N-30D 1 vf.txt PUTNAM VOYAGER FUND Putnam Voyager Fund ANNUAL REPORT ON PERFORMANCE AND OUTLOOK 7-31-02 [GRAPHIC OMITTED: COMPASS] [SCALE LOGO OMITTED] FROM THE TRUSTEES [GRAPHIC OMITTED: PHOTO OF JOHN A. HILL AND GEORGE PUTNAM III] Dear Fellow Shareholder: In this persistently challenging environment, many investors have sought to cut their losses by getting out of the stock market entirely. It is our view that for those who still have several years before they need to make withdrawals, this may have been the wrong move to make, for history has been on the side of investors who have dared to weather even sustained periods of market retreat. If you had what you believed was an effective investment program before the markets began their decline and thus far have resisted the temptation to veer off that course, we strongly urge you to remain patient. As always, however, it is a good idea to consult your financial advisor for specific counsel in regard to your own situation. Quite naturally, we are disappointed at having to report the negative results posted by Putnam Voyager Fund during the fiscal year ended July 31, 2002. However, we believe that the fund remains positioned to benefit once investors begin to recognize the economy's positive fundamentals. On the following pages, you will find a full explanation of the reasons for the fund's decline during the period, as well as a view of prospects for the months ahead. Respectfully yours, /S/ JOHN A. HILL /S/ GEORGE PUTNAM, III John A. Hill George Putnam, III Chairman of the Trustees President of the Funds September 18, 2002 REPORT FROM FUND MANAGEMENT This fund is managed by the Putnam Large-Cap Growth and Specialty Growth teams Putnam Voyager Fund's 2002 fiscal year was marked by tremendous adversity for financial markets. While the terrorist attacks on New York and Washington on September 11, 2001, were the most shocking events for the markets, other troubles had more lasting effects. Since the collapse of Enron late in 2001, news of improper accounting practices at many companies has hurt market confidence. In such an extraordinary environment, it is important to keep your investment time horizon in mind. Looking at history, we can see that stocks have experienced similar troubles in the past -- sluggish economic performance, corporate scandals, international unrest, even war. In such time periods, the markets reflected troubles by lowering stock prices. But these difficulties were resolved -- wars ended, recessions gave way to expansions, and market practices were reformed to prevent abuses. Afterwards, stocks eventually advanced. We do not manage your fund based on a forecast of when and how the market will recover. We make investment decisions by analyzing the fundamental quality of companies and their ability to generate profits. On this basis, we have confidence in the future because we see that corporate profits are improving. And in the past year, despite the difficult environment, Putnam Voyager Fund's class A shares at net asset value kept pace with the fund's benchmark index as well as the average return for the Lipper Large-Cap Growth Fund category. Additional performance details are on page 7. Total return for 12 months ended 7/31/02 Class A Class B Class C Class M NAV POP NAV CDSC NAV CDSC NAV POP ----------------------------------------------------------------------- -28.24% -32.36% -28.82% -32.22% -28.81% -29.49% -28.64% -31.14% ----------------------------------------------------------------------- Past performance does not indicate future results. Performance information for longer periods and explanation of performance calculation methods begin on page 7. [GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY SECTORS] TOP INDUSTRY SECTORS* Pharmaceuticals 13.1% Retail 10.5% Software 6.0% Conglomerates 5.7% Electronics 5.4% Footnote reads: *Based on net assets as of 7/31/02. Holdings will vary over time. * MARKET SWINGS OBSCURE FUNDAMENTAL IMPROVEMENT Watching economic trends and stock market performance shift during the past year could have caused many investors whiplash. Pessimism swiftly turned into optimism and back to pessimism again. Early in the fiscal year, the question as to whether the economic slowdown qualified as a recession was resolved by the effects of September 11. But then, sooner than many had anticipated, the stock market rallied, reflecting confidence in an economic recovery. This optimism supported the market until the spring, when indications emerged that the speed of the recovery had decelerated. Stocks subsequently fell further than they had in September. Fund Profile Putnam Voyager Fund seeks capital appreciation by investing in stocks of companies believed to offer above-average growth potential. The fund invests in a diversified portfolio of large and midsize companies across a range of industries. The fund targets companies with sales and profits that Putnam believes are likely to grow faster than the overall economy. The fund is appropriate for investors seeking growth of capital and broad exposure to growth-oriented companies. Viewing the picture more broadly, we can see that, rather than being unusually mild, as economists initially thought, this recession has been more similar to past recessions. Fortunately, the unemployment rate has stayed near or below 6%, helping to support consumer spending. In fact, the housing market has been extremely strong. The real shortfall has come in capital investments by businesses. The technology and telecommunications sectors felt the greatest impact and have contracted significantly. The most recent stock price declines in these sectors have reduced valuations to levels last seen prior to the bull market of the late 1990s. Overall, the fundamental condition of the economy and of corporate profitability has improved during the fiscal year. Last year at this time, the economy was contracting, and numerous companies were announcing disappointing earnings results. Profits are now recovering from that downswing. In the quarter that just ended, from April through June, approximately 70% of companies reported profits that beat expectations. Well-managed companies -- including the growth companies this fund targets -- responded to the slowdown by cutting costs and inventories, positioning themselves to become more profitable. * MARKET SENTIMENT DAMAGED BY ACCOUNTING UNCERTAINTIES Although business fundamentals have improved over the last year, market sentiment has deteriorated because of the accounting scandals and bankruptcies of major corporations. Enron and WorldCom were the most notable. As many companies have restated their finances, investors have legitimately questioned the truthfulness of accounting statements and penalized stocks in general. We too have been disappointed by dishonest practices. The fund has a position in Tyco, though it is not a top holding. Tyco's chief executive officer resigned and now faces charges of tax evasion. Although this holding, as well as others mentioned in this report, were viewed favorably by fund management at the end of the reporting period, all are subject to review and adjustment in accordance with the fund's strategy. [GRAPHIC OMITTED: TOP 10 HOLDINGS] TOP 10 HOLDINGS General Electric Co. Conglomerates Microsoft Corp. Software Pfizer, Inc. Pharmaceuticals Wal-Mart Stores, Inc. Retail Johnson & Johnson Pharmaceuticals Intel Corp. Electronics Philip Morris Companies, Inc. Tobacco Cisco Systems, Inc. Communications equipment American International Group, Inc. Insurance Lowe's Companies, Inc. Retail Footnote reads: These holdings represent 28.1% of the fund's net assets as of 7/31/02. Portfolio holdings will vary over time. At this point, a process involving legislation, regulation, and the market's own discipline, is in motion to correct these abuses. The Securities and Exchange Commission is now requiring corporate executives to certify the accuracy of company financial statements. We are also pleased to see many of the companies we invest in demonstrating their quality by initiating actions of their own. For example, Citigroup, a fund holding, has learned from the Enron episode and is now asking its clients to disclose any off-balance-sheet partnership arrangements. * IN ALL ENVIRONMENTS, FUND MAINTAINS INVESTMENT DISCIPLINE Your fund invests in a diverse assortment of growth stocks to provide exposure to U.S. companies we believe are likely to grow faster than the overall economy. We focus our research on companies that, in ordinary terms, qualify as large businesses. In terms of the stock market, by contrast, a sizable minority of fund holdings qualify as midsize companies. That's because relatively few companies rank among the largest companies in the market, compared with literally hundreds of midsize companies that are currently traded. We select stocks with a disciplined, fundamental research process. We begin by surveying the market to identify companies that are achieving or poised to achieve a high rate of profit growth. Such growth can result from a variety of factors, such as rising demand, new products or services, demographic shifts, access to new markets, or a strong competitive position. We assemble a portfolio diversified across all business sectors. During the past year, we have made some adjustments to the portfolio as market conditions have changed. While economic growth was slow, we had larger holdings in the financial sector. Banks and credit card companies, for example, benefited from the strong demand for mortgages, refinancings, and consumer spending in general. One of the fund's top performers was Freddie Mac, which purchases mortgage loans from regional banks. For similar reasons we also favored consumer staples such as Philip Morris and consumer cyclical stocks such as TJX, the operator of TJ Maxx stores. As economic growth has resumed, we have reduced the fund's financial exposure a bit, and placed a little more emphasis on stocks in other sectors that we considered more likely to accelerate in an economic recovery. This has included a modest increase in technology exposure. However, we are still cautious regarding telecommunications stocks, because the industry still faces little demand for new services and many companies carry heavy debt obligations. * TEAMS' OPTIMISM IS BASED ON BUSINESS FUNDAMENTALS During the barrage of negative news over the past year, we kept our focus on analyzing business fundamentals. More than anything, it is these fundamentals that give us a positive outlook for the new fiscal year. We are aware that external events, particularly international affairs, could be disruptive, but we believe that the fund is diversified to offset many of those risks, and that its portfolio contains high-quality companies. 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 7/31/02, there is no guarantee the fund will continue to hold these securities in the future. The fund invests all or a portion of its assets in small to midsize companies. Such investments increase the risk of greater price fluctuations. The fund is managed by the Putnam Large-Cap Growth and Specialty Growth teams. The members of the Large-Cap Growth Team are Brian O'Toole (Portfolio Leader), Tony Elavia (Portfolio Member), Lee Montag, and David Santos. The members of the Specialty Growth Team are Eric Wetlaufer (Portfolio Member), Dana Clark, Kenneth Doerr, Roland Gillis, Daniel Miller, Michael Mufson, Margery Parker, Anthony Sellitto, and Richard Weed. 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 7/31/02 Class A Class B Class C Class M (inception dates) (4/1/69) (4/27/92) (7/26/99) (12/1/94) NAV POP NAV CDSC NAV CDSC NAV POP ------------------------------------------------------------------------------ 1 year -28.24% -32.36% -28.82% -32.22% -28.81% -29.49% -28.64% -31.14% ------------------------------------------------------------------------------ 5 years 1.02 -4.79 -2.71 -4.00 -2.67 -2.67 -1.46 -4.92 Annual average 0.20 -0.98 -0.55 -0.81 -0.54 -0.54 -0.29 -1.00 ------------------------------------------------------------------------------ 10 years 162.39 147.30 143.35 143.35 143.36 143.36 149.59 140.96 Annual average 10.13 9.48 9.30 9.30 9.30 9.30 9.58 9.19 ------------------------------------------------------------------------------ Annual average (life of fund) 11.95 11.75 10.92 10.92 11.11 11.11 11.22 11.10 ------------------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 7/31/02 Russell 1000 Russell 1000 S&P 500 Consumer Growth Index Index Index* price index ------------------------------------------------------------------------------------------------- 1 year -28.75% -22.91% -23.63% 1.41% ------------------------------------------------------------------------------------------------- 5 years -14.40 3.63 2.23 12.02 Annual average -3.06 0.72 0.44 2.30 ------------------------------------------------------------------------------------------------- 10 years 112.25 161.79 161.43 28.04 Annual average 7.82 10.10 10.09 2.50 ------------------------------------------------------------------------------------------------- Annual average (life of fund) --+ --+ --+ 4.94 -------------------------------------------------------------------------------------------------
*The S&P 500 Index has been added to replace the Russell 1000 Index as a secondary benchmark index for the fund because the S&P 500 better reflects the performance of large-capitalization stocks. +The inception date of the Russell 1000 Growth Index was December 31, 1978, the inception date of the Russell 1000 Index was December 28,1978, and the inception date of the S&P 500 Index was December 31, 1969. All were after the fund's inception. 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 are derived from the historical performance of class A shares, adjusted for the applicable sales charge (or CDSC) and higher operating expenses for such shares. LIPPER INFORMATION: The average annualized return for the 728 funds in the Lipper Large-Cap Growth fund category over the 12 months ended 7/31/02 was -28.89%. Over the 5- and 10-year periods ended 7/31/02, average annualized returns for the category were -2.52% and 7.20%, respectively.
