- + The fund changed its fiscal year end from February 28 to October 31. ++ Commencement of operations. * Not annualized. ** On September 23, 2002, Putnam Global Growth Fund acquired the net assets of both Putnam Global Equity Fund and Putnam Global Growth and Income Fund. Putnam Global Growth Fund was the legal survivor and Putnam Global Equity Fund was the accounting and performance survivor in this transaction. In addition, on October 1, 2002, the merged fund changed its name from Putnam Global Growth Fund to Putnam Global Equity Fund. The above financial highlights for the periods prior to October 31, 2002 are those of the former Putnam Global Equity Fund, which have been restated to give effect for this transaction. (a) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding during the period. (b) Total return assumes dividend reinvestment and does not reflect the effect of sales charges. (c) Includes amounts paid through brokerage service and expense offset arrangements (Note 2). (d) Portfolio turnover excludes the impact of assets received from the merger of Putnam Global Growth and Income Fund and Putnam Global Equity Fund. (e) Amount represents less than $0.01 per share. The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS** (For a common share outstanding throughout the period) CLASS M - ------------------------------------------------------------------------------------------------------------------ Eight months Per-share ended Year ended operating performance October 31+ Year ended February 28 Feb. 29 Year ended February 28 - ------------------------------------------------------------------------------------------------------------------ 2002 2002 2001 2000 1999 1998 - ------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $6.78 $8.35 $12.79 $9.04 $8.79 $7.91 - ------------------------------------------------------------------------------------------------------------------ Investment operations: - ------------------------------------------------------------------------------------------------------------------ Net investment income (loss)(a) --(e) (.01) .06 (.06) (.02) (.02) - ------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments (1.02) (1.56) (2.87) 5.55 1.10 2.06 - ------------------------------------------------------------------------------------------------------------------ Total from investment operations (1.02) (1.57) (2.81) 5.49 1.08 2.04 - ------------------------------------------------------------------------------------------------------------------ Less distributions: - ------------------------------------------------------------------------------------------------------------------ From net investment income (.01) -- --(e) (.14) -- (.05) - ------------------------------------------------------------------------------------------------------------------ From net realized gain on investments -- -- (1.60) (1.60) (.83) (1.11) - ------------------------------------------------------------------------------------------------------------------ From return of capital -- -- (.03) -- -- -- - ------------------------------------------------------------------------------------------------------------------ Total distributions (.01) -- (1.63) (1.74) (.83) (1.16) - ------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $5.75 $6.78 $8.35 $12.79 $9.04 $8.79 - ------------------------------------------------------------------------------------------------------------------ Total return at net asset value (%)(b) (15.04)* (18.80) (22.61) 62.48 12.61 27.36 - ------------------------------------------------------------------------------------------------------------------ Ratios and supplemental data - ------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $46,210 $32,641 $47,393 $58,625 $29,384 $25,145 - ------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets (%)(c) 1.24* 1.73 1.62 1.63 1.67 1.75 - ------------------------------------------------------------------------------------------------------------------ Ratio of net investment income (loss) to average net assets (%) .10* (.08) .56 (.56) (.25) (.22) - ------------------------------------------------------------------------------------------------------------------ Portfolio turnover (%) 91.14* (d) 102.99 199.32 209.44 241.46 97.77 - ------------------------------------------------------------------------------------------------------------------ + The fund changed its fiscal year end from February 28 to October 31. * Not annualized. ** On September 23, 2002, Putnam Global Growth Fund acquired the net assets of both Putnam Global Equity Fund and Putnam Global Growth and Income Fund. Putnam Global Growth Fund was the legal survivor and Putnam Global Equity Fund was the accounting and performance survivor in this transaction. In addition, on October 1, 2002, the merged fund changed its name from Putnam Global Growth Fund to Putnam Global Equity Fund. The above financial highlights for the periods prior to October 31, 2002 are those of the former Putnam Global Equity Fund, which have been restated to give effect for this transaction. (a) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding during the period. (b) Total return assumes dividend reinvestment and does not reflect the effect of sales charges. (c) Includes amounts paid through brokerage service and expense offset arrangements (Note 2). (d) Portfolio turnover excludes the impact of assets received from the merger of Putnam Global Growth and Income Fund and Putnam Global Equity Fund. (e) Amount represents less than $0.01 per share. The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS** (For a common share outstanding throughout the period) CLASS Y - -------------------------------------------------------------------------------- For the period Per-share September 23, 2002 operating performance to October 31 - -------------------------------------------------------------------------------- 2002 - -------------------------------------------------------------------------------- Net asset value, beginning of period $5.89 - --------------------------------------------------------------------------------- Investment operations: - -------------------------------------------------------------------------------- Net investment income (a) --(e) - -------------------------------------------------------------------------------- Net realized and unrealized gain on investments .23 - -------------------------------------------------------------------------------- Total from investment operations .23 - -------------------------------------------------------------------------------- Net asset value, end of period $6.12 - -------------------------------------------------------------------------------- Total return at net asset value (%)(b) 3.90* - -------------------------------------------------------------------------------- Ratios and supplemental data - -------------------------------------------------------------------------------- Net assets, end of period (in thousands) $144,718 - -------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(c) .12* - -------------------------------------------------------------------------------- Ratio of net investment income to average net assets (%) .03* - -------------------------------------------------------------------------------- Portfolio turnover (%) 91.14* (d) - -------------------------------------------------------------------------------- * Not annualized. ** On September 23, 2002, Putnam Global Growth Fund acquired the net assets of both Putnam Global Equity Fund and Putnam Global Growth and Income Fund. Putnam Global Growth Fund was the legal survivor and Putnam Global Equity Fund was the accounting and performance survivor in this transaction. The former Putnam Global Equity Fund did not hold any class Y shares. In addition, on October 1, 2002, the merged fund changed its name from Putnam Global Growth Fund to Putnam Global Equity Fund. (a) Per share net investment income has been determined on the basis of the weighted average number of shares outstanding during the period. (b) Total return assumes dividend reinvestment. (c) Includes amounts paid through brokerage service and expense offset arrangements (Note 2). (d) Portfolio turnover excludes the impact of assets received from the merger of Putnam Global Growth and Income Fund and Putnam Global Equity Fund. (e) Amount represents less than $0.01 per share. The accompanying notes are an integral part of these financial statements.