[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 7/31/92 Fund's class A Russell 1000 Russell 1000 S&P 500 Consumer price Date shares at POP Growth Index Index Index index 7/31/92 9,425 10,000 10,000 10,000 10,000 7/31/93 11,280 10,244 11,032 10,873 10,278 7/31/94 11,900 10,755 11,508 11,434 10,562 7/31/95 16,031 14,134 14,518 14,419 10,868 7/31/96 18,514 16,328 16,803 16,808 11,189 7/31/97 24,479 24,794 25,262 25,572 11,431 7/31/98 28,600 29,733 30,026 30,504 11,623 7/31/99 35,006 36,881 35,924 36,666 11,865 7/31/00 48,224 45,872 39,810 39,957 12,299 7/31/01 34,461 29,788 33,958 34,232 12,626 7/31/02 $24,730 $21,225 $26,179 $26,143 $12,804 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 $24,335 and $24,336, 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 $24,959 ($24,096 at public offering price). See first page of performance section for performance calculation method.
PRICE AND DISTRIBUTION INFORMATION 12 MONTHS ENDED 7/31/02 Class A Class B Class C Class M ------------------------------------------------------------------------------ Distributions (number) 1 1 1 1 ------------------------------------------------------------------------------ Income $0.042 $-- $-- $-- ------------------------------------------------------------------------------ Capital gains Long-term 0.745 0.745 0.745 0.745 ------------------------------------------------------------------------------ Short-term -- -- -- -- ------------------------------------------------------------------------------ Total $0.787 $0.745 $0.745 $0.745 ------------------------------------------------------------------------------ Share value: NAV POP NAV NAV NAV POP ------------------------------------------------------------------------------ 7/31/01 $19.53 $20.72 $17.59 $19.23 $18.71 $19.39 ------------------------------------------------------------------------------ 7/31/02 13.42 14.24 11.96 13.13 12.79 13.25 ------------------------------------------------------------------------------ TOTAL RETURN FOR PERIODS ENDED 6/31/02 (most recent calendar quarter) Class A Class B Class C Class M (inception dates) (4/1/69) (4/27/92) (7/26/99) (12/1/94) NAV POP NAV CDSC NAV CDSC NAV POP ------------------------------------------------------------------------------ 1 year -25.08% -29.40% -25.66% -29.21% -25.64% -26.36% -25.47% -28.09% ------------------------------------------------------------------------------ 5 years 17.86 11.06 13.47 11.97 13.57 13.57 14.97 10.96 Annual average 3.34 2.12 2.56 2.29 2.58 2.58 2.83 2.10 ------------------------------------------------------------------------------ 10 years 191.59 174.84 170.08 170.08 170.55 170.55 177.44 167.79 Annual average 11.30 10.64 10.45 10.45 10.47 10.47 10.74 10.35 ------------------------------------------------------------------------------ Annual average (life of fund) 12.22 12.02 11.19 11.19 11.38 11.38 11.49 11.37 ------------------------------------------------------------------------------ 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. 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 Russell 1000 Growth Index* is an unmanaged index of those companies in the Russell 1000 Index chosen for their growth orientation. S&P 500 Index* is an unmanaged index of common stock performance. The Russell 1000 Index* is an unmanaged index of the largest 1,000 companies in the Russell 3000 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. *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. 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 To the Trustees and Shareholders of Putnam Voyager Fund In our opinion, the accompanying statement of assets and liabilities, including the fund's portfolio, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Putnam Voyager Fund (the "fund") at July 31, 2002, and the results of its operations, the changes in its net assets and the financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of investments owned at July 31, 2002 by correspondence with the custodian, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Boston, Massachusetts September 6, 2002
THE FUND'S PORTFOLIO July 31, 2002 COMMON STOCKS (97.8%) (a) NUMBER OF SHARES VALUE Advertising and Marketing Services (0.2%) ------------------------------------------------------------------------------------------------------------------- 542,300 Interpublic Group Companies, Inc. $11,339,493 778,800 Lamar Advertising Co. (NON) 24,594,504 ------------- 35,933,997 Aerospace and Defense (1.1%) ------------------------------------------------------------------------------------------------------------------- 341,500 L-3 Communications Holdings, Inc. (NON) 15,784,130 1,229,500 Lockheed Martin Corp. 78,823,245 347,700 Northrop Grumman Corp. 38,490,390 875,500 Raytheon Co. 28,523,790 165,200 Rockwell Collins, Inc. 4,245,640 526,795 United Technologies Corp. 36,612,253 ------------- 202,479,448 Automotive (0.9%) ------------------------------------------------------------------------------------------------------------------- 856,100 Dana Corp. 13,766,088 1,066,530 Delphi Automotive Systems Corp. 10,622,639 1,263,700 General Motors Corp. 58,825,235 395,900 Johnson Controls, Inc. 32,075,818 1,072,000 Lear Corp. (NON) 46,203,200 ------------- 161,492,980 Banking (4.4%) ------------------------------------------------------------------------------------------------------------------- 587,000 Bank of America Corp. 39,035,500 2,793,168 Bank of New York Company, Inc. (The) 89,437,239 555,300 Bank One Corp. 21,606,723 563,500 Charter One Financial, Inc. 19,113,920 211,200 Doral Financial Corp. 8,097,408 767,775 Fifth Third Bancorp 50,726,894 63,900 First Tennessee National Corp. 2,391,777 556,100 Golden West Financial Corp. 36,563,575 690,600 Greenpoint Financial Corp. 33,355,980 618,900 Investors Financial Services Corp. 19,043,553 247,000 M&T Bank Corp. 20,649,200 1,404,800 National City Corp. 43,408,320 546,100 North Fork Bancorporation, Inc. 22,177,121 364,100 Northern Trust Corp. 14,502,103 133,100 South Trust Corp. 3,359,444 950,500 SunTrust Banks, Inc. 62,542,900 4,073,317 U.S. Bancorp 87,128,251 244,400 UnionBanCal Corp. 10,599,628 2,295,000 Washington Mutual, Inc. 85,855,950 1,853,852 Wells Fargo & Co. 94,286,913 789,500 Zions Bancorporation 39,877,645 ------------- 803,760,044 Beverage (4.4%) ------------------------------------------------------------------------------------------------------------------- 3,762,900 Anheuser-Busch Companies, Inc. 194,579,559 5,108,984 Coca-Cola Co. (The) 255,142,661 1,476,100 Coca-Cola Enterprises, Inc. 27,484,982 3,332,457 Pepsi Bottling Group, Inc. (The) 82,378,337 5,455,630 PepsiCo, Inc. 234,264,752 ------------- 793,850,291 Biotechnology (2.2%) ------------------------------------------------------------------------------------------------------------------- 3,756,125 Amgen, Inc. (NON) 171,429,545 214,800 Applera Corporation-Applied Biosystems Group 4,008,168 875,806 Genzyme Corp. (NON) 19,950,861 1,244,400 Gilead Sciences, Inc. (NON) 37,916,868 707,400 IDEC Pharmaceuticals Corp. (NON) 31,542,966 544,700 IDEXX Laboratories, Inc. (NON) 15,932,475 3,959,960 MedImmune, Inc. (NON) 117,769,210 ------------- 398,550,093 Broadcasting (1.5%) ------------------------------------------------------------------------------------------------------------------- 543,680 Clear Channel Communications, Inc. (NON) 14,162,864 455,900 Cox Radio, Inc. Class A (NON) 10,599,675 2,584,300 Echostar Communications Corp. Class A (NON) 42,149,933 5,388,424 Viacom, Inc. Class B (NON) 209,771,346 ------------- 276,683,818 Cable Television (--%) ------------------------------------------------------------------------------------------------------------------- 350,700 Comcast Corp. Class A (NON) 7,329,630 Chemicals (1.1%) ------------------------------------------------------------------------------------------------------------------- 1,116,300 3M Co. 140,464,029 284,900 Air Products & Chemicals, Inc. 12,606,825 363,000 Eastman Chemical Co. 16,088,160 280,400 Lubrizol Corp. (The) 8,535,376 355,200 Rohm & Haas Co. 13,320,000 ------------- 191,014,390 Commercial and Consumer Services (0.8%) ------------------------------------------------------------------------------------------------------------------- 506,600 American Greetings Corp. Class A 8,141,062 294,900 CDW Computer Centers, Inc. (NON) 14,096,220 404,000 Choicepoint, Inc. (NON) 16,923,560 705,900 Cintas Corp. 30,981,245 1,043,900 Ecolab, Inc. 47,967,205 431,500 H&R Block, Inc. 20,832,820 274,800 Tech Data Corp. (NON) 9,219,540 ------------- 148,161,652 Communications Equipment (2.6%) ------------------------------------------------------------------------------------------------------------------- 28,359,699 Cisco Systems, Inc. (NON) 374,064,430 1,092,400 Extreme Networks, Inc. (NON) 11,360,960 496,200 Juniper Networks, Inc. (NON) 3,969,600 1,507,000 Nokia OYJ ADR (Finland) 18,686,800 1,755,200 QUALCOMM, Inc. (NON) 48,232,896 443,700 Scientific-Atlanta, Inc. 5,612,805 852,229 Tellabs, Inc. (NON) 4,883,272 ------------- 466,810,763 Computers (4.1%) ------------------------------------------------------------------------------------------------------------------- 433,100 Brocade Communications Systems, Inc. (NON) 8,120,625 10,788,178 Dell Computer Corp. (NON) 268,949,278 4,605,300 EMC Corp. (NON) 34,539,750 1,621,100 Emulex Corp. (NON) 37,544,676 4,111,050 Hewlett-Packard Co. 58,171,358 3,318,518 IBM Corp. 233,623,667 679,000 Lexmark International, Inc. (NON) 33,189,520 1,484,700 McDATA Corp. Class A (NON) 15,915,984 1,210,200 QLogic Corp. (NON) 49,315,650 1,667,400 Sun Microsystems, Inc. (NON) 6,536,208 ------------- 745,906,716 Conglomerates (5.7%) ------------------------------------------------------------------------------------------------------------------- 29,663,876 General Electric Co. (SEG) 955,176,807 6,827,914 Tyco International, Ltd. (Bermuda) (SEG) 87,397,299 ------------- 1,042,574,106 Consumer Finance (1.4%) ------------------------------------------------------------------------------------------------------------------- 1,124,900 AmeriCredit Corp. (NON) 21,991,795 2,769,170 Capital One Financial Corp. 87,782,689 166,600 Countrywide Credit Industries, Inc. 8,464,946 1,419,800 Household International, Inc. 60,582,866 4,096,325 MBNA Corp. 79,427,732 ------------- 258,250,028 Consumer Goods (1.6%) ------------------------------------------------------------------------------------------------------------------- 1,119,200 Colgate-Palmolive Co. 57,470,920 579,100 Dial Corp. (The) 11,593,582 376,900 Estee Lauder Companies, Inc. (The) Class A 11,427,608 438,300 Fortune Brands, Inc. 22,923,090 940,200 Newell Rubbermaid, Inc. 28,281,216 1,875,585 Procter & Gamble Co. 166,908,309 ------------- 298,604,725 Consumer Services (0.1%) ------------------------------------------------------------------------------------------------------------------- 229,200 Hotels.com Class A (NON) 9,786,840 Containers (--%) ------------------------------------------------------------------------------------------------------------------- 55,700 Owens-Illinois, Inc. (NON) 696,250 Electric Utilities (0.8%) ------------------------------------------------------------------------------------------------------------------- 835,700 Duke Energy Corp. 21,301,993 812,000 Edison International (NON) 10,637,200 914,000 Entergy Corp. 37,044,420 491,100 Exelon Corp. 24,088,455 182,500 FPL Group, Inc. 10,338,625 189,600 Pinnacle West Capital Corp. 6,446,400 561,300 Progress Energy, Inc. 26,240,775 ------------- 136,097,868 Electrical Equipment (--%) ------------------------------------------------------------------------------------------------------------------- 297,800 Rockwell International Corp. 5,509,300 Electronics (5.4%) ------------------------------------------------------------------------------------------------------------------- 1,269,200 Agilent Technologies, Inc. (NON) 23,962,496 682,200 Avnet, Inc. 11,392,740 2,225,300 Broadcom Corp. Class A (NON) 41,746,628 451,500 Brooks-PRI Automation, Inc. (NON) 8,587,530 839,600 Integrated Device Technology, Inc. (NON) 10,746,880 24,577,051 Intel Corp. 461,802,788 1,070,200 JDS Uniphase Corp. (NON) 2,707,606 1,191,647 Linear Technology Corp. 32,269,801 558,600 Marvell Technology Group, Ltd. (Bermuda) (NON) 10,613,400 3,665,854 Maxim Integrated Products, Inc. (NON) 128,964,744 1,420,400 Micrel, Inc. (NON) 16,291,988 668,100 Microchip Technology, Inc. (NON) 14,711,562 555,500 Micron Technology, Inc. (NON) 10,826,695 2,861,088 Motorola, Inc. 33,188,621 2,941,255 PMC - Sierra, Inc. (NON) 28,088,985 2,739,400 RF Micro Devices, Inc. (NON) 18,244,404 728,300 Semtech Corp. (NON) 14,318,378 873,700 Storage Technology Corp. (NON) 12,406,540 3,459,000 Texas Instruments, Inc. 80,075,850 61,200 W.W. Grainger, Inc. 3,001,248 1,199,391 Xilinx, Inc. (NON) 23,016,313 ------------- 986,965,197 Energy (0.9%) ------------------------------------------------------------------------------------------------------------------- 1,524,394 BJ Services Co. (NON) 48,612,925 736,878 Cooper Cameron Corp. (NON) 31,678,385 1,526,954 GlobalSantaFe Corp. 34,417,543 413,900 Schlumberger, Ltd. 17,764,588 1,069,200 Smith International, Inc. (NON) 33,797,412 ------------- 166,270,853 Engineering & Construction (--%) ------------------------------------------------------------------------------------------------------------------- 180,700 Jacobs Engineering Group, Inc. (NON) 6,268,483 Financial (3.9%) ------------------------------------------------------------------------------------------------------------------- 611,900 Annaly Mortgage Mgmt., Inc. 12,078,906 7,859,903 Citigroup, Inc. 263,621,147 1,587,726 Fannie Mae 118,904,800 4,180,329 Freddie Mac 258,971,382 324,500 MGIC Investment Corp. 20,443,500 221,500 Moody's Corp. 10,986,400 244,100 SLM Corp. 22,213,100 ------------- 707,219,235 Food (0.9%) ------------------------------------------------------------------------------------------------------------------- 328,700 Dole Food Co. 9,841,278 3,333,733 Kraft Foods, Inc. Class A 123,348,121 707,300 Krispy Kreme Doughnuts, Inc. (NON) 25,003,055 ------------- 158,192,454 Gaming & Lottery (0.7%) ------------------------------------------------------------------------------------------------------------------- 429,200 GTECH Holdings Corp. (NON) 8,562,540 1,591,700 Harrah's Entertainment, Inc. (NON) 75,319,244 394,400 International Game Technology (NON) 22,973,800 115,100 Mandalay Resort Group (NON) 3,264,236 138,700 MGM Mirage, Inc. (NON) 4,854,500 1,900,400 Park Place Entertainment Corp. (NON) 17,445,672 ------------- 132,419,992 Health Care Services (5.0%) ------------------------------------------------------------------------------------------------------------------- 830,600 AdvancePCS (NON) 18,622,052 922,800 AmerisourceBergen Corp. 61,818,372 925,000 Cardinal Health, Inc. 53,280,000 2,978,500 Caremark Rx, Inc. (NON) 46,762,450 85,800 CIGNA Corp. 7,722,000 395,652 DaVita, Inc. (NON) 9,337,387 895,400 Express Scripts, Inc. Class A (NON) 46,560,800 2,530,300 HCA, Inc. 118,924,100 1,375,300 Health Management Association, Inc. (NON) 27,822,319 629,400 Health Net, Inc. (NON) 14,085,972 1,057,300 Laboratory Corporation of America Holdings (NON) 36,265,390 977,300 Oxford Health Plans, Inc. (NON) 42,043,446 520,400 Quest Diagnostics, Inc. (NON) 31,426,956 199,300 Steris Corp. (NON) 4,163,377 845,850 Tenet Healthcare Corp. (NON) 40,304,753 3,097,341 UnitedHealth Group, Inc. 271,512,912 382,200 Universal Health Services, Inc. Class B (NON) 18,070,416 992,700 Wellpoint Health Networks, Inc. (NON) 70,978,050 ------------- 919,700,752 Household Furniture and Appliances (0.2%) ------------------------------------------------------------------------------------------------------------------- 916,600 Maytag Corp. 30,366,958 139,100 Whirlpool Corp. 7,980,167 ------------- 38,347,125 Insurance (2.3%) ------------------------------------------------------------------------------------------------------------------- 1,086,900 ACE, Ltd. (Bermuda) 34,422,123 5,008,006 American International Group, Inc. 320,111,744 440,730 Fidelity National Financial, Inc. 13,041,201 439,300 Gallagher, Arthur J. & Co. 12,919,813 286,300 PMI Group, Inc. (The) 10,169,376 499,000 Radian Group, Inc. 22,854,200 109,200 XL Capital, Ltd. Class A (Bermuda) 8,091,720 ------------- 421,610,177 Investment Banking/Brokerage (1.4%) ------------------------------------------------------------------------------------------------------------------- 201,200 Bear Stearns Companies, Inc. (The) 12,116,264 39,900 BlackRock, Inc. (NON) 1,673,805 6,717,842 Charles Schwab Corp. (The) 60,124,686 731,600 Federated Investors, Inc. 20,792,072 357,600 Investment Technology Group, Inc. (NON) 12,111,912 130,000 Lehman Brothers Holdings, Inc. 7,372,300 1,713,700 Merrill Lynch & Company, Inc. 61,093,405 868,040 Morgan Stanley Dean Witter & Co. 35,025,414 1,047,300 SEI Investments Co. 27,554,463 1,018,400 Waddell & Reed Financial, Inc. 18,270,096 ------------- 256,134,417 Leisure (--%) ------------------------------------------------------------------------------------------------------------------- 115,200 Polaris Industires, Inc. 7,834,752 Lodging/Tourism (0.3%) ------------------------------------------------------------------------------------------------------------------- 288,200 Four Seasons Hotels, Inc. (Canada) 11,009,240 503,100 Marriott International, Inc. Class A 16,853,850 1,045,500 Royal Caribbean Cruises, Ltd. 20,721,810 205,900 Starwood Hotels & Resorts Worldwide, Inc. 5,291,630 ------------- 53,876,530 Machinery (0.1%) ------------------------------------------------------------------------------------------------------------------- 303,300 Parker-Hannifin Corp. 12,210,858 Manufacturing (0.3%) ------------------------------------------------------------------------------------------------------------------- 1,000,100 Dover Corp. 29,352,935 245,017 Illinois Tool Works, Inc. 16,168,672 377,300 Shaw Group, Inc. (NON) 8,802,409 ------------- 54,324,016 Media (0.4%) ------------------------------------------------------------------------------------------------------------------- 2,392,719 AOL Time Warner, Inc. (NON) 27,516,269 1,496,400 Fox Entertainment Group, Inc. Class A (NON) 29,853,180 600,038 USA Networks, Inc. (NON) 13,230,238 429,200 Walt Disney Co. (The) 7,609,716 ------------- 78,209,403 Medical Technology (2.5%) ------------------------------------------------------------------------------------------------------------------- 892,600 Apogent Technologies, Inc. (NON) 17,316,440 1,790,300 Baxter International, Inc. 71,450,873 1,415,900 Biomet, Inc. 36,714,287 1,020,000 Guidant Corp. (NON) 35,496,000 5,032,840 Medtronic, Inc. 203,326,736 553,800 St. Jude Medical, Inc. (NON) 21,044,400 138,200 Varian Medical Systems, Inc. (NON) 5,776,760 1,732,250 Zimmer Holdings, Inc. (NON) 64,491,668 ------------- 455,617,164 Metals (0.3%) ------------------------------------------------------------------------------------------------------------------- 3,311,300 Freeport-McMoRan Copper & Gold, Inc. Class B (NON) 50,563,551 679,500 United States Steel Corp. 11,313,675 ------------- 61,877,226 Natural Gas Utilities (0.1%) ------------------------------------------------------------------------------------------------------------------- 925,650 NiSource, Inc. 18,327,870 Office Equipment & Supplies (0.1%) ------------------------------------------------------------------------------------------------------------------- 358,200 Pitney Bowes, Inc. 13,969,800 Oil & Gas (1.7%) ------------------------------------------------------------------------------------------------------------------- 652,100 Apache Corp. 33,583,150 625,885 Burlington Resources, Inc. 22,876,097 1,639,400 Conoco, Inc. 39,542,328 100,500 Devon Energy Corp. 4,188,840 2,889,557 Exxon Mobil Corp. 106,220,115 282,800 Murphy Oil