NOTES TO FINANCIAL STATEMENTS October 31, 2002 Note 1 Significant accounting policies Putnam Global Equity Fund (formerly Putnam Global Growth Fund) ("the fund") is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end manage ment investment company. The fund seeks capital appreciation by investing primarily through a diversified portfolio of growth and value stocks issued by companies worldwide. The fund offers class A, class B, class C, class M and class Y shares. Class A shares are sold with a maximum front-end sales charge of 5.75%. Class B shares, which convert to class A shares after approximately eight years, do not pay a front-end sales charge but pay a higher ongoing distribution fee than class A shares, and are subject to a contingent deferred sales charge, if those shares are redeemed within six years of purchase. Class C shares are subject to the same fees and expenses as class B shares, except that class C shares have a one-year 1.00% contingent deferred sales charge and do not convert to class A shares. Class M shares are sold with a maximum front-end sales charge of 3.50% and pay an ongoing distribution fee that is higher than class A shares but lower than class B and class C shares. Class Y shares, which are sold at net asset value, are generally subject to the same expenses as class A, class B, class C and class M shares, but do not bear a distribution fee. Class Y shares are sold to certain eligible purchasers including participants in defined contribution plans (including corporate IRAs), certain college savings plans, bank trust departments and trust companies, and other defined contribution plans subject to minimum requirements. Effective October 1, 2002, a redemption fee of 1.00% may apply to shares of any class redeemed (either by selling or exchanging to another fund) within 90 days of purchase. Expenses of the fund are borne pro-rata by the holders of each class of shares, except that each class bears expenses unique to that class (including the distribution fees applicable to such class). Each class votes as a class only with respect to its own distribution plan or other matters on which a class vote is required by law or determined by the Trustees. Shares of each class would receive their pro-rata share of the net assets of the fund, if the fund were liquidated. In addition, the Trustees declare separate dividends on each class of shares. The following is a summary of significant accounting policies consistently followed by the fund in the preparation of its financial statements. The preparation of financial statements is in conformity with accounting principles generally accepted in the United States of America and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. A) Security valuation Investments for which market quotations are readily available are stated at market value, which is determined using the last reported sales price on its principal exchange, or if no sales are reported -- as in the case of some securities traded over-the-counter -- the last reported bid price. For foreign investments, if trading or events occuring in other markets after the close of the principal exchange in which the securities are traded are expected to materially affect the value of the investments, then those investments are valued, taking into consideration these events, at their fair value following procedures approved by the Trustees. Securities quoted in foreign currencies are translated into U.S. dollars at the current exchange rate. Short-term investments having remaining maturities of 60 days or less are stated at amortized cost, which approximates market value. Other investments, including restricted securities, are stated at fair value following procedures approved by the Trustees. B) Joint trading account The fund may transfer uninvested cash balances, including cash collateral received under security lending arrangements, into a joint trading account along with the cash of other registered investment companies and certain other accounts managed by Putnam Investment Management, LLC ("Putnam Management"), the fund's manager, an indirect wholly-owned subsidiary of Putnam, LLC. These balances may be invested in issuers of high-grade short-term investments having maturities of up to 397 days for collateral received under security lending arrangements and up to 90 days for other cash investments. 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. Collateral for certain tri-party repurchase agreements is held at the counterparty's custodian in a segregated account for the benefit of the fund and the counterparty. Putnam Management is responsible for determining that the value of these underlying securities is at all times at least equal to the resale price, including accrued interest. D) Security transactions and related investment income Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Gains or losses on securities sold are determined on the identified cost basis. Interest income is recorded on the accrual basis. 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. Non-cash dividends, if any, are recorded at the fair market value of the securities received. E) Foreign currency translation The accounting records of the fund are maintained in U.S. dollars. The market value of foreign securities, currency holdings, and other assets and liabilities are recorded in the books and records of the fund after translation to U.S. dollars based on the exchange rates on that day. The cost of each security is determined using historical exchange rates. Income and withholding taxes are translated at prevailing exchange rates when accrued or incurred. The fund does not isolate that portion of realized or unrealized gains or losses resulting from changes in the foreign exchange rate on investments from fluctuations arising from changes in the market prices of the securities. Such gains and losses are included with the net realized and unrealized gain or loss on investments. Net realized gains and losses on foreign currency transactions represent net realized exchange gains or losses on closed forward currency contracts, disposition of foreign currencies, currency gains and losses realized between the trade and settlement dates on securities transactions and the difference between the amount of investment income and foreign withholding taxes recorded on the fund's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized appreciation and depreciation of assets and liabilities in foreign currencies arise from changes in the value of open forward currency contracts and assets and liabilities other than investments at the period end, resulting from changes in the exchange rate. Investments in foreign securities involve certain risks, including those related to economic instability, unfavorable political developments, and currency fluctuations, not present with domestic investments. F) Forward currency contracts The fund may engage in forward currency contracts, which are agreements between two parties to buy and sell currencies at a set price on a future date. These contracts are used to protect against a decline in value relative to the U.S. dollar of the currencies in which its portfolio securities are denominated or quoted (or an increase in the value of a currency in which securities a fund intends to buy are denominated, when a fund holds cash reserves and short-term investments). The U.S. dollar value of forward currency contracts is determined using current forward currency exchange rates supplied by a quotation service. The market value of the contract will fluctuate with changes in currency exchange rates. The contract is "marked to market" daily and the change in market value is recorded as an unrealized gain or loss. When the contract is closed, the fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. The fund could be exposed to risk if the value of the currency changes unfavorably, if the counterparties to the contracts are unable to meet the terms of their contracts or if the fund is unable to enter into a closing position. G) Futures and options contracts The fund may use futures and options contracts to hedge against changes in the values of securities the fund owns or expects to purchase. The fund may also write options on securities it owns or in which it may invest to increase its current returns. The potential risk to the fund is that the change in value of futures and options contracts may not correspond to the change in value of the hedged instruments. In addition, losses may arise from changes in the value of the underlying instruments, if there is an illiquid secondary market for the contracts, or if the counterparty to the contract is unable to perform. 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. Realized gains and losses on purchased options are included in realized gains and losses on investment securities. Futures contracts are valued at the quoted daily settlement prices established by the exchange on which they trade. The fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the futures contract. Such receipts or payments are known as "variation margin." Exchange traded options are valued at the last sale price, or if no sales are reported, the last bid price for purchased options and the last ask price for written options. Options traded over-the-counter are valued using prices supplied by dealers. H) Security lending The fund may lend securities, through its agent Citibank N.A., to qualified borrowers in order to earn additional income. The loans are collateralized by cash and/or securities in an amount at least equal to the market value of the securities loaned. The market value of securities loaned is determined daily and any additional required collateral is allocated to the fund on the next business day. The risk of borrower default will be borne by Citibank N.A., the fund will bear the risk of loss with respect to the investment of the cash collateral. Income from securities lending is included in investment income on the Statement of operations. At October 31, 2002, the value of securities loaned amounted to $25,235,274. The fund received cash collateral of $26,415,740, which is pooled with collateral of other Putnam funds into 27 issuers of high-grade short-term investments. I) Line of credit The fund has entered into a committed line of credit with certain banks. This line of credit agreement includes restrictions that the fund maintains an asset coverage ratio of at least 300% and borrowings must not exceed prospectus limitations. For the period ended October 31, 2002, the fund had no borrowings against the line of credit. J) Federal taxes It is the policy of the fund to distribute all of its taxable income within the prescribed time and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. It is also the intention of the fund to distribute an amount sufficient to avoid imposition of any excise tax under Section 4982 of the Internal Revenue Code of 1986, as amended. Therefore, no provision has been made for federal taxes on income, capital gains or unrealized appreciation on securities held nor for excise tax on income and capital gains. At October 31, 2002, the fund had a capital loss carryover of approximately $2,758,325,000 available to the extent allowed by tax law to offset future capital gains, if any. This amount includes approximately $9,066,000 of capital loss carryovers acquired in connection with the fund's acquisition of Putnam Global Growth and Income Fund and approximately $323,916,000 of capital loss carryovers acquired in connection with the fund's acquisition of the former Putnam Global Equity Fund which are subject to limitations imposed by the Internal Revenue Code. The amount of the carryover and the expiration dates are: Loss Carryover Expiration - -------------- ------------------ $198,335,000 October 31, 2008 1,895,363,000 October 31, 2009 664,627,000 October 31, 2010 K) Distributions to shareholders Distributions to shareholders from net investment income are recorded by the fund on the ex-dividend date. Distributions from capital gains, if any, are recorded on the ex-dividend date and paid at least annually. The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. These differences include temporary and permanent differences of losses on wash sale transactions, foreign currency gains and losses, nontaxable dividends and realized gains and losses on passive foreign investments. Prior year distributions in the Statement of changes in net assets have been reclassified to conform with current year presentation. 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 period ended October 31, 2002, the fund reclassified $6,430,201 to decrease distributions in excess of net investment income and $2,341,897,341 to increase paid-in-capital, with an increase to accumulated net realized losses of $2,348,327,542. The tax basis components of distributable earnings and the federal tax cost as of period end was as follows: Unrealized appreciation $95,302,414 Unrealized depreciation (425,500,751) ------------------ Net unrealized depreciation (330,198,337) Undistributed ordinary income 7,012,510 Capital loss carryforward (2,758,325,231) Post-October loss -- Cost for federal income tax purposes $3,590,073,342 Note 2 Management fee, administrative services and other transactions Compensation of Putnam Management, for management and investment advisory services is paid quarterly based on the average net assets of the fund. 