Corp. 23,514,820 777,418 Noble Corp. (NON) 25,188,343 420,200 Occidental Petroleum Corp. 11,383,218 159,000 Phillips Petroleum Co. 8,228,250 1,171,000 Unocal Corp. 38,244,860 ------------- 312,970,021 Paper & Forest Products (0.4%) ------------------------------------------------------------------------------------------------------------------- 55,200 Sealed Air Corp. (NON) 800,952 2,499,400 Smurfit-Stone Container Corp. (NON) 36,041,348 582,400 Weyerhaeuser Co. 34,216,000 ------------- 71,058,300 Pharmaceuticals (13.1%) ------------------------------------------------------------------------------------------------------------------- 5,244,950 Abbott Laboratories 217,193,380 1,419,500 Allergan, Inc. 85,865,555 1,278,100 Andrx Group (NON) 28,361,039 476,800 AstraZeneca PLC ADR (United Kingdom) 17,446,112 72,400 Barr Laboratories, Inc. (NON) 4,416,400 642,100 Bristol-Myers Squibb Co. 15,044,403 306,900 Cephalon, Inc. (NON) 14,731,200 511,100 Forest Laboratories, Inc. (NON) 39,594,917 169,900 GlaxoSmithKline PLC ADR (United Kingdom) 6,711,050 467,900 ICN Pharmaceuticals, Inc. 4,908,271 9,990,539 Johnson & Johnson 529,498,567 2,196,000 King Pharmaceuticals, Inc. (NON) 46,577,160 2,581,546 Lilly (Eli) & Co. 150,813,917 5,194,278 Merck & Company, Inc. 257,636,189 887,400 Mylan Laboratories, Inc. 28,787,256 18,366,347 Pfizer, Inc. 594,151,325 4,245,077 Pharmacia Corp. 189,924,745 681,000 Shire Pharmaceuticals Group PLC ADR (United Kingdom) (NON) 17,365,500 364,200 Teva Pharmaceutical Industries, Ltd. ADR (Israel) 24,292,504 348,900 Watson Pharmaceuticals, Inc. (NON) 7,351,323 2,581,600 Wyeth 103,005,840 ------------- 2,383,676,653 Railroads (0.2%) ------------------------------------------------------------------------------------------------------------------- 1,233,600 Burlington Northern Santa Fe Corp. 36,292,512 121,800 Canadian National Railway Co. (Canada) 5,845,182 ------------- 42,137,694 Regional Bells (0.8%) ------------------------------------------------------------------------------------------------------------------- 940,600 BellSouth Corp. 25,255,110 4,066,282 SBC Communications, Inc. 112,473,360 399,100 Verizon Communications, Inc. 13,170,300 ------------- 150,898,770 Restaurants (1.1%) ------------------------------------------------------------------------------------------------------------------- 129,000 CBRL Group, Inc. 3,859,680 678,600 Darden Restaurants, Inc. 15,757,092 5,072,200 Starbucks Corp. (NON) 99,567,286 531,000 Wendy's International, Inc. 19,535,490 2,191,900 Yum! Brands, Inc. (NON) 67,729,710 ------------- 206,449,258 Retail (10.5%) ------------------------------------------------------------------------------------------------------------------- 468,265 99 Cents Only Stores (NON) 11,416,301 274,000 Albertsons, Inc. 7,721,320 479,900 AutoZone, Inc. (NON) 35,392,625 704,207 Bed Bath & Beyond, Inc. (NON) 21,830,417 1,438,650 Best Buy Companies, Inc. (NON) 47,331,585 949,900 Big Lots, Inc. (NON) 15,768,340 735,600 Chico's FAS, Inc. (NON) 11,615,124 1,348,300 Circuit City Stores-Circuit City Group 22,988,515 295,200 Dillards, Inc. Class A 6,937,200 144,800 Dollar Tree Stores, Inc. (NON) 4,517,253 153,500 Expedia, Inc. Class A (NON) 7,463,170 725,000 Family Dollar Stores, Inc. 21,960,250 1,252,200 Federated Department Stores, Inc. (NON) 47,095,242 4,262,507 Home Depot, Inc. (The) 131,626,216 1,010,700 Kohl's Corp. (NON) 66,706,200 4,243,328 Kroger Co. (NON) 82,660,029 3,215,475 Limited, Inc. (The) 57,782,086 7,549,022 Lowe's Companies, Inc. 285,730,483 439,000 Michaels Stores, Inc. (NON) 16,256,170 1,826,400 Office Depot, Inc. (NON) 23,706,672 258,600 PETsMART, Inc. (NON) 3,734,184 467,800 Pier 1 Imports, Inc. 8,092,940 472,800 RadioShack Corp. 12,103,680 203,200 Rent-A-Center, Inc. (NON) 10,873,232 48,700 Ross Stores, Inc. 1,834,042 365,700 Saks, Inc. (NON) 3,891,048 2,016,900 Staples, Inc. (NON) 33,662,061 320,200 SUPERVALU, Inc. 6,672,968 2,278,000 Target Corp. 75,971,300 451,400 Tiffany & Co. 11,122,496 6,962,774 TJX Companies, Inc. (The) 123,449,983 11,229,600 Wal-Mart Stores, Inc. 552,271,728 2,622,400 Walgreen Co. 92,649,392 480,511 Whole Foods Market, Inc. (NON) 21,080,018 1,062,600 Williams-Sonoma, Inc. (NON) 24,174,150 174,800 Winn Dixie Stores, Inc. 2,753,100 ------------- 1,910,841,520 Schools (0.2%) ------------------------------------------------------------------------------------------------------------------- 703,000 Apollo Group, Inc. Class A (NON) 27,592,750 60,900 Career Education Corp. (NON) 2,688,126 ------------- 30,280,876 Semiconductor (1.3%) ------------------------------------------------------------------------------------------------------------------- 4,107,271 Applied Materials, Inc. (NON) 61,075,120 2,750,900 KLA-Tencor Corp. (NON) 108,357,951 2,006,800 LAM Research Corp. (NON) 24,683,640 651,400 Novellus Systems, Inc. (NON) 17,581,286 379,700 Photon Dynamics, Inc. (NON) 9,902,576 847,500 Teradyne, Inc. (NON) 12,712,500 ------------- 234,313,073 Shipping (--%) ------------------------------------------------------------------------------------------------------------------- 164,700 CNF Transportation, Inc. 5,242,401 Software (6.0%) ------------------------------------------------------------------------------------------------------------------- 134,800 Activision, Inc. (NON) 3,871,456 599,700 Adobe Systems, Inc. 14,368,812 550,000 BMC Software, Inc. (NON) 7,397,500 319,000 Business Objects SA ADR (France) (NON) 6,191,790 155,500 Cadence Design Systems, Inc. (NON) 1,935,975 2,034,340 Electronic Arts, Inc. (NON) 122,426,581 561,800 Intuit, Inc. (NON) 24,707,964 14,151,795 Microsoft Corp. (NON) (SEG) 679,003,121 484,100 NETIQ Corp. (NON) 9,590,021 3,643,800 Network Associates, Inc. (NON) 44,272,170 8,774,142 Oracle Corp. (NON) 87,820,387 1,186,698 PeopleSoft, Inc. (NON) 21,336,830 1,796,900 Symantec Corp. (NON) 60,268,026 445,567 VERITAS Software Corp. (NON) 7,498,893 ------------- 1,090,689,526 Technology Services (1.5%) ------------------------------------------------------------------------------------------------------------------- 535,057 Accenture, Ltd. Class A (Bermuda) (NON) 8,828,441 1,331,000 Affiliated Computer Services, Inc. Class A (NON) 62,530,380 1,154,500 Automatic Data Processing, Inc. 43,051,305 924,300 BISYS Group, Inc. (The) (NON) 21,351,330 239,000 Checkfree Corp. (NON) 2,380,440 794,000 Computer Sciences Corp. (NON) 29,378,000 448,000 DST Systems, Inc. (NON) 15,097,600 522,073 Electronic Data Systems Corp. 19,196,624 644,800 Equifax, Inc. 13,669,760 631,559 Fiserv, Inc. (NON) 21,731,945 1,592,300 SunGard Data Systems, Inc. (NON) 37,339,435 ------------- 274,555,260 Telecommunications (0.2%) ------------------------------------------------------------------------------------------------------------------- 972,000 CenturyTel, Inc. 25,855,200 488,500 Citizens Communications Co. (NON) 2,676,980 1,109,000 Sprint Corp. (FON Group) 10,369,150 ------------- 38,901,330 Textiles (0.3%) ------------------------------------------------------------------------------------------------------------------- 300,300 Jones Apparel Group, Inc. (NON) 10,219,209 1,712,000 Reebok International, Ltd. (NON) 46,069,920 ------------- 56,289,129 Tire & Rubber (--%) ------------------------------------------------------------------------------------------------------------------- 390,800 Goodyear Tire & Rubber Co. (The) 6,815,552 Tobacco (2.2%) ------------------------------------------------------------------------------------------------------------------- 8,305,498 Philip Morris Companies, Inc. 382,468,183 232,400 R.J. Reynolds Tobacco Holdings, Inc. 12,696,012 ------------- 395,164,195 Toys (0.3%) ------------------------------------------------------------------------------------------------------------------- 3,131,700 Mattel, Inc. 58,907,277 Transportation Services (0.1%) ------------------------------------------------------------------------------------------------------------------- 322,000 United Parcel Service, Inc. Class B 21,039,480 Waste Management (0.2%) ------------------------------------------------------------------------------------------------------------------- 1,253,100 Waste Management, Inc. 29,660,877 --------------- Total Common Stocks (cost $19,586,668,426) $17,852,760,435 SHORT-TERM INVESTMENTS (3.3%) (a) PRINCIPAL AMOUNT VALUE ------------------------------------------------------------------------------------------------------------------- $219,604,043 Short-term investments held as collateral for loaned securities with yields ranging from 1.77% to 2.03% and due dates ranging from August 1, 2002 to September 19, 2002 (d) $219,485,910 391,153,952 Short-term investments held in Putnam commingled cash account with yields ranging from 1.70% to 1.84% and due dates ranging from August 1, 2002 to September 25, 2002 (d) 391,153,952 --------------- Total Short-Term Investments (cost $610,639,862) $610,639,862 ------------------------------------------------------------------------------------------------------------------- Total Investments (cost $20,197,308,288) (b) $18,463,400,297 ------------------------------------------------------------------------------------------------------------------- (a) Percentages indicated are based on net assets of $18,260,470,771. (b) The aggregate identified cost on a tax basis is $20,923,678,107, resulting in gross unrealized appreciation and depreciation of $579,170,090 and $3,039,447,900, respectively, or net unrealized depreciation of $2,460,277,810. (NON) Non-income-producing security. (SEG) A portion of these securities were pledged and segregated with the custodian to cover margin requirements for futures contracts at July 31, 2002. (d) See footnote 1 to the financial statements. ADR after the name of a foreign holding stands for American Depositary Receipts, representing ownership of foreign securities on deposit with a custodian bank. ------------------------------------------------------------------------------ Futures Contracts Outstanding at July 31, 2002 Market Aggregate Face Expiration Unrealized Value Value Date Appreciation ------------------------------------------------------------------------------ Nasdaq 100 Index (Long) $34,336,200 $32,975,613 Sep-02 $1,360,587 S&P 500 Index (Long) 297,832,625 275,169,574 Sep-02 22,663,051 ------------------------------------------------------------------------------ $24,023,638 ------------------------------------------------------------------------------ Written Options Outstanding at July 31, 2002 (premiums received $334,019) Expiration Date/ Market Contract Amount Strike Price Value ------------------------------------------------------------------------------ 152,520 UnitedHealth Group, Inc. (Call) Aug 02/ 95.00 USD $114,390 ------------------------------------------------------------------------------ The accompanying notes are an integral part of these financial statements.
STATEMENT OF ASSETS AND LIABILITIES July 31, 2002 Assets ------------------------------------------------------------------------------------------- Investments in securities, at value, including $211,832,694 of securities on loan (identified cost $20,197,308,288) (Note 1) $18,463,400,297 ------------------------------------------------------------------------------------------- Cash 782 ------------------------------------------------------------------------------------------- Dividends, interest and other receivables 10,512,510 ------------------------------------------------------------------------------------------- Receivable for shares of the fund sold 41,976,768 ------------------------------------------------------------------------------------------- Receivable for securities sold 286,009,680 ------------------------------------------------------------------------------------------- Receivable for variation margin (Note 1) 1,411,057 ------------------------------------------------------------------------------------------- Total assets 18,803,311,094 Liabilities ------------------------------------------------------------------------------------------- Payable for securities purchased 248,634,709 ------------------------------------------------------------------------------------------- Payable for shares of the fund repurchased 38,203,720 ------------------------------------------------------------------------------------------- Payable for compensation of Manager (Note 2) 25,026,039 ------------------------------------------------------------------------------------------- Payable for investor servicing and custodian fees (Note 2) 2,922,156 ------------------------------------------------------------------------------------------- Payable for compensation of Trustees (Note 2) 689,557 ------------------------------------------------------------------------------------------- Payable for administrative services (Note 2) 14,328 ------------------------------------------------------------------------------------------- Payable for distribution fees (Note 2) 5,810,195 ------------------------------------------------------------------------------------------- Written options outstanding, at value (premiums received $334,019) (Note 1) 114,390 ------------------------------------------------------------------------------------------- Collateral on securities loaned, at value (Note 1) 219,485,910 ------------------------------------------------------------------------------------------- Other accrued expenses 1,939,319 ------------------------------------------------------------------------------------------- Total liabilities 542,840,323 ------------------------------------------------------------------------------------------- Net assets $18,260,470,771 Represented by ------------------------------------------------------------------------------------------- Paid-in capital (Notes 1 and 4) $24,783,864,281 ------------------------------------------------------------------------------------------- Undistributed net investment income (Note 1) 3,468,916 ------------------------------------------------------------------------------------------- Accumulated net realized loss on investments and foreign currency transactions (Note 1) (4,817,185,981) ------------------------------------------------------------------------------------------- Net unrealized depreciation of investments and assets and liabilities in foreign currencies (1,709,676,445) ------------------------------------------------------------------------------------------- Total -- Representing net assets applicable to capital shares outstanding $18,260,470,771 Computation of net asset value and offering price ------------------------------------------------------------------------------------------- Net asset value and redemption price per class A share ($11,811,007,315 divided by 880,243,923 shares) $13.42 ------------------------------------------------------------------------------------------- Offering price per class A share (100/94.25 of $13.42)* $14.24 ------------------------------------------------------------------------------------------- Net asset value and offering price per class B share ($3,406,811,414 divided by 284,833,108 shares)** $11.96 ------------------------------------------------------------------------------------------- Net asset value and offering price per class C share ($156,830,076 divided by 11,941,240 shares)** $13.13 ------------------------------------------------------------------------------------------- Net asset value and redemption price per class M share ($317,613,691 divided by 24,828,960 shares) $12.79 ------------------------------------------------------------------------------------------- Offering price per class M share (100/96.50 of $12.79)* $13.25 ------------------------------------------------------------------------------------------- Net asset value, offering price and redemption price per class Y share ($2,568,208,275 divided by 186,123,941 shares) $13.80 ------------------------------------------------------------------------------------------- * 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 Year ended July 31, 2002 Investment income: ------------------------------------------------------------------------------------------- Dividends (net of foreign tax of $440,808) $267,433,864 ------------------------------------------------------------------------------------------- Interest 7,962,386 ------------------------------------------------------------------------------------------- Securities lending 699,252 ------------------------------------------------------------------------------------------- Total investment income 276,095,502 Expenses: ------------------------------------------------------------------------------------------- Compensation of Manager (Note 2) 113,466,866 ------------------------------------------------------------------------------------------- Investor servicing and custodian fees (Note 2) 38,900,483 ------------------------------------------------------------------------------------------- Compensation of Trustees (Note 2) 509,229 ------------------------------------------------------------------------------------------- Administrative services (Note 2) 87,654 ------------------------------------------------------------------------------------------- Distribution fees -- Class A (Note 2) 37,784,370 ------------------------------------------------------------------------------------------- Distribution fees -- Class B (Note 2) 53,504,702 ------------------------------------------------------------------------------------------- Distribution fees -- Class C (Note 2) 2,071,050 ------------------------------------------------------------------------------------------- Distribution fees -- Class M (Note 2) 3,227,886 ------------------------------------------------------------------------------------------- Other 16,259,185 ------------------------------------------------------------------------------------------- Total expenses 265,811,425 ------------------------------------------------------------------------------------------- Expense reduction (Note 2) (3,652,081) ------------------------------------------------------------------------------------------- Net expenses 262,159,344 ------------------------------------------------------------------------------------------- Net investment income 13,936,158 ------------------------------------------------------------------------------------------- Net realized loss on investments (Notes 1 and 3) (4,345,316,126) ------------------------------------------------------------------------------------------- Net realized loss on futures contracts (Note 1) (90,273,416) ------------------------------------------------------------------------------------------- Net realized gain on foreign currency transactions (Note 1) 69,891 ------------------------------------------------------------------------------------------- Net realized gain on swap contracts (Note 1) 13,024,810 ------------------------------------------------------------------------------------------- Net realized loss on written options (Notes 1 and 3) (1,253,733) ------------------------------------------------------------------------------------------- Net unrealized appreciation of assets and liabilities in foreign currencies during the year 11,757 ------------------------------------------------------------------------------------------- Net unrealized depreciation of investments, swap contracts, written options, and futures contracts during the year (3,399,438,710) ------------------------------------------------------------------------------------------- Net loss on investments (7,823,175,527) ------------------------------------------------------------------------------------------- Net decrease in net assets resulting from operations $(7,809,239,369) ------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements.