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, 0.60% of the next $5 billion, 0.575% of the next $5 billion, 0.555% of the next $5 billion, 0.54% of the next $5 billion, 0.53% of the next $5 billion, 0.52% of the next $5 billion, 0.51% of the next $5 billion, 0.50% of the next $5 billion, 0.49% of the next $5 billion, 0.48% of the next $8.5 billion and 0.47% thereafter. The fund reimburses Putnam Management an allocated amount for the compensation and related expenses of certain officers of the fund and their staff who provide administrative services to the fund. The aggregate amount of all such reimbursements is determined annually by the Trustees. Custodial functions for the fund's assets are provided by Putnam Fiduciary Trust Company (PFTC), a wholly-owned subsidiary of Putnam, LLC. Investor servicing agent functions are provided by Putnam Investor Services, a division of PFTC. Under the subcustodian contract between the subcustodian bank and PFTC, the subcustodian bank 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 bank for the settlement of securities purchased by the fund. At October 31, 2002, the payable to the subcustodian bank represents the amount due for cash advance for the settlement of a security purchased. The fund has entered into an arrangement with PFTC whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the fund's expenses. The fund also reduced expenses through brokerage service arrangements. For the period ended October 31, 2002, the fund's expenses were reduced by $787,648 under these arrangements. Each independent Trustee of the fund receives an annual Trustee fee, of which $3,978 has been allocated to the fund, and an additional fee for each Trustees meeting attended. Trustees receive additional fees for attendance at certain committee meetings. The fund has adopted a Trustee Fee Deferral Plan (the "Deferral Plan") which allows the Trustees to defer the receipt of all or a portion of Trustees Fees payable on or after July 1, 1995. The deferred fees remain invested in certain Putnam funds until distribution in accordance with the Deferral Plan. The fund has adopted an unfunded noncontributory defined benefit pension plan (the "Pension Plan") covering all Trustees of the fund who have served as a Trustee for at least five years. Benefits under the Pension Plan are equal to 50% of the Trustee's average total retainer and meeting fees for the three years preceding retirement. Pension expense for the fund is included in Compensation of Trustees in the Statement of operations. Accrued pension liability is included in Payable for compensation of Trustees in the Statement of assets and liabilities. The fund has adopted distribution plans (the "Plans") with respect to its class A, class B, class C and class M shares pursuant to Rule 12b-1 under the Investment Company Act of 1940. The purpose of the Plans is to compensate Putnam Retail Management, a wholly-owned subsidiary of Putnam, LLC and Putnam Retail Management GP, Inc., for services provided and expenses incurred by it in distributing shares of the fund. The Plans provide for payments by the fund to Putnam Retail Management at an annual rate up to 0.35%, 1.00%, 1.00% and 1.00% of the average net assets attributable to class A, class B, class C and class M shares, respectively. The Trustees have approved payment by the fund at an annual rate of 0.25%, 1.00%, 1.00% and 0.75% of the average net assets attributable to class A, class B, class C and class M shares, respectively. For the period ended October 31, 2002, Putnam Retail Management, acting as underwriter received net commissions of $61,699 and $4,763 from the sale of class A and class M shares, respectively, and received $576,404 and $3,978 in contingent deferred sales charges from redemptions of class B and class C shares, respectively. A deferred sales charge of up to 1.00% and 0.65% is assessed on certain redemptions of class A and class M shares, respectively. For the period ended October 31, 2002, Putnam Retail Management, acting as underwriter received $31,314 and no monies on class A and class M redemptions, respectively. Note 3 Purchases and sales of securities During the period ended October 31, 2002, cost of purchases and proceeds from sales of investment securities other than short- term investments aggregated $715,533,872 and $974,542,139, respectively. There were no purchases and sales of U.S. government obligations. Written option transactions during the period are summarized as follows: Contract Premiums Amounts Received - --------------------------------------------------------------------------- Written options outstanding at beginning of period 171,500 $339,863 - --------------------------------------------------------------------------- Options opened -- -- Options expired -- -- Options closed (171,500) (339,863) - --------------------------------------------------------------------------- Written options outstanding at end of period -- $-- - --------------------------------------------------------------------------- Note 4 Capital shares At October 31, 2002, there was an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows: Eight months ended October 31, 2002 - --------------------------------------------------------------------------- Class A Shares Amount - --------------------------------------------------------------------------- Shares sold 36,472,723 $238,095,906 - --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 474,310 2,776,587 - --------------------------------------------------------------------------- Shares issued in connection with the merger of Putnam Global Growth and Income Fund 8,890,470 50,808,881 - --------------------------------------------------------------------------- Outstanding shares of the former Putnam Global Growth Fund on merger date 337,876,743 1,930,968,844 - --------------------------------------------------------------------------- 383,714,246 2,222,650,218 Shares repurchased (59,491,236) (376,091,045) - --------------------------------------------------------------------------- Net increase 324,223,010 $1,846,559,173 - --------------------------------------------------------------------------- Year ended February 28, 2002 - --------------------------------------------------------------------------- Class A Shares Amount - --------------------------------------------------------------------------- Shares sold 79,623,235 $611,269,812 - --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 147,312 1,065,166 - --------------------------------------------------------------------------- 79,770,547 612,334,978 Shares repurchased (69,097,712) (518,221,018) - --------------------------------------------------------------------------- Net increase 10,672,835 $94,113,960 - --------------------------------------------------------------------------- Year ended February 28, 2001 - --------------------------------------------------------------------------- Class A Shares Amount - --------------------------------------------------------------------------- Shares sold 42,247,540 $478,017,088 - --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 10,570,952 95,525,469 - --------------------------------------------------------------------------- 52,818,492 573,542,557 Shares repurchased (28,185,385) (311,263,186) - --------------------------------------------------------------------------- Net increase 24,633,107 $262,279,371 - --------------------------------------------------------------------------- Eight months ended October 31, 2002 - --------------------------------------------------------------------------- Class B Shares Amount - --------------------------------------------------------------------------- Shares sold 4,204,548 $24,699,677 - --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions -- -- - --------------------------------------------------------------------------- Shares issued in connection with the merger of Putnam Global Growth and Income Fund 5,565,683 29,289,144 - --------------------------------------------------------------------------- Outstanding shares of the former Putnam Global Growth Fund on merger date 70,430,989 370,639,753 - --------------------------------------------------------------------------- 