STATEMENT OF CHANGES IN NET ASSETS Year ended July 31 -------------------------------------- 2002 2001 ------------------------------------------------------------------------------------------------------- Decrease in net assets ------------------------------------------------------------------------------------------------------- Operations: ------------------------------------------------------------------------------------------------------- Net investment income $13,936,158 $50,976,307 ------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments and foreign currency transactions (4,423,748,574) 1,653,354,922 ------------------------------------------------------------------------------------------------------- Net unrealized depreciation of investments and assets and liabilities in foreign currencies (3,399,426,953) (13,822,374,195) ------------------------------------------------------------------------------------------------------- Net decrease in net assets resulting from operations (7,809,239,369) (12,118,042,966) ------------------------------------------------------------------------------------------------------- Distributions to shareholders: (Note 1) ------------------------------------------------------------------------------------------------------- From net investment income Class A (37,163,823) (6,027,144) ------------------------------------------------------------------------------------------------------- Class B -- (2,999,998) ------------------------------------------------------------------------------------------------------- Class C -- (70,453) ------------------------------------------------------------------------------------------------------- Class M -- (176,922) ------------------------------------------------------------------------------------------------------- Class Y (15,118,379) (1,096,178) ------------------------------------------------------------------------------------------------------- From net realized short-term gain on investments Class A -- (771,235,722) ------------------------------------------------------------------------------------------------------- Class B -- (383,880,960) ------------------------------------------------------------------------------------------------------- Class C -- (9,015,181) ------------------------------------------------------------------------------------------------------- Class M -- (22,639,056) ------------------------------------------------------------------------------------------------------- Class Y -- (140,267,375) ------------------------------------------------------------------------------------------------------- From net realized long-term gain on investments Class A (659,215,436) (1,392,387,027) ------------------------------------------------------------------------------------------------------- Class B (274,207,832) (693,057,716) ------------------------------------------------------------------------------------------------------- Class C (9,327,036) (16,275,984) ------------------------------------------------------------------------------------------------------- Class M (19,932,182) (40,872,494) ------------------------------------------------------------------------------------------------------- Class Y (121,109,593) (253,238,366) ------------------------------------------------------------------------------------------------------- Increase (decrease) from capital share transactions (Note 4) (1,786,304,079) 2,519,405,890 ------------------------------------------------------------------------------------------------------- Total decrease in net assets (10,731,617,729) (13,331,877,652) Net assets ------------------------------------------------------------------------------------------------------- Beginning of year 28,992,088,500 42,323,966,152 ------------------------------------------------------------------------------------------------------- End of year (including undistributed net investment income of $3,468,916 and $42,338,282, respectively) $18,260,470,771 $28,992,088,500 ------------------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS (For a common share outstanding throughout the period) CLASS A ----------------------------------------------------------------------------------------------------- Per-share operating performance Year ended July 31 ----------------------------------------------------------------------------------------------------- 2002 2001 2000 1999 1998 ----------------------------------------------------------------------------------------------------- Net asset value, beginning of period $19.53 $30.22 $24.25 $21.36 $19.49 ----------------------------------------------------------------------------------------------------- Investment operations: ----------------------------------------------------------------------------------------------------- Net investment income (loss)(a) .03 .08 (.11) (.05) (.04) ----------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (5.35) (8.17) 9.06 4.53 3.12 ----------------------------------------------------------------------------------------------------- Total from investment operations (5.32) (8.09) 8.95 4.48 3.08 ----------------------------------------------------------------------------------------------------- Less distributions: ----------------------------------------------------------------------------------------------------- From net investment income (.04) (.01) -- -- -- ----------------------------------------------------------------------------------------------------- From net realized gain on investments (.75) (2.59) (2.98) (1.59) (1.21) ----------------------------------------------------------------------------------------------------- Total distributions (.79) (2.60) (2.98) (1.59) (1.21) ----------------------------------------------------------------------------------------------------- Net asset value, end of period $13.42 $19.53 $30.22 $24.25 $21.36 ----------------------------------------------------------------------------------------------------- Total return at net asset value (%)(b) (28.24) (28.54) 37.76 22.40 16.83 ----------------------------------------------------------------------------------------------------- Ratios and supplemental data ----------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $11,811,007 $17,683,446 $25,277,820 $17,180,288 $13,854,611 ----------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(c) .96 .88 .86 .90 .96 ----------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average net assets (%) .21 .33 (.37) (.25) (.20) ----------------------------------------------------------------------------------------------------- Portfolio turnover (%) 91.27 140.30 76.95 85.05 60.04 ----------------------------------------------------------------------------------------------------- (a) Per share net investment income (loss) has been determined on the basis of weighted average number of shares outstanding during the period. (b) Total return assumes dividend reinvestment and does not reflect the effect of sales charges. (c) Includes amounts paid through expense offset and brokerage service arrangements (Note 2). The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS (For a common share outstanding throughout the period) CLASS B ----------------------------------------------------------------------------------------------------- Per-share operating performance Year ended July 31 ----------------------------------------------------------------------------------------------------- 2002 2001 2000 1999 1998 ----------------------------------------------------------------------------------------------------- Net asset value, beginning of period $17.59 $27.68 $22.57 $20.14 $18.57 ----------------------------------------------------------------------------------------------------- Investment operations: ----------------------------------------------------------------------------------------------------- Net investment loss (a) (.08) (.09) (.31) (.21) (.18) ----------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (4.80) (7.40) 8.40 4.23 2.96 ----------------------------------------------------------------------------------------------------- Total from investment operations (4.88) (7.49) 8.09 4.02 2.78 ----------------------------------------------------------------------------------------------------- Less distributions: ----------------------------------------------------------------------------------------------------- From net investment income -- (.01) -- -- -- ----------------------------------------------------------------------------------------------------- From net realized gain on investments (.75) (2.59) (2.98) (1.59) (1.21) ----------------------------------------------------------------------------------------------------- Total distributions (.75) (2.60) (2.98) (1.59) (1.21) ----------------------------------------------------------------------------------------------------- Net asset value, end of period $11.96 $17.59 $27.68 $22.57 $20.14 ----------------------------------------------------------------------------------------------------- Total return at net asset value (%)(b) (28.82) (29.02) 36.69 21.43 16.02 ----------------------------------------------------------------------------------------------------- Ratios and supplemental data ----------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $3,406,811 $7,170,549 $11,692,070 $8,433,131 $7,263,280 ----------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(c) 1.71 1.63 1.61 1.65 1.71 ----------------------------------------------------------------------------------------------------- Ratio of net investment loss to average net assets (%) (.53) (.42) (1.12) (1.00) (.95) ----------------------------------------------------------------------------------------------------- Portfolio turnover (%) 91.27 140.30 76.95 85.05 60.04 ----------------------------------------------------------------------------------------------------- (a) Per share net investment loss has been determined on the basis of weighted average number of shares outstanding during the period. (b) Total return assumes dividend reinvestment and does not reflect the effect of sales charges. (c) Includes amounts paid through expense offset and brokerage service arrangements (Note 2). The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS (For a common share outstanding throughout the period) CLASS C ---------------------------------------------------------------------------------------- For the period Per-share July 26, 1999+ operating performance Year ended July 31 to July 31 ---------------------------------------------------------------------------------------- 2002 2001 2000 1999 ---------------------------------------------------------------------------------------- Net asset value, beginning of period $19.23 $30.00 $24.25 $24.64 ---------------------------------------------------------------------------------------- Investment operations: ---------------------------------------------------------------------------------------- Net investment loss (a) (.09) (.09) (.33) --(d) ---------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (5.26) (8.08) 9.06 (.39) ---------------------------------------------------------------------------------------- Total from investment operations (5.35) (8.17) 8.73 (.39) ---------------------------------------------------------------------------------------- Less distributions: ---------------------------------------------------------------------------------------- From net investment income -- (.01) -- -- ---------------------------------------------------------------------------------------- From net realized gain on investments (.75) (2.59) (2.98) -- ---------------------------------------------------------------------------------------- Total distributions (.75) (2.60) (2.98) -- ---------------------------------------------------------------------------------------- Net asset value, end of period $13.13 $19.23 $30.00 $24.25 ---------------------------------------------------------------------------------------- Total return at net asset value (%)(b) (28.81) (29.05) 36.79 (1.58)* ---------------------------------------------------------------------------------------- Ratios and supplemental data ---------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $156,830 $244,232 $219,658 $822 ---------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(c) 1.71 1.63 1.61 .03* ---------------------------------------------------------------------------------------- Ratio of net investment loss to average net assets (%) (.54) (.40) (1.09) (.02)* ---------------------------------------------------------------------------------------- Portfolio turnover (%) 91.27 140.30 76.95 85.05 ---------------------------------------------------------------------------------------- + Commencement of operations. * Not annualized. (a) Per share net investment loss has been determined on the basis of weighted average number of shares outstanding during the period. (b) Total return assumes dividend reinvestment and does not reflect the effect of sales charges. (c) Includes amounts paid through expense offset and brokerage service arrangements (Note 2). (d) 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 ----------------------------------------------------------------------------------------------------- Per-share operating performance Year ended July 31 ----------------------------------------------------------------------------------------------------- 2002 2001 2000 1999 1998 ----------------------------------------------------------------------------------------------------- Net asset value, beginning of period $18.71 $29.20 $23.61 $20.93 $19.22 ----------------------------------------------------------------------------------------------------- Investment operations: ----------------------------------------------------------------------------------------------------- Net investment loss (a) (.05) (.04) (.25) (.16) (.14) ----------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (5.12) (7.85) 8.82 4.43 3.06 ----------------------------------------------------------------------------------------------------- Total from investment operations (5.17) (7.89) 8.57 4.27 2.92 ----------------------------------------------------------------------------------------------------- Less distributions: ----------------------------------------------------------------------------------------------------- From net investment income -- (.01) -- -- -- ----------------------------------------------------------------------------------------------------- From net realized gain on investments (.75) (2.59) (2.98) (1.59) (1.21) ----------------------------------------------------------------------------------------------------- Total distributions (.75) (2.60) (2.98) (1.59) (1.21) ----------------------------------------------------------------------------------------------------- Net asset value, end of period $12.79 $18.71 $29.20 $23.61 $20.93 ----------------------------------------------------------------------------------------------------- Total return at net asset value (%)(b) (28.64) (28.87) 37.13 21.83 16.21 ----------------------------------------------------------------------------------------------------- Ratios and supplemental data ----------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $317,614 $510,434 $674,784 $390,975 $322,277 ----------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(c) 1.46 1.38 1.36 1.40 1.46 ----------------------------------------------------------------------------------------------------- Ratio of net investment loss to average net assets (%) (.29) (.17) (.87) (.75) (.69) ----------------------------------------------------------------------------------------------------- Portfolio turnover (%) 91.27 140.30 76.95 85.05 60.04 ----------------------------------------------------------------------------------------------------- (a) Per share net investment loss has been determined on the basis of weighted average number of shares outstanding during the period. (b) Total return assumes dividend reinvestment and does not reflect the effect of sales charges. (c) Includes amounts paid through expense offset and brokerage service arrangements (Note 2). The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS (For a common share outstanding throughout the period) CLASS Y ----------------------------------------------------------------------------------------------------- Per-share operating performance Year ended July 31 ----------------------------------------------------------------------------------------------------- 2002 2001 2000 1999 1998 ----------------------------------------------------------------------------------------------------- Net asset value, beginning of period $20.07 $30.89 $24.69 $21.66 $19.70 ----------------------------------------------------------------------------------------------------- Investment operations: ----------------------------------------------------------------------------------------------------- Net investment income (loss)(a) .08 .14 (.04) --(d) .01 ----------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (5.51) (8.36) 9.22 4.62 3.16 ----------------------------------------------------------------------------------------------------- Total from investment operations (5.43) (8.22) 9.18 4.62 3.17 ----------------------------------------------------------------------------------------------------- Less distributions: ----------------------------------------------------------------------------------------------------- From net investment income (.09) (.01) -- -- -- ----------------------------------------------------------------------------------------------------- From net realized gain on investments (.75) (2.59) (2.98) (1.59) (1.21) ----------------------------------------------------------------------------------------------------- Total distributions (.84) (2.60) (2.98) (1.59) (1.21) ----------------------------------------------------------------------------------------------------- Net asset value, end of period $13.80 $20.07 $30.89 $24.69 $21.66 ----------------------------------------------------------------------------------------------------- Total return at net asset value (%)(b) (28.08) (28.33) 38.04 22.75 17.12 ----------------------------------------------------------------------------------------------------- Ratios and supplemental data ----------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $2,568,208 $3,383,428 $4,459,634 $2,406,418 $1,476,485 ----------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(c) .71 .63 .61 .65 .71 ----------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average net assets (%) .45 .58 (.12) --(e) .06 ----------------------------------------------------------------------------------------------------- Portfolio turnover (%) 91.27 140.30 76.95 85.05 60.04 ----------------------------------------------------------------------------------------------------- (a) Per share net investment income (loss) has been determined on the basis of weighted average number of shares outstanding during the period. (b) Total return assumes dividend reinvestment and does not reflect the effect of sales charges. (c) Includes amounts paid through expense offset and brokerage service arrangements (Note 2). (d) Amount represents less than $0.01 per share. (e) Amount represents less than 0.01%. The accompanying notes are an integral part of these financial statements.
NOTES TO FINANCIAL STATEMENTS July 31, 2002 Note 1 Significant accounting policies Putnam Voyager Fund (the "fund") is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. The fund invests primarily in common stocks of companies that Putnam Investment Management, LLC ("Putnam Management"), the fund's manager, an indirect wholly-owned subsidiary of Putnam, LLC, believes have potential for capital appreciation significantly greater than that of the market averages. 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 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. 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 that 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 occurring 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. 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 Management. 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 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) 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. G) Equity swap contracts The fund may engage in equity swap agreements, which are arrangements to exchange the return generated by one instrument for the return generated by another instrument. To manage its exposure to equity markets the fund may enter into equity swap agreements, which involve a commitment by one party to pay interest in exchange for a market-linked return based on a notional principal amount. To the extent that the total return of the security or index underlying the transaction exceeds or falls short of the offsetting interest rate obligation, the fund will receive a payment from or make a payment to the counterparty, respectively. Equity swaps are marked to market daily based upon quotations from market makers and the change, if any, is recorded as unrealized gain or loss. Payments received or made at the end of the measurement period are recorded as realized gains or losses. The fund could be exposed to credit or market risk due to unfavorable changes in the fluctuation of interest rates or in the price of the underlying security or index, the possibility that there is no liquid market for these agreements or that the counterparty may default on its obligation to perform. 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 July 31, 2002, the value of securities loaned amounted to $211,832,694. The fund received cash collateral of $219,485,910, which is pooled with collateral of other Putnam funds into 33 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 year ended July 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 July 31, 2002, the fund had a capital loss carryover of approximately $1,620,664,000 available to the extent allowed by tax law to offset future net capital gains, if any, which will expire on July 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, post-October loss deferrals, nontaxable dividends, unrealized and realized gains and losses on certain futures contracts, and redemption in kind. Prior year distributions in the Statement of changes 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 year ended July 31, 2002, the fund reclassified $523,322 to decrease undistributed net investment income and $12,453,555 to increase paid-in-capital, with an increase to accumulated net realized losses of $11,930,233. 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: 0.70% of the first $500 million of average net assets, 0.60% of the next $500 million, 0.55% of the next $500 million, 0.50% of the next $5 billion, 0.475% of the next $5 billion, 0.455% of the next $5 billion, 0.44% of the next $5 billion, 0.43% of the next $5 billion, 0.42% of the next $5 billion, 0.41% of the next $5 billion, 0.40% of the next $5 billion, 0.39% of the next $5 billion, 0.38% of the next $8.5 billion, and 0.37% 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. 