80,201,220 424,628,574 Shares repurchased (19,679,446) (116,039.692) - --------------------------------------------------------------------------- Net increase 60,521,774 $308,588,882 - --------------------------------------------------------------------------- Year ended February 28, 2002 - --------------------------------------------------------------------------- Class B Shares Amount - --------------------------------------------------------------------------- Shares sold 9,400,836 $67,050,302 - --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions -- -- - --------------------------------------------------------------------------- 9,400,836 67,050,302 Shares repurchased (23,913,461) (167,310,252) - --------------------------------------------------------------------------- Net decrease (14,512,625) $(100,259,950) - --------------------------------------------------------------------------- Year ended February 28, 2001 - --------------------------------------------------------------------------- Class B Shares Amount - --------------------------------------------------------------------------- Shares sold 15,242,422 $167,663,544 - --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 9,329,505 77,904,482 - --------------------------------------------------------------------------- 24,571,927 245,568,026 Shares repurchased (23,597,686) (249,451,574) - --------------------------------------------------------------------------- Net increase (decrease) 974,241 $(3,883,548) - --------------------------------------------------------------------------- Eight months ended October 31, 2002 - --------------------------------------------------------------------------- Class C Shares Amount - --------------------------------------------------------------------------- Shares sold 2,146,967 $13,886,871 - --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions -- -- - --------------------------------------------------------------------------- Shares issued in connection with the merger of Putnam Global Growth and Income Fund 697,227 3,860,087 - --------------------------------------------------------------------------- Outstanding shares of the former Putnam Global Growth Fund on merger date 4,775,803 26,440,470 - --------------------------------------------------------------------------- 7,619,997 44,187,428 Shares repurchased (3,350,794) (21,357,986) - --------------------------------------------------------------------------- Net increase 4,269,203 $22,829,442 - --------------------------------------------------------------------------- Year ended February 28, 2002 - --------------------------------------------------------------------------- Class C Shares Amount - --------------------------------------------------------------------------- Shares sold 4,179,829 $30,925,715 - --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions -- -- - --------------------------------------------------------------------------- 4,179,829 30,925,715 Shares repurchased (4,730,261) (34,922,875) - --------------------------------------------------------------------------- Net decrease (550,432) $(3,997,160) - --------------------------------------------------------------------------- Year ended February 28, 2001 - --------------------------------------------------------------------------- Class C Shares Amount - --------------------------------------------------------------------------- Shares sold 3,816,727 $41,949,383 - --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 639,728 5,620,704 - --------------------------------------------------------------------------- 4,456,455 47,570,087 Shares repurchased (1,604,938) (16,585,420) - --------------------------------------------------------------------------- Net increase 2,851,517 $30,984,667 - --------------------------------------------------------------------------- Eight months ended October 31, 2002 - --------------------------------------------------------------------------- Class M Shares Amount - --------------------------------------------------------------------------- Shares sold 900,371 $6,035,670 - --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions -- -- - --------------------------------------------------------------------------- Shares issued in connection with the merger of Putnam Global Growth and Income Fund 332,625 1,842,814 - --------------------------------------------------------------------------- Outstanding shares of the former Putnam Global Growth Fund on merger date 4,066,086 22,527,004 - --------------------------------------------------------------------------- 5,299,082 30,405,488 Shares repurchased (2,079,927) (13,288,468) - --------------------------------------------------------------------------- Net increase 3,219,155 $17,117,020 - --------------------------------------------------------------------------- Year ended February 28, 2002 - --------------------------------------------------------------------------- Class M Shares Amount - --------------------------------------------------------------------------- Shares sold 2,877,038 $20,399,841 - --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions -- -- - --------------------------------------------------------------------------- 2,877,038 20,399,841 Shares repurchased (3,736,885) (26,991,212) - --------------------------------------------------------------------------- Net decrease (859,847) $(6,591,371) - --------------------------------------------------------------------------- Year ended February 28, 2001 - --------------------------------------------------------------------------- Class M Shares Amount - --------------------------------------------------------------------------- Shares sold 1,979,486 $22,501,104 - --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 878,636 7,709,288 - --------------------------------------------------------------------------- 2,858,122 30,210,392 Shares repurchased (1,768,081) (19,709,734) - --------------------------------------------------------------------------- Net increase 1,090,041 $10,500,658 - --------------------------------------------------------------------------- For the period September 23 to October 31, 2002 - --------------------------------------------------------------------------- Class Y Shares Amount - --------------------------------------------------------------------------- Shares sold 1,380,116 $8,108,311 - --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions -- -- - --------------------------------------------------------------------------- Shares issued in connection with the merger of Putnam Global Growth and Income Fund -- -- - --------------------------------------------------------------------------- Outstanding shares of the former Putnam Global Growth Fund on merger date 24,502,582 144,264,344 - --------------------------------------------------------------------------- 25,882,698 152,372,655 Shares repurchased (2,226,615) (12,856,270) - --------------------------------------------------------------------------- Net increase 23,656,083 $139,516,385 - --------------------------------------------------------------------------- The above capital share activity for the years ended February 28, 2002 and February 28, 2001 is that of the former Putnam Global Equity Fund, the accounting survivor in the September 23, 2002 merger of the former Putnam Global Equity Fund, Putnam Global Growth and Income Fund and Putnam Global Growth Fund. The number of shares in each transaction type have been restated to give