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 year ended July 31, 2002, the fund's expenses were reduced by $3,652,081 under these arrangements. Each independent Trustee of the fund receives an annual Trustee fee, of which $9,213 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 year ended July 31, 2002, Putnam Retail Management, acting as underwriter received net commissions of $2,324,656 and $29,330 from the sale of class A and class M shares, respectively, and received $10,412,224 and $47,705 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 year ended July 31, 2002, Putnam Retail Management, acting as underwriter received $107,333 and no monies on class A and class M redemptions, respectively. Note 3 Purchases and sales of securities During the year ended July 31, 2002, cost of purchases and proceeds from sales of investment securities other than short-term investments aggregated $21,518,162,307 and $24,174,719,856, respectively. There were no purchases and sales of U.S. government obligations. Written option transactions during the year are summarized as follows: Contract Premiums Amounts Received --------------------------------------------------------------------------- Written options outstanding at beginning of year -- $-- --------------------------------------------------------------------------- Options opened 6,631,469 8,158,989 Options exercised (636,865) (789,839) Options expired (3,317,445) (3,931,605) Options closed (2,524,639) (3,103,526) --------------------------------------------------------------------------- Written options outstanding at end of year 152,520 $334,019 --------------------------------------------------------------------------- Note 4 Capital shares At July 31, 2002, there was an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows: Year ended July 31, 2002 --------------------------------------------------------------------------- Class A Shares Amount --------------------------------------------------------------------------- Shares sold 196,622,505 $3,244,063,522 --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 37,592,850 666,898,671 --------------------------------------------------------------------------- 234,215,355 3,910,962,193 Shares repurchased (259,343,238) (4,185,542,499) --------------------------------------------------------------------------- Net decrease (25,127,883) $(274,580,306) --------------------------------------------------------------------------- Year ended July 31, 2001 --------------------------------------------------------------------------- Class A Shares Amount --------------------------------------------------------------------------- Shares sold 181,547,941 $4,337,064,861 --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 84,719,704 2,079,871,162 --------------------------------------------------------------------------- 266,267,645 6,416,936,023 Shares repurchased (197,493,436) (4,642,155,393) --------------------------------------------------------------------------- Net increase 68,774,209 $1,774,780,630 --------------------------------------------------------------------------- Year ended July 31, 2002 --------------------------------------------------------------------------- Class B Shares Amount --------------------------------------------------------------------------- Shares sold 35,795,738 $538,083,473 --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 16,103,032 255,876,098 --------------------------------------------------------------------------- 51,898,770 793,959,571 Shares repurchased (174,805,961) (2,546,310,841) --------------------------------------------------------------------------- Net decrease (122,907,191) $(1,752,351,270) --------------------------------------------------------------------------- Year ended July 31, 2001 --------------------------------------------------------------------------- Class B Shares Amount --------------------------------------------------------------------------- Shares sold 60,856,334 $1,365,994,228 --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 45,100,846 1,001,688,814 --------------------------------------------------------------------------- 105,957,180 2,367,683,042 Shares repurchased (120,675,719) (2,511,506,823) --------------------------------------------------------------------------- Net decrease (14,718,539) $(143,823,781) --------------------------------------------------------------------------- Year ended July 31, 2002 --------------------------------------------------------------------------- Class C Shares Amount --------------------------------------------------------------------------- Shares sold 4,463,652 $73,158,266 --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 483,752 8,441,491 --------------------------------------------------------------------------- 4,947,404 81,599,757 Shares repurchased (5,705,214) (91,425,316) --------------------------------------------------------------------------- Net decrease (757,810) $(9,825,559) --------------------------------------------------------------------------- Year ended July 31, 2001 --------------------------------------------------------------------------- Class C Shares Amount --------------------------------------------------------------------------- Shares sold 7,451,606 $184,258,767 --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 938,316 22,791,711 --------------------------------------------------------------------------- 8,389,922 207,050,478 Shares repurchased (3,012,383) (66,861,681) --------------------------------------------------------------------------- Net increase 5,377,539 $140,188,797 --------------------------------------------------------------------------- Year ended July 31, 2002 --------------------------------------------------------------------------- Class M Shares Amount --------------------------------------------------------------------------- Shares sold 4,673,218 $74,557,423 --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 1,152,626 19,548,532 --------------------------------------------------------------------------- 5,825,844 94,105,955 Shares repurchased (8,282,627) (126,714,332) --------------------------------------------------------------------------- Net decrease (2,456,783) $(32,608,377) --------------------------------------------------------------------------- Year ended July 31, 2001 --------------------------------------------------------------------------- Class M Shares Amount --------------------------------------------------------------------------- Shares sold 7,339,607 $178,420,502 --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 2,630,723 62,058,767 --------------------------------------------------------------------------- 9,970,330 240,479,269 Shares repurchased (5,791,628) (131,420,366) --------------------------------------------------------------------------- Net increase 4,178,702 $109,058,903 --------------------------------------------------------------------------- Year ended July 31, 2002 --------------------------------------------------------------------------- Class Y Shares Amount --------------------------------------------------------------------------- Shares sold 60,180,238 $988,133,170 --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 7,480,943 136,227,972 --------------------------------------------------------------------------- 67,661,181 1,124,361,142 Shares repurchased (50,144,815) (841,299,709) --------------------------------------------------------------------------- Net increase 17,516,366 $283,061,433 --------------------------------------------------------------------------- Year ended July 31, 2001 --------------------------------------------------------------------------- Class Y Shares Amount --------------------------------------------------------------------------- Shares sold 45,735,402 $1,148,833,986 --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 15,670,970 394,601,919 --------------------------------------------------------------------------- 61,406,372 1,543,435,905 Shares repurchased (37,167,368) (904,234,564) --------------------------------------------------------------------------- Net increase 24,239,004 $639,201,341 --------------------------------------------------------------------------- --------------------------------------------------------------------------- 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 Companies, Inc. and the United Way Trustee since 1992 of Putnam of Massachusetts Bay. Member of the Vice President since 1981 Investments, LLC, Board of Governors of the Investment and Putnam Investment Company Institute, Trustee of the Management, LLC 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 July 31, 2002, there were 113 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 or Putnam Retail Management. Messrs. Putnam, III, Lasser, and Smith are deemed "interested persons" by virtue of their positions as officers or shareholders of the fund, or officers of Putnam Management, Putnam Retail Management, or Marsh & McLennan Companies, Inc., the parent company of Putnam Management and Putnam Retail Management. George Putnam, III, is the President of your Fund and each of the other Putnam Funds. Lawrence J. Lasser has been the President, Chief Executive Officer, and a Director of Putnam Investments, LLC, and Putnam Management since 1985, having begun his career there in 1969. Mr. Lasser currently also serves as a Director of Marsh & McLennan Companies, Inc., the parent company of Putnam Management. A.J.C. Smith is a Director of Marsh & McLennan Companies, Inc.
OFFICERS Name, Address, 1 Date of Birth, Inception of Service Position(s) Held with Fund with the Putnam Funds Principal Occupation(s) During Past 5 Years --------------------------------------------------------------------------------------------------------------- Charles E. Porter (7/26/38), Since 1989 Managing Director, Putnam Investments, Executive Vice President, LLC and Putnam Management Treasurer & Principal Financial Officer Patricia C. Flaherty Since 1993 Senior Vice President, Putnam (12/1/46), Investments, LLC and Putnam Management Senior Vice President Michael T. Healy (1/24/58), Since 2000 Managing Director, Putnam Assistant Treasurer and Investments, LLC Principal Accounting Officer Gordon H. Silver (7/3/47), Since 1990 Senior Managing Director, Putnam Vice President Investments, LLC and Putnam Management Brett C. Browchuk Since 1994 Managing Director, Putnam Investments, (2/27/63), Vice President LLC and Putnam Management Ian C. Ferguson (7/3/57), Since 1997 Senior Managing Director, Putnam Vice President Investments, LLC and Putnam Management Richard G. Leibovitch Since 1999 Managing Director of Putnam Investments, (10/31/63), Vice President LLC and Putnam Management. Prior to February 1999, Managing Director at J.P. Morgan. Richard A. Monaghan Since 1998 Managing Director, Putnam Investments, (8/25/54), LLC, Putnam Management and Putnam Vice President Retail Management John R. Verani Since 1988 Senior Vice President, Putnam (6/11/39), Investments, LLC and Putnam Management Vice President Stephen M. Oristaglio Since 2002 Senior Managing Director of Putnam (8/21/55), Management. Prior to July 1998, Vice President Managing Director, Swiss Bank Corp. Brian P. O'Toole Since 2002 Managing Director of Putnam Management. (7/23/63), Prior to June 2002, Managing Director, Vice President Citigroup Asset Management, 100 First Stamford Place, Stamford, CT 06902. Daniel L. Miller Since 2002 Managing Director of Putnam Management (8/15/57), Vice President Eric M. Wetlaufer Since 2002 Managing Director of Putnam Management. (4/13/62), Prior to November 1997, Managing Vice President Director and Portfolio Manager, Cadence Capital Management. --------------------------------------------------------------------------------------------------------------- 1 The address of each Officer is One Post Office Square, Boston, MA 02109.
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 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 PricewaterhouseCoopers 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 and Treasurer Patricia C. Flaherty Senior Vice President Michael T. Healy Assistant Treasurer and Principal Accounting Officer Lawrence J. Lasser Vice President Gordon H. Silver Vice President Ian C. Ferguson Vice President Brett C. Browchuk Vice President Stephen M. Oristaglio Vice President Brian O'Toole Vice President Daniel L. Miller Vice President Eric M. Wetlaufer Vice President Richard G. Leibovitch Vice President Richard A. Monaghan Vice President John R. Verani Vice President This report is for the information of shareholders of Putnam Voyager 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 a representative at 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 AN016-83992 007/883/530/516 9/02 PUTNAM INVESTMENTS [SCALE LOGO OMITTED] ---------------------------------------------------------------------------- Putnam Voyager Fund Supplement to Annual Report dated 7/31/02 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 7/31/02 NAV 1 year -28.08% 5 years 2.30 Annual average 0.46 10 years 168.29 Annual average 10.37 Life of fund (since class A inception, 4/1/69) Annual average 12.02 Share value: NAV 7/31/01 $20.07 7/31/02 $13.80 ---------------------------------------------------------------------------- Distributions: No. Income Capital gains Total Long-term Short-term 1 $0.093 $0.745 -- $0.838 ---------------------------------------------------------------------------- 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.