effect for this transaction. At the merger date, the former Putnam Global Equity Fund did not hold any class Y shares. Note 5 Acquisition of Putnam Global Growth and Income Fund and Putnam Global Equity Fund On September 23, 2002, the fund issued the following shares to acquire the net assets of Putnam Global Growth and Income Fund and Putnam Global Equity Fund in a tax-free exchange approved by the shareholders. Shares Shares Issued Exchanged - --------------------------------------------------------------------------- Putnam Global Growth and Income Fund Class A 8,890,470 5,541,692 Class B 5,565,683 3,242,558 Class C 697,227 423,485 Class M 332,625 202,001 - --------------------------------------------------------------------------- Putnam Global Equity Fund (former) Class A 74,290,109 50,627,571 Class B 33,136,662 21,399,769 Class C 3,478,619 2,320,476 Class M 3,965,317 2,659,922 - --------------------------------------------------------------------------- The net assets of the fund, the former Putnam Global Equity Fund and Putnam Global Growth and Income Fund on September 20, 2002, valuation date, were $2,494,840,415, $640,176,062 and $85,800,926 respectively. On September 20, 2002, the fund had unrealized depreciation of $419,169,223, the former Putnam Global Equity Fund had unrealized depreciation of $89,854,863 and Putnam Global Growth and Income Fund had unrealized depreciation of $11,366,116, respectively. The aggregate net assets of the fund immediately following the acquisition were $3,220,817,403. The fund is to be managed in accordance with the same investment policies and restrictions, and by the same portfolio management team, as the former Putnam Global Equity Fund. The former Putnam Global Equity Fund was determined to be the accounting and performance survivor. Its accounting records for periods prior to September 23, 2002 have been carried forward. Subsequent to the transaction, Putnam Global Growth Fund changed its name to Putnam Global Equity Fund. On October 1, 2002, the former Putnam Global Equity Fund then changed its fiscal year end from February 28 to October 31, effective October 31, 2002. FEDERAL TAX INFORMATION (Unaudited) The fund has designated 100% of the distributions from net investment income as qualifying for the dividends received deduction for corporations. The Form 1099 you receive in January 2003 will show the tax status of all distributions paid to your account in calendar 2002.
TRUSTEES Name, Address, 1 Date of Birth, Position(s) Held with Fund and Length of Service Principal Occupation(s) as a Putnam Fund Trustee 2 During Past 5 Years Other Directorships Held by Trustee - ------------------------------------------------------------------------------------------------------- Jameson A. Baxter (9/6/43), President, Baxter Director of ASHTA Chemicals, Inc., Trustee since 1994 Associates, Inc. Banta Corporation (a printing and (a management digital imaging firm), Intermatic consulting and private Corporation (manufacturer of energy investments firm) control products), Ryerson Tull, Inc. (a steel service corporation), Advocate Health Care, and the National Center for Nonprofit Boards. Chairman Emeritus of the Board of Trustees, Mount Holyoke College. Also held various positions in investment banking and corporate finance, including Vice President and principal of the Regency Group and consultant to First Boston Corp. Charles B. Curtis (4/27/40), President and Chief Member of the Council on Foreign Trustee since 2001 Operating Officer, Relations, the Electric Power Nuclear Threat Research Institute Advisory Council, Initiative (a private the Board of Directors of the Gas foundation dedicated Technology Institute, the University to reducing the threat of Chicago Board of Governors for of weapons of mass Argonne National Laboratory, the destruction), also serves Board of Directors of the as Senior Advisor to the Environment and Natural Resources United Nations Program Steering Committee, Foundation John F. Kennedy School of Government, Harvard University. Prior to 2002, Mr. Curtis was a member of the Board of Directors of the Gas Technology Institute. Until 2001, Mr. Curtis was a Member of the Department of Defense's Policy Board and Director of EG&G Technical Services, Inc. (fossil energy research and development support) and prior to May 1997, Mr. Curtis was Deputy Secretary of Energy. John A. Hill (1/31/42), Vice-Chairman and Director of Devon Energy Trustee since 1985 and Managing Director, Corporation (formerly known as Chairman since 2000 First Reserve Snyder Oil Corporation), Corporation TransMontaigne Oil Company, (a registered investment Continuum Health Partners of advisor investing in New York, Sarah Lawrence College, companies in the and various private companies owned world-wide energy by First Reserve Corporation. industry on behalf of Trustee of TH Lee, Putnam institutional investors) Investment Trust (a closed-end investment company). Prior to acquiring First Reserve in 1983, Mr. Hill held executive positions with several advisory firms and various positions with the federal government, including Associate Director of the Office of Manage ment and Budget and Deputy Director of the Federal Energy Administration. Ronald J. Jackson Private investor Former Chairman, President, and (12/17/43), Chief Executive Officer of Fisher- Trustee since 1996 Price, Inc. (a toy manufacturer). Previously served as President and Chief Executive Officer of Stride- Rite, Inc. and Kenner Parker Toys. Also held financial and marketing positions with General Mills, Parker Brothers, and Talbots. President of the Kathleen and Ronald J. Jackson Foundation (charitable trust). Member of the Board of Overseers of WGBH (public television and radio). Member of the Board of Overseers of the Peabody Essex Museum. Paul L. Joskow (6/30/47), Elizabeth and James Director, National Grid Group Trustee since 1997 Killian Professor of (a UK-based holding company Economics and with interests in electric power, Management and natural gas distribution, and Director of the Center telecommunications networks), and for Energy and the Whitehead Institute for Environmental Policy Biomedical Research (a non-profit Research, Massachusetts research institution). President of the Institute of Technology Yale University Council. Prior to February 2002, March 2000, and September 1998, Dr. Joskow was a Director of State Farm Indemnity Company (an automobile insurance company), Director of New England Electric System (a public utility holding company) and a consultant to National Economic Research Associates, respectively. Elizabeth T. Kennan Chairman, Cambus- Director, Northeast Utilities, and (2/25/38), Kenneth Bloodstock (a Talbots (a distributor of women's Trustee since 1992 limited liability company apparel). Trustee of Centre College. involved in thoroughbred Prior to 2001, Dr. Kennan was a horse breeding and member of the Oversight Committee farming), President of Folger Shakespeare Library. Emeritus of Mount Prior to September 2000, June 2000, Holyoke College and November 1999, Dr. Kennan was a Director of Chastain Real Estate, Bell Atlantic, and Kentucky Home Life Insurance, respectively. Prior to 1995, Dr. Kennan was a Trustee of Notre Dame University. For 12 years, she was on the faculty of Catholic University. John H. Mullin, III Chairman and CEO Director Alex. Brown Realty, Inc., (6/15/41), of Ridgeway Farm Sonoco Products, Inc. (a packaging Trustee since 1997 (a limited liability company), The Liberty Corporation company engaged in (a company engaged in the timber and farming) broadcasting industry), and Progress Energy, Inc. (a utility company, formerly known as Carolina Power & Light). Trustee Emeritus of Washington & Lee University. Prior to October 1997, January 1998, and May 2001, Mr. Mullin was a Director of Dillon, Read and Co. Inc., The Ryland Group, Inc., and Graphic Packaging International Corp., respectively. Robert E. Patterson Senior Partner of Cabot Chairman of the Joslin Diabetes (3/15/45), Properties, LLP and Center, Trustee of SEA Education Trustee since 1984 Chairman of Cabot Association, and Director of Properties, Inc. Brandywine Trust Company (a trust company). Prior to February 1998, Mr. Patterson was Executive Vice President and Director of Acquisitions of Cabot Partners Limited Partnership. Prior to December 2001, Mr. Patterson was President and Trustee of Cabot Industrial Trust (publicly traded real estate investment trust). Prior to 1990, Mr. Patterson was Executive Vice President of Cabot, Cabot & Forbes Realty Advisors, the predecessor of Cabot Partners, and prior to that was Senior Vice President of the Beal Companies. W. Thomas Stephens Corporate Director Director of Qwest Communications (9/2/42), (communications company), Xcel Trustee since 1997 Energy Incorporated (public utility company), TransCanada Pipelines, Norske Canada, Inc. (paper manufacturer) and Mail-Well (printing and envelope company). Prior to July 2001 and October 1999, Mr. Stephens was Chairman of Mail- Well and MacMillan-Bloedel (forest products company). Prior to 1996, Mr. Stephens was Chairman and Chief Executive Officer of Johns Manville. W. Nicholas Thorndike Director of various Trustee of Northeastern University and (3/28/33), corporations and Honorary Trustee of Massachusetts Trustee since 1992 charitable General Hospital. Prior to organizations, September 2000, April 2000, and including Courier December 2001, Mr. Thorndike was Corporation (a book a Director of Bradley Real Estate, manufacturer) and Inc., a Trustee of Eastern Utilities Providence Journal Co. Associates, and a Trustee of Cabot (a newspaper publisher) Industrial Trust, respectively. Previously served as Chairman of the Board and managing partner of Wellington Management/Thorndike Doran Paine & Lewis, and Chairman and Director of Ivest Fund. Lawrence J. Lasser* President and Chief Director of Marsh & McLennan (11/1/42), Executive Officer of Companies, Inc. and the United Way Trustee since 1992 Putnam Investments of Massachusetts Bay. Member of the Vice President since 1981 and Putnam Board of Governors of the Investment Management Company Institute, Trustee of the Museum of Fine Arts, Boston, a Trustee and Member of the Finance and Executive Committees of Beth Israel Deaconess Medical Center, Boston, and a Member of the CareGroup Board of Managers Investment Committee, the Council on Foreign Relations, and the Commercial Club of Boston. George Putnam, III* President, New Director of The Boston Family (8/10/51), Generation Research, Office, L.L.C. (registered investment Trustee since 1984 and Inc. (a publisher of advisor), Trustee of the SEA President since 2000 financial advisory and Education Association, Trustee of other research services St. Mark's School, and Trustee of relating to bankrupt and Shore Country Day School. distressed companies) Previously, Mr. Putnam was an and New Generation attorney with the firm of Dechert Advisers, Inc. Price & Rhoads. (a registered investment adviser) A.J.C. Smith* (4/13/34), Director of Marsh & Director of Trident Corp. (a limited Trustee since 1986 McLennan partnership with over 30 institutional Companies, Inc. investors). Trustee of the Carnegie Hall Society, the Educational Broadcasting Corporation and the National Museums of Scotland. Chairman of the Central Park Conservancy. Member of the Board of Overseers of the Joan and Sanford I. Weill Graduate School of Medical Sciences of Cornell University. Fellow of the Faculty of Actuaries in Edinburgh, the Canadian Institute of Actuaries, and the Conference of Actuaries. Associate of the Society of Actuaries. Member of the American Actuaries, the International Actuarial Association and the International Association of Consulting Actuaries. Prior to May 2000 and November 1999, Mr. Smith was Chairman and CEO, respectively, of Marsh & McLennan Companies, Inc. - ------------------------------------------------------------------------------------------------------- 1 The address of each Trustee is One Post Office Square, Boston, MA 02109. As of October 31, 2002, there were 101 Putnam Funds. 2 Each Trustee serves for an indefinite term, until his or her resignation, death, or removal. * Trustees who are or may be deemed to be "interested persons" (as defined in the Investment Company Act of 1940) of the fund, Putnam Management, Putnam Retail Management or Marsh & McLennan Companies, Inc., the parent company of Putnam LLC and its affiliated companies. Messrs. Putnam, III, Lasser and Smith are deemed "interested persons" by virtue of their positions as officers or shareholders of the fund or Putnam Management, Putnam Retail Management or Marsh & McLennan Companies, Inc. George Putnam, III is the President of your fund and each of the other Putnam funds. Lawrence J. Lasser is the President and Chief Executive Officer of Putnam Investments and Putnam Management. Mr. Lasser and Mr. Smith serve as Directors of Marsh & McLennan Companies, Inc.
OFFICERS In addition to George Putnam III and Lawrence J. Lasser, the other officers of the fund are shown below: Name, Address, 1 Date of Birth, Length of Service with Position(s) Held with Fund the Putnam Funds Principal Occupation(s) During Past 5 Years - --------------------------------------------------------------------------------------------------------------- Charles E. Porter Since 1989 Managing Director, Putnam Investments (7/26/38), Executive Vice and Putnam Management President, Treasurer and Principal Financial Officer Patricia C. Flaherty Since 1993 Senior Vice President, Putnam Investments (12/1/46), Senior Vice and Putnam Management President Karnig H. Durgarian (1/13/56), Vice President and Since 2002 Senior Managing Director, Putnam Principal Executive Officer Investments Michael T. Healy (1/24/58), Assistant Treasurer Since 2000 Managing Director, Putnam Investments and Principal Accounting Officer Steven D. Krichmar (6/27/58), Vice President and Since 2002 Managing Director, Putnam Investments. Principal Financial Officer Prior to 2001, Partner, PricewaterhouseCoopers LLP Charles E. Haldeman Jr. Since 2002 Senior Managing Director, Putnam (10/29/48), Vice President Investments and Putnam Management. Prior to 2002, Chief Executive Officer, Delaware Management Holdings, Inc.; prior to 2000, President and Chief Operating Officer, United Asset Management Stephen M. Oristaglio Since 1998 Senior Managing Director, Putnam (8/21/55), Vice President Investments and Putnam Management. Prior to 1998, Managing Director, Swiss Bank Corp. Gordon H. Silver Since 1990 Senior Managing Director, Putnam (7/3/47), Vice President Investments, Putnam Management and Putnam Retail Management Brett C. Browchuk Since 1994 Managing Director, Putnam Investments (2/27/63), Vice President and Putnam Management Richard G. Leibovitch Since 1999 Managing Director, Putnam Investments (10/31/63), Vice President and Putnam Management. Prior to 1999, Managing Director, J.P. Morgan Richard A. Monaghan Since 1998 Senior Managing Director, Putnam (8/25/54), Vice President Investments and Putnam Retail Management Beth S. Mazor Since 2002 Senior Vice President, Putnam Investments (4/6/58), Vice President John R. Verani Since 1988 Senior Vice President, Putnam Investments (6/11/39), Vice President and Putnam Management Judith Cohen (6/7/45), Clerk and Since 1993 Clerk and Assistant Treasurer, The Assistant Treasurer Putnam Funds Paul C. Warren Since 2002 Managing Director of Putnam Management (10/6/60), Vice President - --------------------------------------------------------------------------------------------------------------- 1 The address of each Officer is One Post Office Square, Boston, MA 02109.
THE PUTNAM FAMILY OF FUNDS The following is a complete list of Putnam's open-end mutual funds. 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. Please read it carefully before you invest or send money. GROWTH FUNDS Growth Opportunities Fund Health Sciences Trust International New Opportunities Fund New Opportunities Fund OTC & Emerging Growth Fund Small Cap Growth Fund Vista Fund Voyager Fund Voyager Fund II BLEND FUNDS Capital Appreciation Fund Capital Opportunities Fund Europe Growth Fund Global Equity Fund Global Natural Resources Fund International Growth Fund International Voyager Fund Investors Fund Research Fund Tax Smart Equity Fund Utilities Growth and Income Fund VALUE FUNDS Classic Equity Fund Convertible Income-Growth Trust Equity Income Fund The George Putnam Fund of Boston The Putnam Fund for Growth and Income International Growth and Income Fund Mid Cap Value Fund New Value Fund Small Cap Value Fund * INCOME FUNDS American Government Income Fund Diversified Income Trust Global Income Trust High Yield Advantage Fund * High Yield Trust Income Fund Intermediate U.S. Government Income Fund Money Market Fund + U.S. Government Income Trust TAX-FREE INCOME FUNDS Municipal Income Fund Tax Exempt Income Fund Tax Exempt Money Market 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 State tax-free money market funds + California, New York ASSET ALLOCATION FUNDS Putnam Asset Allocation Funds--three investment portfolios that spread your money across a variety of stocks, bonds, and money market investments. The three portfolios: Asset Allocation: Balanced Portfolio Asset Allocation: Conservative Portfolio Asset Allocation: Growth Portfolio * Closed to new investors. + An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the funds seek to preserve your investment at $1.00 per share, it is possible to lose money by investing in the fund. Check your account balances and current performance at www.putnaminvestments.com. FUND INFORMATION ABOUT PUTNAM INVESTMENTS One of the largest mutual fund families in the United States, Putnam Investments has a heritage of investment leadership dating back to Judge Samuel Putnam, whose Prudent Man Rule has defined fiduciary tradition and practice since 1830. Founded over 65 years ago, Putnam Investments was built around the concept that a balance between risk and reward is the hallmark of a well-rounded financial program. We presently manage over 100 mutual funds in growth, value, blend, fixed income, and international. INVESTMENT MANAGER Putnam Investment Management, LLC One Post Office Square Boston, MA 02109 MARKETING SERVICES Putnam Retail Management One Post Office Square Boston, MA 02109 CUSTODIAN Putnam Fiduciary Trust Company LEGAL COUNSEL Ropes & Gray INDEPENDENT ACCOUNTANTS KPMG LLP TRUSTEES John A. Hill, Chairman Jameson Adkins Baxter Charles B. Curtis Ronald J. Jackson Paul L. Joskow Elizabeth T. Kennan Lawrence J. Lasser John H. Mullin III Robert E. Patterson George Putnam, III A.J.C. Smith W. Thomas Stephens W. Nicholas Thorndike OFFICERS George Putnam, III President Charles E. Porter Executive Vice President, Treasurer and Principal Financial Officer Patricia C. Flaherty Senior Vice President Karnig H. Durgarian Vice President and Principal Executive Officer Michael T. Healy Assistant Treasurer and Principal Accounting Officer Steven D. Krichmar Vice President and Principal Financial Officer Lawrence J. Lasser Vice President Charles E. Haldeman, Jr. Vice President Stephen M. Oristaglio Vice President Gordon H. Silver Vice President Brett C. Browchuk Vice President Justin Scott Vice President Paul C. Warren Vice President Richard G. Leibovitch Vice President Richard A. Monaghan Vice President Beth S. Mazor Vice President John R. Verani Vice President Judith Cohen Clerk and Assistant Treasurer This report is for the information of shareholders of Putnam Global Equity 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 and Putnam's Quarterly Ranking Summary. For more information or to request a prospectus, call toll free: 1-800-225-1581. The fund's Statement of Additional Information contains additional information about the fund's Trustees and is available without charge upon request by calling 1-800-225-1581. Visit www.putnaminvestments.com or call 1-800-225-1581. NOT FDIC INSURED, MAY LOSE VALUE, NO BANK GUARANTEE [LOGO OMITTED] PUTNAM INVESTMENTS The Putnam Funds One Post Office Square Boston, Massachusetts 02109 - --------------------- PRSRT STD U.S. POSTAGE PAID PUTNAM INVESTMENTS - --------------------- For account balances, economic forecasts, and the latest on Putnam funds, visit www.putnaminvestments.com AN006-84072 005/882/2LT/907/513 12/02 PUTNAM INVESTMENTS [SCALE LOGO OMITTED] - ------------------------------------------------------------------------------ Putnam Global Equity Fund Supplement to Annual Report dated 10/31/02 The following information has been prepared to provide class Y shareholders with a performance overview specific to their holdings. Class Y shares are offered exclusively to clients that meet the eligibility requirements specified in the fund's prospectus for such shares. Performance of class Y shares, which incur neither a front-end load, distribution fee, nor contingent deferred sales charge, will differ from performance of class A, B, C, and M shares, which are discussed more extensively in the annual report. ANNUAL RESULTS AT A GLANCE - ------------------------------------------------------------------------------ Total return for periods ended 10/31/02 NAV 8 month 3.90% 1 year -9.06 5 years 14.14 Annual average 2.68 Life of fund (since class A inception, 7/1/94) 108.85 Annual average 9.24 Share value: NAV 9/23/02 $5.89 10/31/02 $6.12 - ------------------------------------------------------------------------------ Distributions: The fund did not make any distributions during this period. - ------------------------------------------------------------------------------ * Please note that this class made no distributions in this time period. Please note that past performance is not indicative of future results. More recent returns may be more or less than those shown. Returns shown for class Y shares for periods prior to their inception are derived from the historical performance of class A shares, and are not adjusted to reflect the initial sales charge currently applicable to class A shares. These returns have not been adjusted to reflect differences in operating expenses which, for class Y shares, typically are lower than the operating expenses applicable to class A shares. All returns assume reinvestment of distributions at net asset value. Investment return and principal value will fluctuate so your shares, when redeemed, may be worth more or less than their original cost. See full report for information on comparative benchmarks. If you have questions, please consult your fund prospectus or call Putnam toll free at 1-800-752-9894. -----END PRIVACY-ENHANCED MESSAGE-----